recent significant ofccp developments and how these changes affect you

RECENT SIGNIFICANT OFCCP DEVELOPMENTS AND HOW

THESE CHANGES AFFECT YOU

DECEMBER 11, 2014

John C. Fox, Esq. Fox, Wang & Morgan P.C.

315 University Avenue Los Gatos, CA 95030

Phone: (408) 844-2350

© 2014 Fox, Wang & Morgan P.C.

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AGENDA

1.  Catalogue: The President’s Recent Executive Order Hit Parade………………………………………………………………p. 5

2.  Catalogue: DOL’s Recent Significant Regulatory Publications…………………………………………....................p. 7

3.  Upcoming Dates Of “Balls In The Air”....................................p. 9 4.  OMB Switcheroo #1: Newest Surprise and Confusion:

The New V.E.T.S. PV Reporting Form (VETS-4212) Does Not Require A Report of The Four Species Of Protected Veteran..……………………………………………......................p. 12

5.  OMB Switcheroo #2: The Vietnam Era Veterans Readjustment Assistance Act of 1974 is now 4212 (and not “VEVRAA”)………………………….....................................p. 16

6.  OFCCP’s New Audit Scheduling Letter..................................p. 18

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7.  The New OFCCP Audit Scheduling Letter Did Not Revoke OFCCP’s prior exercises of regulatory and prosecutorial discretion to allow Kors to “Phase-In” AAPs and Subpart C……………………………………………p.27

8.  OFCCP’s New “Equal Pay Report” …………………………..p.38

9.  OFCCP Prohibitions On Compensation “Secrecy”…………p.61

10.  EEO EO: “Gender Identity” And “Sexual Orientation” Discrimination Unlawful……………………………………….p.68

11.  NEW Labor Law Certifications For Contract Bids…….......p.74

12.  New Minimum Wage ($10.10) for Federal Kors…………….p.81

AGENDA (CON’T.)

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ABBREVIATION KEY

Ø  DOL = U.S. Department of Labor Ø  Ees = Employees Ø  EO = Executive Order Ø  FR = Federal Register Ø  K = Contract Ø  Kor = Contractor Ø  LGBT = Lesbian, Gay, Bisexual,

Transgender

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1.  THE PRESIDENT’S RECENT EXECUTIVE ORDER HIT PARADE

1)   Minimum Wage, EO 13658, amends nothing (February 12, 2014; 79 FR 9851-February 20, 2014)

2)   Non-Retaliation for Disclosure of Compensation Information, EO 13665, amending EO 11246 (April 8, 2014; 79 FR 20749-April 11, 2014)

3)   “Presidential Memorandum” [directing OFCCP to issue compensation data collection tool] amending nothing (April 8, 2014)

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4)   Equal Employment Opportunity [LGBT], EO 13672 amending EO 11478 and 11246 (July 21, 2014; 79 FR 42971-July 23, 2014)

5)   Fair Pay and Safe Workplaces [Labor Law Compliance Certifications for K Bids], EO 13673 (July 31, 2014; 79 FR 45309-August 5, 2014) amending nothing

NOTE: there are often two different dates on Presidential documents

−  Date signed

−  Date in Federal Register… a few days after signing

1.  THE PRESIDENT’S RECENT EO (CON’T.)

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2.  DOL’S RECENT REGULATORY PUBLICATIONS

1. March 24, 2014:……. OFCCP’s Final Regulations § 503/VEVRAA

2.  August 6, 2014:……..

OFCCP’s NPRM re Compensation Data Collection Reporting Tool

3.  September 17, 2014: OFCCP NPRM: Prohibitions Against Pay Secrecy Policies and Actions

4.  September 25, 2014: VETS Final Rule: Annual Report from federal contractors: VETS-4212

5.  October 1, 2014:....... OFCCP New Audit Scheduling Letter and Itemized Listing (effective Oct. 15, 2014)

6.  October 7, 2014:…… DOL Final Rule: Minimum Wage ($10.10) for certain federal Kors

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2.  DOL’S RECENT REGULATORY PUBLICATIONS (CON’T.)

7. October 27, 2014:…. VETS-4212 Final Rules legally effective

8. November 2014:…… OMB approved the VETS-4212 Form

9. December 9, 2014:.. OFCCP Final Rule: LGBT (legally effective April 9, 2015)

10. January 1, 2015:…. New $10.10 Federal Minimum Wage became legally effective as to “new” contracts signed on or after this date

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3.  UPCOMING DATES OF “BALLS IN THE AIR”

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1)   December 16, 2014: Last day for public to submit comments on OFCCP’s NPRM making it unlawfully discriminatory to take adverse action against applicants/EEs who discuss compensation information

2)   January 5, 2015 (Revised): Last day for public to submit comments on OFCCP’s NPRM requiring federal Kors to “report summary data on employee compensation” (Equal Pay Report)

