The Trump Administration’s Office of Federal Contract Compliance Programs (OFCCP) and its Director, Craig Leen, resurrected the Compliance Check – what’s known in some circles as a compliance evaluation “light.” A Compliance Check is a tool that OFCCP asserts it will use to determine whether a federal contractor or subcontractor has maintained required records related to affirmative action compliance. Essentially, a Compliance Check is an initial indicator of whether a contractor has developed some of the basic and foundational elements in place to comply with affirmative action obligations.
A Short History of Compliance Checks
Although not nearly as intrusive as a full-blown compliance evaluation, a Compliance Check is not to be taken lightly, for successfully navigating through it will involve much more work than many federal contractors may believe. Failure to pass muster could lead to serious consequences, such as a full compliance evaluation, if OFCCP believes that non-compliance is a neutral reason to schedule a deeper audit.
As originally envisioned and implemented early in the Clinton Administration, a Compliance Check was a so-called “coffee conversation” – a brief half hour face-to-face meeting between an OFCCP compliance officer and federal contractor to examine a few basic elements of affirmative action compliance. The compliance officer would examine one item from each of the “laws” that OFCCP enforces: Executive Order 11246, Section 503 of the Federal Rehabilitation Act, and the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA).
Compliance Checks were essentially killed off in the Bush (II) Administration as too costly to implement. This was especially true in rural areas of America where extensive travel was required by compliance officers merely to have a 30-minute onsite conversation. In 2005, OFCCP issued a final rule eliminating the requirement that an agency compliance officer make a physical visit to a contractor’s establishment in order to conduct a Compliance Check. This rule change currently allows federal contractors the option of a personal visit at its establishment, or sending in materials to OFCCP as a form of ‘desk audit’ Compliance Check. In recent years, the Obama Administration completely abandoned Compliance Checks as an audit tool.
Why is This Important?
OFCCP’s March 2019 Corporate Scheduling Announcement List (CSAL) published on the agency’s website identified some 3,500 establishments targeted for some form of compliance review, including 500 Compliance Checks. These establishments generally have lower employee head counts and were to be selected at OFCCP’s regional level. Moreover, according to its April 2019 justification to the Office of Management and Budget (OMB) proposing new and revised scheduling letters, OFCCP anticipates conducting as many as 1,000 Compliance Checks annually. Thus, in order to justify its budget appropriation and achieve a vastly increased number of total compliance evaluations with its dwindling staff, OFCCP must significantly ramp up its use of Compliance Checks.
What’s Involved in a Compliance Check?
A Compliance Check involves documentation that a federal contractor has complied with at least one important element from each of the sources of nondiscrimination enforced by OFCCP:
- Executive Order 11246 (as well as Section 503 & VEVRAA) – Prior year affirmative action plan results
- VEVRAA – Examples of job advertisements, including listings with state employment service agencies
- Section 503 – Examples of accommodations for individuals with disabilities
On its face, what a Compliance Check requires from a contractor appears fairly basic. After all, OFCCP’s scheduling letter justification to OMB estimates that it will take each contractor only two (2) hours to gather applicable materials for a Compliance Check. However, let’s take a look at what’s really involved.
- AAP Results for the Preceding Year (Executive Order, Section 503, VEVRAA)
This first Compliance Check element essentially requires a contractor to have already prepared the preceding year’s complete Executive Order affirmative action plan statistical analysis including availability analysis, utilization analysis, and Placement Goals. About the only step not necessary in a Compliance Check is the AAP’s narrative reports, which often involves a certain amount of “boilerplate” language. For Section 503 and VEVRAA AAPs, this also requires complete tracking of employee disability and veteran demographics, and creating a Utilization Analysis (the goals for individuals with disabilities) and Benchmark Analysis (the goals for protected veterans). Thus, despite the apparent limited scope of information that actually has to be submitted, getting to that point will still be a “crash rush” if a contractor has not already completed its affirmative action plans. OFCCP believes that a substantial number of federal contractors do not prepare their AAPs until receiving a scheduling letter, when the mad scramble begins.The OFCCP’s Compliance Check scheduling letter and Frequently Asked Questions also indicate that the agency will require a contractor to submit information on good faith efforts expended to achieve Placement Goals in its Executive Order AAP, and a full assessment of effectiveness of recruitment and outreach efforts aimed at individuals with disabilities and protected veterans. All told, this first Compliance Check element encompasses a substantial number of documentation and data submissions that would otherwise be required from the Itemized Listing for a full compliance evaluation.
- Examples of Job Advertisements, Including Listings with State ESDS
If a contractor has not listed its vacancies with the applicable Employment Service Delivery System (ESDS), this second Compliance Check element will really be problematic. A contractor will be unable to retroactively provide documentation of listings with job service agencies. In other words, a contractor can’t “recreate the wheel” and submit ESDS listings now for job vacancies that have already been filled, and for which a listing with ESDS was not made. OFCCP compliance officers will often check this prior to the onset of an audit anyway. This alone is a good reason for federal contractors to use a third-party provider that can act as a “clearinghouse” for sending job vacancy announcements to both special interest advocacy organizations and listings with applicable ESDS agencies.
- Examples of Accommodations Made for Persons with Disabilities
It is unknown precisely how many “examples” will be sufficient to satisfy an OFCCP compliance officer about this third Compliance Check element. However, with a bit of memory and existing documentation, examples of accommodations and outcomes can likely be created retroactively without too much trouble. After all, for now these are merely “examples,” and not the entire universe of accommodation requests. Documentation may already exist in human resources related to complying with other federal laws such as the Americans with Disabilities Act or Family Medical Leave Act. Information about job accommodations may be even more readily available if a contractor uses a third-party service provider for leaves and disability management.
The Next Horizon
Although not yet approved, OFCCP’s proposed revised Compliance Check scheduling letter to OMB contains some subtle, yet significant changes. First, if a contractor elects not to undergo an on-site visit, the proposed Compliance Check scheduling letter requires all data and materials to be submitted electronically. Second, actual written affirmative action plans prepared in compliance with Executive Order 11246, Section 503 and VEVRAA must be submitted, and not just the “results for the preceding year.” Third, all requests made for accommodation of persons with disabilities (and action taken) will be required, and not merely “examples.” At this preliminary stage, there is no reason to believe that OFCCP’s proposals will not be approved by OMB.
Clearly, a Compliance Check is nowhere as intrusive or involved as a “traditional” compliance evaluation. Nor is it likely to drag on endlessly like a full establishment review. However, a Compliance Check is not something to be dismissed since it involves a substantial number of the Itemized Listing elements that would otherwise be required in a full-blown audit. A Compliance Check should also be taken seriously because a poor job complying, or a failure to do so entirely, may provide OFCCP with objective justification to target the contractor for a full compliance evaluation in the future.