2012 National ILG RecapThemes & Presentation Summaries

Themes1. Not much is new2. OFCCP is in a holding pattern3. OFCCP is “Screwed up”

Presentations Summaries1. Nita Beecher, Mercer – Workforce Metrics in the

Global Environment: Best Practices for Employer2. Beth Ronnenburg, Berkshire Associates Inc.-

New Census Data and AA Compliance-Understanding the Impact

3. David Goldstein, Littler – OFCCP’s New Scheduling Letter: Anticipating the New Desk Audit Submission

4. John Fox – Recent Significant Developments at OFCCP

Theme #1 - What is new?

•Changes to the Corporate Scheduling Announcement Letter (CSAL)▫Rather than a letter, in 2013 the OFCCP

will provide a list on the internet. Eliminates their need to follow up with

contractors, as 80% of the time those who requested letter didn’t receive one.

•Possibly could issue CSAL this year, but would be via the normal process.

Theme #2 - OFCCP in holding pattern• April 2011 - Proposed revisions to the veterans regulations• August 2011 – Advanced notice of proposed rulemaking

released regarding possible changes to OFCCP's guidance regarding compensation

• September 2011 - Proposed Scheduling Letter changes and the itemized listing that accompanies the scheduling letter

• December 2011 - Proposed revisions to the regulations regarding persons with disabilities

• The proposed changes to the federal contract compliance manual that have been in the works for several years (and that were reportedly complete as of the July 2011 NILG conference in New Orleans)

• Changes to the regulations regarding construction contractors (no formal OFCCP proposal yet)

• Changes to OFCCP's regulations on sex discrimination (no formal OFCCP proposal yet)

Predictions• Most agreed that no initiatives are likely to move forward until after

the election.• Veterans regulations may be released prior to the November

presidential election or get out the door in December• John Fox heard Veterans regulations were on Debra Carr’s desk (not even

at OMB) so they can’t get published.• Some initiatives will not move forward at all.• John Fox predictions• If Romney wins, all regulations stop, except the vets may be out the door in

December. Burdensome comp requests will end and you will see more transparency.

• If Obama elected and Republicans take Senate, the OFCCP will be moribund (in a dying state)

• If Obama elected and Democrats keep the Senate, programs will slowly get done, but with numerous compromises and changes.

• David Cohen predictions if Obama wins…• Some pay cases will be deferred to Dept of Justice• Increased focus on pay• OFCCP will ask companies if they did a proactive comp analysis• Pooled regression analysis is going to happen with SSEG as a variable

Theme #3 - OFCCP is Screwed up•We/They mentality more than ever•Not getting the return on their investment of

time or resources▫More compliance officers - increased from 585

to 798 FTEs – but fewer monetary returns▫Proposing regulations that don’t necessarily

advance Equal Opportunity, but rather give reason for recordkeeping violations – burying themselves in paperwork

•Compensation review incurred major setback

OFCCP Statistics by Administration• Bush Administration (2004-2008) 85-93% of audits

were closed without notice of violation– Charles James (from Bush administration) had best

record in monetary recoveries doing fewer audits and having fewer compliance officers.

• Obama Administration (2009-2011) 72-82% of audits were closed without notice of violation• Essentially 1 in 4 ends in a conciliation agreement,

resulting in a negative correlation between CAs and financial remedies relative to the Bush administration.

– Differences in enforcement amongst regions (See Appendix):• SWARM – 5% CAs• Northeast and Mid-Atlantic– 34% CAs• Midwest – 31% CAs

OFCCP Statistics by Administration•The type of conciliation

agreements/consent decree has flip-flopped between administrations:▫2008 CAs – 60% recordkeeping, 26%

outreach▫2011 CAs – 26% recordkeeping, 58%

outreach

Show me the money – ROI?

• Bread and butter of monetary recoveries is disparate treatment in entry level hiring (95% of findings). • Section 4212/503 Enforcement – Between

2007 – 2011, there were 22,000 complaints of discrimination against vets and individuals with disabilities, of which only 3 claims were found to be valid. Don’t produce backpay.