3.  UPCOMING DATES (CON’T)

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3)   “December 2014”: NPRM to update OFCCP’s Sex Discrimination Guidelines (41 CFR § 60-20)(…I predict as “legislative-type Rules”)

4)   “August 2015”: OFCCP Final Rule re compensation data collection tool

5)   “September 2015”: OFCCP Final Rule to implement EO 13665 (“pay transparency”)

6)   “September 2015”: OFCCP NPRM to update construction Rules (41 CFR § 60-4)

7)   January 20, 2017: President Obama’s last day in office

3.  PROMISES, PROMISES, OFCCP PROMISES: OFCCP PROMISES [FALL SEMI-ANNUAL REGULATORY AGENDA] (CON’T.)

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4. OMB SWITCHEROO #1: NEWEST SURPRISE AND CONFUSION: THE NEW V.E.T.S. PV REPORTING FORM (VETS-4212) DOES NOT REQUIRE A REPORT OF THE FOUR SPECIES OF PROTECTED VETERAN

New reality: OFCCP Post-Offer Self-ID requirement follows the V.E.T.S. reporting form: no subgroup reporting required

Veterans Employment and Training Service (V.E.T.S.) Final Rule: September 25, 2014

Effective date: October 27, 2014

−  (affects 2015 VETS-4212 filings)

¢  VETS-100 form and pre-“Jobs for Veterans Act” rules (pre-Dec 1, 2003) rescinded/removed: GONE!

�  So, 41 CFR § 61-250 rescinded/removed

¢  VETS-100A form renamed to “Federal Contractor Veterans’ Employment Report: VETS-4212

�  So, this Final Rule amends 41 CFR § 61-300

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4.  NEWEST SURPRISE AND CONFUSION: POST-OFFER 4212 SELF-ID FORM… (CON’T.)

V.E.T.S. Final Rule: September 25, 2014 (con’t.)

¢  These regs now catch-up to OFCCP’s VEVRAA regs and properly (and only) identify the four species of Protected Veterans

¢  “Employee” definition unique to VETS-4212 report:

- W-2 ees + - leased ees - not “persons” hired on a casual basis for a specified time or for the

duration of a specified job (i.e. construction) - not those temporarily hired through Ee Kor or agent - not independent contractors

¢  Only two month filing window: August 1 – September 30 ¢  10 or more locations must file electronically

The Big News: you will report ONLY the headcount of all PVs - - - as noted above - - you will not report how many of each of the four species of PV are present in your workforce

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�  OFCCP had announced in Spring 2014 that the Post-Offer 4212 Self-ID form would require identification of the four species of Protected Veterans (in contradistinction to the Pre-Offer Self-ID which prohibits same)

�  V.E.T.S. then published on September 25, 2014 its final V.E.T.S 4212 Rules and sent to OMB its proposed new VETS-4212 form

�  The proposed VETS-4212 form then became visible to the public in mid-October and called for reporting on the number of Protected Veterans (in gross: no sub-categories)

�  V.E.T.S. approved the final VETS-4212 form in November 2014: http://www.reginfo.gov/public/do/PRAViewIC?ref_nbr=201407-1293-001&icID=14762


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�  OFCCP’s regs thus now require only a count of PVs (as a whole: no subgroups) on Kor Post-Offer Self-ID forms. See 41 CFR § 60-300.42 (b) “Post-offer.”

“… the contractor shall invite applicants to inform the contractor whether the applicant believes that he or she belongs to one of more of the specific categories of Protected Veterans for which the contractor is required to report pursuant to 41 CFR Part 61-300.” * * * (emphasis added)

�  Note: Kor may (not required) exercise its discretion to deploy a Post-Offer, Pre-Employment inquiry to job offerees asking (not requiring) them to identify which of the 4 Protected Veteran categories they fall into §  Why would Kor want to do that?

Ø  Hint: “Recently Separated PV” issue


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5.  OMB SWITCHEROO #2: THE VIETNAM ERA VETERANS READJUSTMENT ASSISTANCE ACT OF 1974 IS NOW 4212 (AND NOT “VEVRAA”)

� New reality: “VEVRAA” is now “4212”

− OFCCP adopted “VEVRAA” as its nomenclature in March 24, 2014 503/VEVRAA Rules

− OMB has now changed the terminology at both OFCCP and at V.E.T.S.

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5.  OMB SWITCHEROO #2 (CON’T.)

