ANSWERS

What is a compliance evaluation?

OFCCP conducts compliance evaluations of Federal contractors to ascertain their compliance with equal opportunity and non-discrimination requirements. A compliance evaluation consists of any one or any combination of the following four investigative procedures:

Compliance review -- a comprehensive analysis and evaluation of each aspect of hiring and employment practices, policies and conditions, including such things as hiring, training, employment benefits, promotion, etc. This particular review begins with a desk audit which is a review of the Affirmative Action Plan (AAP) and supporting documentation; and it may also include an on-site review, conducted at the contractor's establishment, to investigate problem areas identified during the desk audit.

Off-site review -- a review of records that may consist of a full desk audit, which is a review of the contractor's AAP or portions thereof, or a review of particular records such as personnel data.

Focused review -- an on-site review restricted to one or more components of the contractor's organization or one or more aspects of the contractor's employment practices.
Compliance check -- a determination of whether the contractor has maintained records consistent with 41 CFR 60-1.12; at the contractor's option the documents may be provided either on-site or off-site.

We don't do any government work here. Federal Government work is performed in some other division in another state. Are we subject to the equal employment laws enforced by OFCCP?

Yes. Generally speaking, once it has been determined that a business or organization is subject to the civil rights requirements enforced by OFCCP, all of the business's or organization's establishments or facilities will be subject to the same regulatory requirements, regardless of where the Federal contract is to be performed.

In addition, some businesses or organizations that do not independently hold Government contracts/subcontracts may still be covered under the laws enforced by OFCCP if they are considered a "single entity" with a related business or organization that holds such contracts. In such instances, OFCCP uses a "single entity" test to determine whether the businesses or organizations are so closely related that they may constitute a single entity for purposes of OFCCP jurisdiction. The test requires OFCCP to consider whether:

The test focuses primarily on whether the ownership, management, and operations of the separate entities are, in fact, sufficiently interrelated to warrant treating them as an integrated enterprise or a single entity. A business or organization need not meet all five factors to be considered a single entity with a covered Federal contractor. However, there is growing recognition that centralized control over labor relations and personnel functions is the most important factor. By way of example, say that two entities are under common ownership, with a common board of directors, and have a central corporate office that determines and issues personnel policy for both entities, and generally manages most personnel-related issues for both entities. At the same time, the operations of the two entities are not particularly dependent on each other. Despite the fact that one of the factors did not apply, the four factors that did outweigh the one that did not, so that the two entities being analyzed will most likely be considered a single entity.

What does OFCCP look for in a contractor's internal audit and reporting system?

The internal audit and reporting system is the contractor's way to assess the overall effectiveness of the contractor's Affirmative Action Program (AAP) and advise senior management of the effectiveness of the AAP. The system should monitor records of all personnel activity (including hires, promotions, transfers and terminations) and compensation at all levels to ensure that non-discriminatory practices have been followed. It is suggested that reporting be performed on a periodic basis and reviewed by appropriate management. In addition, top officials should be notified of the program's effectiveness and any recommendations for improvement. The AAP should contain a narrative description of how the system works.

Some larger contractor establishments may find it necessary and helpful to conduct internal audits and reports more frequently (i.e., quarterly), while smaller contractors may find that an annual review is sufficient. Our regulations only require "periodic" reviews, which OFCCP has historically considered to mean at least once per AAP year.

OFCCP is working on providing self-audit guidance for contractors to enhance their internal audit procedures.

Does OFCCP offer any guidance about how employers may self-audit their own employment practices to make sure that they comply with the laws enforced by OFCCP?

OFCCP has published a technical assistance guide for construction contractors, and has published the Federal Contract Compliance Manual (FCCM). Both have sections that address techniques for performing contractor self audits. The FCCM is available on our web site. We are working on a new technical assistance guide and other compliance assistance materials that will provide additional guidance on performing self audits of a variety of personnel practices. OFCCP offers compliance assistance seminars on how to self audit as well. You can find a regional calendar of compliance assistance seminars on our web site.

At what point during the review of compensation matters will the OFCCP perform a regression analysis?

