OFCCP Proposes Significant Additions to Audit Requirements for Federal Contractors
On November 22, 2022, OFCCP published a proposed scheduling letter and itemized listing that, if finalized, would substantially increase the burden on federal contractors when audited by the agency. OFCCP scheduling letters represent the official commencement of an audit, and the letter lists all the data and documentation requested by the agency to begin its review. The most recent significant revision to the scheduling letter was made in 2014, when OFCCP added employee-level compensation data to the list of required submissions.
New submission requirements that OFCCP proposes for future audits include the following highlights:
- A requirement that contractors provide the agency a list identifying all “action-oriented programs” designed to correct any identified problems with minority or female utilization; selection disparities; gender-, race-, or ethnicity-based compensation disparities; disparities in the employment or advancement of minorities or women; or other areas that could affect the success of the contractor’s AAP.
- Documentation of policies and practices regarding all employment recruiting, screening, and hiring mechanisms, including the use of artificial intelligence, algorithms, automated systems or other technology-based selection procedures.
- Documentation that includes the contractor’s established policies and practices related to promotions, which includes identifying whether each promotion in the previous year was competitive or non-competitive and listing the previous supervisor, current supervisor, previous compensation, current compensation, department, job group, and job title from which and to which the person(s) were promoted.
- For each employee termination in the previous year, identifying the reason(s) for the termination (e.g., retirement, resignation, conduct, etc.) and the gender and race/ethnicity of each terminated employee.
- Employee-level compensation data for all employees for the prior year (in addition to the current year).
- Documentation that demonstrates the contractor has satisfied its annual obligation to evaluate its compensation systems for potential gender-, race-, or ethnicity-based disparities, including the method of analysis employed and, where applicable, how the different forms of compensation were separated or combined for analysis (e.g., base pay alone, base pay combined with bonuses, etc.).
- Copies of existing antiharassment policies, EEO complaint procedures, employment agreements (such as arbitration agreements) that impact employees’ equal opportunity rights, and complaint processes in place for the previous year.
Comments to OFCCP’s proposal are due by January 20, 2023.
Federal contractors should be aware that, if subject to an OFCCP audit, these proposed changes would add significant burden and expense to their EEO compliance obligations.
We will keep you apprised of further developments. If you have any questions, please contact one of the authors.