− Witness:

•  OFCCP new audit Scheduling Letter: “Section 4212 (VEVRAA)”

•  OFCCP Power Points now titled “4212”

•  V.E.T.S new PV reporting form is “VETS-4212”

•  Changes. Changes. Changes in Kor writings… to AAP name? to AAP language? to writings in which you describe OFCCP’s compliance obligations…

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¢  After 3 years of waiting, Pat Shiu gets her new audit Scheduling Letter for Supply and Service contractors

¢  After 35 years, OFCCP gets one of its fondest hopes: its hands on individual, employee-level compensation data on day 31 of the audit

6.  NEW OFCCP SCHEDULING LETTER

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BIG ITEMS IN NEW ITEMIZED LISTING: ¢  Applies to all Supply & Service audits, including

universities; Corporate Management Compliance Evaluations (CMCE = “Glass Ceiling” HQ audits); and Functional Affirmative Action Plan (“FAAP”) audits

¢  New documents: �  OFCCP audit Scheduling Letter for Supply & Service

Compliance Evaluations �  Itemized Listing, attached to Scheduling Letter, has

doubled from 11 document demands (i.e. “11 paragraphs”) to 22 paragraphs

¢  EFFECTIVE NOW!

6.  NEW OFCCP SCHEDULING LETTER (CON’T.)

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EO 11246 CHANGES: ¢  Demands “[d]ata on your employment activity

(applicants, hires, promotions, and terminations)… .” �  Clarifies it seeks only data (not analyses) �  Refers to “applicants” (not mere expressions of interest) �  Does not define hires (but you may include rejected

“offers”) �  OFCCP now demands to know your definition(s) of

promotion


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EO 11246 CHANGES (con’t.): �  Does not define terminations (you should supply only

involuntary terminations = to allow review of “adverse action”)

�  Allows submission by “Job Group” or “Job Title” (as I have been advising for the last 8 years, you will want to form Job Groups = similarly situated employees and thus always submit by such carefully designed Job Groups)

�  Compensation requests: –  Employee level data –  Broad definition of compensation


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ENTIRELY NEW SECTION ON 503: ¢  “Results of the evaluation of the effectiveness of

outreach and recruitment efforts… .” ¢  “Documentation of all actions … taken to comply with

the audit and reporting system requirements… .” ¢  “Documentation of” new data metrics requirement. ¢  “The utilization analysis… .” ¢  “Copy of reasonable accommodation policies, and

documentation of any accommodation requests received and their resolution, if any.”


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ENTIRELY NEW SECTION ON 503 (con’t.): ¢  “… most recent assessment of … personnel processes …

the date …, any actions taken or changes made …, and the date of the next scheduled assessment.”

¢  “… most recent assessment of physical and mental qualifications, … including the date …, any actions taken or changes made …, and the date of the next scheduled assessment.”


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ENTIRELY NEW SECTION ON VEVRAA: ¢  “Results of the evaluation of the effectiveness of outreach and

recruitment efforts … .”

¢  “Documentation of all actions taken to comply with the audit and reporting system requirements … .”

¢  “Documentation of” data metrics.

¢  “Documentation of the hiring benchmark adopted, … .”

¢  “… most recent assessment of … personnel processes, … including … date …, any actions taken or changes made …, and the date of the next scheduled assessment.”

¢  “… most recent assessment of physical and mental qualifications, …, including … date …, any actions taken or changes made …, and the date of the next scheduled assessment.”


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FINALE: “If any of the requested information is computerized, you

must submit it in an electronic format that is complete, readable, and usable. (emphasis added) Please use caution when submitting large electronic files. Check with the OFCCP Compliance Officer and your system administrator to ensure adherence to administrative and system guidelines.” −  FTP sites on the horizon? −  Thumb drive sales to increase −  Burn a CD Rom disk?


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FINALE (con’t.): “We estimate that the average time required to complete

this information collection is 27.9 hours per response, including the time for evaluating instructions, searching existing data needed, and completing and evaluating the collection of information.”

ENJOY!


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7.  THE NEW OFCCP AUDIT SCHEDULING LETTER DID NOT REVOKE OFCCP’S PRIOR EXERCISES OF REGULATORY AND PROSECUTORIAL DISCRETION TO ALLOW KORS TO “PHASE-IN” AAPS AND SUBPART C

�  Reality: The new OFCCP Scheduling Letter will defer to and continue OFCCP’s exercises of: o  Regulatory discretion to allow Kors to “Phase-In” their 503/4212

AAPs, and o  Prosecutorial discretion to allow Kors to “Phase-In” all of “Subpart

C” of the new 503/4212 Rules

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7.  THE NEW OFCCP AUDIT SCHEDULING LETTER REVOKED AND THE PHASE-IN (CON’T.)

•  So, three situations will present themselves: 1)  Data OFCCP demands not yet ripe (because this is a transition

AAP and 6 months might have not yet have elapsed in life of this transition AAP)

2)  After 6 months into transition AAP, the four 6-month update sections will attach

3)  After 12 months of transition AAP, first “fully loaded” AAP will be subject to full force of OFCCP audit Scheduling Letter

Scenario 1) All new 503/4212 data not ripe: Kor either did not “Phase-In,” or the “Phase-In” has now concluded (because the Kor has now developed new 503/4212 AAPs after March 24, 2014) all of subpart C now effective But, all newly required data not yet ripe during the Kor’s “transition AAP.”