Show me the money – ROI?• OFCCP is desperate for a comp settlement – they

have spent a lot of money on increased review, but haven’t recovered the money.• Approximately 1/3 of all CAs last year involved

compensation• No pattern of industry or job type

• 27 comp cases in 2011• 1 was Astra Zeneca for $250,000• 26 of 27 cases were cohort analysis payouts– Most settlements were between 1-3 victims– 2 appeared to collect remedies for men (contrary to the

government’s goal of closing the gender pay gap)– 1 did not list a protected class, but just said person x made

less than others.– Cohorts are an audit nuisance. If the OFCCP says you should

make an adjustment, you can say “No. Show us the intent to discriminate.” Never seen a cohort case go to the solicitor’s office

Compensation Review Setback• The NAS National Research Center was asked to review

OFCCP’s method for measuring and collecting compensation data.

• The National Academy of Sciences' National Research Council (NRC) is suggesting OFCCP (and other federal agencies) should limit their collection of compensation data until the government knows how this data will be kept safe and how it will be effectively used.

• Forget paragraph 12 of new scheduling letter. This NRC report may act as a significant barrier to the implementation of any new compensation-related initiative. MAJOR SETBACK of estimated 4-6 years!!!

• Basic findings of the NAS NRC is that the OFCCP needs to pull back, develop better plan, pilot the plan, test it using an independent contractor, find ways to better protect confidentiality of data and develop legislation to increase the ability of the agency to protect confidential data.

Suggested action

•Federal contractors should get more involved in helping with the regulations

ILG Presentation ReviewsNita Beecher, Mercer•Workforce Metrics in the Global Environment: Best Practices for Employers

Beth Ronnenburg, Berkshire Associates Inc.•New Census Data and AA Compliance-Understanding the Impact

David Goldstein, Littler•OFCCP’s New Scheduling Letter: Anticipating the New Desk Audit Submission

John Fox•Recent Significant Developments at OFCCP

WORKFORCE METRICS IN THE GLOBAL ENVIRONMENT:Best Practices for Employers

Nita Beecher and Liz MacGillivrayThursday, August 30, 20122012 ILG National ConferenceWaikoloa, Hawaii

Global Workforce Metrics Notes• Global companies typically prepare a Global Cultural view

(e.g. respecting differences), not necessarily requiring the same EEO policy.▫ In Asia, diversity is a new concept, not always culturally

understood.• Tracking women is the #1 item tracked globally. Next

would be disability• In many countries (Brazil, Turkey, Vietnam, Cambodia,

Malaysia, Ethiopia, Spain, Jordan, Thailand), you have to hire a certain % of individuals with disabilities based on the number of employees you have or you can be fined.

• Bullying (aka: being a jerk) can violate law in other countries (e.g. Belgium, France, Brazil)

• If you are going to measure diversity, be prepared to do something if you find an issue

New Census Data and New Census Data and AA Compliance AA Compliance

Understanding the Understanding the ImpactImpact

Beth A. Ronnenburg, SPHR

August 30, 2012

EEO 2006-2010 ACS Tabulation•Formerly known as the EEO Special

File

•Provides ethnicity, race and sex civilian workforce data mapped to occupational data

•Used to create external availability statistics for affirmative action planning

EEO 2006-2010 ACS Tabulation•Includes data based on geography,

industry, age, educational attainment, median earnings and citizenship

•Sponsored by OFCCP, EEOC, DOJ & OPM

•Data will be disseminated through American FactFinder▫Most contractors will rely on their AAP

vendor to format the data for them

Current Status

• Scheduled to be released end of Nov or beginning of Dec, 2012

• OFCCP will then issue a directive indicating when contractors will need to begin using the data–The 2000 EEO Special File was released

in December 2003 & OFCCP required contractors to use the data for plans on or after January 1, 2005

Census Occupation Codes•Similar to 2000•488 codes in the latest file (6/18/12)•Four digits versus three in 2000 data

▫In most cases the only change is that a zero is added to the end of the code 012 Financial Managers is now 0120

Financial Managers•Approximately 80% are an exact match

to 2000▫Other 20% are new codes, codes that

were split and codes that were combined

What can you do to prepare?

