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How to Prepare for an OFCCP AuditAre YouReady for aComplianceEvaluation?

IntroductionOur discussion revolves aroundthe OFCCP Supply and ServiceCompliance Evaluation, theimportance of Federal contractorsand sub-contractors in beingprepared for an OFCCP complianceevaluation, and what to do if theCompany is selected. If selected, theCompany must: Permit OFCCP accessduring normal businesshours to company premisesfor the purpose of conductingon- site complianceevaluations, inspectionof such books, accounts andrecords, includingcomputerized records, andother material as may berelevant to the matterunder investigation. Ensure that all individuals thatparticipate in the complianceevaluation are not harassed,intimidated, threatened,coerced or discriminatedagainst.

Selected for aCompliance EvaluationWhat to Document and WhyDocumentation is essential in preparing a response to any alleged deficiency citedby OFCCP. Today, there may be more than one compliance officer or OFCCPmanager involved, the Company may have a change in personnel responsible forthe AAP before the case closes, the case may be open for months or even years,so that if at the conclusion of the compliance evaluation deficiencies are cited bythe OFCCP, and the Company will have documentation should it contestOFCCP’s findings.Occasionally, COs will make statements during the course of an audit which he/she will later contradict. A record of the CO’s comments during the complianceevaluation can be used to “remind” the CO of these prior statements. In summary,the following documentation is essential in developing a proper defense during thediscussions regarding resolution of any deficiencies. In addition, such records canbe very useful in subsequent compliance evaluations or cases. Accurate records of what transpires A listing of what materials were reviewed by the CO A record of what information was communicated to theCO verbally A copy of all documents sent to the OFCCP or provided toOFCCP during the onsite

A record of each telephone contact with OFCCP should bedocumented with date, time, person making contact, andsubstance of conversation. Notes taken during the on-site review along with a summaryof each day’s activities, areas discussed, persons interviewed,and subjects discussed during interviews with managersand supervisors.What to Review and ConsiderPrior to Submission of AAPsThere should be no surprises during an OFCCP compliance evaluation. Throughproper preparation and assessment prior to submission of the AAPs, the Companywill have an advantage by being prepared and not the subject of an OFCCPallegation of discrimination or violation.Impact Ratio Analysis (IRA) of Personnel ActivityIf the Company has had an acquisition during the prior AAP year or the currentAAP year, the Company will want to ensure such employees hired through theacquisition are properly identified so that when conducting IRAs there are no falsepositive indicators of potential discrimination. For example, if the entire workforceof another Company was acquired, all such employees should be shown in theCompany’s personnel activity as a “New Hire Acquisition.” In such cases wherethe entire workforce was acquired, there were no new hire decisions made andsuch employees did not compete for the job, therefore such new hires should notbe analyzed with other new hires. Lastly, if acquired employees are not separatedfrom other new hires, it will give the appearance that the Company had hiringactivity, with no applicant flow for such acquired employees. It may also give theappearance that the Company failed to properly track all applicants.

If acquired employees did compete for the job, such employees should alsobe noted as “New Hire Acquisition.” The Company will also want to know thedemographics of those individuals who did compete for such positions, andconduct Hiring IRAs for such “New Hire Acquisitions” accordingly.As Impact Ratio Analyses are conducted, the Company will certainly want to run theIRAs by Job Group initially. Where there are common pools of applicants for entrylevel jobs e.g., laborers and operatives, even if such jobs cross EEO-1 categories,and applicants merely apply for entry level jobs that is a common pool of applicantsfor both laborers and operatives, in such situations, IRAs should also be conductedby combining the applicants vs. the hires for such job groups and/or job titles, asappropriate.Where there is a substantially different rate of selection in hiring, promotion,transfer, training, or other employment related decisions for any race, sex, orethnic group, it is merely an indicator that further investigation is warranted,does not establish a violation or a finding of discrimination, it is an indicator thatfurther analysis is necessary. Where adverse impact is identified: refine by race/ethnicity and by job title, recalculate IRA by job title and for each step in theselection process, investigate areas where there are indicators of a different rate ofselection, regardless of whether a particular step is statistically significant at 2 ormore standard deviations and take corrective action as may be appropriate. As wediscussed earlier, OFCCP will pursue remedies for one or more persons adverselyaffected under ACE.Compensation AnalysisKnow how compensation in the Company should be evaluated, e.g., job title,salary grade, etc. and know what factors are important in making compensationdecisions? Are such factors continually tracked, monitored, measured andretrievable? In cases where such factors are important but are not retrievable andwhere OFCCP identifies differences, there will be push back from OFCCP arguingthat such factors are not important and irrelevant.