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e.g. List of data not yet ripe OFCCP requests in its October 15, 2014 Itemized Listing:

1)  Section 503

−  Para 7: results of effectiveness review = .44(f);

−  Para 8: documentation of actions re audit reporting = .44(h);

−  Para 9: “data metrics” = .44(k);

−  Para 10: utilization analysis = .45

−  Para 21: annual self-assessment = .44(b);


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e.g. List of data not yet ripe OFCCP requests in its October 15, 2014 Itemized Listing (con’t.):

2)  Section 4212

−  Para 11: results of effectiveness review = .44(f);

−  Para 12: documentation of actions re audits/reporting = .44(h);

−  Para 13: “data metrics” = .44(k);

−  Para 14: documentation hiring benchmark = .45(b)(2);

−  Para 21: annual self assessment = .44(b);


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Scenario 2) “6-Month” Data Are Ripe, the Rest Are Not Yet Ripe �  There are 6 paragraphs of the Itemized Listing

requiring a 6-month update, but only 4 are applicable as of today as to Section 503/4212 and only as to all AAPs dated on or AFTER March 24, 2014 and BEFORE July 4, 2014

§  Note: December 11, 2014 (today) minus 180 days = July 4, 2014 (i.e. your AAP is 6 months old)

§  So, if your post-March 24, 2014 503/4212 AAPs are 6 months old/older, you need to cough up the 6-month reports


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Scenario 2) “6-Month” Data Are Ripe (con’t.) � Here is the index of the 6 six-month report

paragraphs: − Para 9: “data metrics = .44(k) (§ 503); − Para 10: utilization analysis = .45 (§ 503); − Para 13: “data metrics” = .44(k) (4212); − Para 14: documentation of hiring Benchmark

and current year results (4212)


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Scenario 2) “6-Month” Data Are Ripe (con’t.) −  Para 17: Progress towards goals update (requires update,

but not applicable to 503/4212 data): •  applies only to E.O. 11246 AAP

•  is NOT applicable in transition year to § 503 AAP, at any rate, because you have no Utilization Analysis and thus no goal yet; and

•  is not applicable to 4212 Benchmark since it is “not a goal” and Kors have no “action-oriented program” requirements

−  Para 18 Disparity Analyses (for “applicants and hires,” promotions and terminations) apply only to Executive Order 11246 Program and not to 503/4212


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Scenario 3) Kor Phased-In no new 503/4212 Subpart C requirements attach (yet) until Phase-In complete

•  Subpart C includes sections: .40 .41

.42 .43 .44 .45


.46

.47 § 503 (only)

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Scenario 3) Phase-In no new 503/4212… (con’t.)

•  Look above: all the Itemized Listing paragraphs applicable to 503/4212 are Subpart C requirements

Review/recap:

o  Section 503

Para 7 = .44(f) Para 8 = .44(h) Para 9 = .44(k) Para 10 = .45 Para 21 = .44(b)

o  Section 4212 Para 11 = .44(f) Para 12 = .44(h) Para 13 = .44(k) Para 14 = .45 Para 21 = .44(b) Para 22 = .44(c)


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7. THE NEW OFCCP AUDIT SCHEDULING LETTER REVOKED AND THE PHASE-IN (CON’T.) Looking Forward In Time So, when Phasing-In is over (latest possible § 503/4212 AAPs Phase-In date was March 23, 2014 which delayed Subpart C compliance through March 23, 2015), then:

1)  OFCCP audit Scheduling Letters received after Phase-In completed might:

�  First demand data not yet ripe (because this is a transition AAP and 6 months might have not yet have elapsed in life of this transition AAP)

�  After 6 months into transition AAP, the four 6-month update sections will attach

�  After 12 months of transition AAP, first “fully loaded” AAP will be subject to full force of OFCCP audit Scheduling Letter

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THE NEW OFCCP AUDIT SCHEDULING LETTER REVOKED AND THE PHASE-IN (CON’T.)

Looking Forward In Time (Con’t.)

Here is my suggested response to OFCCP’s new audit Scheduling Letter as to its request for “not yet ripe data”:

“We have supplied no documents in response to paragraphs 7-10 and 21 (§ 503) and 11-14 and 21 & 22 (§ 4212) of the Itemized Listing attached to OFCCP’s [DATE] audit Scheduling Letter. OFCCP’s Section 503/4212 regulations do not yet require the Company to develop these data and they are thus not yet ripe for OFCCP review.”

