[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
REVIEWING THE IMPACT OF THE OFFICE OF FEDERAL CONTRACT COMPLIANCE
PROGRAMS'
REGULATORY AND ENFORCEMENT ACTIONS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR AND PENSIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, APRIL 18, 2012
__________
Serial No. 112-59
__________
Printed for the use of the Committee on Education and the Workforce
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----------
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Dale E. Kildee, Michigan
Judy Biggert, Illinois Robert E. Andrews, New Jersey
Todd Russell Platts, Pennsylvania Robert C. ``Bobby'' Scott,
Joe Wilson, South Carolina Virginia
Virginia Foxx, North Carolina Lynn C. Woolsey, California
Bob Goodlatte, Virginia Ruben Hinojosa, Texas
Duncan Hunter, California Carolyn McCarthy, New York
David P. Roe, Tennessee John F. Tierney, Massachusetts
Glenn Thompson, Pennsylvania Dennis J. Kucinich, Ohio
Tim Walberg, Michigan Rush D. Holt, New Jersey
Scott DesJarlais, Tennessee Susan A. Davis, California
Richard L. Hanna, New York Raul M. Grijalva, Arizona
Todd Rokita, Indiana Timothy H. Bishop, New York
Larry Bucshon, Indiana David Loebsack, Iowa
Trey Gowdy, South Carolina Mazie K. Hirono, Hawaii
Lou Barletta, Pennsylvania Jason Altmire, Pennsylvania
Kristi L. Noem, South Dakota Marcia L. Fudge, Ohio
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
Barrett Karr, Staff Director
Jody Calemine, Minority Staff Director
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS
DAVID P. ROE, Tennessee, Chairman
Joe Wilson, South Carolina Robert E. Andrews, New Jersey
Glenn Thompson, Pennsylvania Ranking Member
Tim Walberg, Michigan Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee David Loebsack, Iowa
Richard L. Hanna, New York Dale E. Kildee, Michigan
Todd Rokita, Indiana Ruben Hinojosa, Texas
Larry Bucshon, Indiana Carolyn McCarthy, New York
Lou Barletta, Pennsylvania John F. Tierney, Massachusetts
Kristi L. Noem, South Dakota Rush D. Holt, New Jersey
Martha Roby, Alabama Robert C. ``Bobby'' Scott,
Joseph J. Heck, Nevada Virginia
Dennis A. Ross, Florida Jason Altmire, Pennsylvania
C O N T E N T S
----------
Page
Hearing held on April 18, 2012................................... 1
Statement of Members:
Kucinich, Hon. Dennis J., a Representative in Congress from
the State of Ohio.......................................... 4
Prepared statement of.................................... 6
Roe, David P., Chairman, Subcommittee on Health, Employment,
Labor and Pensions......................................... 1
Prepared statement of.................................... 3
Statement of Witnesses:
Bottenfield, Dana C., PHR, CCP, CBP, director of HRIS,
employment and immigration, St. Jude Children's Research
Hospital................................................... 20
Prepared statement of.................................... 22
Graves, Fatima Goss, vice president for education and
employment, National Women's Law Center.................... 27
Prepared statement of.................................... 29
Horvitz, Alissa A., Esq., shareholder, Littler Mendelson,
P.C........................................................ 37
Prepared statement of.................................... 39
Norris, Jeffrey A., president, Equal Employment Advisory
Council.................................................... 8
Prepared statement of.................................... 10
Additional Submissions:
Ms. Bottenfield, response to questions submitted for the
record..................................................... 86
Ms. Horvitz, response to questions submitted for the record.. 89
Mr. Kucinich:
Letter from American Airlines to the U.S. Department of
Labor (DOL)............................................ 48
Letter, dated Feb. 21, 2012, from Amerigroup Corp. to DOL 50
Letter, dated Feb. 2, 2012, from Bayer Corp. to DOL...... 52
Letter, dated Feb. 7, 2012, from Highmark Inc. to DOL.... 54
Mr. Miller, statement of Patricia A. Shiu, Director, Office
of Federal Contract Compliance Programs, U.S. Department of
Labor...................................................... 78
Mr. Norris:
Letter, dated April 26, 2012, to Chairman Roe............ 85
Response to questions submitted for the record........... 97
Chairman Roe:
Letter, dated April 17, 2012, from Associated Builders
and Contractors (ABC).................................. 66
Letter, dated April 18, 2012, from the U.S. Chamber of
Commerce............................................... 70
Letter, dated April 17, 2012, from the HR Policy
Association............................................ 74
Letter, dated April 17, 2012, from the Society for Human
Resource Management (SHRM) and the College and
University Professional Association for Human Resources
(CUPA-HR).............................................. 75
Letter, dated April 19, 2012, from the Food Marketing
Institute (FMI)........................................ 77
Questions submitted for the record to:
Ms. Bottenfield...................................... 86
Ms. Horvitz.......................................... 88
Mr. Norris........................................... 96
REVIEWING THE IMPACT OF THE OFFICE OF
FEDERAL CONTRACT COMPLIANCE PROGRAMS'
REGULATORY AND ENFORCEMENT ACTIONS
----------
Wednesday, April 18, 2012
U.S. House of Representatives
Subcommittee on Health, Employment, Labor and Pensions
Committee on Education and the Workforce
Washington, DC
----------
The subcommittee met, pursuant to call, at 10:03 a.m., in
room 2175, Rayburn House Office Building, Hon. David P. Roe
[chairman of the subcommittee] presiding.
Present: Representatives Roe, Rokita, Kucinich, Kildee,
Tierney, Holt, Scott, and Altmire.
Staff present: Jennifer Allen, Press Secretary; Katherine
Bathgate, Deputy Press Secretary; Casey Buboltz, Coalitions and
Member Services Coordinator; Molly Conway, Professional Staff
Member; Ed Gilroy, Director of Workforce Policy; Benjamin Hoog,
Legislative Assistant; Barrett Karr, Staff Director; Ryan
Kearney, Legislative Assistant; Donald McIntosh, Professional
Staff Member; Brian Newell, Deputy Communications Director;
Krisann Pearce, General Counsel; Molly McLaughlin Salmi, Deputy
Director of Workforce Policy; Linda Stevens, Chief Clerk/
Assistant to the General Counsel; Alissa Strawcutter, Deputy
Clerk; Joseph Wheeler, Professional Staff Member; Kate Ahlgren,
Minority Investigative Counsel; Aaron Albright, Minority
Communications Director for Labor; Tylease Alli, Minority
Clerk; Daniel Brown, Minority Policy Associate; Brian Levin,
Minority New Media Press Assistant; Richard Miller, Minority
Senior Labor Policy Advisor; Megan O'Reilly, Minority General
Counsel; Laura Schifter, Minority Senior Education and
Disability Advisor; Michele Varnhagen, Minority Chief Policy
Advisor/Labor Policy Director; and Michael Zola, Minority
Senior Counsel.
Chairman Roe. A quorum being present, the Subcommittee on
Health, Employment, Labor, and Pensions will come to order.
Good morning, everyone.
I would like to thank our witnesses for being with us
today. We have a distinguished panel and we look forward to
their insightful testimony.
Roughly one out of every five workers is currently employed
by a federal contractor, providing services ranging from
construction and I.T. management to the acquisition of office
supplies. Drawing from the experience and expertise of the
private sector workforce helps ensure federal projects are
carried out more efficiently and at the most competitive price
for taxpayers.
Like all employers, federal contractors have a
responsibility to ensure equal employment opportunities for
workers and job applicants. Discrimination of any kind is
abhorrent.
An individual's race, gender, religion, disability, or
military service should never preempt a qualified worker from
employment. In fact, federal policies prohibit employment
discrimination and require employers to take affirmative action
to recruit, hire, and advance qualified individuals in targeted
populations.
The Office of Federal Contract Compliance Programs is
responsible for ensuring government contractors meet these
responsibilities. Employers are required to maintain a written
plan detailing efforts to identify and remove employment
barriers. For women and minorities, employers must also
complete an extensive analysis of the workplace that includes a
description of all job classifications, the number of women and
minorities placed in these job classifications, and the steps
an employer will take to remedy situations when they are not
appropriately represented.
These requirements extend to subcontractors and cover every
employee in an employer's workforce, regardless of whether
their job is related to the government contract. Recognizing
the scope and complexity of these requirements, it is critical
our regulatory and enforcement actions promote the rights of
workers without adversely affecting an employer's ability to
run his or her business.
While extensive, current policies have been largely
successful in this endeavor. Individuals are protected and
employers are aware of their legal responsibilities.
However, the administration is advancing numerous
regulations that significantly alter longstanding
nondiscrimination practices and create new waves of uncertainty
for workers and business owners. For example, OFCCP now wants
federal contractors to document each step of the hiring process
for veterans and individuals with disabilities, as well as
submit a written statement of reasons documenting why an
individual was not extended an offer of employment. This
unprecedented regulatory scheme would bury employers in
paperwork, diverting resources away from job creation to manage
administrative burdens.
Additionally, OFCCP is in the process of implementing for
the first time an arbitrary hiring quota for individuals with
disabilities. Supporters have characterized this--as merely a
hiring goal, but when a goal is enforced by a federal agency
make no mistake: it carries the weight of a mandate. This
proposed regulation would also force job applicants to disclose
whether they are disabled despite existing protections
prohibiting an employer from soliciting such personal
information.
Finally, the agency is expanding its jurisdiction to those
who provide health care services to military personnel and
veterans through the federal health care program, TRICARE. The
Department of Defense said it would be impossible to offer
health care to military families if onerous federal contracting
rules were applied to TRICARE providers.
Despite this warning and congressional action, the OFCCP
continues to move forward with its bureaucratic overreach. The
agency has also extended its authority to provide dental,
vision, hearing, and prescription drug services to seniors
under Medicare.
The challenges facing our nation's employers and workers in
the wake of the recession are numerous and one of the greatest
hazards to our economic recovery is heavy-handed regulation.
U.S. Chamber of Commerce reported this week that 52 percent of
small business owners believe regulations pose the greatest
threat to their success.
This timely survey underscores the toughest challenges
facing the American workforce: a persistently weak economy and
lack of jobs. African Americans, individuals with disabilities,
and women are all experiencing higher levels of unemployment
today than they were 3 years ago, and while the job prospects
for veterans have modestly improved, roughly one in 10 veterans
are still searching for work. The nation's unemployment--
unemployed don't need more regulations; they need more jobs.
Now more than ever we need to support smart policies that
protect workers and promote private sector job growth. And
during this time of record deficits and debt we need employers
with skilled workers competing for government contracts so we
can best provide values to taxpayers. The question before us
today is whether the regulatory and enforcement policies of
today's OFCCP are moving our nation in the right direction.
I look forward to our discussion and will now recognize my
distinguished colleagues, Mr. Kucinich, the senior Democratic
member of our subcommittee, for his opening remarks.
[The statement of Chairman Roe follows:]
Prepared Statement of Hon. David P. Roe, M.D., Chairman,
Subcommittee on Health, Employment, Labor and Pensions
Good morning, everyone. I would like to thank our witnesses for
being with us today. We have a distinguished panel and we look forward
to their insightful testimony.
Roughly one out of every five workers is currently employed by a
federal contractor, providing services ranging from construction and IT
management to the acquisition of office supplies. Drawing from the
experience and expertise of the private-sector workforce helps ensure
federal projects are carried out more efficiently and at the most
competitive price for taxpayers. Like all employers, federal
contractors have a responsibility to ensure equal employment
opportunities for workers and job applicants.
Discrimination of any kind is abhorrent. An individual's race,
gender, religion, disability, or military service should never preempt
a qualified worker from employment. In fact, federal policies prohibit
employment discrimination and require employers to take affirmative
action to recruit, hire, and advance qualified individuals in targeted
populations.
The Office of Federal Contract Compliance Programs is responsible
for ensuring government contractors meet these responsibilities.
Employers are required to maintain a written plan detailing efforts to
identify and remove employment barriers. For women and minorities,
employers must also complete an extensive analysis of the workplace
that includes a description of all job classifications, the number of
women and minorities placed in these job classifications, and the steps
an employer will take to remedy situations when they are not
appropriately represented.
These requirements extend to subcontractors and cover every
employee in an employer's workforce, regardless of whether their job is
related to the government contract. Recognizing the scope and
complexity of these requirements, its critical regulatory and
enforcement actions promote the rights of workers without adversely
affecting an employer's ability to run his or her business. While
extensive, current policies have been largely successful in this
endeavor. Individuals are protected and employers are aware of their
legal responsibilities.
However, the Obama administration is advancing numerous regulations
that significantly alter long-standing nondiscrimination practices and
create new waves of uncertainty for workers and business owners. For
example, OFCCP now wants federal contractors to document each step of
the hiring process for veterans and individuals with disabilities, as
well as submit a written ``statement of reasons'' documenting why an
individual was not extended an offer of employment. This unprecedented
regulatory scheme would bury employers in paperwork, diverting
resources away from job creation to manage administrative burdens.
Additionally, OFCCP is in the process of implementing for the first
time an arbitrary hiring quota for individuals with disabilities.
Supporters have characterized this as merely a hiring ``goal,'' but
when a goal is enforced by a federal agency, make no mistake, it
carries the weight of a mandate. This proposed regulation would also
force job applicants to disclose whether they are disabled, despite
existing protections prohibiting an employer from soliciting such
personal information.
Finally, the agency is expanding its jurisdiction to those who
provide health care services to military personnel and veterans through
the federal health care program, TRICARE. The Department of Defense
said it would it would be impossible to offer affordable health care to
military families if onerous federal contracting rules were applied to
TRICARE providers. Despite this warning and congressional action, OFCCP
continues to move forward with its bureaucratic overreach. The agency
has also extended its authority to providers of dental, vision,
hearing, and prescription drug services to seniors under Medicare.
The challenges facing our nation's employers and workers in the
wake of the recession are numerous, and one of the greatest hazards to
our economic recovery is heavy-handed regulation. The U.S. Chamber of
Commerce reported this week that 52 percent of small business owners
believe regulations pose the greatest threat to their success.
This timely survey underscores the toughest challenge facing the
American workforce: A persistently weak economy and lack of jobs.
African-Americans, individuals with disabilities, and women are all
experiencing higher levels of unemployment today than they were three
years ago. And while the job prospects for veterans have modestly
improved, roughly one in 10 veterans are still searching for work. The
nation's unemployed don't need more regulation; they need more jobs.
Now more than ever we need to support smart policies that protect
workers and promote private-sector job growth. And during this time of
record deficits and debt, we need employers with skilled workers
competing for government contracts so we can provide the best value to
taxpayers. The question before us today is whether the regulatory and
enforcement policies of today's OFCCP are moving our nation in the
right direction.
I look forward to our discussion, and will now recognize my
distinguished colleague Rob Andrews, the senior Democratic member of
the subcommittee, for his opening remarks.
______
Mr. Kucinich. Thank you very much, Chairman Roe. It is a
privilege to be with you this morning, my friend, and I look
forward to this hearing. I am grateful for the chance to sit
next to you here. And I want to thank you for calling the
hearing and thank the witnesses for being here so that we can
examine the Office of Federal Contract Compliance Programs.
The federal government spends about $537 billion a year on
contractors. With that kind of money at stake taxpayers have a
right to expect that those contractors will perform to high
standards. One of those standards is a simple one: Obey the
law. Respect the civil rights of American workers.
That is where the Office of Federal Contract Compliance
Programs comes in. The agency's mission is to ensure that
contractors receiving federal tax dollars comply with
employment nondiscrimination and equal opportunity
requirements.
Taxpayer dollars should never be used to violate civil
rights or to perpetuate discrimination. OFCCP monitors
contractors for systemic civil rights violations, including
everything from equal pay for women to failures to hire or
promote veterans or individuals with disabilities.
Today that work is more important than ever. Each year more
than 2 million Americans are affected by workplace
discrimination.
The Equal Employment Opportunity Commission reports that
private sector bias charges are at an all-time high. These
unlawful employment practices cost our country $64 billion
annually. Nearly 50 years after passage of Title VII of the
Civil Rights Act it is unacceptable that workplace
discrimination continues to be so prevalent.
Yesterday we marked a milestone that illustrates how much
work we and the OFCCP have to do. Yesterday was Equal Pay Day.
Equal Pay Day marked the day on which women's compensation
finally caught up with their male counterparts from last year.
To earn what men earned in 2011 women must work all of 2011 and
then keep on working right up until April 17th of this year.
Now, that really bears some thought here because we are not
really talking about people who are differently able; we are
talking about people who are different genders and are being
denied an opportunity for fair pay. The U.S. Census pointed out
women working full time continue to earn just 77 cents for
every dollar a man earns. This pay gap cost women $10,784 in
lost wages last year. Lower lifetime earnings mean women have
smaller pensions and an average annual Social Security benefit
that is 25 percent less than their male counterparts.
And it is not just women who suffer from pay
discrimination. Paying people less than what they are owed is a
drag on the entire economy. Closing the wage gap will help
families stay in their homes, decrease reliance on government
programs, and allow working women the opportunity to spend more
of their hard-earned money in their communities.
The OFCCP is the only agency--the only agency that
systematically reviews federal contractors' employment
practices for pay discrimination. The agency makes sure that
when taxpayer dollars are spent women receive equal pay for
equal work.
The OFCCP's mission extends well beyond women's pay. The
agency is also hard at work protecting our returning veterans,
protecting individuals with disabilities, as well as racial and
ethnic minorities, all of whom have been particularly hard hit
by the great recession.
Fortunately, this agency has not been content to maintain
the status quo. In a recently released regulation the OFCCP
recognized that our nation's veterans face unique challenges in
transitioning to civilian employment. It is working to improve
monitoring and enforcement in this area.
Our veterans have every right to expect that they will
receive fair consideration for employment on projects supported
by federal tax dollars. OFCCP's job is to make sure these men
and women get a fair shake when they return to the civilian
workforce.
The agency has also proposed a regulation updating the
obligations of federal contractors with respect to individuals
with disabilities. According to the Bureau of Labor Statistics,
individuals with disabilities face nearly double the
unemployment rate of individuals without disabilities. It is
astounding, especially at a time when technological advances
make it possible for individuals with disabilities to succeed
in many more jobs than would otherwise be the case.
The fight against discrimination is smart economics.
Taxpayer dollars are limited. Taxpayers should expect that
their dollars are spent wisely, employing, promoting, and
compensating workers based on their merit, not on gender, race,
disability, or veteran status.
This is morally right and a good thing for business.
Nondiscrimination ensures higher quality work.
The OFCCP has gargantuan job monitoring responsibilities,
monitoring the hundreds of billions of taxpayer dollars spent
on contractors every year. While the agency develops ways to
make its enforcement efforts more thorough, more agile, and
more effective, let's not lose sight of the edict it is
attempting to enforce.
It is a simple edict. It is grounded in common sense. If
you want to do business with the federal government you will
treat our citizens fairly.
I look forward, Mr. Chairman, to hearing from our
distinguished panel and thank you, again, for holding this
hearing.
[The statement of Mr. Kucinich follows:]
Prepared Statement of Hon. Dennis J. Kucinich, a Representative in
Congress From the State of Ohio
Good morning, Mr. Chairman.
I want to thank you for calling this hearing to examine the Office
of Federal Contract Compliance Programs (OFCCP).
The federal government spends $537 billion a year on contractors.
With that kind of money at stake, taxpayers have every right to expect
that those contractors will perform to the highest standards.
One of those standards is a simple one. Obey the law. Respect the
civil rights of American workers.
That's where OFCCP comes in. The agency's mission is to ensure that
contractors receiving federal taxpayer dollars comply with employment
nondiscrimination and equal opportunity requirements. Taxpayer dollars
should never be used to violate civil rights or to perpetuate
discrimination.
OFCCP monitors contractors for systemic civil rights violations,
including everything from equal pay for women, to failures to hire or
promote veterans or individuals with disabilities.
Today that work is more important than ever.
Each year, more than 2 million Americans are affected by workplace
discrimination. The Equal Employment Opportunity Commission reports
that private sector bias charges are at an all-time high. These
unlawful employment practices cost our country $64 billion annually.
Nearly 50 years after the passage of Title VII of the Civil Rights Act,
it is unacceptable that workplace discrimination continues to be so
prevalent.
Yesterday we marked a milestone that illustrates how much work we--
and OFCCP--have to do. Yesterday, April 17, was Equal Pay Day. Equal
Pay Day marked the day on which women's compensation finally caught up
with their male counterparts from last year. To earn what men earned in
2011, women must work all of 2011, and then keep on working, right up
until April 17 of this year.
That's because, as the U.S. Census Bureau has pointed out, women
working full-time continue to earn just 77 cents for every dollar a man
earns.
This pay gap costs women $10,784 in lost wages each year. Lower
lifetime earnings mean women have smaller pensions and an average
annual Social Security benefit that is 25 percent less than their male
counterparts.
And it's not just women who suffer from pay discrimination. Paying
people less than what they are owed is a drag on the entire economy.
Closing the wage gap will help families stay in their homes,
decrease reliance on government programs, and allow working women the
opportunity to spend more of their hard-earned money in their
communities.
OFCCP is the only agency that systemically reviews federal
contractors' employment practices for pay discrimination. The agency
makes sure that, when taxpayer dollars are spent, women receive equal
pay for equal work.
OFCCP's mission extends well beyond women's pay. The agency is also
hard at work protecting our returning veterans, individuals with
disabilities, as well as racial and ethnic minorities--all of whom have
been hit particularly hard by the Great Recession.
Fortunately, this agency has not been content to maintain the
status quo.
In a recently proposed regulation, OFCCP recognized that our
nation's veterans face unique challenges in transitioning to civilian
employment. It is working to improve monitoring and enforcement in this
area.
Our veterans have every right to expect that they will receive fair
consideration for employment on projects supported by federal tax
dollars. OFCCP's job is to make sure these men and women get a fair
shake when they join the civilian workforce.
The agency has also proposed a regulation updating the obligations
of federal contractors with respect to individuals with disabilities.
According to the Bureau of Labor Statistics, individuals with
disabilities face nearly double the unemployment rate of individuals
without disabilities.
That is astounding, especially at a time when technological
advances make it possible for individuals with disabilities to succeed
in many more jobs than would otherwise be the case.
The fight against discrimination is smart economics. Taxpayer
dollars are limited. Taxpayers should expect that their dollars are
spent wisely; employing, promoting and compensating workers based on
their merit, not on their gender, race, disability or veteran status.
That is both morally right and good for business. Nondiscrimination
ensures higher quality work.
OFCCP has a gargantuan job monitoring the hundreds of billions of
taxpayer dollars spent on contractors every year. While the agency
develops ways to make its enforcement efforts more thorough, more
agile, and more effective, let's not lose sight of the edict it is
attempting to enforce.
It's a simple edict. It's one grounded in common sense. If you want
to do business with the government of the United States, you will treat
our citizens fairly.
I look forward to hearing from our distinguished panel of witnesses
and yield back. Thank you.
______
Chairman Roe. Thank you.
I thank the distinguished ranking member.
And pursuant to rule--committee rule 7(c), all members will
be permitted to submit written statements to be included in the
permanent hearing record. And without objection the hearing
record will remain open for 14 days to allow such statements
and other extraneous material referenced during the hearing to
be submitted for the official hearing record.
Now it is my pleasure to introduce our distinguished panel.
First, Mr. Jeffrey Norris is the president of the Equal
Employment Advisory Council in Washington, D.C.
And thank you for being here.
Secondly, Ms. Dana Bottenfield is the director of human
resources information system at St. Jude's Children's Research
Hospital in Memphis, Tennessee.
And before we go on I want to thank you all for what you do
at St. Jude's Children's Hospital. We have a branch of St.
Jude's Children's Hospital in my community in Johnson City, as
you know, Tennessee. Not long after St. Jude's Children's
Hospital opened, which was 1962, through the sight and the
thought and benevolence of Danny Thomas, with 125 employees,
that hospital--I was a medical student there in 1969 and I
recall many cases I saw then, and I remember just reminiscing
back a little bit that during that time that an acute
lymphocytic leukemia, which will--there are people out there
today whose children have that--had a 4 percent survival rate.
Today it is 80 percent survival rate thanks to the
incredible people who got up every single day of their lives
knowing that 96 percent of children would not survive and went
to work. And these are the people cleaning the floors, the
people cooking the food, the entire staff. And what a
remarkable place it is.
And just one more personal response to that: I practiced in
Johnson City for 31 years and one of my partners' children was
there and had a less than 3 percent survival rate. He was 3
years old; he is now a senior in high school and doing well.
So thank you for what you all do every day to help children
not only in Memphis, Tennessee and in the South, but around the
world.
Mr. Kucinich. Mr. Chairman, I would like to associate
myself, if I may, with your remarks and thank you for your own
humanitarian instincts, which led you to make those
observations.
Chairman Roe. Thank you.
Next is Ms. Fatima Graves is the vice president for
education and employment at the National Women's Law Center in
Washington, D.C.
Welcome.
And Ms. Alissa Horvitz is a shareholder with the law firm
Littler Mendelson in Washington, D.C.
And before we start we have got to give you the rules of
the game here. Before I recognize you to provide your testimony
let me briefly explain our lighting system.
You have 5 minutes to present your testimony. When you
begin the light in front of you will turn green; with 1 minute
left the light will turn yellow; and when your time is expired
the light will turn red, at which point I will ask you to wrap
up your remarks as best you are able. We are not going to cut
you off in the middle of a sentence, but try to wrap it up.
And as everyone has testified, members will then have 5
minutes to ask the questions of the panel.
And now we will start by recognizing Mr. Norris. We will
start with your testimony.
STATEMENT OF JEFFREY A. NORRIS, PRESIDENT,
EQUAL EMPLOYMENT ADVISORY COUNCIL
Mr. Norris. Thank you very much, Mr. Chairman. I appreciate
the opportunity to speak with you and the other subcommittee
members this morning about the significant changes being
proposed to the regulations by the OFCCP.
I appear here today as president of the Equal Employment
Advisory Council, an association of 300 major federal
contractors. As has already been noted, OFCCP enforces the
nondiscrimination and affirmative action obligations of federal
contractors.
In this context affirmative action refers to the additional
proactive steps federal contractors must take to ensure that
applicants and employees are afforded equal opportunities in
all aspects of their employment. OFCCP monitors contractors'
obligations by conducting approximately 4,000 agency-initiated
compliance evaluations each year--excuse me.
If finalized, OFCCP's proposals will impose extensive new
affirmative action obligations on federal contractors and will
expand exponentially the scope and detail of workforce data
that contractors must submit to OFCCP for review. OFCCP's five
proposals fall into three broad categories: those pertaining to
individuals with disabilities and veterans, those pertaining to
how OFCCP will conduct compliance evaluations, and those
pertaining to compensation analyses.
The veterans and disability proposals would transform what
are today qualitative programs based upon situation-specific,
good faith efforts and equal opportunity into quantitative
programs based on federally mandated numeric targets,
preferential treatment, and extraordinarily burdensome
paperwork requirements. Among other things, these proposals
would for the first time require contractors to establish
numeric placement rate goals for veterans and individuals with
disabilities in the absence of any reliable information
regarding their true availability in the labor market.
They would promote outdated recruitment efforts, relying
upon onerous state job posting requirements and contractor
linkage agreements with OFCCP-prescribed referral agencies,
ignoring completely the advantages of national Internet-based
recruitment technologies and programs. And they would convert
what today are recommended affirmative action measures in the
current regulations into prescriptive mandates with extensive
new record-keeping requirements, including requirements to
extend multiple invitations to self-identify to individuals
with disability and veterans and an obligation to build special
employment files on individuals who do so.
With respect to compliance evaluations, OFCCP has proposed
expanding dramatically the information contractors must submit
to the agency at the beginning of an audit, including
competitively sensitive, employee-specific compensation data.
Abandoning a tiered or phased approach to compliance
evaluations in which the agency initially seeks high-level
workforce data to conduct preliminary analyses, OFCCP now seeks
to gather at the outset of each compliance evaluation, before
there has been an indication of any compliance issue, all
employment information that might become relevant in case a
potential compliance issue should resolve during the--as the
review unfolds.
And third, with respect to compensation, there are two
proposals that relate to compensation analyses. The first
eliminates previously published guidance through agency
investigators on the legal and statistical standards to be used
when evaluating compensation practices--guidance that
contractors found extremely valuable to do their own self-
audits.
The second proposal calls for the development of new
compensation data collection tool that will require federal
contractors to collect and report extensive information about
their compensation and benefits practices. OFCCP has not yet
demonstrated a need for another burdensome compensation
reporting instrument and the proposal duplicates an effort
already underway by the Equal Employment Opportunity
Commission.
As described in my written statement, OFCCP has
consistently underestimated the actual burdens and costs its
regulatory initiatives will impose. As just one example, our
members advise that the compliance cost of the proposed
disability regulations alone will be $2 billion in the initial
year and $1.5 billion in succeeding years; that is more than 30
times OFCCP's estimate of $80.1 million.
In fact, each one of the agency's five proposals carries
with it significant burdens and costs for federal contractors.
In combination, those burdens and costs and economic impact are
staggering.
Just last month, Cass Sunstein, administrator of OMB's
Office of Information and Regulatory Affairs, advised the heads
of all executive departments and agencies to, quote--``take
active steps to take effect--account of the cumulative effects
of new and existing rules and to identify opportunities to
harmonize and streamline multiple rules.'' We believe that is
appropriate advice for OFCCP as it proceeds with its five
pending rulemakings.
Thank you very much.
[The statement of Mr. Norris follows:]
Prepared Statement of Jeffrey A. Norris, President,
Equal Employment Advisory Council
Chairman Roe, Ranking Member Andrews, and Members of the
Subcommittee, thank you for inviting me to testify today about the
major changes that the U.S. Department of Labor's Office of Federal
Contract Compliance Programs (OFCCP) has proposed making to the way it
enforces the employment nondiscrimination and affirmative action
obligations of federal contractors. I appear here today as President of
the Equal Employment Advisory Council (EEAC), a nonprofit association
of nearly 300 major federal contractors that, since its creation in
1976, has dedicated itself exclusively to the development and
advancement of practical and effective programs to eliminate employment
discrimination.
EEAC member companies are--and always have been--fully supportive
of OFCCP's mission to eliminate discrimination in the workplace and
establish policies that serve to promote equal employment opportunities
for all employees--including women, minorities, individuals with
disabilities, and veterans. To that end, EEAC has filed written
comments with OFCCP on virtually every regulatory and sub regulatory
initiative the agency has undertaken over the past 36 years, including
those that are the focus of today's hearing.
Simply stated, the pending regulatory proposals are unprecedented
in terms of their scope, detail, and potential cost impact. If
finalized in their current form they would fundamentally transform, in
a negative way, the traditional working relationship of mutual trust
and respect between OFCCP and federal contractors. They are also very
technical and complex. Given this complexity, I will devote a few
moments at the outset of my remarks to provide some background and
context for today's discussion.
Background: EEOC versus OFCCP
There are two federal agencies primarily responsible for
prohibiting employment discrimination in the private sector--the Equal
Employment Opportunity Commission (EEOC), and the Department of Labor's
Office of Federal Contract Compliance Programs (OFCCP).
Both agencies enforce federal laws that prohibit employment
discrimination on the basis of race, color, religion, sex, national
origin, and disability. The EEOC--but not the OFCCP--also enforces laws
that prohibit discrimination on the basis of age and genetic
composition. The OFCCP--but not the EEOC--also enforces laws that
prohibit discrimination against veterans. EEOC's jurisdiction
encompasses any private employer with 15 or more employees. OFCCP's
jurisdiction extends only to employers that are federal contractors and
subcontractors, entities which collectively employ roughly one-quarter
of the private sector U.S. workforce.
While both agencies are responsible for enforcing nondiscrimination
requirements, OFCCP--and only OFCCP--is also responsible for enforcing
the obligations imposed on federal contractors to engage in affirmative
action. This often misunderstood term simply means in practice that in
addition to refraining from discrimination, federal contractors also
have an obligation to undertake affirmative, proactive steps to ensure
that applicants and employees are afforded equal opportunities in all
aspects of their employment.
The dual mandate imposed on federal contractors (nondiscrimination
and affirmative action) has given rise to very different enforcement
procedures for the EEOC and OFCCP. Under the EEOC's procedures
discrimination claims generally are raised through the filing of
administrative charges by aggrieved individuals or by someone on their
behalf. The nature and scope of EEOC's investigation is defined largely
by the claims made in these individual charges.
The vast majority of OFCCP enforcement actions, in contrast, take
the form of agency-initiated ``compliance evaluations'' conducted at
selected federal contractor establishments. In the recent past OFCCP
has conducted approximately 4,000 compliance evaluations each year.
Unlike EEOC charge investigations that generally focus on the specific
allegations raised in a charge, OFCCP compliance evaluations are open-
ended and can encompass virtually any aspect of the contractor's
employment practices or policies that OFCCP chooses to evaluate.
If finalized as currently proposed, OFCCP's recent regulatory
initiatives will have two major consequences: (1) impose extensive new
and highly burdensome obligations on federal contractors to satisfy
their affirmative action obligations, and (2) expand exponentially the
scope and detail of workforce data that contractors would be required
to collect, maintain and make available to OFCCP during routine
compliance evaluations.
The crucial question of course is whether these regulatory
initiatives are the most effective way to accomplish OFCCP's and
federal contractors' shared goal of matching qualified applicants with
available jobs. In our view, the answer is no.
