OFCCP Affirmative Action Audits on the Horizon

OFCCP federal contractors affirmative action audit Alabama employment law
The OFCCP is about to commence audits of federal contractors to ensure compliance with their affirmative action obligations.

The Office of Federal Contractor Compliance Programs (“OFCCP”) is focusing on the requirement that federal contractors adopt and annually update affirmative action plans. On August 2, 2018, the OFCCP’s Acting Director, Craig Leen, participated in a public discussion during which he reviewed the current compliance process for contractors.   Currently, contractors simply “check the box” to certify compliance with affirmative action obligations in the General Services Administration’s (“GSA’s”) System for Award Management (“SAM”) registration system.  Mr. Leen expressed concern that many contractors checking the box do not actually possess a valid affirmative action plan.

Mr. Leen’s comments were followed-up by a new OFCCP directive on August 24, 2018:  Directive 2018-07.  The subject of that directive is the commencement of an “Affirmative Action Program Verification Initiative.”  OFCCP “is concerned that many federal contractors are not fulfilling their legal duty to develop and maintain AAPs [Affirmative Action Plans] and update them on an annual basis.”  Therefore,  Directive 2018-07 requires OFCCP to develop a comprehensive program to verify that federal contractors are complying with affirmative action obligations on a yearly basis.  That program will include:

• Development of a process whereby contractors would certify on a yearly basis
compliance with AAP requirements.
• Inclusion of a criterion in the neutral scheduling methodology increasing the
likelihood of compliance reviews for contractors that have not certified compliance
with the AAP requirements.
• Compliance checks to verify contractor compliance with AAP requirements.
• Requesting proffer of the AAP by contractors when requesting extensions of time
to provide support data in response to a scheduling letter.
• Development of information technology to collect and facilitate review of AAPs
provided by federal contractors

Directive 2018-07 does not provide a timeline for implementation.  Nevertheless, it is abundantly clear that compliance audits are coming.  Therefore, federal contractors should carefully review their affirmative action plans for compliance, and make sure that those plan are updated annually.

Federal Contractors: Blacklisting Rules Enjoined

Injunction blacklisting rules
A preliminary injunction saves federal contractors from the “blacklisting rules.”

Yesterday, federal contractors received a reprieve from one of President Obama’s executive orders.  Late on October 24, 2016, a federal judge in the Eastern District of Texas granted a preliminary injunction halting implementation of certain provisions of the Fair Pay and Safe Workplaces Executive Order (E.O. 13637) and the Final Rule implementing that order.  The injunction applies nationwide and blocks two key provisions of the Final Rule which affected government contractors: (1) disclosure and disqualification requirements; and, (2) a prohibition on pre-dispute arbitration agreements.

The preliminary injunction blocks the portions of E.O. 13637 and its Final Rule, which are also known as “blacklisting rules.”  Those rules require federal contractors to disclose adverse findings and decisions related to their compliance with federal and state labor and employment laws.  The blacklisting rules also allow federal agencies to deny contracts to employers who are deemed to lack a satisfactory record of integrity and business ethics based on such disclosures.  The blacklisting rules were supposed to take effect on October 25, 2016.

E.O. 13637 and its Final Rule also prohibit certain federal contractors from requiring pre-dispute arbitration agreements from its employees for disputes under Title VII of the Civil Rights Act of 1964, or claims arising out of or related to sexual harassment.  The injunction also blocked those arbitration restrictions.

Importantly, the federal judge did not issue an injunction related to “paycheck transparency” provisions of E.O. 13637 and its Final Rule.  Those provisions will go into effect for solicitations or contract amendments made on or after January 1, 2017. Under the “paycheck transparency” provisions, covered contractors and subcontractors must provide wage statements to covered workers.  Those statements must give workers information concerning hours worked, overtime hours, pay, and any additions to or deductions made from pay.

Federal Contractors: Minimum Wage Increases to $10.20

Federal contractor minimum wage
The minimum wage for employees of federal contractors will increase on January 1, 2017

The minimum wage for employees of many federal contractors will increase to $10.20 per hour effective January 1, 2017.  President Obama’s Executive Order 13658 established a minimum wage for contractors working under four major categories of federal contracts:

  1. Procurement contracts for construction covered by the Davis-Bacon Act (DBA);
  2. Service contracts covered by the Service Contract Act (SCA);
  3. Concessions contracts, including any concessions contract excluded from the SCA by the Department of Labor’s regulations at 29 CFR 4.133(b); and
  4.  Contracts in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public.

Effective January 1, 2015, the minimum wage was set at $10.10 per hour, and that wage has seen five cent increases over the last two years.  On September 20, 2016, the United States Department of Labor announced the increase for 2017.  The notice of wage increase and an updated workers’ rights poster can be found here:  Minimum Wage Increase