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8.  OFCCP’S NEW “EQUAL PAY REPORT”

¢  WARNING: Two more acronyms to learn:

-EPR (Equal Pay Report)

-OIS (Objective Industry Standard)

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¢  Amends ONLY 41 CFR § 60-1.7 (Reports and other required information)

¢  Repeats standard EEO-1 filing requirement

8.  OFCCP’S PROPOSED “EPR” (CON’T.)

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Adds a new “Equal Pay Report.” EPR requires Kors and SubKors >100 employees to provide “summary data” on:

¢  compensation paid to Ees “by sex, race, ethnicity, specified job categories, and other relevant data points”

¢  in format and manner required by OFCCP


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¢  Must be filed by each: �  prime contractor and first tier subcontractor required

to file the EEO-1 Report(s)/IPEDs �  with > 100 employees, �  a K, SubK, or purchase order > $50,000 or more �  that covers a period of at least 30 days, including

modifications Note: this footprint eliminates about 80% of the universe of federal Kors

Practice Tip: Kors will now need to catalogue their federal Ks to determine whether they must file the new EPR


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¢  Practical issues 1)  As proposed, covered Kors need to report in the1st

quarter of the year, compensation data for employees who appeared in the contractor’s EE0-1 report the contractor filed 3 to 9 months earlier •  Practice tip: Kors will need to preserve the identities of the

individuals in the EE0-1 filing so as to generate the corresponding pay reports 3 to 9 months later o  This is known as a data integration challenge


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¢  Practical issues (con’t.)

2)  Put perturbating on your “To Do” list - the in-thing to do in 2015

o  Always perturbate compensation data

o  No names: use numeric identifier o  No references to company name or location

o  Password protect if you send via-email


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¢  Practical issues (con’t.)

2)  Put perturbating on your “To Do” list (con’t.)

o  Consider use of encrypted FTP site if you use the Net o  Try to avoid the Net altogether: send a password protected

thumb drive/CD Rom disk to OFCCP

o  Perturbate job titles by assigning numeric identifiers o  Send in key codes separately to OFCCP


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¢  These are calendar year reports due in first quarter of calendar year (as supplemental columns to EEO-1)

¢  Must submit electronically through OFCCP’s web-based filing system (absent hardship waiver)


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¢  Confidentiality: “OFCCP will treat information contained in the Equal Pay Report as confidential to the maximum extent the information is exempt from public disclosure under the Freedom of Information Act, 5 U.S.C. 552.”

� Restrain laughter � Kor argument: confidential/sensitive/release

would subject Kor to commercial harm


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¢  “OFCCP may publish aggregate information based on compensation data collected from” the EPR

¢  “…such as ranges or averages by industry, labor market, or other groupings”

¢  “but only in such a way as not to reveal any particular establishment’s or individual employee’s data.”

¢  Why? ¢  The government is here to help ¢  Huh? Bottom feeding Kors will learn they are at

bottom and seek to float up their pay? Really?


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¢  Why have an EPR, anyway? � Pay discrimination investigative tool?

�  No. OFCCP audit selection and targeting tool

�  How to pick targets?

�  How to weight EPR data harvest relative to FCSS EE0-1 harvest?

o  All audits driven by EPR results?

o  Half of all OFCCP audits driven by EPR results?

o  Weight EPR results 50/50 with FCSS EE0-1 results?


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¢  Why have an EPR, anyway? (con’t.)

Fox observation: Audit pattern will likely change dramatically from FCSS audits selections

Here is what OFCCP says it proposes to do with EPR data:


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“For purposes of selecting contractors for compliance evaluations using the Equal Pay Report data, OFCCP proposes to focus primarily on a strategy that ranks contractors against the objective standards, and then prioritizes compliance evaluations of those contractors and subcontractors who have larger race or gender pay gaps than what is typically reported in the industry as measured by the objective industry standard described in the section above… .” (emphasis added)


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“Those contractors and subcontractors who (sic) report patterns with the greatest deviation from the applicable standard would have the highest likelihood of selection for further investigation under this approach. Under its usual compliance evaluation procedures, the agency would then examine their detailed compensation data and practices to make a determination about the contractors’ actual compliance. OFCCP specifically proposes comparing average pay differences across contractors who are in the same industry within EEO-1 job categories… .”


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“While EEO-1 categories are far too broad to identify pay discrimination at the individual employer level with precision, they are practical and useful for setting enforcement priorities by comparing across employers based on summary data. As explained further in this section, the agency also plans to consider how other data sources may provide information on firm or employee characteristics that would help refine and improve OFCCP’s ability to use Equal Pay Report data to rank contractors and prioritize compliance evaluations. …”


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“Under the approach proposed by OFCCP, using an objective industry standard, the goal is not simply to identify absolute differences in pay, which may be explained in any particular case by a variety of legitimate factors. Rather, it is to identify contractors with pay differences that substantially depart from the objective industry standard, reducing the likelihood that legitimate factors explain all of the differences.”


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¢  OFCCP’s compensation disparity sniffer Industry Subject Company

EE0-1 Category

-5% Pay Disparity Women

vs. Men

-10% Pay Disparity Women

vs. Men

5% Pay Disparity Women

vs. Men

8% Pay Disparity Women

vs. Men


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¢  Usual OFCCP Recordkeeping requirements at: 41 CFR 60-1.12(a) attach plus (New) AA compliance certifications “Requirements for bidders or prospective contractors—(1) Certifications and representations of compliance with the requirements of Executive Order 11246 and its implementing regulations. Each agency shall require each bidder or prospective prime contractor and proposed subcontractor, where appropriate, to represent by a statement in the bid or in writing at the outset of negotiations for the contract:

con’t. on next page.