OFCCP's Traditional Regulatory Approach
During its 47-year history, OFCCP has adopted a set of regulations
and sub-regulatory guidance that both define the standards by which
contractor compliance is measured, and establish procedures and
protocols for conducting agency compliance evaluations. With respect to
identifying unlawful discrimination, OFCCP generally applies the same
legal standards followed by the EEOC. With respect to defining and
evaluating federal contractor affirmative action commitments, OFCCP has
tended to focus on four primary areas:
(1) Development of written affirmative action programs (AAPs) for
women and minorities, individuals with disabilities, and protected
veterans;
(2) Development of targeted outreach programs seeking diverse
qualified applicant pools for all openings;
(3) Statistical monitoring of selection rates (hires, promotions,
transfers, terminations, educational opportunities, etc.) to ensure
there are no institutional or attitudinal barriers to equal opportunity
for any particular group; and
(4) Monitoring of compensation patterns to ensure nondiscrimination
in pay for all employees.
Each one of these four affirmative action categories has been the
subject of one or more OFCCP-initiated Administrative Procedure Act
rulemakings. EEAC and other contractor associations have used these
rulemakings to provide input into the practical implications of the
agency's proposals, including the need for OFCCP to understand that
federal contractors are not monolithic; their businesses are not all
structured in the same way; nor do they select, develop or compensate
employees in a one-size-fits-all fashion.
Until recently, this process has yielded, if not complete agreement
on all issues, at least a respectful mutual understanding of the
important role OFCCP and federal contractors each play in promoting
equal employment opportunity. Contractors have looked to OFCCP to
define and enforce the compliance standards in a clear, consistent and
transparent manner, and OFCCP has looked to contractors to undertake
good faith efforts to apply those standards in the context of their
unique business environments.
The regulatory proposals issued by OFCCP over the past 16 months,
if finalized in their current form, threaten to unravel this respectful
mutual understanding to the detriment of the very individuals OFCCP and
federal contractors are committed to protect. As discussed below, the
proposals would convert current regulatory guidance and recommendations
into highly prescriptive mandates, rejecting ``good faith efforts'' as
a measure of compliance in favor of extensive recordkeeping and
accomplishment of artificially created numerical benchmarks.
Perhaps most troubling, the proposals appear to reflect an unspoken
but yet unmistakable underlying OFCCP assumption that virtually all
employers subject to the agency's oversight are engaging in unlawful
discrimination, and as such must be compelled to adhere to the
processes prescribed by OFCCP; must document each and every outreach
effort and employment decision; and must make all of this information
available to OFCCP during compliance evaluations so that the agency can
assure itself that contractors are, in fact, keeping their commitments.
Simply stated, the respectful mutual understanding developed between
OFCCP and federal contractors over the years is today very much in
jeopardy.
OFCCP Has Underestimated the Potential Economic Impact of Its Pending
Regulatory Proposals
During calendar year 2011, OFCCP proposed five major changes to its
enforcement regulations:
January 3: Rescind existing guidance on procedures and
standards for investigating systemic compensation discrimination
April 26: Require establishment of numerical targets for
veterans' employment and impose sweeping new obligations related to
documenting the identification, recruitment and treatment of veterans
August 10: Impose broad new compensation reporting
requirements on contractors
September 11: Seek permission from OMB to vastly expand
the scope and amount of data requested of contractors at the outset of
compliance evaluations
December 9: Impose 7% hiring goal for individuals with
disabilities and impose sweeping new obligations related to documenting
the identification, recruitment and treatment of individuals with
disabilities
In addition to these proposals OFCCP has indicated that major
changes to its construction industry regulations and sex discrimination
guidelines will be proposed in the near future.
For each proposal OFCCP conducted a cost and burden analysis under
the Paperwork Reduction Act. In the course of preparing comment letters
on the proposals, EEAC solicited feedback from its member companies
regarding OFCCP's cost and burden estimates. Without exception, EEAC
members concluded that OFCCP's figures vastly understated the actual
burdens and costs of implementing the proposals in their workplaces.
The specific deficiencies in OFCCP's economic impact analyses are
discussed in detail in each EEAC comment letter. They include
inaccurate counts of the number of covered contractor establishments;
complete omission of certain critical compliance requirements;
inaccurate assessments of the ease with which certain workforce data
can be extracted from contractor computer systems; and wholly
unrealistic estimates of the time required for contractors to
accomplish prescribed new responsibilities.
The most in-depth analysis of the accuracy of OFCCP's economic
impact estimates was conducted with respect to the proposed revisions
to the disability regulations. Shortly after the proposal was
published, EEAC, the U.S. Chamber of Commerce and the Center for
Corporate Equality developed a survey instrument to collect from their
federal contractor members fact-based estimates of the proposal's
anticipated burdens and utility. A total of 108 major federal
contractors submitted complete or substantially complete responses to
the survey. Collectively, these respondents employ more than 4.54
million employees in the United States, or roughly 17% of the entire
federal contractor workforce, as estimated by OFCCP. During 2011 these
companies filled more that 1.1 million job openings, for which they
received more than 37 million applications.
OFCCP estimated the cost of implementing its disability proposal to
be $80.1 million. The survey results estimated that the actual
implementation costs will be at least $2 billion in the initial year
(more than 30 times the agency estimate) and at least $1.5 billion
annually thereafter. Additional survey results are noted in the more
detailed analysis that follows. The consistent pattern of substantial
discrepancies between OFCCP's burden and cost estimates and those of
major federal contractors raises serious concerns over whether OFCCP
has performed an adequate assessment of the likely impact of its
proposals as required by Executive Orders 12866 and 13536 and the
Paperwork Reduction Act of 1995.
I now offer comments on each of OFCCP's five pending regulatory
proposals.
Revision of Regulations Pertaining to Individuals with Disabilities and
Covered Veterans
Two of the five pending regulatory proposals pertain to federal
contractor nondiscrimination and affirmative action obligations on
behalf of veterans covered by the Vietnam Era Veterans' Readjustment
Assistance Act (``VEVRAA''), and individuals with disabilities
protected under Section 503 of the Rehabilitation Act (``Section
503''). The current VEVRAA and Section 503 regulations are very
similar, although not identical. Because OFCCP has always enforced them
in parallel fashion, I discuss them together.
In sum, the pending proposals would transform a qualitative program
based on situation-specific good faith efforts, equal opportunity, and
respect for privacy of a person's disability into a quantitative
program based on federally mandated numeric targets, preferential
treatment, ineffective and extraordinarily burdensome paperwork
requirements, and invasive inquiries into the disability status of tens
of millions of U.S. workers and job seekers each year.
Establishment of Numeric Hiring Goals
OFCCP has long required federal contractors to establish numeric
placement rate goals for minorities and women in situations where their
current employment levels are below what reasonably would be expected
given their representation (i.e., ``availability'') in the labor
market. The goals are calculated using the U.S. Census Bureau's Special
EEO File which provides detailed minority and gender labor force
participation rates broken out by job category, specific occupation and
location.
OFCCP has never before required numeric hiring goals for veterans
and individuals with disabilities. Both proposals would require their
establishment for the first time. The problem with such a requirement,
however, is that there are no reliable ``availability'' data for
veterans and individuals with disabilities comparable to that provided
through Census data for women and minorities. The proposals address
this inconvenience in two different, and equally ineffective, ways.
The veterans' proposal contemplates that contractors will calculate
their own ``availability'' estimates utilizing two data points provided
by OFCCP and three data points unique to each contractor. These five
data points are then ``weighted'' by the contractor according to their
relative significance to arrive at a single veteran availability
estimate upon which the goals would be based. In contrast, the Section
503 proposal does not require contractors to calculate their own
availability estimates for individuals with disabilities, but rather
mandates use of a standard 7% utilization goal for each job group in
the contractor's affirmative action plan. The primary data source for
the 7% disability goal is the Census Bureau's American Community Survey
(ACS), an instrument that does not collect disability information in a
manner consistent with Section 503 or the Americans with Disabilities
Act.
The most fundamental flaw in both proposals is that there is not an
exact match between the individuals upon which the benchmarks are based
and individuals with disabilities protected by Section 503 or veterans
covered under VEVRAA. Without an apples-to-apples comparison as exists
with respect to women and minorities, the estimated veterans and
disability benchmarks are useless standards by which to evaluate the
success of a contractor's outreach efforts. Moreover, numeric hiring
goals not based upon true availability encourage one of two
unacceptable outcomes--contractors simply ``checking the box'' that the
goals had been accomplished or, more significantly, engaging in
unlawful preferences simply to meet the goal and avoid OFCCP scrutiny.
OFCCP estimates that calculating goals for veterans will take each
establishment 1 hour per year, while EEAC's estimate is 4 hours per
year. The net difference between OFCCP's economic impact estimate for
all goal-related aspects of its veterans' proposal and EEAC's estimate
is approximately $95 million per year.
Recruitment Requirements--Mandatory State Job Postings and Linkage
Agreements
OFCCP traditionally has left it up to contractors to identify the
most productive recruitment sources and determine the most effective
way to utilize them. While contractors are still free to do so, the
disability and veterans' proposals mandate that federal contractors
must also list their open positions with certain state and local
employment agencies, and establish and monitor ``linkage agreements''
with referral agencies specified by OFCCP. In addition to being
administratively burdensome, the mandated local recruitment efforts
ignore the national scope of most contractors' recruitment initiatives
and the sophisticated Internet-based technology used in today's
employment searches.
Mandatory State Job Listings
Contractors for many years have been required by VEVRAA to list
most of their open positions at an appropriate local employment service
office. This ``mandatory listing'' requirement has posed enormous
compliance challenges for federal contractors, for OFCCP, and for the
hundreds of state agencies that often lack the financial, technical and
personnel resources to handle the volume of job postings filed. The
advent of Internet recruiting has only exacerbated the challenge.
The mandatory job listing requirement has been handled in several
different ways. At one time contractors could satisfy their obligation
by simply listing their openings on the America's Job Bank (AJB), a
nationwide job board maintained by the U.S. Department of Labor. When
AJB was eliminated in 2007, OFCCP required contractors to list their
openings directly with the state or local employment agencies, but
permitted them to do so in a manner (FAX, e-mail, or other electronic
postings) acceptable to the contractor. More recently, OFCCP has
flipped this option and now requires that job openings be posted in the
``manner and format'' required by the local agency. With no consistency
in the filing requirements imposed by the local agencies, this
obligation presents enormous burdens and costs for contractors engaged
in nationwide recruiting.
There never has been a similar posting obligation for individuals
with disabilities. The new disability proposal, however, would require
that contractors for the first time post their open positions at the
``One-Stop Career Center'' nearest to the contractor's facility.
Unfortunately, there is no guarantee that the nearest ``One-Stop Career
Center'' will also be the state employment service office that the
contractor is using to satisfy its veterans' mandatory job listing
requirement. EEAC has recommended to OFCCP that any posting with the
state employment service satisfy both the veterans' and disability
posting requirements.
OFCCP's economic impact analysis assumes that contractor
establishments will have only two open positions per year that require
posting. The 108 EEAC survey respondents alone had 1.1 million such
openings in 2011.
Over the years, EEAC members have found the mandatory listing
requirement to be burdensome, costly and only marginally productive in
matching veterans with job openings. Since the requirement is
statutorily based, the compliance challenges it has created for federal
contractors, OFCCP and the state agencies can only be alleviated
through a Congressional response. In our view, the current mandatory
listing requirement should be eliminated and replaced with a national
job board patterned after America's Job Bank that could serve as a
centralized job posting system which would serve as the federal
government's clearinghouse of job opportunities for which employers are
specifically recruiting individuals with disabilities and protected
veterans.
Linkage Agreements
In addition to the mandatory postings, the disability and veterans'
proposals also both require contractors to execute formal ``linkage
agreements'' with OFCCP-specified referral agencies. Each set of
regulations requires a minimum of three linkage agreements per
establishment. One of the specified linkage agreements would qualify
under both proposals thus resulting in a minimum total of five written
linkage agreements per establishment. In addition, the effectiveness of
each linkage agreement would need to be evaluated annually. With
approximately 285,000 contractor establishments in the U.S., a total of
1,425,000 written linkage agreements would need to be negotiated and/or
reviewed each year.
Mandating linkage agreements with government-specified agencies
ignores the fact that most contractors already have well-established
relationships with various employment services and placement
organizations, and have become adept at utilizing Internet-based
recruiting techniques. Unlike the centralized job posting system
recommended above, the proposed linkage agreements will not facilitate
matching veterans and individuals with disabilities with available
jobs.
The linkage agreements will instead constrain the already limited
resources of both contractors and employment services agencies. Indeed,
in comments filed with OFCCP on the proposed disability regulation, the
National Association of State Workforce Agencies (NASWA)--an advocacy
organization for state workforce programs and policies--warned that
``[t]he volume of paperwork and administrative bulk of creating,
approving, signing and maintaining such linkage agreements would be
overwhelming. Without any administrative funding provided, this becomes
an unfunded mandate to an already severely constrained system trying to
provide universal services to a growing labor force.''
Time required to initiate each linkage agreement: OFCCP
estimate = 5.5 hours; EEAC survey estimate (35% of respondents) = 10
hours
Time to annually update each linkage agreement: OFCCP
estimate = 15 minutes; EEAC survey estimate (54% of respondents) = 3 or
more hours
Invitations to Self-Identify
Federal contractors are already required under current regulations
to solicit veteran and disability-related information from job
applicants after an offer of employment has been extended, but before
the individual begins working. Both sets of regulations would expand
contractors' self-identification obligations. Individuals with
disabilities would be afforded three opportunities to self-identify:
(1) whenever they apply for or are considered for employment, (2) after
being extended a job offer but before they begin working, and (3)
annually as part of a required anonymous survey conducted by their
employer. Veterans would be extended two invitations to self-identify:
(1) a pre-offer invitation to self-identify as a ``protected veteran,''
and (2) a post-offer, pre-employment invitation to self-identify with
respect to each applicable category of protected veteran.
OFCCP's approach to the identification and treatment of individuals
with disabilities (including disabled veterans) as reflected in the new
proposals is very different than the approach advocated by the EEOC
since enactment of the Americans with Disabilities Act (ADA). The EEOC
prohibits employers from making preemployment disability inquiries
except when required to undertake affirmative action by federal, state
or local law, or when using the information to benefit individuals with
disabilities (such as running sheltered workshops). The EEOC also has
been very reticent to sanction post-employment invitations to self-
identify as mandated in the proposals.
It has always been unclear whether simply being subject to Section
503 is sufficient to justify extending pre-offer invitations to self
identify. OFCCP apparently assumes that it is. The EEOC recently issued
updated guidance on the ADA that simply reaffirms its traditional
policies and fails to answer the question directly. Nevertheless,
OFCCP's self-identification proposals, along with the requirement that
contractors maintain special employment files on applicants and
employees with disabilities (discussed below), stand in stark contrast
to the EEOC's approach under the ADA that an individual's disability
status generally is relevant only in the context of considering the
need for reasonable accommodations.
Contractors thus have concerns about OFCCP's self-identification
proposals from the standpoint of (1) invasion of employee privacy, (2)
potential exposure to ADA claims, and (3) cost.
Time required to develop capability to extend pre-offer
disability invitations: OFCCP estimate = 5 minutes per establishment;
EEAC survey estimate = on average more than 560 hours per contractor
Time required to develop capability to extend post-offer/
pre-employment disability invitations: OFCCP estimate = no additional
economic impact; EEAC survey estimate = on average more than 458 hours
per contractor
Time required to develop capability to extend annual
anonymous survey of employee disability status: OFCCP estimate = 5
minutes per establishment; EEAC survey estimate = on average more than
722 hours per contractor
Ineffective and Burdensome Paperwork Requirements
The proposed disability and veterans' regulations would impose a
wide array of paperwork requirements and costly administrative burdens
on contractors while contributing little if anything to matching
veterans and disabled individuals with job openings.
Annual Review of Personnel Processes
The existing disability and veterans' regulations require the
``periodic'' review of personnel processes to ensure that individuals
with disabilities and veterans are considered for open positions and
training opportunities. The appendix to the current regulations
contains suggested methods for carrying out such reviews.
The new proposals turn these suggested methods into mandates by
requiring contractors to:
Identify each known applicant and employee who is disabled
or is a protected veteran;
Keep a record of every vacancy and training opportunity
for which protected veterans or disabled applicants and employees are
considered;
Prepare a statement for each instance in which protected
veterans or disabled applicants and employees are rejected for a
vacancy, promotion, or training opportunity, outlining the reason for
the rejection and any accommodations considered;
Describe the nature and type of accommodations accorded to
disabled individuals (including disabled veterans) who were selected
for hire, promotion, or training programs; and
Make these statements available to the applicant or
employee upon request.
The net effect of these requirements will be to require contractors
to create a unique compliance file on each and every protected veteran
and disabled applicant and employee, documenting each and every
employment and training opportunity the individual has ever had with
the company, along with the reasons in each instance where the person
was not successful.
Time required to construct and maintain files: OFCCP
estimate = 30 minutes per establishment; EEAC survey estimate (57% of
respondents) = 3 hours or more per individual
Time required to justify and document each non-selection
decision: OFCCP estimate = 30 minutes per establishment; EEAC survey
estimate (45% of respondents) = 3 hours or more per individual
In cases where changes to existing systems, forms or
procedures would be necessary to comply with this requirement, more
than half of EEAC survey respondents reported that the cost would
exceed $100,000
Review of Physical and Mental Job Qualifications
The current disability and veteran regulations require the
``periodic'' review of all physical and mental job qualifications to
ensure that where such qualifications tend to screen out disabled
veterans or persons with disabilities, they are job-related and
consistent with business necessity. The proposed regulations would
mandate that these reviews be performed for all jobs on an annual
basis, irrespective of whether there has been a vacancy or the job has
changed over the prior year. In addition, such reviews must be
documented in such a way that would ``list the physical and mental job
qualifications for the job openings during a given AAP year * * * and
provide an explanation as to why each requirement is related to the job
to which it corresponds.''
Time to conduct annual review: OFCCP estimate = 2.5 hours
per establishment; EEAC estimate = 2,500 hours per contractor
New Data Collection and Analysis Requirements
The new disability and veterans' proposals require contractors to
collect and tabulate ten (disability) or eleven (veterans) new data
points annually, to be used in the assessment of the contractor's
disability and veterans affirmative action efforts. These data points
pertain to such minute details as:
The number of referrals of protected veterans and
individuals with disabilities--separately calculated for referrals from
employment service offices, ``linkage'' agencies, and other sources;
The number of applicants who are known to be or who self-
identified as being a protected veteran or individual with a
disability;
Total number of job openings, total number of jobs filled,
and the ratio of jobs filled to openings;
Total number of applicants for all jobs, the ratio of
protected applicants to all applicants (``applicant ratio''), and the
number of protected applicants hired; and
The total number of applicants hired and the ratio of
protected applicants hired to all hires (``hiring ratio'').
The cost to federal contractors to comply with this one requirement
is staggering:
Time to design and implement the systems, forms and
procedures to comply with this mandate: OFCCP estimate = one hour per
establishment per year; EEAC survey estimate = on average more than
3,755 hours per contractor
Time to perform and document the annual evaluation of the
effectiveness of each outreach and recruitment effort: OFCCP estimate =
10 minutes per establishment; EEAC survey estimate = on average more
than 1,946 hours per contractor
New Required Training
The disability and veterans' proposals both impose new mandatory
training obligations on federal contractors. First, the contractor's
disability and veterans affirmative action policies must be discussed
``thoroughly in any employee orientation and management training
programs.'' Second, training must be provided annually for all
personnel involved in ``recruitment, screening, selection, promotion,
disciplinary, and related processes.'' The proposals detail the
specific topics that must be covered in the training as well as the
contemporaneous records that must be maintained regarding which
personnel received the training, when they received it, and who
facilitated it.
Among the records that must be retained are the written and
electronic materials used for the training, which must cover, at
minimum, the following topics: (1) the benefits of employing protected
veterans and individuals with disabilities; (2) appropriate sensitivity
toward veterans and individuals with disabilities; (3) the legal
responsibilities of the contractor and its agents regarding protected
veterans and individuals with disabilities; and (4) the obligation to
provide reasonable accommodation.
OFCCP believes the burden and costs for this training to be
minimal--20 minutes to develop and 5 minutes to present the orientation
sessions per establishment each year, and 40 minutes to develop and 20
minutes to deliver the personnel selection training per establishment
each year. These estimates are totally unrealistic in part because they
totally ignore the costs involved in removing employees from their jobs
to attend and receive the training. The EEAC survey estimates the
actual costs of the orientation training to be $310.3 million and the
actual costs of the personnel selection training to be $254.5 million--
a combined training cost of approximately $564.8 million.
Proposed Expansion of Contractor Desk Audit Submission Requirements
As noted earlier, OFCCP carries out its enforcement
responsibilities primarily through conducting agency-initiated
compliance evaluations at selected contractor establishments. Unlike
the scope of EEOC investigations which are defined primarily by the
allegations contained in the discrimination charge, OFCCP compliance
evaluations are largely open-ended and thus potentially can embrace any
and all of a contractor's employment policies, practices and decisions.
Contractor establishments are notified of their selection for
review through OFCCP issuance of an OMB-approved Scheduling Letter and
attached Itemized Listing. The Itemized Listing enumerates information
OFCCP may request at the outset of the compliance evaluation such as
copies of Affirmative Action Plans (AAPs); recent EEO-1 Reports;
summaries of applicants, hires, promotions and terminations; aggregate
compensation information; and copies of collective-bargaining
agreements.
The requested information must be submitted by the contractor to
OFCCP within 30 days of receipt of the Scheduling Letter, and OFCCP
uses the information to conduct its preliminary analysis--referred to
as the ``desk audit.'' If OFCCP's desk audit review reveals potential
compliance questions, additional information may be requested through
focused follow-up data requests or through compliance officers visiting
the contractor's premises to conduct an ``onsite investigation.''
Until recently, OFCCP's practice was to evaluate the desk audit
submission to ensure that the AAPs and other written information
conformed to all technical requirements of the regulations, and to
conduct preliminary statistical analyses of the employment transactions
(hires, promotions and terminations) and compensation. In cases where
the submission conformed to the regulations and there were no
statistical ``indicators'' of potential discrimination against any
group, the audit was closed. Conversely, where there were indicators of
noncompliance or statistical adverse impact, a further investigation
would be conducted focused on the problematic areas.
This ``tiered'' or ``phased'' approach to compliance evaluations
offered several advantages to both OFCCP and to contractors.
Contractors knew from the Itemized Listing what information they needed
to maintain on an ongoing basis for submission to OFCCP, and by
authorizing OFCCP to evaluate only that information during the desk
audit phase, OMB discouraged OFCCP from venturing off into unfocused
``fishing expeditions'' during their compliance evaluations. This
approach also enabled OFCCP to focus its resources on issues having
significant potential for noncompliance.
The key to maintaining this effective balance is the OMB-approved
Itemized Listing. Each time the Itemized Listing comes up for periodic
OMB renewal under the Paperwork Reduction Act there is a struggle
between OFCCP and federal contractors. OFCCP invariably seeks OMB
authorization to collect more comprehensive and detailed information
for desk audit review, and federal contractors invariably seek OMB
protection from being required to disclose highly sensitive and
confidential information to OFCCP at the outset of a compliance
evaluation before there is any indication of a compliance-related need
for it.
The Scheduling Letter and Itemized Listing currently are before OMB
for reauthorization, and the struggle continues--but this time the
stakes are much higher given the breadth of OFCCP's request for
information and the agency's abandonment of a tiered approach to
compliance evaluations. There are several new items of information that
OFCCP wants to add to the Itemized Listing, but two of them are
particularly problematic for federal contractors--employment
transactions data and compensation data.
Employment Transactions Data
Currently federal contractors are required to submit to OFCCP
summary information on applicants, hires, promotions and terminations
(1) by gender and minority/nonminority status, (2) for each AAP job
group or each job title. This is the source information that OFCCP
traditionally has used to determine whether there are any preliminary
``indicators'' of statistically significant adverse impact in
selections.
OFCCP is now seeking authorization from OMB to collect such
information (1) by gender and individual race/ethnicity categories, (2)
for each AAP job group and job title. In addition, OFCCP wants
contractors to identify by race and gender the ``actual pool of
candidates'' who applied or were considered for promotion, or who were
considered for termination. This request is objectionable for two
reasons--the data in the preferred format are too granular to be useful
for many statistical selection analyses, and most contractors do not
utilize ``pools'' for all of their promotions and terminations.
Compensation Data
Over the years the compensation data requested on the Itemized
Listing has served as the greatest source of friction between OFCCP and
federal contractors. OFCCP has contended that it needs employee-
specific compensation data to conduct meaningful compensation analyses;
contractors have responded that employee-specific compensation data at
the higher levels of an organization are among the most sensitive and
competitively confidential information they maintain. The result thus
far has been a compromise brokered by OMB--OFCCP has been authorized to
collect aggregate level (i.e., not-employee specific) compensation data
for purposes of desk audit analysis, and then may issue requests for
detailed employee-specific information when a need for it has been
established. This compromise has generally worked well, although the
standards utilized by OFCCP to demonstrate ``need'' for the follow-up
information have eroded significantly in recent years.
As with the transactions data, OFCCP is now petitioning OMB for
permission to request in the Itemized Listing far more detailed
compensation information. The new request modifies (1) the date the
compensation ``snapshot'' is taken [February 1 each year], (2) the
range of employees for whom compensation information must be provided
[including contract, per diem, day labor, and temporary employees], and
(3) the scope and detail of the compensation data requested [in
addition to base salaries and wage rates--such items as bonuses,
incentives, commissions, merit increases, locality pay, and overtime].
In addition to being extremely burdensome (discussed below) and
technically objectionable, OFCCP's transaction and compensation data
requests are also operationally objectionable because they reflect the
agency's abandonment of tiered compliance evaluations in favor of
thorough ``wall-to-wall'' compliance evaluations in each and every
compliance review. OFCCP apparently assumes that most (or all) federal
contractors are out of compliance with their nondiscrimination and
affirmative action obligations and it is therefore necessary to gather
at the outset of each compliance evaluation--before there is any
indication of a compliance issue--all employment information that might
be potentially relevant in case a potential violation should develop as
the review unfolds. We believe such an assumption is unwarranted, and
OFCCP's request to OMB, if approved, will result in contractors
maintaining, evaluating and disclosing to OFCCP large amounts of
sensitive and confidential business information that will turn out to
be unnecessary for a determination of compliance.
OFCCP Burden Estimates
Notwithstanding seeking permission to require audited contractors
to provide OFCCP with more data, more records, more manual tabulations,
and more information at the outset of the review, OFCCP estimates that
its proposed changes will actually reduce the overall burden on each
audited federal contractor by approximately 1.34 hours per audit. In
addition to defying logic, over two-thirds of the comments submitted to
OFCCP in response to its proposed changes questioned the agency's
burden estimates as being unrealistically low. EEAC members report that
if OMB grants OFCCP's request, their current burden hours will increase
three-and in some instances four-fold. OFCCP's burden estimates are
simply not credible.
Compensation Analysis
In addition to the proposed Scheduling Letter changes, two other
OFCCP proposals will impact the way federal contractors and OFCCP
evaluate compensation. The first is OFCCP's proposal, announced in
early 2011, to rescind its 2006 Systemic Compensation Discrimination
Guidelines and replace them with new--as yet unpublished--guidance. The
second is OFCCP's intention to develop a new compensation data
collection tool that will require federal contractors to periodically
report to the agency extensive information about their compensation
systems, practices and patterns.
Rescission of Systemic Compensation Discrimination Guidelines
Prior to 2006, OFCCP did not have a consistent approach to how it
audited contractor compensation practices. There was no consistency
with respect to such fundamental questions as: (1) how employees should
be grouped together for purposes of analysis, (2) what pay variables
should be included in the analysis, (3) what statistical methodologies
were appropriate for conducting the analysis, (4) how to interpret the
statistical results, or (5) whether discrimination allegations could be
predicated upon statistics alone or needed to be supplemented with
anecdotal evidence of discrimination. In those days the results in any
particular audit would depend upon which field offices--or which
auditors--were conducting the analysis.
This changed in 2006 when these and other questions were addressed
in OFCCP's systemic compensation discrimination guidelines. While
admittedly not perfect in all respects, the guidelines nevertheless
were predicated upon sound legal and statistical principles accepted by
the federal courts in compensation discrimination cases. They thus
constituted a valuable blueprint for both OFCCP and federal contractors
to follow in conducting compensation analyses. The predictability
generated by the guidelines encouraged federal contractors to conduct
voluntary self-critical analyses of their compensation systems.
The compensation guidelines serve as a good illustration of the
beneficial consequences that can flow from clearly articulated,
consistently applied OFCCP policies. Unfortunately, OFCCP concluded
that the guidelines were too rigid and constraining and that it needed
greater flexibility to utilize a ``variety of investigative and
analytical tools.'' OFCCP has indicated that it will not officially
rescind the 2006 guidelines until new guidance is developed to replace
it. Thus far there is no indication of what form that guidance will
take other than a commitment that it will be based upon principles
contained in Title VII of the Civil Rights Act of 1964.
The key point to be learned by the rescission of the compensation
guidelines is that preserving investigative flexibility for OFCCP
invariably carries with it investigative uncertainty for contractors.
In most instances OFCCP's mission will be better served through a clear
articulation of policy and standards that both OFCCP and contractors
can rely upon--as was the case with the 2006 systemic compensation
discrimination guidelines.
Compensation Data Collection Tool
On August 10, 2011, OFCCP requested public comment on a proposed
new collection tool that would require federal contractors to collect,
calculate, and disclose to OFCCP millions of confidential data points
on their pay and benefits policies and decisions. OFCCP posed 15
specific questions regarding the scope, content, and format of the data
collection tool--not one of which posed the fundamental question of
whether there is actually a need for such a potentially burdensome and
intrusive requirement.
EEAC, in conjunction with several other business organizations,
have asked OFCCP not to proceed with developing the compensation data
collection tool. The agency already has extensive compensation
information available to it in the files of recently-completed
compliance evaluations, and will have significantly more information
from this source should OMB grant the agency's request to expand the
Scheduling Letter and Itemized Listing.
In addition, the EEOC currently is sponsoring a project being
conducted by the National Academy of Sciences (``NAS'') to ``review
methods for measuring and collecting pay information'' from U.S.
employers for purposes of administering Title VII. Given the Obama
Administration's emphasis on having agencies coordinate their
enforcement efforts--and given the EEOC's and OFCCP's commitment to the
National Equal Pay Enforcement Task Force to do so--OFCCP should not
proceed with the development of a compensation data collection tool
independently of the NAS study.
Conclusion
Over the past sixteen months, OFCCP has published five major
regulatory proposals. In three instances (disability regulations,
veterans' regulations, and revisions to the compliance evaluation
Scheduling Letter Itemized Listing), OFCCP is proposing to expand
exponentially the recordkeeping, data collection and analysis, and
reporting requirements already imposed on federal contractors by the
agency's existing regulations. In one instance (rescission of the 2006
compensation guidelines), OFCCP is proposing to withdraw and replace
well-founded legal guidance that served as a useful catalyst for
voluntary compliance. And in one instance (compensation data collection
tool), OFCCP is proposing development of a massive reporting
requirement without having established a need for it and apparently
without coordination with a parallel study being conducted by the EEOC.
By itself, each proposal carries with it significant burdens and
costs for federal contractors. In combination, the burdens and costs
are enormous, and the economic analyses conducted by OFCCP suggest a
serious underestimation of what those burdens and costs actually will
be.
Last month, Cass Sunstein, Administrator of OMB's Office of
Information and Regulatory Affairs, reminded the heads of all executive
departments and agencies to be aware of the ``cumulative effects of
regulations.'' He noted that President Obama's Executive Order 13563
urges agencies to promote ``coordination, simplification, and
harmonization,'' and directs them to ``propose or adopt a regulation
only upon a reasoned determination that its benefits justify its
costs.'' He further observed that consistent with the Executive Order,
agencies should:
``[t]ake active steps to take account of the cumulative effects of
new and existing rules and to identify opportunities to harmonize and
streamline multiple rules. The goals of this effort should be to
simplify requirements on the public and private sectors; to ensure
against unjustified, redundant, or excessive requirements; and
ultimately to increase the net benefits of regulations.''
None of the five proposals discussed in this testimony has been
finalized. It is still possible, therefore, to identify and modify
their most problematic aspects. As it has throughout its 36-year
history, EEAC is ready and willing to engage in a serious and reasoned
dialogue with OFCCP to identify and address those aspects of the
proposals that we see as roadblocks to our shared goal of matching
qualified applicants--including women, minorities, veterans and
individuals with disabilities--with available job openings. It is in
that spirit that we make the following six recommendations:
1. The outdated, onerous, and only marginally effective mandatory
job listing requirements for veterans should be replaced with a
national job board patterned after the former America's Job Bank. Such
a step would facilitate national recruitment efforts, capitalize on
current Internet-based recruiting techniques, and eliminate the need
for negotiating and annually updating approximately 1.4 million costly
and locally-oriented linkage agreements.
2. OFCCP and EEOC should reconcile their seemingly divergent
approaches to identifying and employing individuals with disabilities.
OFCCP's insistence upon multiple and ongoing self-identification
invitations, in combination with the obligation to build special files
on applicants and employees with disabilities, raises the uncomfortable
possibility that contractor compliance with OFCCP's regulations can be
accomplished only at the risk of violating the Americans with
Disabilities Act.
3. OFCCP should not require the establishment of numerical hiring
goals for veterans and individuals with disabilities in the absence of
reliable labor market availability data.
4. The numerous recommended affirmative action measures for
veterans and individuals with disabilities in the current regulations
should remain ``recommendations'' and not be converted into
prescriptive, mandatory requirements complete with exhaustive
documentation and recordkeeping obligations. Such internally-focused
``process'' requirements do little to promote actual job creation or
placement.
5. Federal contactors should be provided with clear and
consistently-applied guidance regarding OFCCP's compliance standards.
