As covered in GovConLaw article “OFCCP Compliance Evaluations: General Overview”, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) monitors contractor compliance with Equal Employment Opportunity (“EEO”) laws and corresponding affirmative action requirements through compliance evaluations. A compliance evaluation can be an involved process; however, they are not one-size-fits-all. Your compliance evaluation can vary in scope and breadth based on the type of investigative procedure OFCCP elects to employ, or the existence of complaints against your company. This article will survey the four types of investigative procedures that OFCCP generally uses, as well as a couple of unique evaluations that you may encounter depending on your circumstances.
The first, which represents the majority of OFCCP’s audit activity, is known simply as a compliance review. A compliance review may have up to three phases: the desk audit, an on-site review, and an off-site analysis. In the desk audit phase, an OFCCP compliance officer performs a thorough assessment of the contractor’s employment policies and practices as well as the results of the contractor’s affirmative action efforts, to determine its compliance with all three EEO laws. If the compliance officer cannot determine that the contractor is in compliance or cannot assess the scope of potential violations, then the compliance officer may choose to proceed to phase two, the on-site review. This phase is exactly what it sounds like. An OFCCP compliance officer will schedule a visit to the contractor’s facilities, to dig deeper and ensure that the contractor is not only writing policies, but also implementing and adhering those policies. OFCCP may inspect the premises, hold conferences with executives, and interview employees, among other things. If OFCCP still cannot reach a determination of compliance after the on-site review, then it may continue the evaluation in a third phase, an off-site analysis. In this phase, OFCCP will continue to review the results of the desk audit and on-site review, and will continue dialogue with the contractor until such a determination can be reached.
Off-Site Review of Records
The second investigatory procedure is the “off-site review of records”. This review includes an analysis and evaluation of all or some portion of the contractor’s AAPs and supporting documentation, as well as other documents related to the contractor’s personnel policies and employment actions that may be relevant to a determination of whether the contractor complied with EEO laws.
Third is the compliance check, which evaluates only whether the contractor has complied with the EEO laws pertaining to record retention. For a compliance check, the contractor has the option of providing the documents either on-site or off-site. Note, however, that refusing to allow OFCCP access to your establishment for the on-site review of requested records or failing to submit the listed records to OFCCP for the compliance check, may result in enforcement proceedings or rescheduling for a full compliance review.
Lastly, OFCCP can perform a focused review, which is an on-site review that focuses on a component of the contractor’s organization, an aspect of the contractor’s employment practices, or one of the three EEO laws. For example, in a Section 503 focused review, the compliance officer would review policies and practices of the contractor related solely to Section 503 compliance. For any focused review, OFCCP will identify the subject of the focused review and inform the contractor before the start of the review. Note that while focused reviews are not currently the most common, OFCCP has made a concerted effort to use focused reviews more frequently since 2018.
Other Distinct OFCCP Evaluations
OFCCP also has two unique types of reviews that do not fall neatly into the OFCCP’s four categories. First is aCorporate Management Compliance Evaluation, or CMCE. In a CMCE, OFCCP essentially follows the same structure as a regular compliance evaluation, but focuses on whether individuals at your company are encountering artificial barriers to advancement into middle and senior-level corporate management. The CMCE has this distinct focus on high positions because OFCCP recognizes that the selection criteria for these positions often are more subjective. Moreover, the selection criteria at these levels are closely related to corporate culture and values. As such, to ensure a thorough analysis of EEO compliance, CMCEs look at not only personnel activity data at the corporate headquarters, but also its affirmative action policies and procedures that ensure EEO leading to advancement throughout the organization and to its most senior levels.
The second unique review is a Functional Affirmative Action Program (FAAP) Evaluation, which is limited to companies that have entered FAAP agreements with OFCCP. FAAP agreements allow companies to craft their policies (including an AAP) in a way that fits their particular business model. Some contractors may find it appropriate to develop AAPs based solely on functional or business units, while others may elect to use a combination of both functional units and establishment-based AAPs. In the absence of an approved FAAP agreement, the regulations require contractors to develop, implement, and maintain separate AAPs for each physical location or establishment with 50 or more employees. Any supply or services contractor subject to OFCCP’s AAP requirements may request a FAAP agreement that permits the development and use of function- or business unit-based FAAPs.