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(i) Whether it has participated in any previous contract or subcontract subject to the Equal Opportunity Clause in § 60-1.4(a);

(ii) Whether it is currently required to develop affirmative action programs as prescribed under the regulations in this chapter and to file reports set forth in this section;

(iii) And, if so, whether it developed the affirmative action programs;



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(iv) Whether it has filed with the Joint Reporting Committee all reports due under the applicable filing requirement; and

(v) Whether it currently holds a Federal contract or subcontract that requires the filing of an Equal Pay Report(s) with OFCCP, and whether it filed an Equal Pay Report with OFCCP for the most recent reporting period, as prescribed by paragraph (b) of this section.”


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Sanctions: “Failure to file timely, complete and accurate reports, and certifications and representations as required under this section constitutes a violation of Executive Order11246 and its implementing regulations that may subject the contractor to the sanctions.”

See also:

18 U.S. Code § 1001 - Statements or entries generally

“(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully —



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18 U.S. Code § 1001 - Statements or entries generally

(con’t.):

(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;

(2) makes any materially false, fictitious, or fraudulent statement or representation; or

(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall be not more than 8 years.”


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9.  OFCCP PROHIBITIONS ON COMPENSATION “SECRECY”

¢  April 8, 2014: Executive Order 13665, amending E.O. 11246

¢  September 17, 2014: 30 page OFCCP NPRM ¢  Bottomed on asserted authority per Federal Property and

Administrative Services Act, 40 U.S.C. § 101 et seq.

“This order is designed to promote economy and efficiency in Federal Government procurement. It is the policy of the executive branch to enforce vigorously the civil rights laws of the United States, including those laws that prohibit discriminatory practices with respect to compensation. Federal contractors that employ such practices are subject to enforcement action, increasing the risk of disruption, delay, and increased expense in Federal contracting. Compensation discrimination also can lead to labor disputes that are burdensome and costly.”

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“When employees are prohibited from inquiring about, disclosing, or discussing their compensation (emphasis added) with fellow workers, compensation discrimination is much more difficult to discover and remediate, and more likely to persist. Such prohibitions (either express or tacit) also restrict the amount of information available to participate in the Federal contracting labor pool, which tends to diminish market efficiency and decrease the likelihood that the most qualified and productive workers are hired at the market efficient price. Ensuring that employees of Federal contractors may discuss their compensation without fear of adverse action will enhance the ability of Federal contractors and their employees to detect and remediate unlawful discriminatory practices, which will contribute to a more efficient market in Federal contracting.”

9.  OFCCP SECRECY PROHIBITIONS (CON’T.)

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“The contractor will not discharge or in any other manner discriminate against any employee or applicant (emphasis added) for employment because such employee or applicant has inquired about, discussed or disclosed the compensation of the employee or applicant or another employee or applicant. This provision shall not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee’s essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor’s legal duty to furnish information.”


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¢  This OFCCP proposed Rule now seeks to redefine unlawful “discrimination” to occur even though not based on race, sex, national origin, color, religion, disability and/or protected veteran status

¢  Why did OFCCP not cast this rule as anti-retaliation (although Executive Order is so titled)?

¢  Can OFCCP stretch the concept of discrimination law that far to accomplish an employee rights (NLRA) notion?


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¢  OFCCP’s Proposed Rule �  Would amend regs and EEO clauses

�  Notification to covered federal subcontractors required

�  Special clauses for federally assisted construction contracts/subcontracts

�  Identifies and limits Kor defenses

�  Requires notification to union, if any, employees and job applicants of their rights

Comments due to OFCCP on or before December 16, 2014


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¢  New (broad) definitions emerging: “Compensation means any payments made to, or on behalf of, an employee or offered to an applicant as remuneration for employment, including but not limited to salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and contributions to retirement.”

“Compensation information means information pertaining to any aspect of compensation, including but not limited to information about the amount and type of compensation as well as decisions, statements, or actions related to setting or altering employees’ compensation.”


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¢  Effective date: contracts entered into on or after effective date of final OFCCP Rules

�  Likely trajectory: Late summer 2015

Fox Comment: I think this regulation violates the Separation of Powers doctrine and Kors could more likely than not successfully resist its application

−  Prediction: Kors will not resist except if OFCCP tries to force a “discrimination” case in the course of an audit


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¢  E.O.13672 amended E.O. 11246 (and also E. O. 11478 - - applicable to federal government) � Colloquially known as the Lesbian, Gay, Bisexual

and Transgender (LGBT) rights order

10. EEO EO: “GENDER IDENTITY” AND “SEXUAL ORIENTATION” DISCRIMINATION UNLAWFUL

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10.  EEO EO (CON’T.)