Such guidance promotes voluntary compliance.
6. The ``phased'' approach to compliance evaluations should be
retained. Contractors should not be required to submit volumes of
detailed and highly sensitive employment information to OFCCP at the
outset of an audit before there is any indication of a compliance-
related need for it.
Thank you again for the opportunity to testify before the
Subcommittee today. I will be pleased to answer any questions you may
have.
______
Chairman Roe. Thank you.
Ms. Bottenfield?
STATEMENT OF DANA BOTTENFIELD, DIRECTOR OF HUMAN RESOURCES
INFORMATION SYSTEMS, ST. JUDE CHILDREN'S RESEARCH HOSPITAL
Ms. Bottenfield. Chairman Roe, Senior Ranking Member Mr.
Kucinich, and other members, I am very honored to speak with
you today as a representative at St. Jude Children's Research
Hospital and share with you my experiences of the affirmative
action planning process. I am the director of H.R. information
systems, employment, and immigration at St. Jude.
The mission of St. Jude is to eliminate catastrophic
diseases in children through research and treatment. We are a
nonprofit run primarily on donor dollars. We have over 3,700
employees who hail from more than 80 countries and every
continent but Antarctica.
Annually, we receive over 30,000 applications every year
and hire more than 600 individuals. As a government contractor
and a standalone organization we are required to complete a
single affirmative action plan every year.
Our efforts to comply with the regulations of the OFCCP are
multifaceted. Some duties are just embedded in the day-to-day
activities of our team, which make them difficult to extract or
quantify.
The appropriate infrastructure to support our efforts is
absolutely required. This includes software, hardware, and
storage systems, including onsite physical files, offsite
storage, and electronic storage. In addition, in my opinion, an
affirmative action vendor and legal attorney are absolutely
necessary.
All of these require time and effort. However, the efforts
I discuss today will be mostly focused on what I consider to be
the tip of the iceberg, not on creating and maintaining the
infrastructure to support these efforts.
Every year St. Jude expends resources to collect, audit,
and process data collected in our systems to send to our vendor
to create our plan. Once the plan is finalized we must review,
understand, and implement meaningful actions around the
results.
We need to stay current of new and pending regulations and
devise strategies to comply with these. And we need to ensure
the continued training of new and existing staff around these
regulations. Last but not least, we must endeavor to improve
data collection processes as opportunities for improvement
always exist.
To illuminate our efforts I want to focus on our current
affirmative action plan. This document is over 450 pages long.
In addition, our background--our affirmative action vendor
provides the statistical analysis that the OFCCP would run if
were audited. This is an additional 250 pages long. This
information has to be read and absorbed and actions taken.
In our current plan we have 21 placement goals, 15
potential areas for adverse impact, and more compensation
issues than I can count. For our plan year our estimated time
for these activities around these issues is 500 person hours
and--at the cost of $58,000.
If our organization is audited our efforts and costs will
increase. Our last audit was in 2009 and it lasted 8 months. A
conservative estimate put the time and cost to meet the request
of the auditor and to defend ourselves against charges of
discrimination at a person hour--400 person hours and $37,000.
Contractors can be audited every 2 years.
St. Jude takes very seriously our responsibility of
guarding against discrimination. When any allegations occur we
are committed to dealing with these in a fair, swift, and
consistent manner. However, current regulatory framework poses
challenges for us to meet the goals and standards set by the
OFCCP and the increasing scrutiny of minutia in the audit.
If St. Jude is not employing enough minorities or women in
a particular job category then we may--it may appear we are
discriminating. If we devise strategies to eliminate this
discrepancy and we are too successful in our efforts, meaning
we have actually now hired too many men or too many women or
minorities, then it may appear that we are engaged in reverse
discrimination and actually have adverse impact on another
group.
Standards require that we have the perfect mix of gender
and racial groups for every job category. It is an impossible
standard to meet, not to mention that the data elements used to
conduct the analysis are crude and incomplete.
If you only look at race and gender as predictors of
hiring, promotions, termination, and pay, then you are actually
ensuring that these are the factors that will explain the
statistical variance. In reality, there are a plethora of
factors that influence these decisions, most of which are not
easy to capture in a database or to quantify for over 30,000
applicants and 3,700 employees each year.
Every year our burdens increase. An example would be the 7
percent target representation of persons with disabilities for
each job category with an estimated effort of 30 minutes. Based
on my experience, this effort is grossly underestimated.
There are good things that come from the affirmative action
process. Employer outreach to underemployed groups, attention
to eliminating barriers to employment for women, minorities,
veterans, and disabled individuals, and encouraging employers
to assess their efforts regularly are desirable and of real
benefit. The real question, though, is whether the OFCCP's
methods and new regulations actually promote these good things
in an efficient and effective way or simply create excessive
burdens and fodder for litigation.
In conclusions, the effort, resources, and cost to comply
with the OFCCP creates significant burdens and barriers far in
excess of what is necessary to accomplish effective affirmative
action. Our team is not focused on providing a fair and diverse
workplace, but instead of surviving our next audit.
Thank you, Mr. Chairman.
[The statement of Ms. Bottenfield follows:]
Prepared Statement of Dana C. Bottenfield, PHR, CCP, CBP, Director of
HRIS, Employment and Immigration, St. Jude Children's Research Hospital
Chairman Roe and other members of the Committee, I am honored for
the opportunity to speak to you as a representative of St. Jude
Children's Research Hospital and share with you my experience with the
Affirmative Action Planning process.
Background
St. Jude Children's Research Hospital (St. Jude) was founded in
1962 by the late entertainer Danny Thomas, who believed that no child
should die in the dawn of life. Since inception, St. Jude has been not
only a hospital, but also an academic research center. In fact, St.
Jude has changed the way the world treats childhood cancer and other
life-threatening diseases. Supported largely by donations, St. Jude is
a non-profit institution where no family pays for medical care, and for
every child treated here, thousands more have been saved worldwide
through St. Jude discoveries. Our 3,700 employees hail from more than
80 countries and every continent except Antarctica. St. Jude receives
more than 30,000 applications annually and hires about 600 employees
each year. We are a government contractor and stand-alone organization;
consequently, we only create a single affirmative action plan. More
complex organizations, including hospitals with multiple locations and
services (e.g., hospitals, hospice care, nursing homes, outpatient
surgery) may be required to complete multiple plans.
I have 17 years of experience in Human Resources, with all but two
of these years at St. Jude. I have worked in Compensation, Human
Resources Information Systems (HRIS), Immigration, Benefits and
Employment. I have 15 years of experience in HRIS and seven years of
experience in employment. My current title is Director of HRIS,
Employment and Immigration. In my 15 years at St. Jude, we have been
audited by the Office of Federal Contract Compliance Programs (OFCCP)
three times, with the most recent audit starting and concluding in
2009. During these 15 years, my exposure to Affirmative Action Planning
(AAP) has increased to the point that I am now responsible for aspects
of our plan including, general compliance and communication, and I also
serve as the main contact for any audits.
In the paragraphs that follow, you will see what the AAP process
looks like when put into practice in the real-world setting of a
pediatric research hospital. To say the process takes an insignificant
number of hours and dollars would grossly underestimate the time,
effort, resources and costs required to collect, store and process
data, create the actual AAP, construct and implement a meaningful
action plan based on the AAP results, conduct outreach efforts,
coordinate with linkage sources, stay current as to new and pending
regulations, comply with new regulations and ensure ongoing staff
training. If I had to estimate the actual hours spent by St Jude's team
in preparing St. Jude's AAP, it would vary from a minimum of 300 to 600
person hours over the course of a year. For the current AAP year, based
upon our current initiatives, I expect for St. Jude employees to spend
500 hours on affirmative action duties that are in addition to their
day-to-day affirmative action duties. The estimated cost of these
expenditures, including consulting and the hours of additional effort
is approximately $58,000. If our institution is audited, then another
200 to 400 hours can be added to this effort. Our last audit was in
2009. St. Jude employees spent, conservatively estimated, 400 hours
working on this audit with an estimated cost of $37,000, including
legal fees, consulting fees and cost of employee efforts. However, this
does not fully capture the costs or effort. The necessary
infrastructure must exist and continue to be maintained. Software
systems must be selected, installed, tested, set-up, upgraded and
maintained along with the necessary hardware. Document storage systems,
including onsite files, offsite files and electronic storage must be
also be created and maintained. And day-to-day compliance is built into
the jobs and responsibilities that our HR teams carry out daily. There
are real hours and dollars included in the cost of building and
maintaining this infrastructure and to get to the point where you have
a viable program. The time, effort and costs are not included because
it is not simple to determine; however, it would easily double or
triple the time, effort and costs I have already quoted. In short,
creating an AAP is not merely running a few reports and submitting the
results to the OFCCP. It's an intensive process that St. Jude must take
seriously or else face penalties.
I sincerely hope that you as members of the U.S. Congress will
agree that as important a mechanism as the Affirmative Action Plan is,
there is indeed an opportunity to improve the process so that it is
more streamlined and productive and becomes the meaningful and
efficient process it was intended to be.
Creating the Affirmative Action Plan
The first requirement in creating an AAP is to have the systems and
staff in place to collect and produce the required applicant and
employee data. At St. Jude, we have a team of professionals dedicated
to HRIS (8.3 full-time equivalents). This team is responsible for
selection, installation, testing, troubleshooting, reporting and daily
maintenance of HR systems in conjunction with applicable technical
professionals in our Information Sciences Department and our vendors.
We have two systems that hold data required for our AAP--an applicant
tracking system (ATS) and an HR/Payroll system (HRMS). The ATS handles
the collection and storage of applicants, applications, resumes, other
documents and demographic elements about applicants for all open
positions. Any candidates selected for a position are then fed to our
HRMS through an interface, and the employment history of the employee
is tracked in this system. These systems require regular interaction
and maintenance in order to code, collect, endure date integrity and
store the applicable data and documents.
To pull the data required for the AAP, the appropriate table and
coding structure must exist in the applicable software systems, and
then the reports must be developed to extract the data for the required
timeframes. I was personally involved in the creation of all the
current reports used by St. Jude, which easily took 400 person hours.
The reports in the ATS were developed using report writing software by
the HRIS team at St. Jude in conjunction with our ATS vendor. The
reports in our HRMS were developed by a programmer at St. Jude due to
the complexity of pulling historical information from the applicable
data files in this system and the computer programming knowledge
needed. Over time, these reports continue to be refined and tweaked
annually. Depending upon the change, this effort can take from a matter
of minutes to about 10 hours. An example of a recent ``tweak'' is
adding the address of the applicant at the time the application was
submitted. This has allowed us to better understand where, from a
geographic perspective, we get our applicants, which then corresponds
to a more accurate estimate for factor weights used to create our
availability statistics. This relatively small tweak took more than 5
hours to complete. The time and effort to set up computer systems,
create useful reports and continue to update systems and reporting as
needed will vary widely dependent upon the resources available at an
institution and the computer systems being used.
In total, our team generates and audits 10 reports each year that
contain the raw data used to create our AAP. Because of the volume of
data, it is inevitable that coding errors and other discrepancies will
exist. Attempts are made to find and correct any deficiencies in the
data. Because we use two systems, certain data from these systems must
be compared and validated against each other. For example, every
selected candidate in our ATS must match a corresponding record for a
hire, rehire, promotion, demotion or transfer record in our HRMS. Each
year there are a handful that do not match. A common reason for this
discrepancy is the person's name has changed from the time she or he
applied for the position and the date of hire. However, failure to
correct this prior to sending our data to our affirmative action vendor
will create an error when creating our plan. Consequently, we try to
find and correct this on the front end. These sorts of data errors are
unavoidable, whether due to human error or a process or computer system
issue.
We start our initial report/auditing process in late September each
year. This is to start identifying any potential errors or issues that
will need to be addressed and corrected. Our plan year runs from
October 1 to September 30. By the end of October all data regarding
filled positions, hires, promotions, separations and applicable pay
increases for the AAP plan year are complete and closed in both of our
computer systems, and the reports have been validated and are ready to
be sent to our affirmative action vendor. Annually, the auditing,
production and validation of our reports for our AAP take about 25 to
40 hours.
Our next step is to forward our raw data to our affirmative action
vendors. St. Jude has elected to enlist an outside vendor because the
skills, knowledge and expertise necessary to compile and run the
applicable statistical analyses are not something we have on our
current team. Without our outside vendor I can say with certainty the
task of completing an AAP each year would be beyond the ability of the
St. Jude team. Literally we could not do it ourselves.
Once our affirmative action vendor receives our data, the vendor
runs a series of validation processes. They compare our current year
data to previous year data and then ask us to validate any changes or
discrepancies. Both are inevitable and must be researched, potentially
corrected or explained. Over the years, as we learn of potential
weaknesses in our data collection and/or processes, we make adjustments
to correct for future years. This process of back-and-forth between St.
Jude and our affirmative action vendor lasts two to three months each
year with an effort of 10 to 20 hours per month by St. Jude employees.
Once all additional data issues are resolved, our affirmative
action vendor begins to compile the basic numbers and statistics for
the AAP. St. Jude then moves its focus to update other areas of the AAP
that must be reviewed each year. This includes the narrative, feeder
groups and factor weights. All of these are forwarded to our
affirmative action vendor for inclusion into the final AAP. This takes
about 5 to 10 hours to update each year and has remained constant over
the last three years. These duties are handled by the manager of
employment or me.
St. Jude's most recent AAP, for the dates of October 1, 2010, to
September 30, 2011, was more than 450 pages. We also have our
affirmative action vendor run the various statistical analyses that
would be generated by the OFCCP if we were audited. This report for the
most recent plan year is more than 250 pages. These final reports were
sent to us in February. Multiple employees spend significant time
reviewing the results and compiling questions and concerns. Typically,
about a month after we have received the AAP, we have a one to two hour
conference call with our affirmative action vendor to review our
concerns and for our affirmative action vendor to point out issues and
areas for improvement based upon the audit experiences of their other
clients. The time and effort to review and absorb the affirmative
action plans and statistical analysis varies upon the number of initial
issues found. For our most recent AAP, I have easily spent 30 hours
reviewing our plan and conducting trend analyses. Other St. Jude
employees also have spent a great deal of time on this process, and I
am not able to assess their efforts at this time.
Continual Improvement
After the conference call has concluded, the St. Jude team has a
final AAP, and we have identified areas of concern that warrant further
analysis. In our current plan, we have 21 placement goals, more than 15
potential issues around adverse impact and numerous potential
compensation issues. Placement goals are always reviewed with our
entire recruitment team. The placement goals are reviewed over time
along with sourcing data to determine if we are headed in the right
direction with our efforts or if we need to devise new strategies.
Any statistical indication of potential adverse impact with
selection, promotion and termination decisions are reviewed by the
employment team. Any statistical indication of potential compensation
issues are reviewed by the compensation team. Each group will devise
strategies, research the issues, and conduct additional analysis. All
of this effort and time varies widely each year dependent upon what
findings we have in our plan.
In addition, every year we focus on any new and proposed
regulations that may become effective in the future and potential areas
of weakness in which our processes and systems can be improved or may
need to be modified. Each step can be expensive and time-consuming even
for small improvements. For example, in the past two years, we have
created new recruitment and retention initiatives relating to U.S.
veterans returning from the Iraq and Afghanistan wars. We also had a
team research and implement a solution that allows for applicants with
disabilities to have new alternative methods (other than using our
Career Center website) to apply for open positions. Unfortunately,
sometimes the investment does not produce results desired, and we bear
the cost of wasted time and expense. For example, we also have
attempted to improve our system for collecting data elements relating
to the selection process in order to be able to respond fully to OFCCP
data requests and to analyze the data. Our current ATS is not designed
to provide the data elements we need. Consequently, we paid for and
implemented customizations to our ATS about 18 months ago, which we
thought would solve this problem. Unfortunately we were off target and
are still struggling to find a way to address those issues. The result
is that we must now reconsider the steps and expend additional time and
expense to make an incremental modification in order to be able to
respond to OFCCP data requests. All of these efforts require resources,
effort and dollars and vary widely from year to year.
Carrying out the processes and producing the affirmative action
plan required by OFCCP regulations is an extremely involved undertaking
and can be overwhelming. This is my third year of having full
responsibility for the AAP. The first year, given the volume of work
required to meet regulatory requirements, all I could manage to do was
just to absorb some of the data. The second year, the information and
how to address the issues started to solidify. In my third year, I
finally gained enough understanding of the data elements and statistics
to truly begin to manage many aspects of the AAP processes and to be
more active and able to interact effectively with our vendor.
Training
Every year, we expect our teams to participate in training relating
to OFCCP regulations. Our compensation and employment teams participate
in local conferences, seminars, webinars, list serves and other
activities to ensure that we are up-to-date in our current knowledge.
Many of our current compensation professionals and recruiters were not
at St. Jude for our last audit in 2009. Consequently, we are in the
process of scheduling our affirmative action vendor to conduct two to
three days of training for our team onsite. This will cost $4,000/day
plus travel expenses. The need to train new employees on the entire
process and keep other employees current in their knowledge is a
constant requirement. This will be in addition to an onsite session
with our vendor to revise our data collection, analysis and reporting
around factor weights, feeder groups and availability percents.
Audits
All of these efforts I have described are solely in preparation for
an audit and passing the audit. Over the course of my employment at St.
Jude, we have been audited three times. The last two audits happened in
quick succession, in 2007 and 2009. The audit in 2009 started and
concluded in that year and lasted about eight months. The length is
similar to previous audits. The time and effort expended in 2009 was
significant. Each month, our auditor had a number of questions and
concerns, which had to be researched and addressed. Before sending any
response, St. Jude discussed the questions and our response with our
affirmative action vendor and our legal counsel. This back-and-forth
process consumed about 20 to 40 hours of effort each month, depending
on the number of individuals required to research and compose the
response.
In June, we were notified that an onsite visit was required. We
were told that there were three job titles that had potential
discrimination with respect to compensation and that this was the
reason for our audit being elevated from what is referred to as a
``desk audit'' to a full audit with an onsite visit. Four St. Jude
employees spent weeks pulling applications, personnel files, resumes
and curriculum vitas to compile additional data that we felt would
explain the difference in the pay in these three job titles. Examples
of the type of information we collected and entered into a spreadsheet
for each employee in these job titles were years of directly related
job experience obtained before hire, level of degree, number of
degrees, area of specialty, years in job title (not necessarily the
same as tenure) and past performance reviews. This information was sent
to our affirmative action vendor who reran the applicable statistical
analyses. In all instances the statistical indication of potential
discrimination was eliminated by these relevant factors. Two other team
members focused their time on creating a presentation for the auditors
to explain the nature of work done at St. Jude and how we were
different than the typical sort of institution being audited by the
OFCCP.
General Concerns and Conclusion
St. Jude takes seriously our responsibility of guarding against
discrimination and when such allegations occur, we are committed to
dealing with these in a fair, swift and consistent manner. But the
current regulatory framework poses challenges for us to meet the goals
and standards set by the OFCCP. If St. Jude is not employing enough
minorities and women in a job category, it may appear that we are
discriminating; if we devise a strategy to eliminate this discrepancy,
but we are too successful in our efforts--essentially meaning now we
have hired too many women and minorities--then we may appear to be
engaged in reverse discrimination. The standards require that we have
the perfect mix of gender and racial groups for every job category. It
is an impossible standard to meet, not to mention that the data
elements used to conduct the analysis are crude and incomplete. If you
only look at race and gender as predictors of hiring, promotions,
terminations and pay, then you are actually ensuring that these are the
factors that create a statistical variance. The focus of audits, in my
professional opinion, become on smaller and smaller bits of data.
The OFCCP's focus on statistical analysis and forcing federal
contractors to collect more and more detailed data encourages
contractors to focus on data collection data storage, paperwork and
legal defense, not on the outreach and employee development that are
the essence of affirmative action. The statistical numbers generated in
an AAP do not paint a full and accurate picture. The factors that go
into making hiring, pay, promotion and termination decisions are
numerous and cannot always be quantified, much less collected in a
database. Two individuals may have bachelor's degrees--one from a
prestigious educational institution and the other from an institution
where the only requirement for entrance is to pay the fee and has
minimal standards for the individuals teaching the courses. I can
potentially capture in a database that both applicants have a degree,
but how do I quantify the value or worth of the educational experience
represented by each degree? The educational institutions are very
different form one another. Yet the OFCCP's analysis treats them
equally valuable and may accuse us of discrimination for hiring a
graduate of one educational institution over another. The entire list
of intangible factors that matter for my institution are many;
including number of publications, quality of publications, number of
citations, impact on field of study, number of grants, phone
interviews, face-to-face interviews, references, quality of references,
awards, etc. It is not possible to pull all of this into our analysis
for more than 30,000 applicants every year and more than 3,700
employees, as much of this information doesn't even exist in a
database. The burden of collecting, maintaining and analyzing this
information in the manner that is expected in an OFCCP audit is immense
and essentially requires the expense of outside experts. The
appropriate focus, and the only one that actually produces the type of
results that are supposed to be the OFCCP's goal, is on good faith
efforts to improve diversity in the applicant and promotion pools, and
creating fair selection processes
And every year the burdens continue to increase as new regulatory
requirements must be met. The new proposed regulation relating to
affirmative action for persons with disabilities is likely to increase
burdens significantly. The proposed target for disability hiring for
each job group is 7%. This will require a whole host of additional
responsibilities for employers. The OFCCP has estimated that an
employer can accomplish all of these new obligations in only 30 minutes
each year, but this is grossly underestimated in my opinion.
There are good things that come from the affirmative action
process. Employer outreach to under-employed groups, attention to
eliminating barriers to the employment of women, minorities, veterans
and disabled individuals and encouraging employers to assess their
efforts regularly are desirable and can be of real benefit. The real
question, though, is whether the OFCCP's methods and new regulations
actually promote those good things in an efficient and effective way or
simply create excessive burdens and fodder for litigation. As an
individual who has worked on OFCCP compliance diligently for a number
of years, the process is all ``stick'' and no ``carrot.'' It does not
feel as though St. Jude is rewarded for its good behavior or for making
the good faith efforts to combat problems that are larger than the
institution.
In conclusion, the efforts, resources and costs to collect the
data, create an AAP, do something with the information from the AAP,
stay current of new and pending regulations, ensure education for our
team and meet other compliance obligations and OFCCP requests create
significant burdens and barriers to efficiency and impose a level of
expense of time and money that is far in excess of what is necessary to
accomplish effective affirmative action. In other words, our team is
not focused on providing a fair and diverse workplace, but instead
surviving our next audit. Thank you.
______
Chairman Roe. Thank you for your testimony.
Ms. Graves?
STATEMENT OF FATIMA GOSS GRAVES, VICE PRESIDENT FOR EDUCATION
AND EMPLOYMENT, NATIONAL WOMEN'S LAW CENTER
Ms. Graves. Mr. Chairman, Ranking Member Kucinich, and
members of this subcommittee, thank you for this opportunity to
testify today on behalf of the National Women's Law Center. I
am pleased to speak today about the Office of Federal Contract
Compliance Programs because it is an office of great importance
to workers and to women in particular.
OFCCP's authority is not limited to merely responding to
complaints. It proactively addresses discrimination by bringing
systemic investigations, conducting compliance reviews, and
providing real guidance to contractors on affirmatively
promoting equal opportunity in the workplace.
The key role that OFCCP has played in improving economic
security for workers and their families cannot be overstated,
so though my testimony today is focused primarily on OFCCP's
important work on sex discrimination and employment, OFCCP's
historic and current role in addressing discrimination based on
race, national origin, religion, veteran status, and disability
has improved opportunities for a wide range of workers and it
would be impossible in a short statement to detail it all.
Through the years OFCCP has integrated workforces and taken
on large systemic problems. And as this nation recovers from
the deep recession that began in 2007 and women finally begin
to gain jobs that were lost even in the economic recovery,
OFCCP's current role could not be more important.
In fact, as was already noted, yesterday was Equal Pay Day,
the day in which women's wages finally catch up to the wages of
men from the prior year. According to the most recent data
available from the U.S. Census Bureau, the typical woman
working full time made only 77 percent of male full-time
workers' earnings. The wage gap is even larger for many women
of color, with African American women making only 62 cents and
Hispanic women only 54 cents for every dollar earned by white,
non-Hispanic men.
OFCCP has a tremendous responsibility and opportunity to
help address these and other barriers to workplace equality for
women, and its regulatory agenda, along with the reinvigorated
enforcement of Executive Order 11246, demonstrates that it
understands the urgency of equal employment opportunities for
women and their families.
To begin with, OFCCP has prioritized pay discrimination
enforcement, and I saw in a document released just yesterday by
the Equal Pay Enforcement Task Force that 20 percent of its
financial settlements are now in the area of pay
discrimination. This emphasis is especially important given the
difficulties workers face even in identifying pay
discrimination.
A recent settlement with AstraZeneca, a company with $2
billion in federal contracts, illustrates this point. After
OFCCP found gender-based pay disparities it agreed to pay
$250,000 to 124 current and former female employees who were
paid an average of $1,700 less than their male counterparts.
That is $1,700 lost for those women and their families.
Second, OFCCP has identified key areas for regulatory
improvement in the area of pay discrimination, proposing
measures that would allow its enforcement capabilities to be
enhanced and allowing it to conduct more accurate and strategic
reviews of contractor compensation practices. For example, it
has proposed the rescission of two guidance documents that
undermined OFCCP's ability to address pay discrimination. In
addition, last fall OFCCP took the initial steps towards
implementing an instrument specific to compensation data.
Since 2006, private employers have not been required to
systematically report gender-or race-identified wage data to
the federal government. OFCCP sought the input of stakeholders
on approaches for collecting this wage data and on ways to
limit the burden of data collection for employers.
And although women are typically paid less than men in the
same occupation, unequal access to high-paying jobs exacerbates
the persistent pay disparities between male and female workers,
which leads me to my third point. The recent settlement with
Tyson Fresh Meats for over $2 million in back pay wages,
interest, and benefits to more than 1,600 women who, despite
being qualified applicants, were rejected for positions at
Tyson's plants is therefore worth highlighting.
In addition to its work on issues for women, OFCCP has
importantly exercised the full range of its authority, focusing
not just on Executive Order 11246 but also its authority under
Section 503 of the Rehabilitation Act and VEVRAA. If anything,
updates to these laws are long overdue and are really crucial
in light of the extraordinary rates of unemployment experienced
by both veterans and individuals with disabilities.
I will just end by saying that there is no doubt that
enforcement priorities and policy proposals put forth by OFCCP
stand to improve worker protections, and in these times there
is no worker and really no family who can afford to have their
employment opportunities limited or their wages arbitrarily
lowered by discrimination. OFCCP's role is really essential.
Thank you.
[The statement of Ms. Graves follows:]
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Chairman Roe. Thank you.
Ms. Horvitz?
STATEMENT OF ALISSA HORVITZ, SHAREHOLDER,
LITTLER MENDELSON, P.C.
Ms. Horvitz. Mr. Chairman, Ranking Member Kucinich, and
members of the subcommittee, thank you for the opportunity to
speak with you today regarding the Department of Labor's Office
of Federal Contract Compliance Programs. The OFCCP is the
Department of Labor agency charged with ensuring that companies
receiving federal dollars in the form of contracts--not grants
or federal financial assistance--are practicing the two-fold
obligation: to engage in affirmative action by using good faith
efforts to increase the representation of qualified females,
minorities, individuals with disabilities, and veterans, in
candidate or applicant pools when opportunities become
available; and two, to ensure that when the company's decision-
makers have an opportunity to make a decision to hire, to
promote, to terminate, to set compensation, that they are doing
so fairly and in accordance with the principles of equal
employment opportunity.
OFCCP's mission is an important one and one that I would
not want to see eliminated.
I know that being a federal government contractor has
repeatedly been heralded as a privilege and not a right.
However, I also understand that many in the business
community--and especially the small business community--are
incredibly frustrated because being a government contractor
under the current OFCCP administration has become so
overwhelmingly burdensome under the existing regulatory
framework, and it is anticipated to become significantly and
substantially more burdensome if OFCCP's proposed regulations
are adopted without change.
Several of my clients have terminated their relationship
with the federal government when their contracts ended and
others are making the decision not to get into the relationship
with the government because of the immense startup costs,
burdens, hurdles, and compliance barriers that OFCCP has placed
in their path. I am thoroughly convinced that more companies
would be willing to contract with the government if at lower
contract dollar values they could be exempted from some of
these onerous provisions. It would drive up competition and it
would drive down taxpayer costs.
In my opinion, the dollar threshold to impose affirmative
action plan obligations on supply and service contractors
should be raised from the current threshold of a mere $50,000
to a tiered approach based on contract values starting at
$250,000. And the implementation time before OFCCP can select
the company for an audit should be extended from its current
120 days to 12 months, if not longer. I am advocating for audit
exemptions for companies that don't have contracts worth $1
million in the first year working with the government.
In addition, despite the administration's repeated
statement that it was going to be more transparent, the current
OFCCP administration has been decidedly nontransparent in very
critical respects. For example, in December 2010 OFCCP issued
Directive 293, which purported to set forth the circumstances
under which OFCCP would assert jurisdiction over various health
care providers and pharmaceutical suppliers. As of April 16,
2012, when these remarks were written, that directive was
nowhere to be found on OFCCP's Web site.
It also issued a directive in June of 2010 which sets forth
how the compliance officers are supposed to be evaluating pay
during routine compliance review, but that directive is not
available to contractors. How are companies who want to do the
right thing and be in compliance proactively supposed to do
that when OFCCP does not publish the directives it later
enforces and without advising government contractors how to
self-evaluate their own data?
In my experience, when some companies have gone to OFCCP's
district offices to attend compliance assistance seminars and
meetings and have asked, how is OFCCP evaluating compensation,
its district offices have not provided any answers. It seems
fundamentally contrary to notions of due process that companies
should be accused of violating OFCCP's regulations when the
agency doing the enforcing has failed to identify the
benchmarks and standards that companies should follow.
In my experience, OFCCP's conduct during compliance reviews
is one of the principal reasons why more companies do not want
to contract with the government. There is no current compliance
manual that defines how audits ought to be conducted, which has
led to OFCCP's compliance officers conducting these audits very
differently across its six regions. The most onerous aspect of
OFCCP's reviews is the scrutiny it gives to non-hired
applicants.
I have found that OFCCP will develop its own database, make
its own judgment about whether an applicant was qualified or
not, and then refuse to discuss its database. There is no room
for negotiation with the agency in these situations.
In short, OFCCP's approach to compensation is not
transparent, not consistent, not well-defined, and arbitrary.
The notion that OFCCP can develop a Web-based, uploadable tool
in a one-size-fits-all approach to compensation, in my opinion.
In conclusion, much has changed at OFCCP in the last
several years. I appreciate the agency's commitment to
achieving its mission. However, I have seen that the contractor
community is increasingly frustrated by the negative tenor of
these audits, the perception that compliance officers approach
audits with an eye towards finding violations, and citing
employers for noncompliance, and the increased willingness to
take contractors into enforcement if they are unwilling to
agree to the very harsh negotiation tactic that OFCCP employs
at the conclusion of these reviews.
We hope that there is a great willingness to be more
objective, less biased, and more conciliatory, especially when
dealing with employers that truly are trying to do the right
thing and be in compliance with the laws and regulations that
OFCCP enforces. I contend that an open and clear communication
of contractors' compliance obligations is a better use of
OFCCP's resources and will go further in achieving the agency's
mission.
Thank you very much.
[The statement of Ms. Horvitz follows:]
Prepared Statement of Alissa A. Horvitz, Esq., Shareholder,
Littler Mendelson, P.C.
Mr. Chairman and Members of the Subcommittee: Thank you for the
opportunity to speak with you today regarding the Department of Labor's
Office of Federal Contract Compliance Programs (OFCCP).
I am a shareholder in the Washington D.C. office of Littler
Mendelson, P.C. and one of the two co-chairs of our OFCCP Practice
Group. My practice is devoted to working with companies that choose to
do business with the federal government and to helping them to comply
with the equal opportunity laws that OFCCP enforces.
My testimony today is based on my own personal views and does not
reflect the views of Littler, its attorneys, or of any other
organization or client.
The OFCCP is the Department of Labor agency charged with ensuring
that companies receiving federal dollars in the form of contracts--not
grants or federal financial assistance--are practicing their two-fold
obligation:
(1) to engage in affirmative action by using good faith efforts to
increase the representation of qualified females, minorities,
individuals with disabilities and veterans in candidate or applicant
pools when opportunities become available; and
(2) to ensure that when the company's decision makers have an
opportunity to make a decision--to hire, to promote, to terminate, to
set compensation--that they are doing so fairly and in accordance with
the principles of equal employment opportunity.
OFCCP's mission is an important one, and one that I would not want
to see eliminated. It performs this mission by engaging in compliance
assistance and by conducting random audits known as compliance reviews.
OFCCP conducts roughly 4,000 compliance reviews per year.
The Dollar Threshold Should Be Raised
Different compliance obligations are triggered depending on the
value of the federal contract, but in my opinion, the dollar threshold
to impose these obligations is far too low for the burden placed on
companies.
When the aggregated value of all the company's federal contracts in
a 12-month period exceeds a mere $10,000, onerous record keeping and
subcontractor flow down obligations are triggered.
At a mere $50,000 from one single contract (not an aggregate), the
company must prepare two written affirmative action plans--one for
women and minorities, which plan includes extensive annual data
analyses, and a second plan for individuals with disabilities. Because
$50,000 is the dollar threshold that triggers written affirmative
action plans, contracts above this dollar threshold are subject to
audit.
