Navigating an OFCCP Audit

In my previous blogs, I've discussed wage and hour requirements and the elements of a compliant AAP. But what should you do if you've received the dubious honor of being selected by the OFCCP for an audit? Read on.

Under the OFCCP's new Active Case Management system for conducting non-construction compliance evaluations, all compliance reviews now begin with a standard desk audit.

If you receive notice of a desk audit, you will need to send a copy of your AAP (both the plan for females and minorities and the plan for veterans and individuals with disabilities) for the current plan year, as well as the items on the listing attached to the letter (11 total). This includes activity data for the first six months of the current plan year if you receive the audit letter in the second half of your plan year. The AAP and supplemental data to be sent is based on the address where the audit letter is sent; that location is the "establishment" that is being audited.

The itemized listing of data/information to be sent also includes:

• compensation data for all employees included in the AAP,
• copies of any bargaining unit contracts; and
• copies of the last three years of EEO-1 filings
  

You will have 30 days from the receipt of the letter to provide the current AAP and the additional information requested. Once the response package is received at the OFCCP office that issued the audit letter, they will check to see if all required items are included and will analyze the information provided to determine if there are indicators of "systemic discrimination" (i.e., a potential affected class of 10 or more applicants/workers). If there are no indicators and your AAP is compliant with the regulations, you will receive a closure letter. If there are indicators, a full desk audit will be conducted. This will entail further requests for information and possibly an on-site review. If there is an on-site review, it will likely include a review of I-9 records, interviews of employees and managers, and a review of employment records.

Based on our experience over the past 12 years in support of numerous clients through the audit process, we leave you with the following tips to help you navigate the process:

• Verify that the data you submit is accurate and complete and in full response to the request. It is very difficult to explain away errors in the data submitted.
• Respond in a timely manner to all items listed in the audit letter, as well as additional requests for information, to the extent that they are reasonable requests. If you need more time to respond accurately and completely, ask for it.
• Be ready to explain the non-discriminatory reasons for negative results in the analysis.
• Get your I-9's in order.
• Document your efforts in outreach to veterans and individuals with disabilities.
• Check your workplace and applicant process for accessibility; and your documentation of postings of job openings to state agencies.
• Ensure that you have met your EEO-1 and VETS 100/100A filing requirements.
• Make sure your applicant flow data meets the standards expected by the OFCCP (see the previous blog for details).
• Review your employee files to confirm that they do not contain information that should be in separate confidential files (e.g., medical information, internal investigation reports).
• Prepare a list of accomplishments and good faith efforts for the previous and current plan years.
  

The audit will either be closed out with a closure letter indicating that no violations were found or that only technical violations were found that are easily remedied. If discriminatory practices are found, a conciliation agreement and possible monetary settlement will result.

Here's the good news: once an audit is closed out, you cannot be audited again at that location for two years.

Authored by Dave Waldorf

10 Tips for Ensuring Compliance, 8 Tips for Selecting an AAP Vendor

It sure seems like we're running on empty. Jobs are in short supply. So are small business loans. And what about the funding for the "Cash for Clunkers" program?

But there's been no shortage of change since the Obama administration took office. And the change has filtered down to the OFCCP (Office of Federal Contract Compliance Programs), the agency that oversees compliance with Affirmative Action regulations.

The new administration has proposed a 33% increase in the OFCCP's 2010 budget. This provides for an increase in agency staffing, and consequently, an increase in the number of audits and complaint investigations.

Under its new Active Case Management program, a full "desk audit" (conducted at the OFCCP regional office) will be conducted for every 25 audits, and an on-site review (at the contractor site) for every 50 audits. The focus of the audits is to eliminate "systemic discrimination" (evidence of on-going pattern and practice), with emphasis on discrimination in compensation practices as well as selection, promotion and termination activity.

There is also an emphasis on review of contractor practices with respect to veterans and individuals with disabilities, including efforts in outreach to these groups and job-posting practices.

A new directive has also been issued by the OFCCP for audit of contractors receiving funds under the new American Recovery and Reinvestment Act of 2009 (ARRA).

These directives and increases in budget mean that federal contractors must ensure that they are fully compliant with all of the federal workplace laws enforced by the U.S. Department of Labor. This includes Affirmative Action, I-9, eVerify (mandatory electronic check of employee eligibility to work in the U.S., effective 9.8.09) regulations and prevailing wage and overtime pay regulations. An ounce of prevention will be worth a ton of cure.

10 Tips for Ensuring Compliance

1. Review sourcing for female and minority candidates for areas of underrepresentation in your workforce.
2. Review outreach activities to veterans and individuals with disabilities.
3. Make sure your applicant tracking and record keeping procedures are compliant for sufficiency of applicant flow, an adequate and effective self-identification process, and recording of disposition of applicants (i.e. interviewed, refused offer, did not show up for interview, not minimally qualified, etc.).
4. Ensure that pay plans are non-discriminatory and that any significant differences in average pay are not due to race/gender.
5. Provide adequate access to your application process for individuals with disabilities, especially to web-based application systems, as well as to company facilities/programs.
6. Maintain and update employee information in your HRIS to make sure that the data used as the basis for the AAP is current and accurate.
7. Conduct mid-year plan reviews to gauge progress towards the goals and other action plans set for the plan year.
8. Determine the non-discriminatory reasons for any adverse impact identified in employment activity and revise practices/policies as necessary.
9. Communicate and implement the action plans included in the AAP narrative, and train supervisors/managers as needed.
10. Keep records for two years (one year if under 150 employees).

8 Tips for Selecting an AAP Vendor

The regulatory requirements are complex and the potential costs of non-compliance are high. If you choose to hire outside help for preparing your AAP, consider the following:

1. Will the vendor provide support to you throughout the year, including support during an OFCCP audit?
2. Does the vendor consider this to be a full plan-year relationship?
3. Are optional services provided, such as EEO-1 and VETS-100A preparation?
4. How qualified is the staff that provides the services?
5. Do they have proven track record and solid references?
6. Will the vendor provide periodic updates for changes in regulations and procedures?
7. What do the deliverables look like?
8. Does the vendor provide management level reporting (i.e. executive summary)?

Need help? Contact us for more information on our compliance services.