¢  E.O. 11246 amended to make unlawful, discrimination based on:

“sexual orientation” and

“gender identity”

¢  Affirmative Action for “sexual orientation” and “gender identity” also required

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¢  OFCCP went right to “Final” Rule this week; no proposed Rule

¢  “Affirmative Action” requirements:

� Update EEO Clause to replace “sex” discrimination with “sex, gender identity and sexual orientation.”

� Covered federal subcontracts

� External notifications

�  Job solicitations: “EOE”


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¢  What/how “affirmative action” not defined (con’t.)

� The President’s EO revisions are not effective now as to EO 11246 •  E.O. 11246 revisions become legally effective when

OFCCP regulations go to final •  120 day implement action period from publication

date = April 8, 2015

� OFCCP’s coming sex discrimination Rule will be where the action is, I predict •  Domestic partner benefits coming?


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¢ Interesting analytical schism: �  OFCCP Press Release announcing E.O. 13672

predicated coverage on a federal government employee decision known as Macy v. Holder (Attorney General). Macy broke new legal ground

�  Found Title VII had always outlawed sexual orientation discrimination


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¢  What/how affirmative action not defined (con’t.)

�  Conundrum: If Title VII, and hence E.O. 11246, had always made sexual orientation discrimination unlawful thru their prohibitions on “sex discrimination,” why:

a)  did the President have to “amend” E.O. 11246 to establish this protected right?; and

b)  has Capitol Hill voted down LGBT protections in the 39 out of the last 40 years such protections have been introduced?

Predictions: Nonetheless, other than religious groups, I doubt any federal Kor will challenge OFCCP’s LGBT regulations across the board

−  Prediction: Kors will not resist except if OFCCP tries to force a discrimination case in the course of an audit


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11. NEW LABOR LAW CERTIFICATIONS FOR CONTRACT BIDS

¢  New statutory and regulatory certifications required to become a federal Kor July 31, 2014: E.O. 13673: Fair Pay and Safe Workplaces

•  No proposed regs yet

WHY:

“This order seeks to increase efficiency and cost savings in the work performed by parties who contract with the Federal Government by ensuring that they understand and comply with labor law. Contractors that consistently adhere to labor laws are more likely to have workplace practices that enhance productivity and increase the likelihood of timely, predictable, and satisfactory delivery of goods and services to the Federal Government. Helping executive departments and agencies to identify and work with contractors with track records of compliance will reduce execution delays and avoid distractions and complications that arise from contracting with contractors with track records of noncompliance.”

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WHAT: “For procurement contracts for goods and services, including construction, where the estimated value of the supplies acquired and services required exceeds $500,000 each agency shall ensure that provisions in solicitations require that the offeror represent, to the best of the offeror’s knowledge and belief, whether there has been any administrative merits determination, arbitral award or decision, or civil judgment, as defined in guidance issued by the Department of Labor, rendered against the offeror within the preceeding 3 year period for violations of any of the following labor laws and Executive Orders (labor laws) (emphasis added):

* * *

(G) Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity); (H) Section 503 of the Rehabilitation Act of 1973; (I) 38 U.S.C. 3696, 3698, 3699, 4214 (sic), 4301-4306, also known as the Vietnam Era Veterans’ Readjustment Assistance Act of 1974;”

11. NEW LABOR LAW (CON’T.)

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¢  Flow Down

HOW:

“For any subcontract (emphasis added) where the estimated value of the supplies acquired and services required exceeds $500,000 and that is not the commercially available off-the-shelf items, a contracting officer” shall require that, at the time of execution of contract, a contractor represents to the contracting agency that the contractor: Will require each subcontractor to disclose any administrative merits determination, arbitral award or decision, or civil judgment rendered against the subcontractor within the preceding 3 year period for violations of any of the requirements of the labor laws listed in paragraph (i) of this subsection, and update the information every 6 months; and” (emphasis added)


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¢  Flow Down (con’t.) “before awarding a subcontract, will consider the information submitted by the subcontractor pursuant to subparagraph (A) of this paragraph in determining whether a subcontractor is a responsible source … .

* * * “…require that a contractor incorporate into subcontracts … a requirement that the subcontractor disclose to the contractor any administrative merits determination, arbitral award or decision, or civil judgment rendered against the subcontractor… .”