With a single contract worth $100,000, the obligation to prepare an
affirmative action plan for veterans is triggered, and contractors must
also undertake the separate obligation to ensure that throughout the
organization, including establishments and facilities at which no
government contract work is performed, every job vacancy is listed with
requisite state and local job banks, unless the job is a temporary job
lasting 3 days or less, unless it is a senior management or high-level
executive position, or it will be filled with an internal candidate. It
does not matter whether the state and local workforce agencies are
amply funded, or not, or are able to refer the employer any qualified
candidates, or not.
I know that being a federal government contractor has repeatedly
been heralded as a privilege and not a right. However, I also
understand that many in the business community (and especially the
small business community) are incredibly frustrated because being a
government contractor under the current OFCCP administration has become
so overwhelmingly burdensome under the existing regulatory framework,
and is anticipated to become significantly and substantially more
burdensome if OFCCP's proposed regulations are adopted without change.
Several of my clients have terminated their relationship with the
federal government when their contracts ended and others are making the
decision not to get into the relationship with the government because
of the immense start-up costs, burdens, hurdles and compliance barriers
that OFCCP has placed in their path. I am thoroughly convinced that
more companies would be willing to contract with the government if, at
lower contract dollar values, they could be exempted from these onerous
provisions. It would drive up competition and drive down taxpayer
costs. In my opinion, the dollar threshold to impose affirmative action
plan obligations should be raised from the current threshold of $50,000
to a tiered approach based on contract value starting at $250,000, and
the implementation time before OFCCP can select the company for an
audit should be extended from its current 120 days to 12 months, if not
longer.
I do not believe that raising the dollar threshold, which triggers
the heavy administrative burdens, will cause otherwise law-abiding
companies, already subject to other federal and state nondiscrimination
laws, to begin engaging in intentional discrimination if their
contracts are below that value.
I am advocating for audit exemptions for companies that do not have
contracts worth at least $1,000,000 in the first year working with the
government. If the contract is worth $500,000, the company could be
audited after two years. If the contract is worth $250,000, it could be
audited after completing its third year. Congress needs to give smaller
and medium businesses that are new to these obligations adequate time
to evaluate the profit margin from these contracts and to take steps to
comply with OFCCP's obligations.
In addition, despite the Administration's repeated statements that
it was going to be more transparent, the current OFCCP administration
has been decidedly non-transparent in critical aspects. For example, on
December 16, 2010, OFCCP issued Directive 293, which purported to set
forth the circumstances under which OFCCP would assert jurisdiction
over various health care providers and pharmaceutical suppliers. As of
April 16, 2012, when these remarks were written, that directive still
was nowhere to be found on OFCCP's website. OFCCP's recent enforcement
settlement with Federal Express was posted on OFCCP's media page the
same day as the settlement was announced, but significant and
desperately-needed guidance to the health care industry is available
only if you obtain a copy of the directive through other means.
OFCCP also issued Directive 289 on June 4, 2010, which sets forth
how compliance officers are supposed to be evaluating pay during
routine compliance reviews, but this directive is not available to
contractors, either. Contractors are expected to evaluate employees'
pay annually to ensure that there are no gender, race, or ethnicity-
based disparities, but OFCCP has not published any information or
guidance that sets forth how it is going to evaluate compensation
during audits, and yet from June 2010 through at least the beginning of
this year, OFCCP was using this new protocol in audits.
How are companies who want to do the right thing and be in
compliance, proactively, supposed to do that when OFCCP does not
publish the directives it later enforces and without advising
government contractors how to self-evaluate their own data? In my
experience, when some companies have gone to OFCCP's district offices
to attend compliance assistance seminars and meetings, and have asked
how OFCCP is evaluating compensation, OFCCP's district offices have not
provided an answer. It seems fundamentally contrary to notions of due
process that companies could be accused of violating OFCCP's
regulations when the Agency doing the enforcing has failed to identify
the benchmarks and standards that companies should follow.
Compliance Burdens
Once the value of all the company's contracts over the course of 12
months exceeds $10,000, there are two compliance burdens that begin:
(1) the obligation to notify all subcontractors and vendors that
they, too, may have affirmative action obligations if the work they
perform is necessary to the performance of a government contract (41
CFR Section 60-1.4(a)(7)); and
(2) the extraordinary record keeping obligations set forth in
section 60-1.12.
For example, if one small research lab in a large hospital enters
into a research contract with an agency of the federal government, then
the entire hospital is required to ensure that for each and every
position it seeks to fill--both internally and externally--it must
implement a way to track every single expression of interest in
employment that it receives.
If a recruiter does not look at the expression of
interest, the company must develop a way to default that application to
``not considered.''
If the recruiter looks at the resume or electronic
application, the recruiter must evaluate the candidate's credentials to
determine if the candidate is qualified or not.
If the candidate is not qualified, the company must still
maintain a record of that application for two years from the making of
the record or the hiring decision, whichever is later.
If the company is a small business, and the value of its
contract is more than $10,000 but less than $150,000, it is obligated
to keep those records for only one year.
For each qualified candidate, the company must be able to
identify every stage of the hiring process that the candidate made it
through, and for every qualified candidate who is not hired, the burden
is on the employer to have documentation that explains why the
qualified candidate was not hired.
For each qualified candidate, the employer must solicit
the applicant's race and gender. If, over time, a sufficient percentage
of candidates voluntarily elects not to disclose that information,
OFCCP might substitute labor market availability for actual data in an
effort to find that the contractor is engaging in discrimination
against females or a racial subgroup.
The contractor must develop a mechanism to solicit race
and gender, then ensure that the actual decision makers do not have
access to that information, but cross reference the hidden information
back to the candidate's application every year for purposes of
evaluating whether managers--who did not have access to race and gender
information--nonetheless rejected a disproportionate percentage of
applicants based on race or gender, even though they did not have
access to that information unless and until the candidate was
interviewed.
If the contractor does have records of who applied, OFCCP
might go to the state workforce agency and locate expressions of
interest that the agency collected and deem them to be potential
victims of hiring discrimination, even though there is no proof that
the employer actually considered those individuals for employment.
At the $50,000 level, and as part of the written affirmative action
plan for women and minorities, employers are expected to perform three
sets of data analyses:
(1) a comparison of employment against availability,
(2) analyses of hiring rates, promotion rates and termination rates
to ensure that those rates do not differ significantly for men compared
to women, or any one racial sub group against all other racial
subgroups, and
(3) a compensation analysis.
Under the goal-setting compliance obligation, for any grouping of
titles in the workforce (which grouping the employer has discretion in
developing), if the contractor's employment of females and minorities
is less than reasonably expected, the employer is obligated to set a
hiring goal. There are no fines or penalties for not meeting the goal,
but there is an obligation on the part of the employer to identify the
goal in its written affirmative action plan under the ``Identification
of Problem Areas'' section of the plan, and there is an obligation for
the employer to develop an ``action oriented program'' for each group
with a goal, designed to improve the representation of qualified
females or minorities when opportunities arise in the future. If the
employer hires externally for such vacant positions, initiatives might
include the use of new recruiting sources, outreach to organizations
that help to place qualified females and minorities, and the like. If
the employer tends to promote from within, then ensuring that women and
minorities are trained and mentored could be examples of action-
oriented programs for those job groups.
Still at the $50,000 level, government contractors also have
obligations under the regulations that implement Section 503 of the
Rehabilitation Act of 1973, which deals with individuals with
disabilities. Employers are required to include the EO Clause in each
of their covered contracts or subcontracts. Employers must make
available the entire written affirmative action program to any employee
or applicant for employment upon request.
Employers must also include the following sections and legal
commitments in a written affirmative action program under Section 503:
1. Prepare an equal opportunity policy statement that indicates the
Chief Executive Officer's commitment and that it is updated annually.
2. Review personnel processes to ensure they provide for careful
and systematic consideration of the job qualifications of applicants
and employees with disabilities.
3. Establish a schedule for the periodic review of all physical and
mental job qualification standards to ensure that qualification
standards are job related and do not screen out otherwise qualified
disabled applicants and employees.
4. Make reasonable accommodation to the physical and mental
limitations of otherwise qualified individuals with disabilities unless
the contractor can demonstrate that the accommodation would impose an
undue hardship on the operation of its business.
5. Develop and implement procedures to ensure that its employees
are not harassed because of any disability.
6. Undertake appropriate outreach and positive recruitment
activities to recruit qualified individuals with disabilities.
7. Ensure adequate internal support from supervisory and management
personnel to encourage them to take the actions necessary to meet the
contractor's affirmative action obligations, and disseminate its policy
internally.
8. Design and implement an audit and reporting system that measures
the effectiveness of the contractor's affirmative action program.
9. Designate an official to be assigned responsibility for
implementing the contractor's affirmative action program.
10. Train all personnel involved in the recruitment, screening,
selection, promotion, evaluation, and discipline systems to ensure that
the contractor's commitments are implemented.
At $100,000, the Veterans obligations begin. They largely overlap
with the Section 503 regulations, but the additional obligation to list
every nonexecutive, non-temporary, and non-internal position with the
employment service delivery systems is a tremendous burden for small
businesses who, after subtracting expenses from revenue, often cannot
afford a third-party vendor costing tens of thousands of dollars
annually, who can scrape the employer's website for new vacancies and
ensure that they are posted properly. It is also an unreasonable burden
for employers seeking highly skilled professionals, to be forced to use
these one-stop employment service delivery systems because the
candidates being referred are not likely to be qualified. A university
looking for a Ph.D. assistant professor candidate in physics still has
to list that assistant professor job with the unemployment office or it
is a violation of the Veterans' regulations that OFCCP enforces. A
hospital looking for a Neurosurgeon has to list that vacancy with the
one-stop employment service delivery system.
In sum, these burdens are currently imposed on all companies doing
business with the government at very low thresholds. Profits from low-
dollar contracts do not begin to cover the costs of ensuring that each
one of these obligations is met within 120 days of signing the
contract, or the in case of the mandatory job listings, on the date
that the contract is signed.
Compliance Reviews
In my experience OFCCP's conduct during compliance reviews is one
of the principal reasons why more companies do not want to contract
with the government. There is no current compliance manual that defines
how audits ought to be conducted, which has led to OFCCP's compliance
officers conducting these audits very differently across OFCCP's six
regions. For almost two years now, OFCCP has made representations to
the contractor community that it is revising and republishing the
manual.
The most onerous aspect of OFCCP's compliance reviews is the
scrutiny it gives to non-hired applicants.
Using twelve (12) months of data from the employer's HRIS or
payroll system, the employer is expected to know for each vacancy it
filled, who was the qualified applicant pool. The employer is required
to evaluate hiring rates of women against men, and every racial group
against all other racial groups that comprise 2% of the labor force or
2% of the employer's workforce. If any of these applicant and hire
equations reveals statistically significant differences in hiring
rates, the OFCCP compliance officers are trained to follow up with the
employer and obtain a substantial amount of underlying data, including
all resumes, applications, interview notes, and the like to evaluate
whether the employer's decisions were based on legitimate,
nondiscriminatory reasons. The burden is on the employer to have all
this documentation going back two years (unless it is a small business
with fewer than 150 employees) because if it does not, OFCCP will
presume that the information would have been unfavorable to the
employer. It will launch burdensome information requests for every
application that the employer included on its applicant flow log, and
it will come onsite to the employer's premises to interview HR
managers, recruiters, hiring managers, and hired employees. In my
experience, in its search for anecdotal evidence, it will also
interview rejected applicants.
Many employers have had to invest in expensive electronic applicant
tracking systems in order to maintain this information. To make it
easier for recruiters to fill positions and record the reasons why an
applicant might not be the most qualified person for the job, many of
these applicant tracking systems use disposition codes--a code to
indicate why the applicant was rejected.
OFCCP affords employer applicant flow log disposition codes little
to no deference in audits. If the employer's human resource managers
coded applications as ``not qualified,'' ``unstable work history,''
``lacks relevant experience,'' OFCCP compliance officers will likely
attempt to substitute their judgment for the employer's judgment and
include those rejected candidates in OFCCP's remedies if the employer
hired only one person whose resume or application appeared to include
``unstable work history'' or lacking in relevant experience. Again, in
my experience, a number of OFCCP compliance officers equate even the
littlest inconsistency in an employer's hiring process with intentional
discrimination.
When the hiring rates for women are greater than the hiring rates
for men, or the hiring rates for minorities are greater than the hiring
rate for nonminorities, OFCCP will still pursue information requests if
those hiring rates are statistically significantly different. It
apparently does not matter whether the employer had a goal for women or
minorities, and tried to increase the percentage of qualified females
or minorities in the candidate pools. If the employer's hiring rates
are not proportional based on the applicant population, OFCCP will
follow up in audits. I have found that there is most definitely a
perception among the equal employment opportunity and diversity
professionals charged with compliance that there is a no-win situation
with many of OFCCP's compliance officers. These auditors are apparently
approaching audits as if the employer is presumed to have discriminated
and presumed to have lost records.
If the employer fails to maintain complete and accurate records
that will explain the nonselection of all qualified candidates, OFCCP
will seek back pay remedies on behalf of the non-hired applicants who
appear on paper to be just as qualified as the hired employees. When
OFCCP is pursuing an adverse impact in hiring case, the applicant flow
data base is very important. It forms the basis for the OFCCP's
argument as to who applied, who was qualified, who wasn't interviewed,
who wasn't hired. In too many recent cases, I have found that OFCCP
will develop its own database, make its own judgment about whether an
applicant was qualified or not, and refuse to discuss the database. The
applicant flow database--which forms the basis for the OFCCP's
assertion of monetary relief--is ``off the table.'' There is no room
for negotiation with the Agency in these situations. If the employer
``accepts'' the database, it is responsible for locating all non-hired
applicants and affording them monetary back pay relief. Every non-hired
applicant has to get added to the employer's payroll for purposes of
paying back pay and withholding taxes, and then once the checks are
cut, the alleged victims of discrimination are removed from the payroll
so that they are not inadvertently counted in future affirmative action
plan reports.
When an employer with incomplete records is accused of violating
the Executive Order and OFCCP's regulations, and OFCCP seeks to
negotiate a conciliation agreement, I have found the employer is facing
an Agency that will not negotiate a reasonable settlement offer. In my
experience, OFCCP begins settlement negotiations under the presumption
that the non-hired candidates could never have found other, alternative
employment, even at the minimum wage, until much later in the
negotiating process. Opening offers seem artificially inflated. Indeed,
OFCCP in the current administration frequently asks the employer to
begin negotiations by coming up with the amount it is willing to pay;
OFCCP does not open negotiations by valuing the non-hired applicants'
alleged loss and adjusting for median tenure or wage mitigation.
OFCCP audits can proceed quickly, some closing in less than 30
days. The more common scenario, however, is that an OFCCP audit can
last more than a year. Our law firm has at least four audits that are
approximately five years old. OFCCP currently is seeking regulatory
authority to expand the temporal scope of a compliance review. Right
now, OFCCP can review two years' of data looking back from the date
that the employer receives its audit letter. OFCCP is proposing to
increase the scope of the audit so that the audits can stay open
indefinitely. I understand that many in the contractor community have
strongly opposed that provision in the proposed veterans and 503
regulations, and Congress ought to step in and ensure that audits
cannot cover a data period more than the current two-year period going
back from the date the audit letter is received.
Compensation
The other issue that has frustrated government contractors in my
experience is OFCCP's position on compensation. Although OFCCP has no
standards or guidance to employers about how it will evaluate
compensation in audits, OFCCP compliance officers have been focusing on
every job title where there is a 2% or $2000 difference and requiring
the contractor to justify the difference. If the employer wants to
justify the difference based on prior relevant experience, it needs to
produce a resume or application supporting that difference. If the
employer wants to justify the difference based on performance, it needs
to have performance evaluations.
Because of how OFCCP enforces its unpublished, stealth directive on
compensation, labor market demands and economic factors are not taken
into consideration by compliance officers pursuing information
requests.
Most employers present their compensation data in an audit by job
title because in most workplaces, individuals who are placed into the
same title often (but not always) are doing similar work. At the first
phase of the audit, when an employer is required to provide summary
compensation, the OFCCP compliance officer looks to see if there are
any job titles with 2% or $2000 differences. If just one title has this
2% or $2000 difference, OFCCP has sent out a form letter seeking
additional information from the government contractor for every job
title in the establishment being audited. It does not matter whether
the job has one single incumbent, or all incumbents in the job title
are all the same race or the same gender. OFCCP demands that the
employer produce the additional information on everyone, and if the
employer does not have the information stored in an easily retrievable
human resource information system or payroll system, the OFCCP will
come on site, demand the production of employee personnel files, and it
will build this data base itself.
This focus on whether there are current differences in average pay,
however, has no basis in Title VII compensation law. Under Title VII,
as amended by the Lilly Ledbetter Fair Pay Act of 2009, a plaintiff in
litigation must be able to point to a decision that the employer made
that was discriminatory. OFCCP, despite its stated intention to follow
Title VII principles when it investigates compensation, is not doing
that. OFCCP is focused on whether there are disparities or differences
in current pay. If there are differences in pay, then I have found that
OFCCP immediately shifts the burden of producing a nondiscriminatory
reason back onto the employer--for every job in the workplace with a 2%
or $2000 difference. Employers with tens of thousands of employees in
one AAP are spending months trying to justify current compensation,
pulling thousands of paper and electronic files, looking at resumes and
applications, refreshing their recollections as to why pay was
initially set as it was decades ago. Employers that have acquired new
companies with very different salary structures are not given
recognition for how long legacy differences in pay are allowed to
exist.
What OFCCP compliance officers ought to be focusing on are employer
decisions made during the audit time frame, typically a 12-month period
preceding the audit letter's receipt. When the government contractor
had an opportunity to hire someone, or promote someone, or make salary
increases, did it do so fairly and in accordance with equal employment
principles?
In addition, during an onsite visit, OFCCP interviews managers
responsible for setting compensation and employees to build a record of
everything that the employees do that are the same. OFCCP compliance
officers typically do not focus on parts of the job that are different,
and the employer may not have an attorney or management representative
in employee interviews to ensure that the compliance officer's
questions are fair, objective and balanced. In short, OFCCP's approach
to compensation is not transparent, not consistent, not well-defined,
and arbitrary in audits. The notion that OFCCP can develop some type of
web-based, data uploadable tool in a one-size-fits-all approach is the
wrong approach, in my opinion. It is not going to enable OFCCP to hone
in on compensation decisions that were made unlawfully based on race,
ethnicity, or gender, and it is going to place unreasonable
documentation and record keeping burdens on already-thinned human
resource and equal opportunity staff, who are trying to comply with
these laws and regulations.
Reinstate the Ombudsman
During prior OFCCP administrations, there was an Ombudsman--someone
at OFCCP whose job it was to field concerns about inconsistent
positions among the OFCCP's compliance officers and district officers
and enable these types of concerns to be dealt with efficiently. In my
view, it would be a positive development if the Ombudsman position
could be reinstated.
Separate Facility Exemptions
Finally, I question why it takes approximately two years for OFCCP
to evaluate an employer petition for a separate facility exemption. In
2002, OFCCP developed a process for companies (particularly retail
companies) to apply for an exemption for those facilities not connected
with a government contract. The idea behind the exemption was that if a
clothing retailer, which had hundreds if not thousands, of stores in
malls and shopping centers all across the nation, was also selling
clothes to the military, for example, but only out of its corporate
office or its distribution center, OFCCP could be petitioned to require
the corporate office and the distribution center to have to comply with
all these rules and regulations, but OFCCP would grant the employer an
exemption for all the small retail stores in the malls and shopping
centers. It seemed to be a fair and reasonable approach to all these
compliance burdens. I do not know how many pending separate facility
exemption petitions are currently pending at OFCCP, but I do not
understand why it should take upwards of 19 months, which is very
burdensome for employers waiting for a response.
Functional Affirmative Action Plans (FAAPs)
OFCCP's regulations explain that an employer is expected to have a
separate affirmative action plan for each facility with 50 or more
employees. In some larger workplaces, the notion of having an AAP tied
to a physical building is artificial. Workforces are spread out among
several different physical buildings, but they report to the same
executive. Splitting up the workforce into separate physical
establishments makes it harder for that executive to appreciate whether
his or her workforce has any employment goals for women and minorities,
or whether when that executive's managers and directors made hiring,
promotion, and termination decisions, those decisions were made fairly.
Rather, I believe it makes more sense for the employer to be able
to prepare an affirmative action plan based on a functional
organizational unit, like a division or department. OFCCP developed a
process known as the Functional Affirmative Action Plan (FAAP)
directive that allows an employer to petition OFCCP for permission to
prepare its plans on a functional basis. In 2011, however, OFCCP
revised the 2002 FAAP directive and required that all employers that
previously had been granted permission to prepare plans on a functional
basis had to re-apply for permission to prepare plans that way. A term
or condition of the 2011 re-approval process is that the contractor
agrees when audited to provide all applicant flow, hires, promotions,
terminations, and compensation data in Microsoft Excel or Access, not
pdf. There is no such obligation under other current regulations.
In addition, if the contractor wants to renew the FAAP agreement,
at least two FAAP facilities will have to undergo a compliance
evaluation during the three-year term of the FAAP approval. Thus, under
OFCCP's new FAAP approval process, companies that wish to continue
preparing AAPs on a functional basis are guaranteed to undergo at least
two audits. If the company has only four functional agreements, it is
100% guaranteed to have 50% of its plans audited every three years, if
it wants to continue doing business with the federal government and
prepare its plans in a manner that makes more sense. The new directive
comes across as harsh and punitive. It is clearly a game-changer for
many companies that thought preparing plans on a functional basis was a
better way to track and report employment data.
In conclusion, much has changed at OFCCP in the last several years.
I appreciate the Agency's commitment to achieving its mission. However,
I have seen that the contractor community is increasingly frustrated by
the negative tenor of compliance reviews, the perception that
compliance officers approach audits with an eye towards finding a
violation and citing the employer for noncompliance, and the increased
willingness to take contractors into enforcement if they are unwilling
to agree to the often harsh negotiation tactics that OFCCP may employ
at the conclusion of these reviews. We hope there is a greater
willingness to be more objective, less biased, and more conciliatory,
especially when dealing with employers that truly are trying to do the
right thing and be in compliance with the laws and regulations that
OFCCP enforces. I contend that an open and clear communication of
contractors' compliance obligations is a better use of OFCCP's
resources and will go further in achieving the Agency's mission.
______
Chairman Roe. Thank all the witnesses.
Mr. Kucinich?
Mr. Kucinich. Thank you very much, Mr. Chairman.
As I am listening to the testimony one of the things that
strikes me is that we have got men and women out in the field
right now with their lives on the line--veterans that will be
returning home. They put their lives on the line, they want--
and there is a very high rate of unemployment among returning
veterans--but can't find jobs.
The best shot they have is when you have requirements that
if somebody has a federal contract, if anyone wants to go to
work with them that the veteran is going to have some
protection in making sure that the law is going to be enforced
with respect--with respect to returning veterans, and if the
regulations that are being proposed right now are not put in
force we are looking at veterans having really less
opportunities. I want to point out that in April 2011 the OFCCP
issued a proposal to strengthen the nondiscrimination and
affirmative action protections for veterans, and it proposed
its regulations in response to the employment obstacles that
veterans are facing when they return from Iraq and Afghanistan.
We have a national unemployment rate of about 8.2 or 8.3
percent; the unemployment rate for veterans serving on active
duty at any time after September 2001 was 12.1 percent in 2011,
and 26 percent of recently returning veterans reported having a
service-connected disability in August 2011.
Excuse me, but federal contractors wouldn't even have the
ability to participate in these programs if you didn't have
veterans who are protecting the rights of all of us. And it
doesn't seem like it would be asking much when these men and
women come home to just say, ``Well, you have got to jump
through a few extra hoops to make sure that somebody is giving
a fair them opportunity.'' Now, this is one of the reasons why
the Paralyzed Veterans of America are supporting not just
annual hiring bench, but that you have them supporting the
proposal of the OFCCP.
But you have opponents like the Chamber of Commerce. I
mean, what a bunch of phonies at the Chamber of Commerce. You
know, they are the first to wave the flag when our men and
women are over there, but when they come back they are the ones
that are fighting the efforts to try to make sure that
reporting requirements are there to insist that these men and
women get hired. So please----
Now, Mr. Norris--how much time we got left--in your
testimony you say that this proposed legislation would be
detrimental to business. However, you have companies, including
Bayer, Highmark, Amerigroup, American Airlines, and Walgreens--
they have recognized the benefits of hiring individuals with
disabilities and they have written in support of this
regulation.
And, Mr. Chairman, without objection I would like to submit
these letters for the record from these corporations.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
------
Chairman Roe. Without objection, so ordered.
Mr. Kucinich. I appreciate that, Mr. Chairman.
And, you know, some, in fact, have set hiring goals for
people with disabilities that exceed the 7 percent established
in the regulations. Now, where you point to concerns these
companies see benefits. In one letter of support Bayer says,
quote--``Although it will be an adjustment for Bayer and other
companies to be more proactive around collecting data that can
track the incidence of disability within our workforce and
within our applicant pool, the reality is that this data will
help us set goals and monitor performance internally in a more
systemic way than we are currently able to do.'' So businesses
are saying this benefits.
Now, Ms. Graves, can you implement this--can implementing
this regulation help address the employment gap for people with
disabilities?
Ms. Graves. I think there is no doubt that it would make a
real difference. As you point out, the employment gap is almost
two times for--between people with disabilities and without
disabilities.
And what history has shown is that this won't happen on its
own, that contractors and other employers, that some will not
engage in the steps that are required to improve access to
high-quality jobs for people with disabilities that are so
needed. And so much has changed since Section 503 was passed in
the 1970s that it is really time that Congress' mission really
be fulfilled on this point.
Mr. Kucinich. Thank you very much, Mr. Chairman. Yield
back.
Chairman Roe. I thank the gentleman for yielding.
Mr. Rokita?
Mr. Rokita. Thank you, Mr. Chairman.
I would like to also thank the witnesses for their
participation today. My first question deals with the recently
issued proposal to require contractors to ask job applicants to
self-identify as an individual with a disability.
And I missed--admittedly missed some of your testimony, Mr.
Norris, and if you talked about this I apologize, and I will go
to you with this question first. Do you believe this proposal
is consistent with the requirements of the ADA or not, and
where do you see litigation, if any, going?
Mr. Norris. This proposal is very inconsistent with the
underlying philosophy of the Americans with Disabilities Act,
which is to minimize one's disability, to keep it a private
matter except in instances where it is necessary to be
discussed in the context of a--of affording a reasonable
accommodation. What this proposal will do will be to feature
one's disability, will be to ask people to identify their
disabilities and their veteran status not once, not twice, but
sometimes three times on an annual basis for purposes of
establishing numerical targets that are not based upon labor
market data.
So this proposal is inconsistent in the sense that it is
featuring someone's disability and it raises the uncomfortable
prospect that companies will be able to satisfy OFCCP's
regulations only at the expense of violating the Americans with
Disabilities Act.
Mr. Rokita. Yes, it seems to me, and coming from a guy who
used to run a couple of agencies back in the state of Indiana,
it is a classic example of the right hand not knowing or not--
more offensively, not caring what the other hand is doing, and
asking business, the engine of our economy, to try to interpret
all that.
Mr. Norris. That is exactly right.
Mr. Rokita. Very unfair.
Ms. Bottenfield, thank you for your testimony, as well. I
was amazed to hear some of your figures--450 pages for your
manual and another 250 pages for what?
Ms. Bottenfield. For the analysis that the OFCCP would run
if we were audited, so we do that proactively every year.
Mr. Rokita. And then without the audit you are running
about $60,000 a year in costs?
Ms. Bottenfield. It will vary depending each year, but that
is what we plan to spend this year.
Mr. Rokita. And then your last audit, which was part of the
roving audit scheme that is going on, you didn't--it wasn't a
complaint-based audit that caused this, right?
Ms. Bottenfield. No.
Mr. Rokita. Right. That was $40,000, and you had--that took
8 months?
Ms. Bottenfield. Yes.
Mr. Rokita. Now, they sat in your office for 8 months, or
how did all this work?
Ms. Bottenfield. Lot of phone calls, e-mailing back and
forth for a number of months, so we would get requests for data
or requests to justify something we had been doing, so a lot of
back and forth----
Mr. Rokita. Was the data readily available or did it cause
you to have to redo I.T. programs, or go off on searches, or
how easy was that to compile, in all honesty?
Ms. Bottenfield. Well, when they decided to come on-site,
and we had three job titles where they said we had
discrimination with respect to pay, we had to pull a number of
personnel files to collect data that wasn't originally in the
analysis that we felt were the drivers and the explanation for
that pay. So, for example, that would be years of experience
prior to coming to St. Jude, so we would have to get that from
the application; the degree that the candidate or the employee
had, and is it meeting the job requirement or in excess of that
job requirement.
Mr. Rokita. And all this was part of the 400 man hours----
Ms. Bottenfield. Yes.
Mr. Rokita [continuing]. Person hours, excuse me.
We are all aware from your testimony and just general
knowledge about the mission of St. Jude's. Given that St. Jude
is a non-for-profit and funding is largely from donations--
majority is still from donations, is that right?
Ms. Bottenfield. Yes.
Mr. Rokita. Okay. Do you believe these OFCCP compliance
resources spent largely on paperwork and recordkeeping could be
used elsewhere within the hospital--400 person hours?
Ms. Bottenfield. As a nonprofit, any dollar not spent on
administration is always going to be made available for
research or patient care. But I could also argue that we could
spend these dollars more effectively to truly reach the goals
of affirmative action. Instead of focusing on pieces of paper
and documenting that our team could do real community outreach,
as other business partners in the city of Memphis have done,
to, for example, reach out to our city schools and get children
interested in science, technology, engineering, and math, so
that they are eligible to get the college educations that are
going to make them----
Mr. Rokita. What an excellent, positive idea. If you do
that or if you were to do that would you get any credit, so to
speak, or any kind of recognition in your audit from OFCCP?
Ms. Bottenfield. I have got to have the documentation of
that----
Mr. Rokita. Mr. Norris, do you--oh, so--but they would give
you----
Ms. Bottenfield. They would give me some credit, but then
it is going to go back to that they are going to come back and
say, ``Well, it looks like you have got discrimination issues
with respect to this compensation. That is all really great but
deal with this bit of minutia,'' and that is what we would have
to defend. There are so many potential areas that you have to
defend, you might have these great efforts, and they are great,
and they say, ``We applaud you but now we are focused on this
small bit of information and we want you to defend that.''
Mr. Rokita. Understood. Thanks. I am out of time.
Yield----
Chairman Roe. Gentleman's time is expired.
Mr. Kildee?
Mr. Kildee. Thank you, Mr. Chairman.
Mr. Norris, you spoke of the costs which OFCCP imposes on
business. Fire prevention costs money but prevents negative
consequences. How do we determine whether the costs of
enforcing OFCCCP are reasonable or unreasonable?
OFCCP may cost business, but women waiting until April 17th
to catch up with men in their compensation certainly cost women
money. How do we justify that? Everything costs some money.
But we do know that women--and this is--the data has been
sifted through many, many times--really have to wait till April
17 to catch up with men, and they are being cost money. How do
you justify that and how do you get your figures for the cost
to business?
Mr. Norris. Well, there is no question that there is costs
attendant to compliance with these regulations. The question is
whether or not the resources that are required to comply with
the regulations are being used in the most effective manner.
And I will use your example of pay as a good example. One
of the most beneficial things that OFCCP did back in 2006 was
to eliminate prior confusion as to how companies should monitor
their compensation practices for pay equity, and they came up
with some legal and statistical standards that their auditors
would use in their compliance evaluations. With that clear
guidance companies were able to take that guidance and apply it
to their own practices to ensure that their pay systems were
equitable and that women, minorities, everybody was being paid
equitably.
That is an effective use of resources. Requiring some of
the burdensome paperwork requirements of this new regulation is
not an effective use of resources.
Mr. Kildee. Why do you say it is not an effective--what
waste is taking place there?
Mr. Norris. Well, for the very reason that Ms. Bottenfield
just said, that their resources that could be used for
outreach, that could be used to try and match veterans,
individuals with disabilities with jobs, instead are being
directed internally to comply with all of the paperwork
requirements so that in the event that there is a compliance
evaluation the company can document that they went through each
and every step that OFCCP prescribes must be done. Companies
should be left to develop their own resources in light of their
own business needs and be evaluated on the bottom line, not on
the very prescriptive steps to get there.
Mr. Kildee. But knowledge is power, and you have to have
knowledge of what--how a business is operating, and it is
extremely important to try to get information to empower the
agency to carry out the effect of the laws and regulations
which the federal government puts in place. You know, my dad
worked at the auto plant in Flint, Michigan from 1916 to 1960,
and unless federal government had moved in there the number of
people who were physically injured would have escalated.
So there has to be some cost to protect people, whether it
be their wages, their health. Has to be some cost, and
knowledge is helpful in determining how we can protect those
people.
Mr. Norris. Well, and I think knowledge is a two-way
street. I think it is helpful for OFCCP to clearly articulate
what its requirements are going to be for contractors, and
contractors then have to take that information and translate it
into programs that are in compliance.
Mr. Kildee. I thank you, Mr. Norris.
Thank you. I yield back. I yield back, Mr. Chairman.
Chairman Roe. Mr. Tierney?
Mr. Tierney. Thank you, Mr. Chairman.
So, Ms. Horvitz, when you say your clients choose to do
business with the federal government who do they choose not to
do business with in making that choice?
Ms. Horvitz. I guess I am unclear about your question. Who
do they not choose to do business----
Mr. Tierney. I mean, so who do they pass up in order to do
business with the federal government if they choose to do
business with the federal government?
Ms. Horvitz. They are going to do business with other
private companies that don't impose these onerous obligations.
Mr. Tierney. Okay. And nobody is stopping them from doing
that, right?