A regression analysis will be conducted when there are indicators of potential systemic compensation discrimination problems. OFCCP will perform a regression analysis and provide summary results to the contractor in support of a Predetermination Notice or a Notice of Violation alleging systemic compensation discrimination. The purpose of the regression analysis is to analyze the relationship between the compensation and the legitimate factors that the contractor uses to determine pay decisions, such as work performed, responsibility level, skills and qualifications, education, performance, or other relevant experience. The regression analysis will show whether or not race and/or gender have statistically significant effects on compensation.

OFCCP's review of a contractor's compensation practices generally will proceed through the following steps:

What documents are employers required to retain related to the application process?

With regard to record keeping responsibilities, OFCCP regulations require that federal contractors maintain for a period of two years from the making of the record or the personnel action, all job postings and advertisements, applications received, any interview notes, test and test results, records of job offers, and the applications themselves. Contractors with fewer than 150 employees or a contract of less than $150,000 need only keep these records for a period of one year. See 41 CFR 60-1.12(a). In addition, OFCCP regulations and the Uniform Guidelines on Employee Selection Procedures (UGESP) obligate covered federal contractors to compile and maintain applicant data in order to ensure that the selection process used during hiring does not result in discrimination against a particular protected group. See 41 CFR 60-1.12, 41 CFR 60-3.4, and 60-3.15. Accordingly, a contractor must be able to identify the race, gender, and ethnicity (Hispanic or non-Hispanic) status of all applicants. Self-identification is the most reliable method and the preferred method for compiling such information about an individual. Contractors are encouraged to use tear-off sheets, post cards, or short forms to request demographic information from applicants that can be maintained separate and apart from the applications themselves. For more information on how to comply with OFCCP's regulations regarding the collection of race, gender, and ethnicity data, see OFCCP's directive entitled "Contractor Data Tracking Responsibilities" dated April 21, 2004 at http://www.dol.gov/esa/regs/compliance/ofccp/directives/dir265.htm. Note that OFCCP is currently engaged in rulemaking to address record keeping requirements regarding internet applicants and has issued a proposed rule. See Obligation to Solicit Race and Gender Data for Agency Enforcement Purposes, 69 Fed. Reg. 16446 (March 29, 2004), which can be found at http://www.dol.gov/esa/regs/fedreg/proposed/nprm_frn.htm. In addition, the agencies that issued the UGESP (including the Department of Labor) also published proposed guidance regarding record keeping and internet applicants. See Agency Information Collection Activities: Adoption of Additional Questions and Answers to Clarify and Provide a Common Interpretation of the Uniform Guidelines on Employee Selection Procedures as They Relate to the Internet and Related Technologies, 69 Fed. Reg. 10152 (March 4, 2004), which can be found at the Government Printing Office's website. http://edocket.access.gpo.gov/2004/04-4090.htm.

In addition to the requirement to collect demographic data for applicants, the regulations implementing Section 503 require employers to invite individuals to self-identify so that they can take advantage of the company's Affirmative Action Program for individuals with disabilities. For the same reasons that disability-related questions may not be asked prior to extending a job offer, the invitation to self identify must be given after an individual is made a job offer, but prior to the individual starting work. For more information regarding the invitation to self identify and when the invitation must be made, see 41 CFR 60-741.42. It is available on-line at http://www.dol.gov/dol/allcfr/ESA/Title_41/Part_60-741/41CFR60-741.42.htm. For a sample invitation to self identify, see http://www.dol.gov/dol/allcfr/ESA/Title_41/Part_60-741/41CFR60-741.84.htm. Note that similar regulations exist under VEVRAA governing when employers may invite disabled veterans to self identify. See 41 CFR 60-250.42, available on-line at http://www.dol.gov/dol/allcfr/ESA/Title_41/Part_60-250/41CFR60-250.42.htm.

In addition, VEVRAA requires that contractors invite applicants to self identify as a protected veteran regardless of whether s/he has a disability. Such invitation may be done at any time before the applicant begins employment. For a sample invitation to self identify for both specially disabled and other covered veterans, go to http://www.dol.gov/dol/allcfr/ESA/Title_41/Part_60-250/41CFR60-250.85.htm.