* * * �  Newly created “Labor Compliance Advisors” to assist in evaluating

the information on labor compliance submitted by subcontractors


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Effective Date: Not effective until a final Rule to be issued by FAR Council

¢ No deadline set ¢ Will likely take a year, or more to go final


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Paper Tiger as to OFCCP’s 3 “Statutes”: ¢  Federal government may not debar or “passover” or

otherwise affect adversely federal contractor opportunities without full, formal, and final Administrative Hearing and follow-on hearing (ALJ; ARB; Federal Courts)

¢  With all due deliberate speed: Years pass from problematic OFCCP audit to lawsuit before ALJ determination (which is then only a “Recommended Decision and Recommended Order”). Many more years pass before ALJ/ARB process is ever exhausted (i.e. BofA case currently (simultaneously) in Federal District Court and before ALJ springs from a 1992 audit)


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OFCCP Moves With Glacial Speed…

¢  Also, if the Kor loses, but agrees to cure, Kor cannot be debarred or adversely affected �  OFCCP debarment (uniquely in federal contract law) is

“incentive” to comply; not a punishment for failure


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1)  Executive Order 13658 (February 12, 2014) �  Increases hourly minimum wage for certain workers

of certain federal contractors and subcontractors to at least $10.10/hour

�  DOL issued NPRM to implement Order: June 17, 2014 (79 FR 34567)

�  Final Rule published October 7, 2014

12.  NEW MINIMUM WAGE ($10.10) FOR FEDERAL KORS

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Architecture of Executive Order 13658:

1)  Applies to only 4 kinds of procurement contracts

2)  Applies to only certain employees of Kor; and

3)  Starts in 2015

12. NEW MINIMUM WAGE ($10.10) (CON’T.)

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2)  Executive Order 13658: What does it require?

¢ Increases minimum wage with contracts signed on or after January 1, 2015

� Different rate and calculation for tipped employees

� The Final Rule notes that a unilateral exercise of a pre-negotiated option to renew an existing contract by the Federal Government is NOT subject to Executive Order 13658 (See § 10.2)

12. NEW MINIMUM WAGE ($10.10) (CON’T.)

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2)  Executive Order 13658: What does it require? (con’t.)

�  Contracts entered into prior to January 1, 2015 will constitute a new contract subject to Executive Order 13658 if, through bilateral negotiation, on or after January 1, 2015:

o  The contract is renewed;

o  The contract is extended, unless the extension is pursuant to a term in the contract as of December 31, 2014 providing for a short-term limited extension; or

o  The contract is amended pursuant to a modification that is outside the scope of the contract.

12. NEW MINIMUM WAGE ($10.10) CON’T.)

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12. NEW MINIMUM WAGE ($10.10) (CON’T.) 2)  Executive Order 13658: What does it require?

(con’t.)

¢  EXECUTIVE ORDER APPLIES TO Federal contractors and subcontractors entering into one of the 4 specially enumerated types of a contracts or contract-like instruments that: A:

�  are a procurement contract for services or construction; �  are for services covered by the Service Contract Act; �  are in connection with federal property or lands and

related to offering services for federal employees, their dependents, and/or the general public;

�  are for concessions; (see § 10.3) and

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B: �  affects wages of those employees working under a

contract or contract-like instrument governed by the FLSA, the Service Contract Act, or the Davis-Bacon Act (see § 10.3)

�  The minimum wage rate requirement, however applies only to those employees:

� Directly engaged in performing the specific work called for by the contract (could be only 1 hour); or

�  spending at least 20% of their work hours performing duties in connection with the covered contracts

12. NEW MINIMUM WAGE ($10.10) (CON’T.)

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�  NOT: Grants or federal financial assistance agreements;

�  NOT: Contracts and agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act; or

�  NOT: Any contracts or contract-like instruments expressly excluded by regulation


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¢ Beginning January 1, 2016 and annually thereafter, Secretary of Labor to determine new minimum wage amount as to non-tipped employees:

� Not less than the amount in effect on date of determination

�  Increased by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (rounded to nearest multiple of $0.05)

� Secretary of Labor to publish new wage rate in Federal Register at least 90 days before new rate goes into effect


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�  Absence of contract provision may be retroactively remedied by contracting agency or authorized representative of the Dept. of Labor

�  Executive Order applies to oral contracts as well �  Employees covered by EO cannot waive rights

under the Order �  Employer must keep and maintain payroll and

time records for period of three years �  Kors must post notice to workers of new wage

requirement


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3)  Executive Order 13658: What does it require? ¢ Preamble to Final Rule makes clear that

Executive Order applies only to an instrument which:

� is a “new contract” resulting from a solicitation issued on or after January 1, 2015, or is a contract awarded outside the solicitation process on or after January 1, 2015


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4)  Executive Order 13658: Remedies ¢  Complaint registered with the Wage and Hour

Division

�  Department of Labor may keep identity of complainant confidential

¢  Failure to pay may result in civil proceeding

¢  Contractor may initiate hearing as to disputes concerning compliance with OALJ pursuant to Order of Reference

�  Hearings to be conducted pursuant to procedures set forth in 29 C.F.R. Part 6


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4)  Executive Order 13658: Remedies (con’t.)

¢  Penalties available to Government:

�  withhold accrued payments or advances as necessary to pay workers full amount of wages

�  suspend further payment or advance of funds until violations cease

�  terminate agreement

�  debarment


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THE FOX, WANG & MORGAN 503/VEVRAA COMPLIANCE CONVERSION KIT

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Questions?

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