Ms. Horvitz. No. No one is stopping them, but the problem
really is that many companies get pulled into this arena
without their knowledge of it. You could have a company----
Mr. Tierney. Seriously?
Ms. Horvitz. Absolutely. You could have a company that has
a major customer. They are supplying $50,000 of their product
to another company. It is a great customer relationship.
And that other company could decide that it wants to get
into the business of doing business with the federal
government. That other company is a direct federal contractor,
and now my client who was simply producing widgets for a
customer all of a sudden is a federal government subcontractor,
and all of OFCCP's obligations have been pulled down at the
subcontractor level and it never signed onto that. OFCCP has
jurisdiction when what my client is producing is necessary to
the performance of that prime contract.
Mr. Tierney. Because now they are providing matters--or
materials to a company that is doing direct contracting with
the government and because----
Ms. Horvitz. And they did so for a specific cost, and now
all of a sudden the costs of preparing the affirmative action
plan, and engaging the vendors, and hiring the statisticians,
and doing all the outreach, and complying with the mandatory
listings is all put on them. It is a very expensive
proposition----
Mr. Tierney. Which they will reflect in their cost, I
assume, right, when----
Ms. Horvitz. Excuse me?
Mr. Tierney. Which they will reflect in the amount that
they charge?
Ms. Horvitz. To the American taxpayer, that is right,
because the company doing business with the government is going
to have to pay more because the subcontractor is going to have
to spend more costs.
Mr. Tierney. Do you think it is important to have a law
that requires that people not be able to discriminate on race?
Ms. Horvitz. Absolutely.
Mr. Tierney. On color?
Ms. Horvitz. Absolutely.
Mr. Tierney. On religion?
Ms. Horvitz. Yes.
Mr. Tierney. On national origin?
Ms. Horvitz. Yes.
Mr. Tierney. On gender?
Ms. Horvitz. Yes.
Mr. Tierney. On disability?
Ms. Horvitz. Yes.
Mr. Tierney. On veteran status?
Ms. Horvitz. Yes. I am for the mission of OFCCP and I would
not want to see it eliminated.
Mr. Tierney. So basically your argument is on matter of
degree.
Ms. Horvitz. It is a matter of what has happened in this
administration to businesses.
Mr. Tierney. Well, what has primarily happened is they have
proposed some matters and they put out an advanced notice of
rulemaking, right?
Ms. Horvitz. Well, yes, in part, and our----
Mr. Tierney. Well, that is primarily what the beef is here,
right? There has been advanced notice of proposed rulemaking on
a couple of issues--on compensation and on disability. And on
those matters when they put out advanced notice of rulemaking
you get to give your complaints to them.
Ms. Horvitz. Correct.
Mr. Tierney. Which you have done, I presume?
Ms. Horvitz. Yes.
Mr. Tierney. As forcefully as you have done it here today?
Ms. Horvitz. Hopefully.
Mr. Tierney. And you are awaiting some decision?
Ms. Horvitz. Yes.
Mr. Tierney. Then I think we are a little early for this
hearing, Mr. Chairman.
So what is the beef? You have a process. You have been
given an opportunity to make your cases. I have had no
indication from you that they are ignoring you and that they
won't consider them.
That is what we have the advanced notice of rulemaking for;
that is what we have the rulemaking process for. We all agree
with you. We don't want discrimination against any of these
matters, particularly women, who I think Ms. Graves made a
particular case of. They have been discriminated in pay
compensation.
Lilly Ledbetter apparently is forgotten by some of our
colleagues here. That was not too long ago that we had to take
action on that matter.
Nobody wants to see people with disabilities discriminated
against. We have an affirmative obligation to the agency that
is responsible for making sure that that doesn't happen. They
are doing the best that they can to make sure that they do that
fairly. They have asked for your advice and counsel.
In fact, they put out that notice because they wanted you
to give them ideas of how it would affect your business, how it
might be done better, how it might be less intrusive, and how
you could both agree with the goal of making sure there is no
discrimination in the way that is most efficient for you. And
you have submitted your suggestions for that.
Ms. Horvitz. I have. I really hope they take our
suggestions into account if they finalize the rule.
Mr. Tierney. Well, let's wait and see.
But, Mr. Chairman, until they do that maybe we could have
fewer preemptive hearings and let the agency do its job and the
companies make their case, and then if something goes awry we
can come in and take the committee's time. I yield back. Thank
you.
Chairman Roe. Mr. Scott?
Mr. Scott. Thank you, Mr. Chairman.
Ms. Graves, can you explain how you can guarantee
nondiscrimination in employment if you don't have regulations?
Ms. Graves. I think you have hit the nail on the head. It
is one thing to have a ban on discrimination or a promise for
equal opportunity, but you need enforcement.
And I just want to give one example where it really matters
around pay discrimination. You know, there is a huge veil of
secrecy around pay discrimination, and many employers have
either firm policies or unwritten policies that you can't even
talk about your own wages.
So you mentioned--Congressman Tierney mentioned Lilly
Ledbetter. She worked for almost 20 years without knowing that
she was experiencing pay discrimination.
So without the OFCCP's ability to do a systemic evaluation
of pay practices wage disparities and wage discrimination could
go on for many, many years without individuals in the workplace
being able to do anything about it.
Mr. Scott. And what about if discrimination is going on in
employment--say racial discrimination--how would anybody know
it if you don't keep the records that are being requested?
Ms. Graves. That is precisely right. I mean, the complaints
that have been heard today have essentially been about the
requirement for record-keeping and the requirement to do
outreach. And if a company is taking really great steps to do
the sort of outreach and they are ensuring that they aren't
discriminating, you know, I am not sure what OFCCP is supposed
to do to evaluate the sort of disparities if they don't have
records, and I am not sure how a company is supposed to take
the sort of equal opportunity steps if it doesn't do outreach.
Mr. Scott. Well, the numbers alone are not sufficient to
prove discrimination. Is that right?
Ms. Graves. That is right.
Mr. Scott. And so if there is discrimination going on and
you have got obviously disparate numbers, how would you show--
Well,if they are not discriminating and have disparate numbers
they would have to show that they at least tried--good faith
effort. Is that right?
Ms. Graves. You know, there is no hard quota or anything
like that, to be sure, but I mean, I just want to say, in terms
of the record-keeping that is required, it gives a company the
opportunity to show, ``This is what we have been doing. These
are the steps that we have taken and here is our response to
your concerns.''
So, you know, an audit may take an additional piece of
time, but if an employer is undertaking the type of self-
evaluation that it is required to take in some areas and it is
tracking its steps it will be able to demonstrate, ``Well, you
know what, you know, here is why there are significant
disparities and here is what we do.'' And OFCCP could give some
additional advice there about some additional things they could
do to increase their talent pool.
Mr. Scott. You have indicated that a lot of times people
don't know they are being discriminated against. If we had to
wait for people to bring individual cases of discrimination
what would be wrong with that?
Ms. Graves. We would never get at the problem. I mean,
that, you know--the EOC's charges have increased, particularly
during this economic downturn, but I will tell you that that is
just a drop in the bucket in terms of the type of
discrimination that is out there because when you are having to
wait for an individual to undertake the burden of filing a
discrimination charge, risking retaliation, standing alone in
that type of instance, that takes a particular type of person.
Most discrimination is going to go unchecked and unaddressed
without the sort of systemic enforcement that OFCCP can do.
Mr. Scott. And if we don't do this in government contracts
what chance would there be that the culture would change?
Ms. Graves. It just wouldn't happen. And I think in
government contracts in particular, the privilege of being a
government contractor, the role of the government contractor
really needs to reflect the society's nondiscriminational
norms, and it is a process and OFCCP's proposals, I believe,
are a way to move forward with that process.
Mr. Scott. Thank you, Mr. Chairman.
Chairman Roe. Thank the gentleman for yielding.
Dr. Holt?
Mr. Holt. Thank you. Thank you, Mr. Chairman.
I thank the witnesses.
Ms. Horvitz, do you agree that there are instances of those
things that you want to prevent--instances of employment
discrimination based on sex, based on disability, based on
returning veteran status, and so forth?
Ms. Horvitz. I suppose there probably are some instances
out there.
Mr. Holt. Okay.
Mr. Norris, you said at one point--kind of my paraphrase--
what you are really asking is to let companies do their work,
or leave them to their own devices to solve these problems. How
would you rephrase what I just----
Mr. Norris. That is partially correct.
Mr. Holt. Okay.
Mr. Norris. What I am saying is the enforcement agency has
responsibilities to enforce the laws that it administers. It
has to provide standards by which it is going to do that--
legally, statistically defensible standards. And once those
standards are issued then contractors have an obligation to try
to exercise good faith efforts to try and accomplish those
obligations.
We are not saying that there should not be any oversight of
a company's affirmative action and nondiscrimination
requirements. What we are saying is that those are actually
shared goals that federal contractors and OFCCP have and the
contractor community and the OFCCP should be working together
to devise methods by which they can accomplish that objective
of matching people with jobs.
Mr. Holt. So, Ms. Bottenfield, I think I heard you say--not
a--I won't go back to read the record--have the record read--
but it was essentially, if we do a good job in outreach, if you
have some sort of outreach program for science--STEM education,
or whatever, OFCCP would then say, ``But what about this
instance of discrimination?''
Ms. Bottenfield. Yes.
Mr. Holt. I have----
Ms. Bottenfield. Yes. That is the analysis that is
considered--it is called adverse----
Mr. Holt. Now, I am sure St. Jude's Hospital is very well
intentioned, but don't you think there are institutions where
there are, indeed, instances of discrimination?
Ms. Bottenfield. I am sure there are.
Mr. Holt. Well, you know, I am trying to get a sense of
just how widespread this is. I mean, we hear, for example, that
women are earning 77 cents on the dollar compared to men. We
have some state breakdowns of median earnings for full-time,
year-round workers by sex and state, and, you know, it is--I
see the lowest here appears to be Wyoming at 63.8 percent; the
highest is the District of Columbia at 91.4 percent.
It would be really good if we had good--really good data
about how much discrimination there is.
Ms. Goss Graves, is there anything different about the
District of Columbia, why that number might be higher?
Ms. Graves. You know, it is hard to say. Part of it could
be the role of the federal government as an employer in the----
Mr. Holt. Yes. Let me offer that as a suggestion. The
contractors here and the employers here in--are more the
federal government than they are in North Dakota, Wyoming, the
other states, where women evidently are not doing quite so
well.
So, you know, I understand my colleague, Mr. Tierney's,
frustration with holding this hearing prematurely. I would
argue a little differently, that I think it is not that the
hearing is premature, but the witnesses' testimony is directed
toward the wrong thing.
It shouldn't be, how can we get the government out of our
hair? But it should be directed toward, what do we need to
understand? How will we get the data that we need? What record-
keeping must be done so that we have the data so that we can
deal with what are very real problems and actually solve those
problems?
There is very real discrimination out there, and relying on
the good faith of good employers evidently, looking over
decades of data, is not good enough. It requires record-
keeping. Otherwise we won't know what is going on. We won't
know how bad the problem is or how we are going to solve it.
That is the role that we have given to the OFCCP and I hope
that that will be the focus of this and any future hearings.
Thank you.
Chairman Roe. I thank the gentleman for yielding.
I will now ask some questions and submit for the record--
and I don't for 1 minute think the Obama White House is doing
this on purpose, it is just what it is. But the 2011 annual
report of White House staff, female employees earned a median
salary of $60,000, which is about 18 percent less than the
median salary for male employees.
Now, I don't think they intentionally did that but that is
a fact, and so I would like to submit that to the record and
also submit to the record for the pay discrimination, and
obviously discrimination of any kind is wrong. I want to bring
up something from my 30-something years as an employer and just
ask your advice about this. We had a decision on the Florida
hospital case where the OFCCP's issuance of the Directive 293
and the National Defense Authorization Act that was passed this
year contained a provision clarifying that health care
providers operating as a part of TRICARE network may not be
considered a federal contractor or subcontractor, and they did
that.
So that means if I take--in my medical practice, if I take
a TRICARE patient maybe I now have to comply with all these
directives that OFCCP did. Here is the problem I have: I am an
OB/GYN doctor. I have never had anybody in my office as an
employee in 35 years but a female. We have half of our medical
practice now are female; my office manager has always been a
female. Am I, in that office, doing reverse discrimination?
And because of this, now, if I am--if this applies to me
the simplest thing for me to do as a practitioner is to get out
of TRICARE, quit seeing people who have served this nation, as
I have--I am the--I think I am the only Vietnam veteran sitting
here--and what should I do?
And the second question I have--and I would like Ms.
Horvitz, let me give you a chance to answer that. Am I involved
in reverse discrimination?
Ms. Horvitz. No, Mr. Chairman. I don't think you are
involved in reverse discrimination when you have hired
qualified physicians who happen to be female if they are the
most qualified people who applied for that opportunity.
The problem that contractors have, however, is that when
they offer opportunities they are going to place an
advertisement. Chances are you are going to field a pool of
candidates and the most important thing that you have to keep
in mind is you have to hire the most qualified person for the
job.
But a federal government contractor has to do something
different. We are supposed to collect information on race and
gender and then hide it from the decision-makers, go ahead and
make our decision, and then marry all the data to make sure
that the information we collected but didn't use as part of our
decision-making reveals at the end of the day that we didn't
discriminate in employment. That is a very difficult burden to
impose on even small businesses--small medical practices who
may be part of larger institutions.
Chairman Roe. And, Ms. Bottenfield, one of the concerns I
have also is that the 450 pages and however much money you--and
then 250 pages of your auditor, and then--and what was the
result of your 2009 audit? What happened after all that year,
almost, that went by?
Ms. Bottenfield. We had a full-day on-site visit from our
auditors. It was expected that that would continue forth over a
number of weeks but when we presented our data and actually did
a tour of our facilities and explained how St. Jude was really
different than the sorts of organizations they typically audit,
which are logistics firms and construction firms in the Memphis
City area, they ultimately took our data and said, ``Thank you,
goodbye.''
Chairman Roe. Well, thank goodness, because all of that
effort you put in did not go to taking care of childhood
cancers and research and the people down there that have done
it. It took away from that, and that bothers me.
The other thing that bothered me was I think you put in
your testimony you were paying $4,000-plus per day for
training, plus expenses for people to come in, because you do
have turnover in your----
Ms. Bottenfield. Yes.
Chairman Roe [continuing]. In your shop. Is that correct?
Ms. Bottenfield. Yes. We feel it is imperative that they
are trained and understand the regulations they need to comply
with.
Chairman Roe. There needs to be. And just one other entry
into the record, and I am sure Mr. Kucinich did not realize
this about the Chamber, but in March of 2011 the Chamber
launched a program called Hiring our Heroes, which is a
nationwide effort to hire veterans like myself and military
spouses for employment, and they had 100--in the last 12 months
140 hiring fairs in 47 states and the District and have placed
over 10,000 veterans in jobs. So that was a good thing.
I think what we are trying to do is no one here is saying,
``Do you want discrimination?'' That is like saying, ``Do you
still beat your wife?'' Nobody wants that. And that is a loaded
question.
What you want is you want a situation where employers can
meet these criteria and not be buried in paperwork or not, like
me, just get out of TRICARE--create a situation where you just
fold your hands up and say, ``We are done.'' Is that
reasonable, what I have just said?
Mr. Norris?
Mr. Norris. Yes it is. It is absolutely reasonable.
Ms. Graves. And, Chairman Roe, may I respond to the TRICARE
question, too?
Chairman Roe. Yes. Ms. Graves?
Ms. Graves. I just wanted to point out in the example you
gave that the OFCCP affirmative action obligations and many of
the record-keeping pieces that we have discussed here today
don't apply to all contractors, it is contractors with
employee--50 or more employees and contracts of $50,000 or
more----
Chairman Roe. I have 50 employees in my office; I have 350.
And also, I don't know whether we have that--I know we do that
in Medicare and they are trying--this OFCCP is trying to get
into Medicare Part D, Medicare Part C, and so it is a slippery
slope for me to be on to know if I am compliant.
Ms. Graves. And if I could just raise one more point, it is
my understanding that the Florida hospital litigation is on--is
continuing as there will be an assessment about what this new
law means.
Chairman Roe. Thank you.
I see no other witnesses--I mean no other congressmen here,
so I will ask Mr. Kucinich if he has any closing--and I want to
thank the panel, too--and if you have any closing remarks?
Mr. Kucinich. I do, Mr. Chairman, and I want to thank you
very much for calling this hearing. I note your remarks about
the Chamber of Commerce. That is good. They are encouraging
veterans to be hired, and all they have to do is go a step
further and say, let's make sure that it is done in a way the
veterans' rights are never going to be compromised, that there
are a lot of veterans out there that need jobs. Let's follow
equal employment opportunity laws, and in addition to that to
look at the proposals that are under review by this
subcommittee today.
One of the things that, as I am hearing this discussion,
that concerns me is there seems to be an undercurrent on the
part of some of the people who are testifying that promotes
this type of thinking: How can we get the federal government
out of federal contracting requirements? You can't. It is a
privilege, as Ms. Graves said, to have a federal contract.
No business is owed a federal contract. We are not talking
about private businesses dealing with each other here; we are
talking about private businesses dealing with the federal
government. Federal government has every right to put these
requirements on here for the protection of minorities, women,
veterans, protecting against any gender-based discrimination.
So thank you, Ms. Graves, for pointing out that it is a
privilege to have a federal contract, and I think that if we
are going to--those businesses who are having difficulty
dealing with the federal government should keep in mind that it
is a privilege to have a federal contract.
Thank you, Mr. Chairman.
Chairman Roe. I thank Mr. Kucinich.
And I want to thank the panel. I read all of your testimony
end to end--a little tedious for some of it for a doctor to be
reading it, but I did read it all. It was very informative, and
what I believe, obviously, the goal should be is to reduce and
eliminate discrimination as--if it is possible in this country
to do that without the onerous obligations of the federal
government to stymie business. I think that is what--it is a
delicate balance, and it is hard to do.
And I look at my 30-plus years in my business that I have
run and trying to jump through all these hoops. One of the
things that you may not be doing, as Ms. Horvitz pointed out is
that you may be a subcontractor and may not be involved at all
but be involved by not--through no action of your own. I think
we need to clarify those things for subcontractors so that they
are not there.
And certainly when you look at a--and I cannot say enough
good things about St. Jude's Hospital because you have changed
so many lives of people that I have seen--babies I have
delivered that have these terrible childhood cancers, and
anything that gets in the way of your mission should be--and
fortunately, the OFCCP saw that when they go down there, that
is 3,700 employees, that you are making a good faith effort in
providing a nondiscriminatory environment and the highest
quality of care in the world for our citizens and for people
around the world.
So I think that is what we are trying to do here and that
is what the mission of this would be. I thank you all for being
here and I thank both sides for this, and I think we will
continue this discussion.
Meeting adjourned.
[Additional submissions of Chairman Roe follow:]
April 17, 2012.
Hon. Phil Roe, Chairman; Hon. Robert Andrews, Ranking Member,
Subcommittee on Health, Employment, Labor and Pensions, Committee on
Education and the Workforce, 2181 Rayburn House Office
Building, U.S. House of Representatives, Washington, DC 20515
Dear Chairman Roe and Ranking Member Andrews: On behalf of
Associated Builders and Contractors (ABC), a national association with
74 chapters representing 22,000 merit shop construction and
construction-related firms, I am writing in regard to the subcommittee
hearing, ``Reviewing the Impact of the Office of Federal Contract
Compliance Programs' (OFCCP) Regulatory and Enforcement Actions.''
ABC supports OFCCP's mission to address employment discrimination
against individuals with disabilities. However, ABC has serious
concerns regarding a recent proposed rulemaking designed to update
existing requirements for federal contractors and subcontractors under
Section 503 of the Rehabilitation Act of 1973. OFCCP itself has
referred to the proposal as a ``sea change.''
The December 2011 notice of proposed rulemaking (NPRM), drafted
under questionable statutory authority, mandates arbitrary quotas
(referred to by the agency as ``goals'') for the hiring of disabled
workers by all contractors with a government contract or subcontract of
$50,000 or more and 50 or more employees. To date, OFCCP has failed to
compile any meaningful evidence to indicate federal contractors are
currently failing to meet their affirmative action and
nondiscrimination obligations toward the disabled community. In
addition, OFCCP minimized, and in some instances ignored, the
regulatory burdens the NRPM would impose on contractors, particularly
small businesses--more than 20,000 of which currently contract with the
federal government.
ABC is deeply concerned about each of the failures identified
above.However, our greatest concern is that OFCCP failed to analyze or
justify the draconian impact of its proposal on the construction
industry, and has not acknowledged or explained the inconsistencies
between the NPRM and OFCCP's longstanding differentiation of the
construction industry from other industries with regard to affirmative
action requirements. Our industry has long been exempted from being
forced to engage in job group utilization analyses, data collection and
reporting--all of which will be required if the proposal is finalized.
ABC has requested OFCCP withdraw its proposal immediately so the
agency can address the many concerns outlined in this letter (and
described in greater detail in our formal comments, which are
attached). It is our hope that this hearing will also highlight these
concerns.
We commend the subcommittee for its attention to this issue, and
look forward to its continued oversight of this important rulemaking.
Geoffrey Burr,
Vice President, Federal Affairs.
via electronic submission
February 21, 2012.
Patricia A. Shiu, Director,
Office of Federal Contract Compliance Programs, U.S. Department of
Labor, 200 Constitution Avenue, NW, Room C-3325 Washington, DC
20210.
Debra A. Carr, Director,
Division of Policy, Planning and Program Development, Office of Federal
Contract Compliance Programs, U.S. Department of Labor, 200
Constitution Avenue, NW, Room C-3325 Washington, DC 20210.
Re: Affirmative Action and Nondiscrimination Obligations of Contractors
and Subcontractors Regarding Individuals with Disabilities (RIN
1250--AA02)
Dear Directors Shiu and Carr: Associated Builders and Contractors,
Inc. (ABC) submits the following comments in response to the above-
referenced notice of proposed rulemaking (NPRM), published in the
Federal Register by the U.S. Department of Labor's Office of Federal
Contract Compliance Programs (OFCCP, or Department) on Dec. 9, 2011, at
76 Fed. Reg. 77056.
About Associated Builders and Contractors, Inc.
ABC is a national construction industry trade association
representing 22,000 contractors, subcontractors, materials suppliers
and construction-related firms within a network of 74 chapters
throughout the United States. ABC member contractors employ workers
whose training and experience span all of the more than 20 skilled
trades that comprise the construction industry. Moreover, the vast
majority of our contractor members are classified as small businesses.
ABC's membership is bound by a shared commitment to the merit shop
philosophy. This philosophy is based on the principles of
nondiscrimination due to labor affiliation and the awarding of
construction contracts through open, competitive bidding based on
safety, quality and value. This process assures taxpayers and consumers
will receive the most for their construction dollar.
ABC is submitting these comments to make the Department aware of
the adverse impact the NPRM will have on the construction industry and
to request immediate withdrawal or modification of the proposal to
maintain consistency with the Department's historic recognition of the
unique employment features of the construction industry. Also, ABC
seconds the comments of other organizations that represent government
contractors generally, and small business contractors in particular,
whose burdens the Department has failed to acknowledge or properly
analyze.
ABC's Comments in Response to OFCCP's NPRM
ABC strongly supports OFCCP's longstanding regulatory goal of
affirmative action and nondiscrimination regarding individuals with
disabilities under Section 503 of the Rehabilitation Act. Of equal
importance, however, is the longstanding recognition by the Department
that the construction industry is different in many ways from other
industries that contract with the government. ABC is concerned the NPRM
fails to recognize the uniquely burdensome impact of the proposed data
collection and reporting requirements on the construction industry and
fails to acknowledge or explain the inconsistency between the proposed
rule and OFCCP's longstanding differentiation of the construction
industry from other industries with regard to affirmative action
requirements.
As stated in OFCCP's own guide with regard to Executive Order
11246, ``in order to take into account the fluid and temporary nature
of the construction workforce, OFCCP does not require construction
contractors to develop written affirmative action programs.'' \1\ In
particular, unlike the requirements of job group utilization analyses
the Department has required of other industries under Executive Order
11246 for minorities and women, OFCCP has long recognized the
collection and reporting of utilization data in such detail would be a
wasteful and futile exercise for construction contractors, whose
workforces ebb and flow much more frequently than other types of
government contractors. Therefore, in lieu of extensive data analysis
and reporting, OFCCP for decades has maintained a special set of
regulations for the construction industry enumerating more practical
good faith steps that covered construction contractors must take in
order to increase their employment of minorities and women in the
skilled trades.\2\
Unlike Executive Order 11246, construction contractors have not
been specifically exempted from the provisions of Section 503 of the
Rehabilitation Act of 1973, as implemented in 41 C.F.R. Part 60-741.
Until now, this did not place an onerous burden on construction
contractors because the provisions of Section 503 and OFCCP's
implementing regulations did not mirror the job group utilization
analyses and related data collection efforts required under Executive
Order 11246 for non-construction contractors. Instead, prior to the
NPRM, OFCCP regulations under Section 503 focused exclusively on good
faith affirmative action efforts similar in scope to those already
applicable to the construction industry under Executive Order 11246.
Thus, no requirement exists under the current Section 503 regulations
for any contractor to undertake burdensome job group utilization
analyses of disabled workers, to document or report the reasonable
accommodations offered to such workers, or to meet any arbitrarily
selected target goal for the number of disabled workers hired into the
workplace.
All of that is about to change under the Department's NPRM.
Notwithstanding the absence of any statutory authority under Section
503 itself, OFCCP is proposing to mandate arbitrary target quotas for
the hiring of disabled workers by all contractors with a government
contract or subcontract of $50,000 or more and 50 or more employees--a
threshold that will impact more than 20,000 small businesses in all
industries that currently contract with the federal government. In the
Department's own words, this is a ``sea change'' in the Department's
affirmative action regulations.\3\
Not only has OFCCP failed to identify any statutory authorization
for its radical new approach, but the Department has failed to compile
any statistical or other evidence that federal contractors are failing
to meet their affirmative action obligations towards the disabled
community.\4\ Instead, the preamble to the NPRM relies exclusively on
statistics purporting to show higher unemployment of workers with
disabilities in the workforce as a whole, without any assessment of the
employment rate of disabled vs. nondisabled workers employed by
government contractors.\5\ In short, OFCCP has collected no data on
which to support the premise that government contractors' affirmative
action efforts are failing to meet their objectives. Under such
circumstances, no justification exists for the Department's drastic
changes to the affirmative action requirements of federal contractors
generally.
Even worse, OFCCP has ignored or unfairly minimized the regulatory
burdens that the NRPM will impose on government contractors,
particularly small business contractors. The Department has thereby
acted in a manner inconsistent with the congressional mandate that
federal agencies should encourage and give preference to small and
disadvantaged businesses in procurement of government contracts, as set
forth in the Small Business Act.\6\
ABC is deeply concerned about each of the failures identified above
as they appear in the NPRM. But ABC's greatest concern is that OFCCP
has apparently failed to notice, and has certainly failed to analyze or
justify, the draconian impact of its proposal on the construction
industry. In particular, as further discussed below, the NPRM gives no
attention at all to the historical reasons why the construction
industry has been exempted from being forced to engage in the sort of
wasteful and fruitless job group utilization analysis and other data
collection and reporting that will now be required if the proposal is
finalized.
1. The NPRM Ignores the Unique Aspects of Construction
Industry Employment, Contradicting Decades of
Regulation by OFCCP
As noted above, OFCCP has for many decades recognized the unique
employment challenges facing construction contractors, resulting in a
separate set of regulations governing construction contractors'
affirmative action requirements.\7\ While these unique regulations have
traditionally applied only in the context of minorities and women, as
opposed to disabled workers, the reasons underlying the longstanding
differentiation between construction contractors and other industries
apply with even greater force to the proposal. Specifically, the fluid
and temporary nature of employment in the construction industry renders
most forms of job category utilization analysis futile and wasteful.
Given that OFCCP has repeatedly recognized this fact with regard to the
employment of minorities and women, it makes no sense for the
Department to suddenly require construction contractors to engage in
the much more difficult analysis of the utilization of disabled
workers. It is obvious the analysis called for in the NPRM will be much
more difficult for employment of disabled workers than minorities and
women because of the need to make numerous difficult judgments
regarding reasonable accommodations, undue hardships and direct threats
to safety, none of which are necessary in analyzing the employment of
minorities and women. The Department gives no attention to these
proposed new burdens on the construction industry in the proposal.
The Department should also be aware that the construction industry
is one of the most physically demanding and hazardous industries, which
renders many of the assumptions underlying the NPRM irrelevant and
incorrect. For example, in support of the need for strengthening the
affirmative action rules, the Department cites the fact that employment
rate disparities continue to persist in the entire workforce ``despite
years of technological advancements that have made it possible to apply
for and perform many jobs from remote locations, and to read, write,
and communicate in an abundance of ways.'' \8\ Yet the overwhelming
majority of construction work cannot be performed anywhere except the
jobsite, so the ability to perform other types of jobs from remote
locations is of little or no value to the construction industry. Even
the ability to read, write and communicate through technological
advances, while somewhat more helpful to construction workers, is often
not the primary consideration in determining whether a disabled
individual is able to perform the essential elements of a construction
job requiring physical and hazardous labor, with or without reasonable
accommodation.
The point is not that construction contractors should be entitled
to shirk their duty to take affirmative steps to recruit and
accommodate disabled workers when such accommodations do not create
undue hardships or direct threats to health and safety on construction
sites. Rather, the point is that a ``one size fits all industries''
rule, such as the one being proposed by the Department, is arbitrary
and capricious because it fails to take into account the very real
differences between industries and the unique challenges confronting
construction contractors in particular. Again, there has been no
showing by the Department that construction contractors have
significantly failed to meet the affirmative action requirements of
Section 503 on government projects that would call for imposition of
the additional burdens by the NPRM.
Chief among the additional burdens, as noted above, is the
requirement that all government contractors above a minimal size
(contracts of $50,000 or more and 50 or more employees) must perform a
job group utilization analysis for disabled workers comparable to, and
even more extensive than, the analysis required for non-construction
industries regarding minorities and women. What is most striking about
the NPRM in this regard is the assumption that all industries already
routinely engage in such analysis.\9,10\ In other words, the drafters
of the proposal appear to have forgotten that construction contractors
have never been required to perform such analyses as to minorities and
women under Executive Order 11246, so the newly proposed analysis will
be a drastic and burdensome change.
The 7 percent target goal arbitrarily adopted for all industries by
the Department is flawed on many levels; but limiting our focus to
construction, OFCCP erroneously assumes contractors will use their
``existing job groups'' for analysis, a shortcut not available to
construction contractors who have not previously been required to
conduct such analyses under Executive Order 11246. Even worse is the 2
percent sub-goal that the Department is considering. OFCCP offers no
consideration as to how construction contractors can safely target
workers, except in rare circumstances, who suffer from total deafness,
blindness, paralysis, epilepsy and severe intellectual disability, to
name only a few of the severe disabilities referenced in the NPRM.
Again, a one-size-fits-all approach makes no sense for the construction
industry and must be withdrawn as arbitrary and capricious.
2. OFCCP's Initial Analysis Under the Regulatory
Flexibility Act (RFA) is Deeply Flawed
The RFA requires all agencies conducting rulemakings to ``prepare
and make available for public comment an initial regulatory flexibility
analysis,'' which ``shall describe the impact of the proposed rule on
small entities.'' \11\ As part of its analysis, the agency is required
to consider other significant alternatives to the rule that could
affect the impact on small entities, and explain any rejection of such
alternatives in its final regulatory flexibility analysis.\12\ The sole
relevant exception to this requirement arises if ``the head of the
agency certifies that the rule will not, if promulgated, have a
significant economic impact on a substantial number of small
entities.'' \13\
The agency must provide a factual basis for its certification, the
determination of which is subject to judicial review for correctness
under a non-deferential standard.\14\
Reports from ABC members and our knowledge of the construction
industry lead ABC to respectfully submit that OFCCP has significantly
understated the costs of compliance with its proposal. The time for
compliance with the paperwork burdens (repeatedly cited by the
Department as taking anywhere from five minutes to 30 minutes) has been
understated by several decimal points. In other words, ABC is reliably
informed by its members that the time spent on training managers;
interacting with applicants about the self-identification process;
analyzing, documenting, and reporting on the number of disabled
individuals recruited, hired and laid off; and the time spent
analyzing, documenting, and reporting the reasonable accommodations,
undue hardships and direct threats to safety are more likely to take
hundreds, if not thousands, of hours. Most small contractors will be
unable to perform the analysis required at all, and will no doubt
instead be compelled to turn to outside consultants at significant
additional costs in order to comply. OFCCP's erroneous cost estimates
must be entirely reconsidered and the NPRM withdrawn for further study
in order to determine the unique impact it will have on the
construction industry and on small federal contractors generally.
For each of the reasons set forth above and in the comments of
other organizations representing construction contractors and small
businesses generally, the NPRM should be withdrawn, or significantly
modified and republished for public comment.
Thank you for the opportunity to submit comments on this matter.
endnotes
\1\ OFCCP, Technical Assistance Guide for Federal Construction
Contractors, May 2009.
\2\ See 41 C.F.R. 60-4.
\3\ Bureau of National Affairs (BNA), OFCCP Proposal Includes
`Utilization' Goal for Contractors Employing Disabled Workers, Dec. 8,
2011.
\4\ 76 Fed. Reg. at 77074: ``DOL is not aware of any existing data
that show the number or percentage of federal contractor employees with
disabilities. * * *''
\5\ 76 Fed. Reg. at 77069.
\6\ 15 U.S.C. 637(d).
\7\ 41 C.F.R. Part 60-4.