Where there are differences, review and determine reasons for differences, andare such differences justified and non- discriminatory? Test the Company’s positionto determine if it holds true for all job titles, even those where there are nodifferences. For example, if education and experience are important, ensure thatholds true across all jobs if that is the Company’s position. If it does not, furtherreview should be conducted to determine the reason for such differences.Also, if the Company has for example business titles and job titles, or job titles andgovernment contract titles, or any other combination of titles that are used, theCompany will want to know which title drives compensation, what title is used formarket studies? If the answer is business titles and the AAP was developed usingjob titles, you may want to consider revising your AAP and all analyses includingcompensation analyses using business titles.Since there is no one size fits all compensation analyses, it is so very importantthat the Company know how their compensation is be analyzed, and identify andcorrect any differences that cannot be explained. Once the data is submitted toOFCCP and the Company determines there were errors in the data, etc., and resubmits the data, that does and will continue to affect the Company’s credibilityand the integrity of future data submissions to the OFCCP.Review prior results of an OFCCP compliance evaluation. If the Company hasundergone a prior OFCCP compliance evaluation or investigation, OFCCP willfollow-up on the results of such prior compliance activities. Are there any indicatorsof potential repeat violations? Identify what they are and determine the statusof such commitments, and implement the necessary corrective action, as maybeappropriate.Review commitments made in the AAPs and determine the status of suchcommitments, and take corrective action, as appropriate. It is important to takethe time to review the AAPs, understand statistical indicators and commitmentsmade. Further, if time is not devoted up front, and statistical indicators are notunderstood, investigated and corrected if appropriate, it will subject the Companyto OFCCP’s rigorous lengthy investigation. An AAP that is fully implemented allowsfor corrective actions to be made without being the subject of a discrimination ortechnical finding.

What to do once AAPsare submittedCreate or update a Brag Book. Based upon the commitments in the AAP, theBrag Book will address what has been done to fulfill such commitments. Suchcommitments should address outreach efforts to achieve goals for minorities andfemales, the disabled and veterans, accommodations that have been made duringthe AAP year with reference to where the tracking of accommodations requestedand the status of such accommodations are maintained. So often we do things outof habit and discount their importance. Please document all the Company’s effortsas they are all important.Ensure all required posters and the EEO Policy Statement are posted. Conducta tour of all work areas, locker rooms, washrooms, lunchrooms and areas whereemployees have access to ensure the workplace is free of any graffiti and anyinappropriate materials.Hold a meeting with all managers and supervisors to inform them that there is anOFCCP compliance evaluation underway and to explain what will happen duringthe on-site review. Because some managers/supervisors may be interviewed bythe CO, this meeting should include a review of the basic principles of affirmativeaction and their respective responsibilities. A supervisor who is asked by the COabout the AAP and responds with the question “what is affirmative action,” doesnot create the correct impression. A review of the types of questions which may beasked using some examples may be helpful. Sample questions for employees maybe found at then end of this presentation.Review EEO complaints filed internally and externally within the past 2 years, arethere any systemic or ongoing issues? If so, can such be resolved, are there actionoriented programs in place to correct?Continue to review and resolve, as may be appropriate, any outstanding issuesidentified in the AAP and support data prior to submission of the AAP.

The AAP Through the Eyes ofOFCCP at Desk AuditThrough the desk audit OFCCP is able to identify areas for an in-depthinvestigation of potential discrimination: (1) where one or more groups areunderrepresented and concentrated in the workforce; (2) where employmentactivity has adversely affected one or more groups; and (3) where there may bedifferences in compensation affecting one or more groups. Upon completion ofthe DA the CO will enter the results of applicable statistical analysis into the CMS.National office will review and discuss with the respective region, the type of reviewthe Company will undergo.Regardless of whether there is an onsite or just a desk audit, the CO may requestadditional data, such as employment applications, company policies, collectivebargaining agreements, personnel files for current and former employees, a listingof accommodations requested and the status of such accommodations, EEOcomplaints, interviews with current and former employees, and selection officials orofficials involved in making one or more employment decisions.OFCCP OnsiteThe major purpose of the onsite phase of the compliance review is to investigatepotential problem areas identified at desk audit, to verify the contractor'simplementation of its AAPs, and to begin to resolve violations. If there is a onsite,one person from the company should be present for all parts of the onsite reviewso that one person will have knowledge of all matters reviewed. The onsite phasewill include: Entrance conference A review of OFCCP’s pre-onsite letter requestingadditional information