In Like a Lion, Out Like a Lamb?

In Like a Lion, Out Like a Lamb?

The Office of Federal Contract Compliance Programs has entered March like a lion. Although we hope the Agency will adhere to the weather proverb and go out like a lamb, that does not seem likely. The month began with the the issuance of Corporate Scheduling Announcement Letters, identifying facilities that may be scheduled for compliance evaluations during the fiscal year, which closes September 30, 2008. The OFCCP identified approximately 5,000 facilities for possible review in this scheduling cycle, using its Federal Contractor Selection System. This is on the heels of the OFCCP’s collection of $51,680,950 in back pay and benefits last year for 22,251 workers. According to the OFCCP, 98% of its enforcement cases involved systemic discrimination where the Agency found a significant number of workers or applicants subjected to discrimination because of an unlawful employment practice or policy.

We are often asked to “predict” which industry and/or regions the OFCCP will target. Candidly, we don’t know. We have seen, however, an increase in the number of hospitals, health care facilities, and diagnostic centers selected for review. The assumption that health care facilities are required to develop AAPs because of Medicare and Medicaid funds received is incorrect. Health care entities are generally captured by affirmative action regulations because of compensation received from the Veterans Administration for services rendered to patients, direct contracts with the Department of Defense or related agencies for health care services performed or to be performed through programs such as the Civilian Health and Medical Program of the Uniformed Services, or contracts to perform testing for agencies of the U.S. government. Given the many organizational, compensation, and functional issues unique to the health care industry, it is imperative that strategic AAPs are developed that accurately reflect the contractor's workplace, selection processes, and compensation structure, and avoid creating the appearance of discrimination.

Regardless of industry, all federal contractors and subcontractors should prepare now for an eventual audit. The OFCCP’s selection methods are far-reaching and consider information that was previously unavailable or under-used, such as the Agency’s “Contracts First” initiative, pre-award notifications, and conciliation agreement monitoring. Under the Contracts First initiative, the OFCCP gathers information from the various federal agencies regarding companies that are directly or indirectly doing business with them. This allows the OFCCP to go beyond the universe of companies that have self-identified as federal contractors on EEO-1 Reports. Thus, many companies who don’t even know that they are required to comply with affirmative action requirements will be receiving scheduling letters from the OFCCP. Ignoring these letters would be a mistake – rather, recipients should thoroughly research whether they are federal contractors or subcontractors within the meaning of the regulations because the OFCCP is not sending out scheduling letters without some basis for believing that coverage exists.

In addition, the “new and improved OFCCP” screens contractors’ AAPs for potential discrimination indicators using its Active Case Management system, seeking to effectively and efficiently use its resources to get the biggest “bang for its buck.” Therefore, it's more important than ever to have an accurate and strategic AAP, so that the OFCCP “lion” will leave your audit like a “lamb.”

About Constangy, Brooks & Smith, LLC:

Constangy, Brooks & Smith, LLC has counseled employers on labor and employment law matters, exclusively, since 1946. The firm represents Fortune 500 corporations and small companies across the country. More than 100 lawyers partner with clients to provide cost-effective legal services and sound preventive advice to enhance the employer-employee relationship.

Learn more about Constangy, Brooks & Smith, LLC.