\8\ 76 Fed. Reg. at 77056.
\9\ 76 Fed. Reg. at 77067: ``Although measurements specific to
disability are new requirements of this proposed regulation, the non-
disability-specific data, such as the total number of applicants, the
total number of job openings, and the number of jobs filled is
information that contractors are already required to maintain pursuant
to Executive Order 11246. * * *''
\10\ See also 76 Fed. Reg. at 77075: ``OFCCP expects that
contractors will conduct this assessment in conjunction with the
correlating assessments required under [Executive Order] 11246. * * *''
\11\ 5 U.S.C. Sec. 603(a).
\12\ Id. at Sec. 604. A ``significant regulatory alternative'' is
defined as one that: 1) reduces the burden on small entities; 2) is
feasible; and 3) meets the agency's underlying objectives. See A Guide
for Government Agencies, How to Comply with the Regulatory Flexibility
Act, SBA Office of Advocacy, June 2010, p. 73-75 (available at http://
www.sba.gov/advo/laws/rfaguide.pdf).
\13\ Id. at Sec. 605(b).
\14\ North Carolina Fisheries Association v. Daley, 27 F. Supp. 2d
650 (E.D. Va. 1988); Aeronautical Repair Station Assn, Inc. v. FAA, 449
F. 3d 161, 175-177 (D.C. Cir. 2007), reversing agency certification of
lack of impact on small entities.
______
April 18, 2012.
Hon. David P. Roe, Chairman,
Subcommittee on Health, Employment, Labor, and Pensions, Committee on
Education and the Workforce, U.S. House of Representatives
Washington, DC 20515.
Dear Chairman Roe: We are writing on behalf of the U.S. Chamber of
Commerce (Chamber), the world's largest business federation
representing the interests of more than three million businesses and
organizations of every size, sector, and region, in advance of the
Subcommittee's hearing scheduled for April 18, 2012, entitled Reviewing
the Impact of the Office of Federal Contract Compliance Programs'
Regulatory and Enforcement Actions. The purpose of this letter is to
provide you with a summary of our members concerns regarding the
agency's regulatory and enforcement agenda.
At the outset, we wish to thank you for holding a hearing on this
important subject. The laws and Executive Orders that the Office of
Federal Contract Compliance Programs (OFCCP) implements and enforces
are very important. They and the regulations implementing them are also
very detailed and technical, requiring an investment of significant
time and resources to fully understand. We wish to express our
appreciation for the Subcommittee making OFCCP oversight a priority. We
look forward to working with you and other members of the Subcommittee
on these issues in the coming months.
In this letter, we present the concerns of our members first with
OFCCP enforcement. We then turn to a summary of our concerns with the
OFCCP's very active regulatory and sub-regulatory agenda. We wish to
emphasize that it is not our intent in this letter to debate the merits
of any Executive Order or law that the OFCCP is charged with
implementing and enforcing. Instead, these comments focus on the manner
in which the OFCCP is carrying out its responsibilities under these
laws and Executive Orders.
OFCCP Enforcement
No discussion of OFCCP enforcement can begin without first
understanding the tremendous leverage that OFCCP has over federal
contractors stemming from the OFCCP's authority to cancel or terminate
a particular government contract and the OFCCP's authority to debar a
contractor from future opportunities.\1\ The threat of such a penalty
is so severe that it creates a powerful incentive for contractors to
settle any dispute with OFCCP no matter how frivolous an allegation may
be or how egregiously agency staff has acted. While sophisticated
contractors may push back against OFCCP allegations, few are willing to
go through all of the Administrative reviews and seek protection of
their rights in court because even a small risk of debarment is
unacceptable no matter how good the contractor's case.
Given the tremendous leverage that debarment and these other severe
sanctions give the OFCCP, it is all the more important that enforcement
be reasonable and undertaken only after careful and thoughtful analysis
has been conducted. Unfortunately, it appears that all too often the
OFCCP is failing to acquit itself in such a manner.
It should also be emphasized that enforcement tactics can be
difficult to summarize in a letter such as this. Many concerns seem
outrageous on their face. Others might not seem egregious standing
alone, but repeated time and again or combined with other abuses,
become more serious. The following summarizes a handful of examples of
enforcement abuses that we have heard from our members over the last
year:
OFCCP staff telling a contractor that it was welcome to
bring a matter before an administrative law judge, ``but the judge
works for us.''
Agency staff using strong arm tactics in employee
interviews to get the answers they want to hear.
Employers passing an audit and then investigators
returning and re-opening the investigation until they can find a
violation.
OFCCP might have an issue with a handful of job groups or
titles, but will demand information on all job groups or titles.
OFCCP is not interested in discussing narrowing the scope
of its information requests. Rather than data on problem areas, OFCCP
wants data on everyone.
Agency staff telling employers ``we can ask for anything
we want.''
Sitting on data for years without closing cases.
Using substandard interpreters while interviewing
employees who do not speak English.
OFCCP looks at large data sets and cherry picks to allege
violations, such as using arbitrary timelines or combinations of
protected classes.
Blind adherence to statistics, such as assuming any
numerical disparity more than two standard deviations must be
attributable to discrimination and ignoring the fact that any large
data set will produce some number of statistical disparities.
Not understanding other laws or regulations that constrain
employers may be responsible for disparities, such as the relation of
payments to physicians to schedules set by the Center for Medicare and
Medicaid Services.
These examples are just a few reported to us by our membership
recently. Some of these examples come from contractors who by any
measure would be considered among the most progressive and compliant
employers in the nation. As you may understand, most contractors and
subcontractors are not willing to discuss these concerns publicly for
fear of retaliation. Consequently, we urge you to continue the
Committee's oversight of OFCCP enforcement with this in mind, perhaps
by utilizing the General Accounting Office, or another route that
provides strong confidentiality for contractors and subcontractors who
may be interviewed.
OFCCP Regulatory and Sub-Regulatory Agenda
The OFCCP has an incredibly aggressive regulatory and sub-
regulatory agenda. While a comprehensive review of these matters is
beyond the scope of these comments, the following identifies several of
the OFCCP's most controversial policy initiatives, a summary, and,
where available, links for further information.
OFCCP Jurisdiction
OFCCP has continued to push its interpretation of its jurisdiction
to the limits of credibility, earning it a sharp rebuke from Congress.
Nevertheless, rather than recognize its overreach, the agency has
pledged to fight for greater jurisdiction.
The OFCCP has jurisdiction over virtually all federal contractors
and subcontractors. However, the issue of whether an employer is a
contractor or subcontractor is not as straightforward as it otherwise
might seem. While OFCCP has always maintained a broad view of its
jurisdiction, we have seen the agency take an even broader view in
recent years with perhaps the highest profile example being treatment
of certain hospitals.
For example, OFCCP Directive No. 262 limited jurisdiction over
hospitals that had contracted with an insurer who, it turn, contracted
with the federal government under the Federal Employees Health Benefits
Plan (FEHBP).\2\ Now, the OFCCP has rescinded Directive 262 \3\ and is
litigating a high profile case to try to establish jurisdiction over a
hospital as a FEHBP subcontractor.\4\ Compounding challenges for the
hospital is the fact that its contracts with the insurer were
established before the insurer ever contracted with the federal
government.\5\
In a similarly high profile case, OFCCP has sought jurisdiction
over hospitals that have contracted with insurers under TRICARE.\6\
This case is particularly egregious because the Department of Defense
specifically stated that the payments to hospitals were federal
financial assistance (and thus not a subcontract). Nevertheless, OFCCP
argued that its determination was controlling, not that of the
Department of Defense.\7\
Responding to this case, Congress stepped in and adopted language
as part of the National Defense Authorization Act stating that such
arrangements to provide care under TRICARE do not confer jurisdiction
as covered subcontractors.\8\ Rather than accept this rebuke, OFCCP
condemned the legislation, which was signed into law by the president,
and vowed that ``this isn't over yet.'' \9\ It is disturbing that even
in light of a Congressional rebuke the OFCCP would continue to assert
such broad jurisdiction.
Compensation, Data Collection, and Analysis
Through three separate but related initiatives, the OFCCP has
proposed doing away with what little transparency exists in how the
agency will assess whether systemic compensation has occurred. It is
also embarking on an effort to collect massive amounts of individually
identifiable pay and benefits data without adequate privacy protections
and without even a scintilla of evidence of wrongdoing.
The OFCCP has at least three separate initiatives that raise
significant concerns among contractors related to the agency's approach
toward data collection and analysis, specifically compensation data.
1. Rescinding Guidelines for Determining Systemic
Compensation Discrimination.\10\
On January 3, 2011, the OFCCP published a notice proposing to
rescind guidance issued during the last administration related to
systemic compensation discrimination. The existing guidance makes it
clear that the OFCCP will not use the debunked pay-banding method (or
the so-called DuBray method) of determining whether discrimination may
have occurred, but will instead use more robust and accurate
methodologies such as multivariable regression. It also issued
voluntary guidelines for self-evaluation.
OFCCP now plans to abandon these guidelines without replacing them,
which could mean that the OFCCP will return to using debunked
statistical analysis as it pursues compensation discrimination claims.
The Chamber filed comments on this proposal on March 4, 2011:
http://www.uschamber.com/issues/comments/2011/comments-ofccp-
rescissioncompensation-guidance
2. New Compensation Data Collection Tool.\11\
On August 10, 2011, the OFCCP published an advanced notice of
proposed rulemaking to develop a replacement for the EO survey to
implement Executive Order 11246. This is highly controversial since the
EO survey required extensive time for contractors to complete and
produced no useful data for enforcement, as verified by a third party
review of the program. The ANPRM solicits comments from the public on
15 separate questions. Perhaps most alarming, the agency in one of
their questions has raised the possibility that businesses bidding on
future Federal contracts will need to submit compensation data as part
of the Request for Proposal process. OFCCP has also stated their
intentions to use this type of compensation data for research, such as
analyzing industry trends. On October 11, 2011, the Chamber submitted
comments seeking withdrawal of the regulation.
Chamber comments filed Oct. 11, 2011:
http://www.uschamber.com/issues/comments/2011/comments-non-
discriminationcompensation-compensation-data-collection-tool-adva
3. Modification of the ``scheduling letter and itemized
listing.'' \12\
On May 12, 2011, the OFCCP published a notice, which seeks to make
significant changes to the ``scheduling letter'' and ``itemized
listing'' that it uses at an initial stages of a compliance evaluation.
On July 11, 2011, the Chamber submitted comments sharply critical of
some of the proposed changes, in particular, the creation of a new
government database of private compensation information, the burdens
that would be imposed by the new recordkeeping and reporting
obligations, and the invasion of privacy and threat to proprietary and
confidential information. On September 28, 2011, the OFCCP sent a final
version of the letter and itemized listing to OMB. The Chamber
submitted comments on October 28, 2011.
Chamber comments filed July 11, 2012:
http://www.uschamber.com/issues/comments/2011/comments-proposed-
extensionapproval-information-collection-requirements
Chamber comments filed Oct. 28, 2011:
http://www.uschamber.com/issues/comments/2011/comments-proposed-
extensionapproval-information-collection-requirements%E2%80%94non-co
New Tremendously Burdensome Affirmative Action Regulations
The proposed revisions to affirmative action regulations that OFCCP
has made are heavy on paperwork and recordkeeping requirements and have
grossly underestimated the costs of compliance. In addition, there are
many new proposals that seem impracticable at best. It is within the
OFCCP's power to strengthen these regulations through an approach that
would increase employment for protected veterans and individuals with
disabilities by consensus without imposing such dramatic costs for
programs of questionable utility.
Among the two most burdensome initiatives proposed by the OFCCP so
far are revisions of affirmative action and non-discrimination
regulations that apply with respect to protected veterans and
individuals with disabilities. We wish to emphasize that these
requirements were enacted pursuant to laws that the Chamber supports.
Our criticism of revisions to the regulations should not be interpreted
as criticisms of these laws. While we appreciate that the OFCCP may
believe that the existing regulations may not have operated
effectively, the approach taken by the OFCCP in its proposals would be
tremendously burdensome. We strongly believe that a consensus approach
could be found to both sets of regulations and we renew our call for
OFCCP to engage stakeholders to sit down and work through the many
difficult issues to arrive at a shared goal.
1. Federal Contractor Affirmative Action Obligations under
the Vietnam Era Veterans Readjustment and
Assistance Act
On April 26, 2011, OFCCP issued a proposed rule that seeks to
strengthen affirmative action requirements by requiring federal
contractors to conduct more substantive analyses of recruitment and
placement actions under the Vietnam Era Veterans Readjustment
Assistance Act (VEVRAA, as amended) and the use of numerical targets to
measure effectiveness. The proposal also imposes vast new recordkeeping
and other burdens on contractors and subcontractors. The Chamber filed
comments, in conjunction with other employer associations, on July 11,
2011, emphasizing the significant new burdens that would be imposed on
contractors should the rule be implemented, and offered alternative and
less burdensome mechanisms to achieve the shared goal of increasing
employment opportunities for our nation's veterans.
The coalition comments may be accessed here:
http://www.uschamber.com/issues/comments/2011/coalition-full-comments-
affirmative-actionand-nondiscrimination-obligations-co
2. Federal Contractor Affirmative Action Obligations under
the Rehabilitation Act
On December 9, 2011, OFCCP published a notice of proposed
rulemaking significantly altering the regulations implementing Section
503 of the Rehabilitation Act. If implemented, the proposal would
establish a utilization goal for hiring individuals with disabilities
for every job group. The proposal also would require contractors to ask
every applicant for employment to self-identify as an individual with a
disability upon application as well as later in the hiring process. It
would also require contractors to survey their entire workforce each
year to ascertain disability status. The proposal further would
establish numerous new paperwork burdens, such as tracking every
reasonable accommodation request, no matter how informal. The Chamber,
in conjunction with other associations, conducted a survey of about 100
federal contractors and estimated that the costs of the regulation are,
at a minimum, $2 billion per year. The Chamber submitted comments on
February 21, 2012.
The comments may be accessed here:
http://www.uschamber.com/sites/default/files/comments/120221--
503Comments.pdf
Conclusion
We wish to thank you for taking the time to hold this important
hearing on OFCCP oversight. These comments only begin to summarize the
very great concern that we have with the OFCCP's enforcement and policy
agenda. We look forward to working with you as you continue to examine
these important issues. Please do not hesitate to contact us if we may
be of assistance in this matter.
Sincerely,
Michael J. Eastman, Senior Vice President,
Executive Director, Labor, Immigration & Employee Benefits Labor
Law Policy.
endnotes
\1\ See, e.g., Exec. Order No. 11246, Sec. 209(a)(6).
\2\ Mar 17, 2003.
\3\ OFCCP Directive No. 293 (Dec. 16, 2010).
\4\ OFCCP v. UPMC Braddock, ARB Case No. 08-048 (May 29, 2009).
\5\ Ralph Lindeman, Hospitals Wage Legal Battle with OFCCP:
Hospitals Claim High-Stakes Controversy, DAILY LABOR REPORT (BNA)(Feb.
17, 2011).
\6\ OFCCP v. Florida Hospital of Orlando, ALJ Case No. 2009-OFC-
00002 (Oct. 18, 2010).
\7\ See Ralph Lindeman, Hospitals Wage Legal Battle with OFCCP:
Hospitals Claim High-Stakes Controversy, DAILY LABOR REPORT (BNA)(Feb.
17, 2011).
\8\ Pub.L. 112-81, Sec. 715.
\9\ Jay-Anne B. Casuga, Shiu Says OFCCP Will Assess Its Policies In
Light of Subcontractor Provision in NDAA, DAILY LABOR REPORT (BNA)(Dec.
21, 2011).
\10\ Interpretive Standards for Systemic Compensation
Discrimination and Voluntary Guidelines for Self-Evaluation of
Compensation Practices Under Executive Order 11246; Notice of Proposed
Rescission, 76 Fed. Reg. 62 (Jan. 3, 2011).
\11\ Non-Discrimination in Compensation; Compensation Data
Collection Tool, Advanced Notice of Proposed Rulemaking, 76 Fed. Reg.
49,398 (Aug. 10, 2011).
\12\ Agency Information Collection Activities; Submission for OMB
Review; Comment Request; Office of Federal Contract Compliance Programs
Recordkeeping and Reporting Requirements--Supply and Service, Notice,
76 Fed. Reg. 60,083 (Sept. 28, 2011).
______
April 17, 2012.
Hon. David P. Roe, Chairman,
Subcommittee on Health, Employment, Labor, and Pensions, Committee on
Education and the Workforce, U.S. House of Representatives
Washington, DC 20515.
Dear Chairman Roe: HR Policy Association is writing to commend you
for holding the hearing, ``Reviewing the Impact of the Office of
Federal Contract Compliance Programs' Regulatory and Enforcement
Actions,'' to examine the Department of Labor's (DOL's or Department's)
Office of Federal Contracts Compliance Programs (OFCCP). Though the
OFCCP is not widely known, its operations have wide-reaching effects as
their policies have been estimated to cover 25 percent of the
workforce.
While HR Policy is concerned in general with reports from our
members about the OFCCP's aggressive enforcement of its rules, our
members are most concerned specifically with OFCCP's December 9, 2011
Notice of Proposed Rulemaking (NPRM) revising the regulations
implementing the non-discrimination and affirmative action regulations
of section 503 of the Rehabilitation Act of 1973. We strongly believe
that this proposal, on its own, merits a close examination by your
Subcommittee with an additional hearing.
As you know, our association has a long-standing commitment to the
development of a workable and effective federal policy regarding the
employment of individuals with disabilities. Because of that
commitment, the last time Congress addressed federal workplace
disability policy, we were actively engaged in the enactment of the
Americans with Disabilities Act Amendments Act of 2008 (ADAAA). The
final bill was largely a result of negotiations between the business
community and the disability and civil rights groups, in which HR
Policy played a critical role. We believe this process formed a
valuable template for formulating federal workplace disability policy--
an approach that is being abandoned with the NPRM.
The Section 503 NPRM would, for the first time, set a goal that
seven percent of every job group in a contractors' workforce be filled
with individuals with disabilities. The proposed rules would apply to a
contractor's entire workforce regardless of the percentage of the
company that is devoted to the federal contract. The difficulty in
achieving this goal is underscored by the fact that the federal
government as well as most agencies (including the Department of Labor)
fall short of the proposed goal on a workforce-wide basis, not to
mention in each job group. In addition, the Department is, like most
federal agencies, unable to meet the federal government's goal of
filling two percent of its workforce with individuals with ``targeted''
disabilities.
Given the OFCCP's own description of the aggressive enforcement it
would apply to the new rules, most federal contractors, to avoid the
threat of debarment, would have to treat the goals as, in effect, a
quota system, even though the federal courts have ruled that quotas are
illegal. The NPRM also fails to explain how employers can achieve these
goals if they are not hiring new employees. Would current employees
have to be displaced in order to hire individuals with disabilities?
Further, the proposal requires employers to ask each job applicant
if he or she has a disability, even though employers are prohibited
under federal law. In addition to violating a specific prohibition in
the Americans with Disabilities Act, this requirement raises
substantial privacy issues and contravenes sound human resource
practices by shifting the focus of a job applicant's abilities that
would match the employer's needs to a focus on the disabilities of
employees and applicants.
Finally, the NPRM deliberately kept the cost estimates below the
$100 million threshold to avoid triggering additional procedural
hurdles for regulations that are considered ``economically
significant.'' The estimate was kept lower by ignoring major new
requirements that would be imposed on contractors. Factoring these in,
we estimate that compliance will cost $1.8 billion annually.
Given that OFCCP has put this proposal on a fast track to be
finalized this year, we believe it is critical that your Subcommittee
review this proposal carefully. Thus, HR Policy urges you to consider
holding a hearing specifically to examine this NPRM. Thank you for your
consideration and we respectfully request that this letter be included
in the record of the hearing.
Sincerely,
Daniel V. Yager, President and General Counsel,
HR Policy Association.
______
April 17, 2012.
Hon. Phil Roe, M.D., Chairman,
Subcommittee on Health, Employment, Labor and Pensions, U.S. House of
Representatives, Washington, DC 20515.
Dear Chairman Roe: Thank you for holding the April 18, 2012 hearing
reviewing the impact of recent regulatory and enforcement actions taken
by the U.S. Department of Labor's Office of Federal Contract Compliance
Programs (OFCCP). On behalf of the Society for Human Resource
Management (SHRM) and the College and University Professional
Association for Human Resources (CUPA-HR), we write to express concern
with OFCCP's recent flurry of activity.
As you know, OFCCP is responsible for enforcing affirmative action
and equal employment opportunity laws for employers that do business
with the Federal government. Both SHRM and CUPA-HR are supportive of
the affirmative action goals articulated by the executive orders and
laws administered by OFCCP and the underlying goals of recent OFCCP
rulemakings.
However, we are very concerned that the recent regulatory and
enforcement initiatives will not achieve our shared objective of
increased employment opportunities for protected classes as the agency
has not provided accurate and reliable methods for compiling the data
necessary to implement its proposed requirements. At the same time, the
recent regulatory actions impose requirements for federal contractors
that conflict with other statutes, intrude on employee privacy, and set
unrealistic objectives and impose unnecessary and burdensome paperwork
requirements.
In the past 18 months, OFCCP has issued the following regulations:
January 3, 2011--notice of proposed rescission of its
systemic compensation discrimination standards and self-audit
guidelines for evaluating pay practices for federal contractors and
subcontractors under Executive Order 11246 (See CUPA-SHRM comments:
http://www.shrm.org / Advocacy / PublicPolicyStatusReports / Courts-
Regulations / Documents / 3 % 204 % 2011 % 20OFCCP % 20comments % 20on
% 20rescission % 20of % 20comp % 20guidance % 20stds % 20 %
20FINAL.pdf)
April 26, 2011--notice of proposed rulemaking under the
Veterans' Readjustment Assistance Act overhauling the federal
contractor affirmative action program requirements for covered veterans
(See CUPA-SHRM comments: http://www.shrm.org / Advocacy /
PublicPolicyStatusReports / Courts-Regulations / Documents / 7 % 2011 %
2011 % 20Protected % 20Veterans % 20Comments % 20FINAL.pdf)
August 10, 2011--advanced notice of proposed rulemaking
soliciting comments on development of a compensation data collection
tool (See CUPA-SHRM comments: http://www.shrm.org / Advocacy /
PublicPolicyStatusReports / Courts-Regulations / Documents /
20111011155702497.pdf)
September 29, 2011--formal request to the Office of
Management and Budget to review and approve a significant revision of
the information they routinely request on Scheduling Letters and
Itemized Listings from federal contractors (See CUPA-SHRM comments:
http://www.shrm.org / Advocacy / PublicPolicyStatusReports / Courts-
Regulations / Documents / Oct % 2028 % 20CUPA-HR % 20and % 20SHRM %
20Scheduling % 20Letter % 20comment.pdf)
December 9, 2011--notice of proposed rulemaking amending
the regulations implementing Section 503 of the Rehabilitation Act of
1973 revising nondiscrimination and affirmative action employment
requirements for individual with disabilities for all federal
contractors (See CUPA-SHRM comments: http://www.shrm.org / Advocacy /
PublicPolicyStatusReports / Courts-Regulations / Documents / SHRM %
20comments % 20to % 20OFCCP % 20on % 20Changes % 20to % 20Affirmative %
20Action % 20Requirements % 20forIndividuals % 20with % 20Disabilities
% 20- % 202.21.2012.pdf)
We have filed detailed comments on all of these regulatory actions
reflecting our concerns (links listed above). These comments are
attached and we respectfully request they be included in the official
hearing record. In addition to the above actions, we understand OFCCP
is currently developing five regulatory proposals that may lead to even
greater administrative burdens on employers.
Mr. Chairman, thank you for your consideration of our concerns with
OFCCP's significant changes to its regulatory and enforcement policies.
We look forward to working with you on these issues.
Sincerely,
Michael P. Aitken, Vice President, Government Affairs,
Society for Human Resource Management;
Joshua Ulman, Chief Government Relations Officer,
College and University Professional Association for Human
Resources.
______
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
[Additional submission of Mr. Miller follows:]
Prepared Statement of Patricia A. Shiu, Director, Office of Federal
Contract Compliance Programs, U.S. Department of Labor
Chairman Roe, Ranking Member Andrews, and Members of the
Subcommittee, thank you for holding this important hearing. As the
Director of the Office of Federal Contract Compliance Programs
(``OFCCP'') at the Department of Labor (``Department''), I am pleased
to provide this Statement for the Record on the impact of OFCCP's
regulatory and enforcement actions. OFCCP is a worker protection
agency, responsible for enforcing the civil rights of nearly one-
quarter of American workers. The mission of OFCCP's more than 700
dedicated staff is to protect workers, promote diversity, and enforce
the nation's equal employment opportunity laws in federal contractors'
and subcontractors' workforces. OFCCP has jurisdiction over 170,000-
plus establishments that profit from over $700 billion in government
contracts annually. These companies are held to the fair and reasonable
standard that discrimination must never be a factor in their hiring,
promotion, termination, compensation, and other employment decisions.
With jurisdiction over so many employees and companies, the work OFCCP
does to level the playing field has a ripple effect across the entire
labor market.
The thoughtful testimony given by the witnesses and insightful
questions posed by the Members of the Subcommittee at its hearing on
April 18, 2012, revealed the positive effect that OFCCP's work has on
the lives of thousands of women, minorities, individuals with
disabilities, and protected veterans. Much of what was said is also
reflected in the thousands of comments we received on OFCCP's recent
regulatory proposals. OFCCP remains committed to reviewing and
considering any and all feedback that will help achieve the shared goal
that was repeated by several participants in the hearing: to combat
discrimination and ensure equal employment opportunity in a manner that
is efficient, effective, measurable, consistent with the law, and fair.
Background on OFCCP
OFCCP has long been a pillar of the federal government's civil
rights enforcement and enforces, for the benefit of job seekers and
wage earners, the contractual promise of equal employment opportunity
(both nondiscrimination and affirmative action) required of those who
do business with the federal government. OFCCP administers and enforces
three legal authorities that require equal employment opportunity: 1)
Executive Order 11246, as amended (``the Order'' or ``EO 11246''); 2)
Section 503 of the Rehabilitation Act of 1973, as amended, 29 USC Sec.
793 (``Section 503''); and 3) the Vietnam Veterans' Readjustment
Assistance Act of 1974, as amended, 38 U.S.C. 4212 (``VEVRAA'').
The Executive Order prohibits federal contractors and federally-
assisted construction contractors and subcontractors (hereafter,
``contractors'') who have contracts of at least $10,000 with the
federal government from discriminating in employment on the basis of
race, color, religion, sex, or national origin. Among other things,
this includes discrimination in rates of pay or other forms of
compensation. For contractors with 50 or more employees and a contract
of at least $50,000, the Executive Order also requires contractors to
take affirmative action to ensure that equal opportunity is provided in
all aspects of their employment.
Section 503 protects the employment rights of individuals with
disabilities. It covers persons with a wide range of mental and
physical impairments that substantially limit or restrict a major life
activity such as hearing, seeing, speaking, walking, breathing,
performing manual tasks, caring for oneself, learning, or working. Like
the Executive Order, Section 503 requires federal contractors with
Government contracts of at least $50,000 and 50 employees to take
affirmative action to employ and advance in employment these
individuals.
VEVRAA sets forth the requirements for nondiscrimination against
veterans by federal contractors. Section 4212(a) (1) prohibits federal
contractors from discriminating against specified categories of
veterans and requires contractors to take affirmative action to employ,
and advance in employment, those veterans. Federal contractors with a
contract of at least $100,000 and 50 or more employees are required to
take affirmative action to employ and advance in employment protected
veterans.
Taken together, these laws ban discrimination and require federal
contractors to take affirmative action to ensure that all individuals
have an equal opportunity for employment, without regard to race,
color, religion, sex, national origin, disability or status as a
protected veteran. Under all three laws, contractors must develop
written programs detailing the actions that they are taking for this
purpose and make the plans available when requested in a compliance
evaluation or complaint investigation.
Over the past few years, OFCCP has focused on three priorities:
strengthening enforcement activities,
broadening outreach to agency stakeholders, and
implementing an ambitious agenda of regulatory reform.
Enforcement
OFCCP is one of three federal agencies protecting the civil rights
of employees, the other two being the Equal Employment Opportunity
Commission and the Civil Rights Division of the U.S. Department of
Justice. But OFCCP is unique in that it conducts in-depth compliance
evaluations of about 4,000 contractor establishments each year,
according to a neutral selection and scheduling system. These are
scheduled reviews, not triggered by specific complaints. While OFCCP
does investigate complaints, the majority of its work consists of
compliance evaluations, during which compliance officers check to make
sure that contractors are meeting their legal obligations to provide
equal opportunity for all of their workers.
OFCCP's compliance reviews are particularly important because too
often, workers are unaware of the discrimination they face. Job seekers
who don't get an offer, employees who are being paid less than
colleagues doing similar work, workers who are downsized in a bad
economy--they may not know if the underlying cause is discrimination,
because they do not have the necessary information. But federal
contractors have specific obligations when it comes to record-keeping
and data collection, including maintaining information about listed job
openings; worker recruitment methods; selections of interviewees for
openings; and decisions about hiring, terminations, placement, pay, and
promotions. Contractors are required to share those records with OFCCP
during audits, and OFCCP is able to analyze that data and determine if
there are indicators of discrimination. If so, OFCCP does a more in-
depth investigation to see if the contractor treats protected groups
differently or follows practices that create an unjustified adverse
impact on job seekers or workers.
Under this Administration, OFCCP has undertaken a concerted effort
to shift toward more thorough, careful and consistent compliance
reviews, toward higher quality--not just quantity--of evaluations. In
2010, OFCCP provided the first national training for its compliance
officers in more than a decade. Also in 2010, it updated its
enforcement and evaluation protocols to improve the way compliance
evaluations are conducted--with more thorough desk audits, more
frequent on-site investigations, more flexibility in defining classes
of victims, and more reviews focused on specific types of
discrimination. Now, OFCCP investigates all types of discrimination--
not just hiring, but also compensation, placement, promotion,
termination, harassment, retaliation, and other conditions of
employment; every protected group, including women, minorities, people
with disabilities, and protected veterans; and every industry and job
group. Notably, these changes have been accomplished while maintaining
the overall level of compliance evaluations conducted at approximately
4,000 per year.
One important example of these changes is that OFCCP now reviews
compliance with Sections 503 and VEVRAA in every evaluation in which a
contractor meets minimum coverage requirements. Previously, the agency
audited for Section 503 and VEVRAA compliance in only in a few focused
reviews each year, which meant that very few violations of those laws
were ever uncovered. Now that OFCCP routinely reviews Section 503 and
VEVRAA compliance, the proportions of evaluations in which violations
are found have significantly increased: for Section 503, the proportion
rose from three percent in FY 2005 to 21 percent in FY 2011; for
VEVRAA, from five percent in FY 2005 to 25 percent in FY 2011. The vast
majority of these are violations such as failure to have an Affirmative
Action Program, failure to post job listings as required, failure to do
outreach, and recordkeeping violations.
The increased thoroughness of OFCCP's compliance reviews is
revealed by several other performance statistics as well:
The proportion of compliance evaluations in which some
kind of violation--including discrimination as well as violations such
as failure to have an Affirmative Action Program (AAP), failure to list
job openings as required, failure to do outreach, and recordkeeping
violations--rose dramatically, from 13 percent in FY 2007 to 38 percent
in FY 2011.
In FY 2011, the number of cases closed with financial
remedies was at its highest point since at least FY 2005.
The amount of back pay and interest collected in FY 2011--
$12.3 million--was at its highest point since at least FY 2005.
The average back pay and interest per eligible worker in
FY 2011--$842--was at its highest point since at least FY 2005.
One statistic that has remained constant is that the vast majority
of reviews in which violations were found--99 percent--are resolved by
conciliation agreement or consent decree. Extremely few cases go to
litigation, and voluntary compliance is always OFCCP's goal. That said,
OFCCP will litigate if necessary, and, for the worst offenders, will
seek debarment of federal contracts.
Focus On Compensation Discrimination
Despite passage of the Equal Pay Act of 1963, which requires that
men and women in the same workplace be given equal pay for equal work,
and of the Civil Rights Act of 1964, which prohibits compensation
discrimination more generally, the ``gender gap'' in pay persists. On
average, women, who work full-time, still earn only about 77 cents for
every dollar a man earns. The gap is even larger for African American
women, who earn about 64 cents, and Hispanic women who earn about 56
cents for each dollar that white males earn. Over a woman's lifetime,
this wage gap adds up and grows over time. By age 65, the cumulative
gap in earnings can be hundreds of thousands of dollars.
Decades of research shows that the ``gender gap'' in pay remains
even after factors like the kind of work people perform and
qualifications, such as education and experience, are taken into
account. Many studies address how much these factors explain why women
earn less than men. They consistently conclude that a pay gap still
remains and that discrimination is the best explanation for the
difference. Research also shows that progress towards closing the pay
gap has stalled. In other words, pay discrimination is a real and
persistent problem that continues to shortchange American women and
their families.
As a member of the President's Equal Pay Task Force, OFCCP has made
combating pay discrimination a major priority. On the enforcement side,
about 20 percent of OFCCP's financial settlements addressed
compensation issues in FY 2011--a significant increase over prior
years. In fact, the 28 conciliation agreements with financial remedies
in compensation cases in FY 2011 were greater than the number of such
conciliation agreements in FYs 2006 through 2009 combined.
OFCCP's equal compensation enforcement efforts have made real
differences in the lives of many workers. For example, in June of 2011,
OFCCP settled a lawsuit against AstraZeneca, alleging that the
pharmaceutical company discriminated in compensation at its
Philadelphia Business Center in Wayne, Pennsylvania. OFCCP determined
that 124 female sales specialists were paid, on average, $1,700 less
than their male counterparts. Under the terms of the settlement
agreement, the company agreed to pay $250,000 to the women who were
discriminated against, to adjust salaries accordingly going forward,
and to work with OFCCP to re-examine its pay practices at facilities
across the country. AstraZeneca also agreed to develop and annually
update its affirmative action plan and keep all supporting
documentation as required by law.
Outreach to Stakeholders
Through its outreach efforts, OFCCP seeks to ensure input from
stakeholders as it develops policies that are both practical and
effective. Outreach is also undertaken to make sure that workers
understand OFCCP is available as their resource. At both the national
and local levels, OFCCP proactively reaches out to community-based
groups, veterans' service organizations, labor unions, employer
associations, civil rights leaders, contractors, subcontractors, and
the workers directly affected by its protections. OFCCP's leadership
has made it a priority to meet with groups that are directly affected
by its program, and has had numerous and productive conversations with
some of the organizations that testified at the hearing.
In FY 2011, OFCCP hosted more than 1,800 outreach events where more
than 61,000 stakeholders were engaged. Of these events, nearly 1,000
compliance assistance events provided contractors with the tools to
understand and comply with the laws it enforces. More than a third of
those compliance assistance events were directed specifically at small
businesses and first-time federal contractors.
Regulatory Proposals
Over the last three years, OFCCP has recovered nearly $35 million
in back wages and interest on behalf of over 70,000 workers affected by
discrimination. It has audited more than 12,000 businesses which employ
almost 7 million workers. While these are major accomplishments,
workplace discrimination against women, minorities, people with
disabilities, and protected veterans is still a major problem. To
increase the effectiveness of its efforts and those of contractors to
eliminate such discrimination, OFCCP has recently issued several
regulatory proposals, which were discussed at the Subcommittee's
hearing.
Notice of Proposed Rulemaking to Strengthen Affirmative Action
Obligations With Respect to Employment Opportunities for People
with Disabilities under Section 503
On December 9, 2011, OFCCP published a Notice of Proposed
Rulemaking (NPRM) to strengthen affirmative action obligations with
respect to employment opportunities for people with disabilities under
Section 503. The NPRM details specific actions contractors must take in
the areas of recruitment, training, record-keeping and policy
dissemination--similar to those that have long been required to promote
workplace equality for women and minorities. The proposed rule would
establish, for the first time, a single, national utilization goal for
individuals with disabilities: contractors would be required to set an
aspirational goal of having 7 percent of their employees be workers
with disabilities in each job group of the contractors' workforce. This
aspirational goal is not a quota and failure to meet it would not be
evidence of discrimination; rather, it will help contractors evaluate
the effectiveness of their recruitment efforts towards workers with
disabilities. The proposed rule also would improve collection of data
on the employment of people with disabilities by requiring contractors
to invite applicants to voluntarily self-identify as an ``individual
with a disability'' at the pre-offer stage of the hiring process, to
invite post-offer voluntary self-identification, and to survey all
employees annually to invite their self-identification in an anonymous
manner. Under the proposal, contractors would also, for the first time,
develop and implement written procedures for processing requests for
reasonable accommodation.
At the Subcommittee's hearing on April 18, 2012, a concern was
raised that the voluntary self-identification requirements in the
Section 503 NPRM could be in conflict with the Americans with
Disabilities Act. I would like to take a moment to address that
concern. As the Preamble to OFCCP's proposed rule explains:
The requirement to give applicants and employees the opportunity to
self-identify is consistent with the ADA's restrictions on pre-
employment disability-related inquiries. Although the ADA generally
prohibits inquiries about disability prior to an offer of employment,
it does not prohibit the collection of this information by a contractor
in furtherance of its section 503 affirmative action obligation to
employ and advance in employment qualified individuals with
disabilities. (Emphasis supplied.)
In fact, in its regulations and guidance implementing the ADA, the
EEOC specifically states that ``inviting individuals to identify
themselves as individuals with disabilities * * * to satisfy the
affirmative action requirements of section 503 of the Rehabilitation
Act is not restricted'' by the ADA as long as individuals are given
clear notice that their response to the invitation is voluntary, that
refusal to provide a response will not subject the individual to any
adverse treatment, and that the information will be kept confidential
and used only for affirmative action purposes.\1\ In developing its
proposed rule on Section 503, OFCCP worked in close partnership with
officials at the EEOC to ensure that any regulatory changes are
completely consistent with both the letter and the spirit of the ADA.
---------------------------------------------------------------------------
\1\ Appendix to 29 CFR 1630.14(a); Enforcement Guidance on
Disability-Related Inquiries and Medical Examinations of Employees
Under the Americans With Disabilities Act, U.S. EQUAL EMP'T OPPORTUNITY
COMM'N, Question 23 (July 7, 2000), http://eeoc.gov/policy/docs/
guidance-inquiries.html#10.
---------------------------------------------------------------------------
Notice of Proposed Rulemaking on Contractors' Obligations With Respect
to Employment Opportunities for Protected Veterans under VEVRAA
OFCCP's VEVRAA regulations have remained unchanged, in large
measure, since the implementing rules were first published in 1976.
Meanwhile, increasing numbers of veterans are returning from tours of
duty in Iraq, Afghanistan, and other places around the world, and many
are faced with substantial obstacles in finding employment upon leaving
the service. In fact, veterans who served on active duty since
September 2001 face a higher rate of unemployment than nonveterans. On
April 26, 2011, OFCCP proposed changes to the VEVRAA regulations that
would improve the job opportunities for this group and ensure that the
men and women who served our country are afforded their full rights and
protections under VEVRAA.
Specifically, the VEVRAA proposal would require contractors to
record and maintain quantitative data on their recruitment and hiring
of veterans and establish annual hiring benchmarks based on relevant
information. Contractors would also have to evaluate the effectiveness
of their efforts to ensure that protected veterans have access to
employment opportunities.
Policies Regarding Compensation Discrimination
With regard to compensation discrimination, OFCCP has several
policy initiatives underway.
First, on January 3, 2011, OFCCP proposed to rescind two policy
documents that were adopted in 2006--``Interpretive Standards for
Systemic Compensation Discrimination'' and ``Voluntary Guidelines for
Self-Evaluation of Compensation Practices for Compliance With
Nondiscrimination Requirements of Executive Order 11246''--because the
Standards ``have limited [its] ability to effectively investigate,
analyze and identify compensation discrimination'' and the Voluntary
Guidelines ``have not been an effective enforcement strategy'' (76 Fed.
Reg. 62 (January 3, 2011)).
Second, on August 10, 2011, OFCCP published an Advanced Notice of
Proposed Rulemaking (ANPRM) seeking comments on the possibility of
systematically collecting compensation data with respect to gender,
race and national origin from federal contractors and subcontractors,
to strengthen its ability to identify and remedy compensation
discrimination. The ANPRM posed 15 questions for public response on the
types of data that should be requested, the scope of information OFCCP
should seek, how the data should be collected, how the data should be
used, what the tool should look like, which contractors should be
required to submit compensation data, and whether the tool might create
potential burdens for small businesses. By publishing this ANPRM, OFCCP
proactively sought feedback on what a compensation data tool might look
like.
Potential Impact on Contractors
Finally, I would like to address some of the issues raised during
the recent hearing. In particular, there was concern expressed that in
recent years government contractors' obligations have become overly
burdensome and would increase if the proposed regulations are
finalized.
I would like to assure the Members of the Subcommittee that in
moving forward with all of OFCCP's regulatory initiatives and in
developing a data compensation tool, OFCCP is diligently analyzing the
impact that our proposals may have on contractors and the business
community as a whole. By reviewing and considering any and all public
comments on these proposals, OFCCP is ensuring that federal contractors
and their representatives, as well as workers and their
representatives, play a central role in its efforts.
Many, if not all, of the concerns raised regarding OFCCP's
regulatory proposals are being examined by OFCCP and were addressed in
comments the agency received. For instance, some concerns were raised
at the Subcommittee's hearing that the compensation data device was
burdensome and costly. Yet there have been no decisions, and no device
has been deployed--or even formally proposed. OFCCP is reviewing,
considering and analyzing the more than 7,800 comments submitted from a
broad range of stakeholders in response to the ANPRM. The issues and
concerns raised during the hearing were reflected in these comments,
and OFCCP will take them into account in developing any proposal for a
compensation data tool.
In addition, the guidance, training, webinars, and other forms of
technical assistance that OFCCP provides informs contractors both about
their obligations under the law and about the agency's regulatory and
other policy proposals. OFCCP is committed to sharing information about
our regulatory proposals to the extent it can do so within the law and
to considering constructive feedback about the impact of such proposals
on stakeholders, and will stay true to this commitment as its
regulatory reform efforts go forward.
The overall burden imposed by OFCCP compliance reviews is
relatively small. As noted above, OFCCP conducts an average of
approximately 4,000 compliance reviews a year--out of more than 170,000
contractor establishments. Accordingly, each establishment has less
than a 2.4 percent chance of being reviewed each year.
Moreover, the total number of OFCCP's compliance evaluations has
remained quite steady over the last six years. In FY 2011, OFCCP
conducted 4,014 compliance evaluations. This total is very close to
4,122, the average number of evaluations conducted per year in FY 2005
through FY 2011, and, in fact, is the median number conducted for those
years (the number conducted having been fewer in FYs 2005, 2006, and
2009, and greater in FYs 2007, 2008, and 2010).
The perspective provided at the hearing by the witness from St.
Jude's Children's Research Hospital about her experience as an employee
of a federal contractor who dealt with an OFCCP compliance evaluation
was extremely informative. St. Jude's clearly takes its obligations as
a federal contractor very seriously. In OFCCP's 2009 compliance review,
St. Jude's successfully documented its compliance: after an exchange of
data and a single day of on-site interviews, OFCCP compliance officers
concluded the audit fully satisfied and with no finding of
discrimination. The witness testified that approximately 400 employee
hours were spent to respond to this audit. However, St. Jude's Hospital
has 3,700 employees, and thus 400 employee hours is the equivalent of
only 20 percent of one full-time employee's time per year.
With regard to record-keeping obligations, the witness testified
that about eight full time employees work on St. Jude's employee
databases, which are used in OFCCP-related record-keeping. However not
only is that is only 0.2 percent of St. Jude's staff, but most of that
employee time would have to be expended on similar tasks even absent
OFCCP, to manage employee records electronically for payroll, tax and
accounting functions and compliance with other employment laws.
The witness estimated the cost of preparing an Affirmative Action
Program at $58,000, but that amount is approximately 0.01 percent of
the total revenue of $589,885,089 that St. Jude's reported on its FY
2010 tax return and a small proportion of the approximately $82 million
that St. Jude's currently receives in federal contracts.
Finally, the witness testified that St. Jude's took additional
steps, such as running various statistical analyses on the data, which
are not required by OFCCP. For the largest contractors, it costs
approximately $8,000 per year to develop (in the first year) or to
review and update (in subsequent years) an Affirmative Action Program.
The additional measures that St. Jude's took while preparing its plan
may well explain why the stated cost ($58,000) varies from the national
estimate. More importantly, St. Jude's willingness to go beyond OFCCP's
requirements illustrates how well-run organizations are aware of the
value of keeping adequate records on personnel activity, compensation,
diversity and affirmative action compliance.
Some concern has been expressed that OFCCP has abandoned its tiered
approach to compliance evaluations. That is not true, however. Pursuant
to its settled practice, OFCCP continues to conduct desk audits on all
scheduled compliance evaluations and generally conducts onsite visits
only when the desk audits reveal some evidence of potential
discrimination or concerns about data integrity.
In some cases, OFCCP requests additional information during the
desk audit phase of a compliance evaluation. This has been a long-
standing practice of OFCCP and has been upheld by the courts, which
have found that contractors must provide the information requested
because, as one United States District Court stated: ``submission to
such lawful investigations is the price of working as a federal
contractor.'' \2\ OFCCP has always verified and followed up on concerns
presented in a contractor's Affirmative Action Plan or otherwise
revealed in a desk audit, and will continue to do so.
---------------------------------------------------------------------------
\2\ United Space Alliance, LLC v. Solis, Civil Action No. 11-746,
2011 WL 5520428 (D.D.C. Nov. 14, 2011).
---------------------------------------------------------------------------
Moreover, recordkeeping is essential to a contractor's success in
increasing employment opportunities for minorities, women, protected
veterans, and people with disabilities. The law requires employers to
maintain and analyze their records not merely in anticipation of an
OFCCP review, but also as a tool for self-evaluation, and to help
employers proactively address challenges and opportunities when it
comes to ensuring diversity in their workforce.
It is a simple rule of business that what gets measured gets done.
Any successful company relies on data every day to track its
performance and identify where it can do better. OFCCP's recordkeeping
requirements ensure that contractors have the data they need to measure
their own performance in providing equal employment opportunity and to
identify areas where they can do better. Businesses must be able to
track their progress in hiring our nation's veterans or closing the pay
gap for women just as they track sales, inventory, profits or any other
critical measure of success.
While there are limited costs associated with complying with
OFCCP's regulations, being a federal contractor remains a privilege.
Federal contractors receive millions--in some cases billions--of
dollars in federal contracts. As these contractors continue to benefit
from taxpayer dollars, so do we strive to ensure that they respect the
civil rights and advance the opportunities of the taxpayers who are
their employees.
Confidentiality
Concerns were also expressed about the confidentiality of employee-
specific compensation data under the proposed regulations. OFCCP has
always taken steps to protect the confidentiality of contractor data,
and will continue to do so. Specifically, OFCCP treats compensation and
other personnel information provided by the contractor during a
systemic compensation investigation as confidential to the maximum
extent the information is exempt from public disclosure under the
Freedom of Information Act.
Transparency
Some witnesses expressed concern that OFCCP has not been
sufficiently transparent in the standards it uses to evaluate
contractors' compliance. OFCCP is committed to transparency, and
OFCCP's website reveals the extent to which the agency provides
detailed information about its standards and procedures. An important
element of these efforts is the Federal Contractor Compliance Manual
that OFCCP staff use in compliance evaluations, which is publicly
available at http://www.dol.gov/ofccp/regs/compliance/fccm/
fccmanul.htm. OFCCP is in the process of reviewing and updating the
Compliance Manual; in the meantime, the current Manual remains in
effect. Any interim changes to procedures in the Manual are made
public, as appropriate, via Directives or other agency guidance.
In addition, virtually all of OFCCP's directives are available to
the public on the OFCCP website. OFCCP does maintain the
confidentiality of a few directives that contain sensitive information
involving its law enforcement protocols and internal policies. The use
of such internal directives is not unique to OFCCP; nor is it a
recently developed OFCCP practice.
Finally, OFCCP spends thousands of hours each year providing free
compliance assistance to any federal contractor or subcontractor that
seeks clarity on the law. This service is free of charge (and without
the possibility of any kind of adverse action toward contractors) and
is offered via Webinars and trainings and forums at regional and field
offices across the country, as well as in individual consultations.
In sum, OFCCP is committed to providing transparency regarding any
changes to existing guidance once that process is complete. And both
before and after such changes may be made, the OFCCP staff stands able,
willing and ready to provide any information, technical assistance or
education that will enable contractors to understand their obligations
under the law.
Conclusion
Workers are our nation's greatest resource. The United States has
the most talented, most innovative, and most hard-working people in the
world, and they are the engine of our economic recovery. That is why
the Department of Labor in general, and OFCCP in particular, are so
singularly focused on making sure that American workers have the
opportunities and working conditions that will allow them and their
employers to flourish.
______
[Additional submission of Mr. Norris follows:]
April 26, 2012.
Hon. Phil Roe, Chairman,
Subcommittee on Health, Employment, Labor and Pensions, Committee on
Education and the Workforce, U.S. House of Representatives,
2181 Rayburn House Office Building, Washington, DC 20515.
Re: OFCCP Oversight Hearing, April 18, 2012
Dear Chairman Roe: At the April 18, 2012 Subcommittee hearing
entitled, ``Reviewing the Impact of the Office of Federal Contract
Compliance Programs' Regulatory and Enforcement Actions,'' you extended
an invitation to the witnesses to supplement their testimony by
inserting additional information into the hearing record.
The testimony I provided on behalf of the Equal Employment Advisory
Council (EEAC) questioned the accuracy of the economic impact analyses
conducted by OFCCP in support of the five pending regulatory
initiatives that were the focus of the hearing. I compared the economic
impact estimates calculated by OFCCP with the considerably higher
estimates provided by EEAC's member companies.
The magnitude of the differences in these cost estimates could not
be captured adequately in my oral or written testimony, but are
compared in detail in the comment letters EEAC submitted to OFCCP on
each of its pending regulatory proposals. Accordingly, I respectfully
request that the following documents be included in the official
hearing record:
March 3, 2011 EEAC comment letter on OFCCP's proposal to
rescind existing guidance on procedures and standards for investigating
systemic compensation discrimination [76 Fed. Reg. 62 (January 3,
2011)] http://www.eeac.org/public/11-046a.pdf
July 11, 2012 EEAC comment letter on OFCCP's proposal to
require numerical targets for veterans' employment and impose sweeping
new obligations related to documenting the identification, recruitment
and treatment of veterans [76 Fed. Reg. 23358 (April 26, 2011)] http://
www.eeac.org/public/11-133a.pdf
October 11, 2011 EEAC comment letter on OFCCP's proposal
to impose broad new compensation reporting requirements on contractors
[76 Fed. Reg. 49398 (August 10, 2011)] http://www.eeac.org/public/11-
197a.pdf
October 28, 2011 EEAC comment letter on OFCCP's proposal
to seek permission from OMB to vastly expand the scope and amount of
data requested of contractors at the outset of compliance evaluations
[76 Fed. Reg. 60083 (September 28, 2011)] http://www.eeac.org/public/
11-206a.pdf
February 21, 2012 EEAC comment letter on OFCCP's proposal
to impose a 7% hiring goal for individuals with disabilities and impose
sweeping new obligations related to documenting the identification,
recruitment and treatment of individuals with disabilities [76 Fed.
Reg. 77056 (December 9, 2011)]
http://www.eeac.org/public/12-037a.pdf
Thank you again for the invitation to testify at the April 18
hearing, and please feel free to call upon us if we can be of
additional assistance.
Sincerely,
Jeffrey A. Norris, President,
Equal Employment Advisory Council.
______
[Questions submitted for the record and their responses
follow:]
U.S. Congress,
Washington, DC, May 31, 2012.
Dana Bottenfield, Director of Human Resources Information Systems,
St. Jude Children's Research Hospital, 262 Danny Thomas Place, Memphis,
TN 38105.
Dear Ms. Bottenfield: Thank you for testifying at the April 18,
2012, Subcommittee on Health, Employment, Labor, and Pensions hearing
entitled, ``Reviewing the Impact of the Office of Federal Contract
Compliance Programs' Regulatory and Enforcement Actions.''
Enclosed are additional questions submitted by subcommittee members
following the hearing. Please provide written responses no later than
June 14, 2012, for inclusion in the official hearing record. Responses
should be sent to Benjamin Hoog of the committee staff, who may be
contacted at (202) 225-4527.
Thank you again for your contribution to the work of the committee.
Sincerely,
Phil Roe, Chairman,
Subcommittee on Health, Employment, Labor, and Pensions.
questions from representative roe
1. Based on your experience complying with the Office of Federal
Contract Compliance Programs' (OFCCP) regulatory requirements and
audits, what suggestions do you have to improve the OFCCP compliance
process?
2. Based on your experience responding to OFCCP audits, do you have
any concerns about the agency's pending proposal pertaining to
individuals with disabilities, which would require contractors to set a
``goal'' that 7 percent of all job groups be filled with individuals
with disabilities, including a ``sub-goal'' of 2 percent for
individuals with severe disabilities? In your experience, how has OFCCP
enforced other such ``goals''?
3. The Americans with Disabilities Act states that employers
``shall not conduct a medical examination or make inquiries of a job
applicant as to whether such applicant is an individual with a
disability or as to the nature or severity of such disability'' prior
to extending a job offer to an applicant. However, OFCCP's proposal
pertaining to individuals with disabilities would require St. Jude and
all federal contractors to make such inquiries. How would this
requirement impact St. Jude's hiring process?
______
Ms. Bottenfield's Response to Questions Submitted for the Record
Below, please find responses from Dana Bottenfield, on behalf of
St. Jude Children's Research Hospital, to additional questions from the
House Committee on Education and Workforce's Subcommittee on Health
Employment, Labor and Pensions. These questions are related to the
subcommittee's April 18, 2012 hearing entitled, ``Reviewing the Impact
of the Office of Federal Contract Compliance Programs' Regulatory and
Enforcement Actions.''
Q1: Based on your experience complying with the Office of Federal
Contract Compliance Programs' (OFCCP's) regulatory requirements and
audits, what suggestions do you have to improve the OFCCP compliance
process?
A: We have a number of suggestions to improve the OFCCP compliance
process:
The length of the OFCCP audit should be defined and
adhered to. St. Jude is audited regularly by many agencies and
accrediting organizations, including, but not limited to the Joint
Commission, OSHA, CMS, FDA, PHS, CAP, USCIS and the State of Tennessee.
OFCCP audits last months or years, while audits by the other agencies
typically last days.
The OFCCP should reinstate the practice that a full audit
is not required unless a desk audit identifies serious issues.
The OFCCP should focus on ``systemic'' rather
``individual'' allegations of discrimination.
The OFCCP should develop a realistic compensation standard
to replace its current unrealistic standard. Currently, the OFCCP
considers it an issue if there is a 2 percent average pay difference
between men and women in a job title or 2 percent average pay
difference between minorities and non-minorities in a job title. There
are many drivers for pay, including differences in performance, special
skills, years of experience prior to employment, level of education and
myriad other pertinent factors. The tight standard does not recognize
that pay can vary widely based upon these legitimate factors. The
unfortunate result of the unrealistic compensation standard is
meritless allegations of compensation issues that nevertheless must be
defended.
For organizations with a history of compliance, positive
audit outcomes, and appropriate hiring efforts, the OFCCP should allow
a longer period between audits than the 2 years currently permitted.
The OFCCP should reconsider the pending regulations,
including the time, effort and costs associated with these regulations
and the feasibility of implementing and adhering to these standards for
members of the Federal contractor community, especially the regulations
that directly conflict with other existing statues.
Q2: Based on your experience responding to the OFCCP audits, do you
have any concern about the agency's pending proposal pertaining to the
individuals with disabilities, which would require contractors to set a
``goal'' that 7 percent of all job groups be filled with individuals
with disabilities, including a ``sub-goal'' of 2 percent for
individuals with severe disabilities? In your experience how has the
OFCCP enforced other such ``goals''?
A: Yes, we have concerns that the 7 percent and 2 percent goals are
unrealistic. Placement goals traditionally have been based on readily
available information, such as census data, and there are no other
predefined, across-the-board placement goals for all job groups. This
will be the first ``hard'' placement goal, rather than targets based
upon availability analysis. A review of St. Jude's ``faculty member''
job category illustrates the difficulty of attaining these goals. All
of the job titles in St. Jude's ``faculty member'' category require an
MD, Ph.D. or other similar doctorate level degree. However, St. Jude
has no idea if 7 percent of the U.S. population with a MD or Ph.D. has
a disability or if 2 percent have a severe disability and whether it
would be possible to reach those goals and satisfy all of our other
hiring criteria. We are concerned about the repercussions if we are
unable to identify and hire the required 7 percent and 2 percent. If
the regulation is implemented, then all contractors must expect that
this will be a focus for any audit and that hard placement goals must
be met. Another major issue is the apparent conflict with the Americans
with Disabilities Act (ADA), which places employers between the
proverbial ``rock and hard place.'' Federal contractors will have to
make very tough decisions that leave them vulnerable for the standards
of one regulation or the other.
Q3: The Americans with Disabilities Act states that employers
``shall not conduct a medical examination or make inquiries of a job
applicant as to whether such applicant is an individual with a
disability or as to the nature or severity of such disability'' prior
to extending a job offer to an applicant. However, OFCCP's proposal
pertaining to individuals with disabilities would require St. Jude and
all Federal Contractors to make such inquiries. How would this
requirement impact St. Jude's hiring process?
A: Employers would face serious challenges with complying with
conflicting regulations. This will mean all contractors are susceptible
to consequences with respect to one statute or the other.
Should you have questions or need additional information, please do
not hesitate to contact Rob Clark, Director of Government Affairs for
St. Jude Children's Research Hospital, at [email protected].
______
U.S. Congress,
Washington, DC, May 31, 2012.
Alissa Horvitz, Shareholder,
Littler Mendelson, P.C., 1150 17th Street, NW, Suite 900, Washington,
DC 20036.
Dear Ms. Horvitz: Thank you for testifying at the April 18, 2012,
Subcommittee on Health, Employment, Labor, and Pensions hearing
entitled, ``Reviewing the Impact of the Office of Federal Contract
Compliance Programs' Regulatory and Enforcement Actions.''
Enclosed are additional questions submitted by subcommittee members
following the hearing. Please provide written responses no later than
June 14, 2012, for inclusion in the official hearing record. Responses
should be sent to Benjamin Hoog of the committee staff, who may be
contacted at (202) 225-4527.
Thank you again for your contribution to the work of the committee.
Sincerely,
Phil Roe, Chairman,
Subcommittee on Health, Employment, Labor, and Pensions.
questions from representative roe
1. The conference report for the 2012 National Defense
Authorization Act exempted TRICARE network providers from the Office of
Federal Contract Compliance Programs' (OFCCP) jurisdiction. In light of
this development, is it your understanding OFCCP has ceased pursuing
health care providers that participate in a TRICARE network? Please
explain.
2. How does an entity that contracts with a direct federal
contractor know whether it must comply with OFCCP's requirements? Is it
possible for OFCCP's requirements to apply to an entity that was not
aware of the requirements at the forming of a contract with a direct
federal contractor?
3. Please explain how a single transaction with the federal
government can unknowingly subject an entity to coverage under OFCCP's
requirements. As part of your response, please discuss whether it is
likely that a single transaction with the federal government--a $50,000
transaction, for example--would cover the costs of complying with
OFCCP's requirements.
4. Your written testimony noted that OFCCP is proposing to increase
the scope of its audit process, so that audits can stay open
indefinitely. First, how long can audits last currently? Second, what
are the potential consequences for contractors of an indefinite
temporal scope to OFCCP audits?
5. In your opinion, is OFCCP focusing adequate resources on
compliance assistance for contractors? What steps, if any, is OFCCP
taking to clarify the rules of the road for contractors?
6. In the context of investigating possible discrimination in
compensation, your written testimony notes that during the audit
process, OFCCP launches a full investigation of a contractor's
compensation practices wherever there is a 2 percent or $2,000
difference between certain workers in a particular job title. How has
OFCCP justified these thresholds? Once OFCCP identifies a compensation
disparity in a contractor's workforce, what burdens does the agency
impose on the contractor to prove that there is no discrimination?
7. Your written testimony highlighted the fact that solely focusing
on differences in average pay between workers has no basis in
compensation discrimination law under Title VII of the Civil Rights Act
of 1964. For the purposes of pursuing a pay discrimination claim under
Title VII, what is the appropriate analysis?
______
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
------
Ms. Horvitz' Response to Questions Submitted for the Record
1. The conference report for the 2012 National Defense
Authorization Act exempted TRICARE network providers from the Office of
Federal Contract Compliance Programs' (OFCCP) jurisdiction. In light of
this development, is it your understanding OFCCP has ceased pursuing
health care providers that participate in a TRICARE network? Please
explain.
No, it is not my understanding that OFCCP has ceased pursuing
health care providers that participate in a TRICARE network. OFCCP held
a web seminar on April 25, 2012 during which time it announced that it
was putting those audits on hold during the pendency of the appeal
involving Florida Hospital of Orlando. Indeed, its litigation position
in the Florida Hospital case is that the National Defense Authorization
Act eliminated only the ``provision of medical care'' as a basis for
subcontractor status via TRICARE. OFCCP argues that Florida Hospital of
Orlando is still a subcontractor based on its role in facilitating the
creation of the TRICARE health network. This interpretation of the
National Defense Authorization Act would have the effect of all but
writing out the exemption in the National Defense Authorization
Act.Also in the interim, while the appeal of the Florida Hospital of
Orlando case is pending, OFCCP has sent letters to hospitals and other
medical institutions, whose audits were on hold because of the Tricare
jurisdictional issue, if OFCCP believes it has an alternate basis to
assert jurisdiction, such as the existence of a direct federal
contract. For those companies with an alternate basis for jurisdiction,
OFCCP is expecting them to submit affirmative action plans as of the
date when the company first received a scheduling letter before the
audit hold went into effect. For some companies, in other words, OFCCP
is now seeking in 2012 a 2009 affirmative action plan, based on 2008's
data.
2. How does an entity that contracts with a direct federal
contractor know whether it must comply with OFCCP's requirements? Is it
possible for OFCCP's requirements to apply to an entity that was not
aware of the requirements at the forming of a contract with a federal
contractor?
It is possible for the agency's requirements to apply to a company
that was not aware of the obligations at the forming of an arrangement
with a federal contractor. There are several ways in which a company
doing business with a contractor could learn that it is a covered
contractor, including receiving a notice from the direct contractor
asking for the subcontractor's certification with the laws and
regulations that OFCCP enforces. Other prime or direct contractors
include references to OFCCP's regulations or the applicable Federal
Acquisition Regulation (FAR) provisions in their standard contract
terms and conditions. It may be in the ``fine print,'' but the direct
contractor has complied with its obligation to flow down the OFCCP's
regulatory compliance obligations to each subsequent level, and it is
up to the subcontractor, supplier, or vendor to determine whether it
must comply.
The problem is that not every vendor and supplier on a direct
federal contract is a covered subcontractor. A covered subcontractor is
an entity that either sells a good or renders a service that is
``necessary to the performance'' of the direct government contract, or
who performs any portion of the direct contractor's obligation under
the contract. Most of the time, the direct contractor's procurement or
contracting officers do not know whether the goods or services they are
procuring are ``necessary'' to the performance of the direct federal
contract. It is simpler to have the direct contractor's procurement
officials insert the clause in every commercial contract and purchase
order they let out along with the words ``as applicable.'' Then, it is
up to the vendor or supplier to inquire as to whether the goods and
services it is providing meet that ``necessary to the performance''
threshold.
OFCCP's position in pending litigation, however, is that whether or
not the incorporated equal opportunity clauses are actually flowed
down, they operate as a matter of law, and their omission from a
contract is not evidence that the company need not comply. OFCCP's
regulations at 41 CFR Sections 60-1.4(e), 60-300.5(e), and 60-741.5(e)
are parallel, and the Executive Order regulation at 1.4(e) states that
``By operation of the [Executive] order, the equal opportunity clause
shall be considered to be a part of every contract and subcontract
required by the order and the regulations in this part to include such
a clause whether or not it is physically incorporated in such contracts
and whether or not the contract between the agency and the contractor
is written.'' In other words, even if the contract does not have any
OFCCP equal opportunity clause language in it, the company could still
be a covered contractor or subcontractor.
That is what happened to UPMC Braddock Hospital, which is
litigating this and other issues before the United States District
Court for the District of Columbia. UPMC Braddock Hospital was selected
for an audit and contested jurisdiction. UPMC Braddock Hospital had
signed participating provider agreements with UPMC's HMO. The HMO in
turn had signed a direct federal contract with the Office of Personnel
Management, which negotiated medical service contracts for the Federal
Employee Health Benefit Program. OPM has its own regulation, duly
promulgated based on notice and comment, which regulation specifically
carves out the participating hospitals and medical providers from the
definition of subcontractor. The contract that UPMC Braddock signed
specifically excluded hospitals from subcontractor jurisdiction, but
the DOL's Administrative Law Judge and the Administrative Review Board
held that OPM's regulation was entitled to no deference. Only the
Director of OFCCP or the Secretary of Labor can exempt an employer from
OFCCP's regulations, and OPM had no authority to do so, according to
the ALJ and ARB. Because the direct contract between the UPMC HMO and
the Federal Employee Health Benefit Program was to provide medical
services to federal employees, their dependents, and beneficiaries, and
UPMC Braddock Hospital provided medical services in fulfillment of that
direct contract, UPMC Braddock Hospital was held to be a covered
subcontractor.
Every time a company receives a document from a federal agency, it
has no certainty at all whether OFCCP's obligations apply, or not.
Suppose the procurement officer forgets to check the box that
incorporates OFCCP's regulations. How does the company know whether the
unchecked box was intentional or inadvertent? Can it rely on that, or
does it have to assume that OFCCP's obligations apply as a matter of
law? There is no definitive answer.
Other agencies are very oblique in the agreements they sign, not
making it clear whether the agency is expending grant funds (which do
not give OFCCP audit jurisdiction) or is contracting with the company
(which would give OFCCP jurisdiction). It's a no-man's land, in many
respects. Other times, procurement officials have entered mis-
information into the federal procurement data system, characterizing
arrangements as contracts when they were not. This has happened
frequently with respect to medical and scientific research. Some
agencies procure medical research through grants and contracts, but
their procurement officials have not been accurate in the
characterization of such arrangements in the Federal Procurement Data
System. Several times, a recipient of grant funds is accused of having
a federal contract, when it does not, and it has to engage a lawyer and
expend additional funds to try to persuade OFCCP to ``administratively
close'' the audit because OFCCP lacks jurisdiction, and the
``agreement'' is really a grant, not a contract.
Finally, as I mentioned during my oral testimony, a company
(Company A) can have an existing relationship to supply a good or
service to another company (Company B) at a fixed, agree-upon price. If
company B decides to become a direct federal contractor, and accepts
the obligations imposed on it by the OFCCP, it has an obligation to
flow-down the compliance clauses to all of its vendors and suppliers,
who are supplying goods or services necessary for the performance of
its new government contract. If Company A is supplying a good necessary
to the performance of the government contract, it is now covered by all
of OFCCP's regulations. It is (unwillingly) a government subcontractor.
If the value of the goods and services that Company A supplies to
Company B (and that are necessary to the performance of the direct
contract) exceed $50,000, the subcontractor must prepare written
affirmative action plans for women and minorities, and for individuals
with disabilities. The women and minorities' plan includes extensive
data evaluation regarding the employment of females and minorities
against census data, the setting of employment goals, and the
evaluation of hiring rates, promotion rates, termination rates, and
compensation equity for the entire company (not just the facility that
is supplying the good or service to the prime contractor). If the value
of the subcontract exceeds $100,000, then on the date that the direct
contractor signed the contract, the subcontractor (unknowingly) had an
obligation to begin listing all of its non-executive and non-temporary
jobs with the unemployment office where the job is located, for all of
its jobs, all over the country, even if only one of its facilities is
supplying a direct federal subcontractor with $100,000 in supplies.
3. Please explain how a single transaction with the federal
government can unknowingly subject an entity to coverage under OFCCP's
requirements? As part of your response, please discuss whether it is
likely that a single transaction with the federal government--a $50,000
transaction, for example--would cover the costs of complying with
OFCCP's requirements?
I think one of the most striking examples of how a transaction
would unknowingly subject an institution to coverage is the example of
a hospital that agreed to treat a federal prisoner with a severe heart
condition. The hospital agreed to treat the prisoner (as if it could
ethically say ``no''?) and, not surprisingly, the medical bills soon
reached $50,000 (if not much higher). In order for the Federal Bureau
of Prisons to pay for the medical care that the hospital rendered, it
had to create a purchase order in its system (after the fact). The
purchase order contained the standard EEO clauses in it. When the
hospital was selected for an audit, it asked OFCCP for evidence of the
contract, and OFCCP sent it the Federal Bureau of Prisons purchase
order. That one hospital was part of a larger network of hospitals, and
as a result of the one hospital's decision to treat the federal
prisoner, OFCCP asserted that the whole hospital system is a covered
contractor with an obligation to prepare AAPs and track applicants, and
the like.
To comply with OFCCP's regulations, particularly the excruciating
record keeping associated with applicant tracking, most companies spend
far more than $50,000 in the first year of the contract:
Companies need to implement changes to any on-line hiring
process to ensure they have a method to solicit the race and gender of
qualified applicants, and to solicit the veteran and disability status
of new hires;
The company's website needs to be re-configured to
accommodate applicants with disabilities;
The company needs to change managers' and supervisors'
hiring processes and train them in all aspects of the OFCCP's
regulations;
The company must prepare written affirmative action plans
for each of its establishments with 50 or more employees if the value
of the single contracts exceeds $50,000, which data queries often
trigger expensive software development upgrades to payroll or HRIS
systems because the systems were not developed with an eye towards
preparing affirmative action plans.
The company is expected to evaluate compensation for race,
ethnicity, or gender-based disparities, and it is highly unwise to do
that without the protection of attorney client privilege, which means
there are legal fees associated with compliance.
If the contract is for $100,000 or more, the obligation to
list every job vacancy with the employment service delivery system in
the jurisdiction where the job is located will apply, and that
obligation is not limited to the building or facility where the
government contract is being performed.
The job listing obligation applies immediately upon
signing a contract, unlike the written AAP obligation which contractors
have 120 days to implement.
And there are other obligations, including engaging in
meaningful outreach for qualified veterans and individuals with
disabilities, which also takes time and resources because since the
federal government eliminated America's Job Bank, multi-establishment
employers have no one-stop place to efficiently and cost-effectively
comply with that job listing obligation. It also results in individuals
with disabilities and veterans having to check multiple sources for
these opportunities, instead of affording them one unified place to
begin a job search.
OFCCP's proposed new scheduling letter will seek even greater
information from employers in audits, if adopted as proposed, and
employers will have to re-configure payroll systems to adapt. ``For all
employees, compensation includes base salary, wage rate, and hours
worked.'' [Proposed New Question 12(a)]. The vast and overwhelming
majority of companies are not tracking hours worked for exempt
employees. I do not know how my clients are going to do this, at all.
4. Your written testimony noted that OFCCP is proposing to increase
the scope of its audit process, so that audits can stay open
indefinitely. First, how long can audits last currently? Second, what
are the potential consequences for contractors of an indefinite
temporal scope to OFCCP audits?
Although, most compliance reviews will end within one year, some
can last a lot longer. I am personally aware of four audits that are
all more than four years old. Our oldest began in July 2007.
As long as I can remember, it has always been OFCCP's practice to
ask for information going back from the date of the scheduling letter.
At first, OFCCP receives the current affirmative action plan, which is
based on the prior year's data. If OFCCP identifies potential
discrimination in that first year's data, it typically asks for one
more year going back, so it can evaluate a total of two years' worth of
data. If the company was more than six months into its current plan
year when it received the scheduling letter, OFCCP also obtained data
for the first six months of the current year. At most, therefore, OFCCP
would have 2.5 years of data to evaluate. It was efficient for
contractors to be able to handle the audits because the data set that
was being evaluated was limited and confined to a concrete period.
Now, OFCCP is proposing to alter its veterans and disabilities
regulations to remove any date limitations on the scope of those
audits, and the Administrative Review Board held in OFCCP v. Frito-Lay
that OFCCP can obtain information past the date of the scheduling
letter in audits conducted pursuant to the Executive Order. OFCCP
compliance officers can stop working on an Executive Order audit (women
and minorities) for four years, pick it up again, and ask the company
for all of its compliance data in the intervening four years, and
contractors will have to gather it. In fact, that is essentially what
happened in the Frito-Lay case. OFCCP did almost nothing in that
compliance review, and then nearly two and a half years later sought to
double the time frame under review based on nothing more than summary
data showing a statistically significant difference in hiring rates
between females and males in one job group. OFCCP did nothing for two
years to understand what was driving the disparity. OFCCP needed more
data for no other reason than OFCCP had not pursued the compliance
review in a timely manner. The ARB's ``objective deficiency'' standard
of one statistically significant disparity to justify extending the
audit out indefinitely is divorced from what statistical significance
means--that an outcome would only occur randomly by chance 5% or less
of the time. In my opinion, most employers do not make decisions
randomly. Without any factual investigation at all, OFCCP will never
know if the nonrandom explanation was discrimination.
Moreover, and more importantly, a 5% or 1 out of 20 result is
statistically expected and not particularly unusual, at all. If
approved, OFCCP's new scheduling letter will ask for hires and
applicant information title by title, and any company with hiring
activity in as few as 20 job titles in its AAP can expect that if its
plan is ``typical'', one of those titles will show a statistically
significant gender-based hiring disparity and another title will show a
statistically significant race-based hiring disparity--that is, of
course if hiring decisions were simply random.
The ARB's assertion that one statistically significant disparity
without any other evidence linking that disparity to discrimination is
an ``objective deficiency'' that justifies an unlimited extension in
the temporal scope of an audit represents either an intentionally broad
directive that will justify the temporal extension of a very large
percentage of OFCCP's compliance reviews or an embarrassingly gross
misunderstanding of the concept of statistical significance.
There are no limitations, at all, as to how long these audits can
take. And now, with the ARB's decision in Frito-Lay, there likewise
will be no limit to the period of time that gets reviewed by OFCCP in a
compliance review when OFCCP fails to process and complete its
compliance reviews in a timely manner.
In my opinion, the EEO professionals who work on these audits want
very much to be in compliance with OFCCP's regulations. Most companies
genuinely want to know if they did something wrong, or are not doing
everything they are supposed be doing. They want to do the right thing.
Tell them what they did wrong so they won't keep doing it. They will
agree to do it right going forward. If the OFCCP finds a violation,
cite the employer, negotiate a fair resolution, and then OFCCP can
monitor progress going forward. The audit is done. If OFCCP finds
statistically significant differences in hiring rates in data it
receives in 2012 for the calendar 2011, what is the point of letting
the contractor continue to engage in the same discriminatory practice
or policy in 2012, 2013, 2014, and into 2015? It makes more sense for
the OFCCP to reach its conclusions early and compel the employer to
stop doing the wrong thing sooner rather than later. Why is it in the
interest of future victims of discrimination to allow the employer to
continue doing the same thing that caused the problem in the first
place? The longer OFCCP takes to conduct the audit, the more victims
there will be in 2012, 2013, 2014, and 2015. The stark reality is that
the longer the audit is open, the more back pay remedies OFCCP will
seek on behalf of more victims. The bigger the dollars, the larger the
media coverage is likely to be.
5. In your opinion, is OFCCP focusing adequate resources on
compliance assistance for contractors? What steps, if any, is OFCCP
taking to clarify the rules of the road for contractors?
In my opinion, OFCCP is not focusing adequate resources on
compliance assistance for contractors. There are some OFCCP district
offices where the district director and assistant district director are
very well-trained, and thus the compliance officer ranks are well
trained. I would recommend that my government contractor clients take
advantage of the assistance OFCCP provides in such offices. Hartford
and Buffalo come to mind in that respect. However, there are other
offices where that is not the case, at all, and companies that have
gone to these compliance assistance seminars are being given incorrect
advice.
For example, we have had clients attend compliance assistance
training, and the compliance officer has told the company that every
single person who sends the company a resume is an applicant, must be
included on an applicant tracking log, and must be sent an invitation
to self-identify. That is incorrect. The OFCCP's Internet Applicant
definition has four parts to it, and only when all four parts are met
does the company have an obligation to solicit race and gender of
applicants. Companies receiving expressions of interest over the
Internet, by fax, or by email, for example, have no obligation to
solicit race and gender from individuals who are not Internet
Applicants. This referenced company received those expressions of
interest via email. If the company did not actually consider the
candidate for an open position, and never even determined whether the
candidate was qualified, there was no legal obligation to solicit race
and gender. A company's obligation is to solicit race and gender of
qualified candidates it actually considers for a vacant position. But
in reliance on the OFCCP compliance officer's incorrect advice, that
company included all the unsolicited resumes on its applicant log, and
OFCCP used that information to assert that the company was
discriminating against those non-hired applicants because of gender
when the rate at which it hired women was significantly less than the
rate it hired men. When the company tried to argue that it did not
actually consider those individuals for an open position, OFCCP
rejected the argument because the company had no evidence in support of
its position. It had no evidence that it did not consider the
individuals. How are companies expected to prove that they did not do
something?
Compliance assistance is hit or miss in the district offices. When
OFCCP has rendered assistance by web seminar out of its national
office, those compliance assistance broadcasts are well done. However,
more compliance assistance could and should be provided.
OFCCP also has the ability to issue Directives and Guidance to the
contractor community, but on several occasions during the Shiu
administration, these directives were never published or made available
to the contractor community so that contractors could be informed about
OFCCP's position. For several years, OFCCP has been telling the
government contractor community that it will be publishing its revised
Compliance Manual, but it has not completed that task, either.
6. In the context of investigating possible discrimination in
compensation, your written testimony notes that during the audit
process, OFCCP launches a full investigation of a contractor's
compensation practices wherever there is a 2 percent or $2,000
difference between certain workers in a particular job title. How has
OFCCP justified these thresholds? Once OFCCP identifies a compensation
disparity in a contractor's workforce, what burdens does the agency
impose on the contractor to prove that there is no discrimination?
I don't think OFCCP has justified the 2% or $2000 threshold. It
apparently designed the threshold to be so low that practically every
contractor fails it, and then it has some basis to obtain line item,
individual compensation data on everyone in the entire workforce, even
for employees that are single incumbents in the job, and including job
titles where everyone in the title is the same race or the same gender.
OFCCP sends the contractor a letter stating that is has identified
``unexplained differences in average compensation that require further
evaluation of your company's compensation practices.'' For example, the
18 variables that districts in the southeast region request are:
Employee ID Number
Job Title
Pay Division/Group as identified in the Itemized 11
response
Job Group (AAP)
Gender
Race/Ethnicity
Annual base salary or base hourly wage (excluding
overtime, bonuses, incentives)
Date of hire (provide the date, not the time in months or
years)
Date of entry into the job title (provide the date, not
the time in months or years)
Part-time/Full-time status (for part-timers, please
include a separate column showing the average hours worked in a typical
week)
Other paid allowances, if any, such as commission pay,
overtime pay, bonus pay or shift differential. Report each allowance in
separate data columns;
Department
Work shift (if more than one and as applicable)
Exempt vs. non-exempt status
Grade level or salary band classification (if applicable)
Employee location
Similarly Situated Employee Groupings (SSEG's), if
developed, and
All other factors relevant to your company's compensation
system.
The form letter then says, ``If any of the items requested above
are not applicable and/or not readily available, please notify us
immediately. We will then determine if we are able to continue our
evaluation with the readily available items and/or to determine if a
need for an onsite visit to gather the items is appropriate.'' The
subtext there is that if the contractor does not invest substantial
time, money, and resources into creating its own database with these
variables included, OFCCP would be willing to come on site, look at
every personnel file, and make its own database. Either the employer
can go through the arduous exercise of building such a database, or
OFCCP would be happy to do it by coming onsite to inspect personnel
records.
Some district offices rationally ask for further information only
on job titles with comparators. Other districts rigidly insist on
having the contractor populate Excel workbooks for every job title in
the workplace, including job titles with no comparators because the
form letter says ``[f]or the next phase of our evaluation, we are
requesting that you provide the following information, for all
employees in your workforce, as of the same date and workforce used in
the your data submission to Itemized 11 of the scheduling letter.''
That rigid approach makes no sense in smaller workplaces where it
is highly unlikely that a lot of jobs will have multiple incumbents of
different races and genders. In a workplace with fewer than 300
employees, you would not expect to have three HR Managers, three
Marketing Managers, three CEOs. It is plausible for a small employer to
have one person doing a job that is unique to him or her. So if it
there is only one CEO, and no comparators, why does OFCCP need the
CEO's Department Name, Exempt FLSA status, work location, date of hire,
date in the job, bonus pay, and the like? Likewise, if the employer has
only three Executive Assistants, and all are Black Females, why does
the OFCCP need the variables for everyone in that job title? Why does
OFCCP insist on having the contractor gather all the additional
information on job titles with single race and gender incumbents? None
of that information is likely to help OFCCP identify whether there is
discrimination based on gender, race or ethnicity.
OFCCP places extensive and extraordinary burdens on employers to
prove that any observed difference in compensation triggered by the 2%
or $2000 threshold is justified by a nondiscriminatory reason. Soon
after the contractor submits its response to Itemized Listing 11, which
includes only total compensation and total number of employees in the
grouping (whether by title, by grade, by range, by family), as noted
above in the response to number 8, OFCCP will send the company a letter
stating that it has identified ``unexplained differences'' in
compensation. OFCCP typically provides only 10 business days for the
contractor to gather the variables, one of which is time in the
position or time in the title. A substantial number of government
contractors are not tracking that information in a way that enables
them to write a query of a database and extract the information
efficiently. They have to go into personnel files and look up each
person individually. Even in situations where time with the company
fully and satisfactorily explains the differences that OFCCP was
observing initially, some district offices insist that the contractor
extract all of the requested variables, not just the one that would
explain the differences. In other cases, OFCCP's rigid variable list
has nothing to do with the differences in pay. Two individuals could
have started in the same job on the same day, and they are making $3000
difference. One came to the job with three years of direct relevant
experience working for a competitor, and the other came to the job
right out of college with no direct relevant experience. There is no
column that identifies whether the experience is relevant, and in those
situations, where experience indeed explains the difference in
compensation, the contractor is expected to produce an application or
resume, clearly showing that there were differences in prior relevant
experience justifying the difference in pay. If a contractor has
evidence that subsequent performance has led to pay differences over
time, it will need to demonstrate that fact with evidence of
performance reviews. If performance review information is not in the
same database as the payroll data, it needs to be ``married'' or
``merged'' into the same database so that the employer can evaluate the
mathematical effect of the performance information on pay.
If the employer is unable to produce evidence in the form of
applications, resumes or performance evaluations, the OFCCP is likely
to come onsite to interview managers responsible for the setting of
compensation, supervisors who may have knowledge about differences in
skills, responsibilities, job performance, attendance, attitude, and
other criteria relevant to pay, and the employees themselves in an
effort to obtain evidence of the similarity of employee roles. In my
opinion, many newer compliance officers who have been hired recently
approach these onsites with a bias against the employer, looking to
find evidence of discrimination. Questions are not neutral and designed
to gather facts. Questions are designed to foster conclusions of
similar work for different pay because that is the evidence OFCCP needs
to allege discrimination. The employer or its representative is not
permitted to sit in on these employee interviews, and the employer is
not allowed to ask the employee what he or she told the auditor. During
manager interviews, if the employer's representative tries to help the
client recall information, the compliance officers will instruct the
second compliance officer in the role of ``scribe'' or ``note-taker''
to write down that it was the lawyer who gave the answer, not the
company. In these cases, it is not about the search for truth; it is
about the search for evidence of discrimination.
7. Your written testimony highlighted the fact that solely focusing
on differences in average pay between workers has no basis in
compensation discrimination law under Title VII of the Civil Rights Act
of 1964. For the purposes of pursuing a pay discrimination claim under
Title VII, what is the appropriate analysis?
Pursuant to the Lilly Ledbetter Fair Pay Act of 2009, if someone
wants to claim pay discrimination, (s)he must identify a specific
discriminatory decision affecting her/his pay. Showing that you are
paid less than a peer is not enough. In other words, under Title VII,
which applies the standards adopted in Lilly Ledbetter Fair Pay Act of
2009, an employee must point to a discriminatory decision affecting
pay, not just differences in pay.
Gender-based (but not race-based) pay difference are relevant under
the Equal Pay Act if the employees are in substantially the same job at
the same location and if the difference in pay is not based on factors
other than sex. OFCCP generally does not pursue its cases under the
limited and very narrow Equal Pay Act.
Yet in a compliance review, OFCCP does not analyze pay decisions at
all. Instead, OFCCP receives total compensation and total number of
employees and calculates an average. It asks the employer to explain
the difference with evidence, such as a resume or application to
differentiate education, skill set, prior relevant experience, and the
like. It may ask for performance evaluations, if the employer contends
that performance influences pay. If the employer asks for a data
variable that the employer does not maintain in its HRIS or payroll
system, the OFCCP will insist on coming onsite to examine personnel
files to obtain the data itself and create its own data base.
Even if the employer is able to extract the demanded variables from
an HRIS or payroll system, OFCCP may decide to conduct onsite
interviews with individuals responsible for setting initial
compensation and with employees in the same job to measure how similar
or different the roles are.
OFCCP knows that if it identifies a difference in pay between
similarly titled individuals, and the amount of the compensation remedy
is less than what it would cost the employer to retain counsel and
oppose the violation, it is more cost effective for the government
contractor to pay the employee the difference in wages than to litigate
the matter through years of enforcement proceedings. Thus, even if the
employer offers a legitimate, nondiscriminatory reason for the
difference, and OFCCP has not identified any discriminatory decision,
OFCCP issues the Notice of Violations and obtains back pay remedies.
OFCCP alleges that the employer violated Executive Order 11246, and so
long as the conciliation agreement contains a non-admissions clause,
the employer capitulates without any proof or evidence at all that
there was a discriminatory decision that led to the difference in pay.
OFCCP is issuing a Notice of Violations in situations when it has not
identified a discriminatory decision.
______
U.S. Congress,
Washington, DC, May 31, 2012.
Jeffrey A. Norris, President,
Equal Employment Advisory Council, 1501 M Street, NW, Suite 400,
Washington, DC 20005.
Dear Mr. Norris: Thank you for testifying at the April 18, 2012,
Subcommittee on Health, Employment, Labor, and Pensions hearing
entitled, ``Reviewing the Impact of the Office of Federal Contract
Compliance Programs' Regulatory and Enforcement Actions.''
Enclosed are additional questions submitted by subcommittee members
following the hearing. Please provide written responses no later than
June 14, 2012, for inclusion in the official hearing record. Responses
should be sent to Benjamin Hoog of the committee staff, who may be
contacted at (202) 225-4527.
Thank you again for your contribution to the work of the committee.
Sincerely,
Phil Roe, Chairman,
Subcommittee on Health, Employment, Labor, and Pensions.
questions from representative roe
1. Your written testimony highlighted that the Office of Federal
Contract Compliance Programs (OFCCP) underestimated the potential costs
and burdens of each of its pending regulatory proposals. For example,
you noted that the burdens associated with the agency's proposal
pertaining to individuals with disabilities may have been
underestimated by 30 fold. Please explain how, in your opinion, the
agency underestimated the burdens of its regulatory proposals. Also, as
part of your response, please include a discussion of the extent to
which OFCCP consulted federal contractors in preparing the regulatory
proposals and appurtenant burden estimates.
2. Your written testimony stated that OFCCP's regulatory proposals
would convert the agency's current regulatory scheme of ``guidance and
recommendations'' into one of ``highly prescriptive mandates.'' These
new mandates would, in large part, reject contractors' ``good faith''
efforts as a measure of compliance. Instead, OFCCP would become more
focused on hyper-technical administrative requirements and whether
contractors are meeting the agency's predetermined outcomes. Based on
your experience, please explain whether OFCCP's mission is best served
by such highly-prescriptive requirements and predetermined outcomes.
3. Your written testimony noted that OFCCP is proposing to mandate
a number of new requirements relating to contractors' obligations to
post jobs with local workforce agencies. This includes forming
``linkage agreements'' with workforce agencies hand-picked by OFCCP.
Please explain the burdens associated with forcing contractors to
undertake these requirements. Also, please explain whether you believe
the potential benefits of requiring these efforts of contractors would
outweigh the costs.
4. Your written testimony noted that OFCCP intends to rescind its
guidelines related to systemic compensation discrimination. In
conjunction with this rescission, I understand OFCCP has also argued
that to prove systemic pay discrimination, it may not need to consider
anecdotal evidence of discrimination in the workplace or the
nondiscriminatory variables that form contractors' pay decisions.
Please explain whether you believe this is consistent with the Supreme
Court's rulings on pattern or practice discrimination under Title VII
of the Civil Rights Act of 1964.
______
Mr. Norris' Response to Questions Submitted for the Record
Dear Chairman Roe: On May 31, 2012 you requested that I provide
written answers to four questions regarding the testimony I presented
to the Subcommittee at the hearing referenced above. I am pleased to do
so. Your questions and my responses are as follows:
1. Your written testimony highlighted that the Office of Federal
Contract Compliance Programs (OFCCP) underestimated the potential costs
and burdens of each of its pending regulatory proposals. For example,
you noted that the burdens associated with the agency's proposal
pertaining to individuals with disabilities may have been
underestimated by 30 fold. Please explain how, in your opinion, the
agency underestimated the burdens of its regulatory proposals. Also, as
part of your response, please include a discussion of the extent to
which OFCCP consulted federal contractors in preparing the regulatory
proposals and appurtenant burden estimates.
The fundamental flaws in OFCCP's economic impact analyses for both
its ``Section 503'' proposal pertaining to individuals with
disabilities and its ``Section 4212'' proposal pertaining to covered
veterans--flaws which we respectfully submit have resulted in a gross
understatement of their true cost burden--were the subject of extensive
discussion and analysis in our comment letters submitted to OFCCP in
response to each proposal's formal Notice of Proposed Rulemaking
published in the Federal Register. I have linked copies of both comment
letters for your review. Please see pages 2-11 of the Section 503
disability comment letter (http://www.eeac.org/public/12-037a.pdf) and
pages 4-11 of the Section 4212 veterans' comment letter (http://
www.eeac.org/public/11-133a.pdf). By way of summary, however, the
errors and omissions contained within OFCCP's economic impact analysis
for each of its two proposals can be categorized as follows:
OFCCP has underestimated by a minimum of 100,000, and
perhaps as many as 200,000, the actual number of federal contractor
establishments subject to the agency's Section 503 and Section 4212
requirements;
OFCCP has completely omitted from its economic impact
analyses certain mandatory compliance requirements--such as mandatory
training sessions and employee meetings--that federal contractors will
be required to spend considerable time and resources to satisfy;
OFCCP has grossly understated or ignored the actual amount
of time federal contractor personnel will spend complying with many if
not most of the agency's proposed requirements; and
OFCCP has grossly understated or ignored other critical
parameters--such as the number of jobs filled by the federal contractor
community each year--in its economic impact analyses.
With respect to OFCCP's efforts to consult with federal contractors
in preparing its Section 503 and Section 4212 proposals, and
specifically to develop accurate and realistic estimates of each
proposal's respective burdens, we respectfully submit that no such
meaningful consultation ever occurred. Aside from a handful of ``town
hall listening sessions'' and ``online chats'' held by the agency
during its development of these regulatory proposals, we are aware of
no other efforts by the agency to engage the contractor community in a
dialogue around how the proposed rules' underlying policy objectives
might be most effectively and efficiently accomplished. Indeed, even
with a history of more than 35 years of close collaboration between
EEAC and OFCCP--regardless of the Administration in power--on matters
of equal employment opportunity and affirmative action policy, EEAC was
not consulted in any meaningful way on either of these two significant
regulatory proposals.
2. Your written testimony stated that OFCCP's regulatory proposals
would convert the agency's current regulatory scheme of ``guidance and
recommendations'' into one of ``highly prescriptive mandates.'' These
new mandates would, in large part, reject contractors' ``good faith''
efforts as a measure of compliance. Instead, OFCCP would become more
focused on hyper-technical administrative requirements and whether
contractors are meeting the agency's predetermined outcomes. Based on
your experience, please explain whether OFCCP's mission is best served
by such highly-prescriptive requirements and predetermined outcomes.
We believe a ``one-size-fits all'' approach to regulating the
employment practices of federal contractors is doomed to fail given the
wide variety of ways that companies structure their businesses and
manage their workforces. OFCCP can most efficiently accomplish its
mission of promoting affirmative action and equal employment
opportunity in the workplace by clearly articulating in general terms
its compliance standards and then monitoring how federal contractors
adapt to those standards in ways appropriate to their unique business
environments.
OFCCP's past evaluation of corporate compensation practices is a
case in point. In 2000, OFCCP implemented an Equal Opportunity Survey
(``EO Survey'')--a reporting form that required federal contractors to
report employment and compensation information in a standardized
format. The prescribed format did not conform to how most companies ran
their businesses. As a result, completing the report was burdensome and
of no practical value to contractors and provided little usable
enforcement information to OFCCP. The EO Survey was rescinded by OFCCP
in 2006 because it ``failed to provide value to either OFCCP
enforcement or contractor compliance.'' Unfortunately, the EO Survey
seems to have acquired a new lease on life in OFCCP's August 10, 2011
Advance Notice of Proposed Rulemaking to develop and implement a new
compensation data collection tool. The proposed tool suffers from all
of the same infirmities as the former EO Survey, with the addition of
many more prescriptive elements.
In contrast to the EO Survey and proposed new compensation data
collection tool, OFCCP's 2006 Systemic Compensation Discrimination
Guidelines (which OFCCP is now proposing to rescind) provide clear
guidance to both OFCCP compliance officers and federal contractors
regarding the statistical and legal standards to be used in evaluating
the equity of corporate compensation systems. Rather than being
prescriptive, the standards instead offer guidance for how contractors
can appropriately evaluate the various components of their compensation
systems. With the benefit of this guidance, many federal contractors
voluntarily undertook compensation self-evaluations and implemented pay
adjustments where warranted.
Such voluntary action under the 2006 compensation guidelines has
better served OFCCP's mission than did the failed EO Survey.
Unfortunately, by proposing to rescind the compensation guidelines and
resurrect the EO Survey in the form of a new compensation data
collection tool, OFCCP currently is proceeding in exactly the wrong
direction.
3. Your written testimony noted that OFCCP is proposing to mandate
a number of new requirements relating to contractors' obligations to
post jobs with local workforce agencies. This includes forming
``linkage agreements'' with workforce agencies hand-picked by OFCCP.
Please explain the burdens associated with forcing contractors to
undertake these requirements. Also, please explain whether you believe
the potential benefits of requiring these efforts of contractors would
outweigh the costs.
The ``mandatory listing'' and ``linkage agreement'' requirements
contained in the Section 503 disability and Section 4212 veteran
proposals are other examples of OFCCP's ``one-size-fits-all'' approach
to enforcement. They are discussed on pages 4-11 of the veteran comment
letter and pages 2-11 of the disability comment letter. Both
requirements prescribe ways federal contractors must recruit veterans
and individuals with disabilities.
The mandatory listing obligation requires contractors to post most
of their employment openings with an ``appropriate'' local employment
delivery system such as the state employment service or a local
veterans' employment representative (for veterans) and the ``One-Stop
Career Center'' nearest the contractor's facility (for individuals with
disabilities). These are not necessarily the same offices in all cases.
Quite apart from the sheer number of postings required, the most
burdensome aspect of the mandatory job listing obligation is the fact
that the listings must be made in the ``manner and format'' required by
the particular receiving office. Accordingly, rather than developing
and utilizing a standard job posting and transmittal process
appropriate for all openings, each listing must be customized to the
idiosyncrasies of the local offices where it is posted.
The ``linkage agreements'' are referral contracts federal
contractors must negotiate with veteran and disability referral
agencies, many of which are specified by the federal government.
Collectively, OFCCP's veterans and disability proposals mandate a
minimum of five linkage agreements for each establishment. With
approximately 285,000 covered contractor establishments in the U.S., a
total of 1,425,000 written linkage agreements would be required each
year.
The notion that contractors will successfully generate greater
numbers of disabled and veteran job applicants by signing more than one
million written linkage agreements and posting their jobs with hundreds
of state and local job services offices in the specific manner and
format each office requires, ignores the modern-day methods and
mechanisms employers use to recruit qualified applicants, as well as
the methods and mechanisms used by veterans to find and express
interest in those jobs. It also ignores the fact that many contractors
already actively utilize numerous resources to recruit disabled persons
and veterans, including some currently mandated by the agency's
existing regulations.
The recruitment efforts, as proposed by OFCCP, dictate a certain
process that largely ignores today's technology and the far reach of
the Internet. Today, a great deal of recruiting is conducted online,
thus making a global community seem far more local. Imposing
restrictions requiring ``local'' recruitment efforts has the effect of
limiting the contractor community to efforts aimed at small pockets of
the disabled and veteran communities. EEAC member companies prefer to
continue to raise awareness of their commitment to the employment of
individuals with disabilities and protected veterans by utilizing
resources that allow individuals access to all of their opportunities,
not only those in their immediate geographic locale.
4. Your written testimony noted that OFCCP intends to rescind its
guidelines related to systemic compensation discrimination. In
conjunction with this rescission, I understand OFCCP has also argued
that to prove systemic pay discrimination, it may not need to consider
anecdotal evidence of discrimination in the workplace or the
nondiscriminatory variables that form contractors' pay decisions.
Please explain whether you believe this is consistent with the Supreme
Court's rulings on pattern or practice discrimination under Title VII
of the Civil Rights Act of 1964.
OFCCP's current Systemic Compensation Discrimination Guidelines
provide that ``[e]xcept in unusual cases, OFCCP will not issue a Notice
of Violation (NOV) alleging systemic compensation discrimination
without providing anecdotal evidence to support OFCCP's statistical
analysis.'' This position is consistent with Supreme Court precedent as
well as with EEOC's enforcement guidance on compensation
discrimination, which provides that ``[a] cause finding of systemic
discrimination rarely should be based on statistics alone.'' See EEOC
Compliance Manual, Section 10, n. 30. OFCCP now finds that traditional
position ``problematic'' in its proposal to rescind the current
compensation guidelines because, in the agency's view, anecdotal
evidence of pay discrimination ``may not exist'' in some cases. Yet in
Int'l Brotherhood of Teamsters v. United States, the lone Supreme Court
precedent that OFCCP relies upon in supporting a statistics-only
approach to compensation discrimination, the government's statistical
evidence of discrimination was bolstered by individual testimony
describing 40 specific instances of discrimination. In the Court's
view, it was this individual, anecdotal evidence that ``brought the
cold numbers convincingly to life.'' It is this same precedent upon
which the EEOC and the courts rely in ``rarely'' pursuing
discrimination cases based upon statistics alone.
While we, like the EEOC, acknowledge that in rare instances
statistics alone can form the basis of a discrimination claim, those
cases are typically reserved for instances where the disparities are so
extreme on their face that additional statistical analyses offer little
additional probative value. In Teamsters, for example, the Court was
faced with evidence that despite the fact that African Americans
represented approximately 50% of Atlanta's population and nearly 20% of
Los Angeles' population, not one of the company's more than 400 line
drivers in those locations were African American. The Court observed
that the company's inability to defend itself came not from statistics,
but from the ``inexorable zero.'' Further, as the Court stated in
Hazelwood School District v. United States, 433 U.S. 299, 312-13 (1977)
only after considering ``all of the surrounding facts and
circumstances'' can a determination be made as to the usefulness of
statistics and their ability to serve as the foundation of a ``pattern
or practice'' of discrimination.
It is troubling that OFCCP now elects to marginalize long-standing
Title VII principles in this area. OFCCP should not be permitted to
convert the rare exception into a general rule by using statistics to
infer discrimination in the absence of any other supporting evidence,
rather than using statistics to confirm the existence or bolster a
theory of discrimination otherwise based upon a foundation of anecdotal
evidence.
Once again, thank you very much for the opportunity to testify on
April 18, and to provide the supplemental information requested in
these additional written responses. I hope the information is helpful
to the Subcommittee in its important deliberations, and that you will
feel free to call upon me in the future if I can be of additional
assistance.
______
[Whereupon, at 11:19 a.m., the subcommittee was adjourned.]