•Contractors who store the census code in their HRIS should ensure that field size can accommodate the change

•Review the crosswalk, but don’t rely solely on the document▫There are 28 2010 census codes that

are NOT directly mapped to a 2000 Census code.

Disability

•Originally told it could not be included because:▫Same questions were not asked each

time▫Research was not conducted on 6

questions that might be used to identify those who had a “disability”

• Information on “disability” will be available from a series of tables created by DOL (ODEP & OFCCP) and will be released at the same time

2010 Census

•Population increased 9.7% (27.3M)▫More than ½ of the growth was due to

increase in Hispanic population (15.2M)

•Regional growth varied▫South/14.3%▫West/13.8%▫Midwest/3.9%▫Northeast/3.2%

Population – Gender (ages 20-69)

2010 Population - Race

2010 Population - Race•Minority population grew 28.8% while

White alone, Not Hispanic grew only 1.2%

•Hispanic and Asian population have the highest growth rates (~ 43%)

•The Black population experienced the 2nd smallest growth rate (12%)

Regional Minority Population

Regional Minority Population

•Texas joined California, DC, Hawaii and New Mexico in having a “majority-minority” population

•Minority population grew in all 50 states▫Nevada increased the most (78%)

•348 counties (11%) now have a majority-minority population

OFCCP’s New Scheduling Letter: Anticipating the New Desk Audit Submission

Recommendation #1 - Summaries• For the annual AAP, continue to prepare summaries of applicant,

hire, promotion and termination data by minority/nonminority groups.

• The regulations prescribing the required contents of written AAPs have not changed in Part 60-2, and they speak only in terms of females and all minorities.

• Section 60-2.17: “must perform in-depth analyses of its total employment process” and “must evaluate . . . Selection, recruitment, referral and other procedures to determine whether they result in disparities in the employment or advancement of minorities or women.”

• Itemized Listing, footnote 6: “The term ‘race/ethnicity’ as used throughout the Itemized Listing includes these racial and ethnic groups: African-American/Black, Asian/Pacific Islander, Hispanic, American Indian/Alaskan Native, and White.”

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Recommendation #2 - IRAs• Under the protection of attorney-client privilege,

prepare job group impact ratio analyses: ▫ Minority versus White (the way the summaries appear in the

AAP)▫ Each race versus White ▫ Each race versus its non-race (but excluding 2 or more races)

Hispanics versus non-Hispanics (including Whites) Blacks versus non-Blacks (including Whites), etc. Will tell you which is the most-favored race

▫ Every other race versus most favored race

• Prepare impact ratio analyses by title▫ If a job title has fewer than 5 selections, not critical to run title

by title analyses

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Recommendation #2 (cont’d)• Under the protection of attorney-client

privilege, if a job group or job title shows a statistically significant impact, look for simplest explanations first ▫ control for job requisition or job opening▫ don’t lose sight of statistical significance—the 1/20

or 5% threshold may be a function mostly of running so many analyses

the more you run, the more likely one or more will “pop” difference between 2 standard deviations and 3+ standard

deviations

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Recommendation #3 – Promos and Terms (cont’d)•Pools

▫Promotions only competitive (applied for) promotions will have specific

pools possible default pool for noncompetitive promotions,

beginning of the year population in the job group or job title, with or without hires (?)

▫Terminations RIFs often will have specific pools other involuntary (for cause) termination likely will not default pool could be beginning of AAP year snapshot of job

group/title, with or without hires (?)

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Recommendation #4 – Retrievability• Do you currently track this data for contractors,

per-diems, day-laborers, and temporary employees? If not, do so now.

• Ensure that HRIS, payroll, performance records, executive compensation, stock awards, bonuses, incentives – all the various tracking systems can “talk to each other” so you can pull the “other” compensation data

• Implement the means to capture 12 months of the non-base salary data going back to February 1 of the prior year

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Recommendation #5 – Comp Data and Policies• Assess what other data you maintain reliably, consistently,

and how retrievable it is▫ Education

▫ Prior work history

▫ Company work history

▫ Company compensation history

▫ Performance ratings

▫ Merit Increases

▫ Initial Starting Salary

• Whose pay is set pursuant to collective bargaining?

• Assess what policies and compensation documentation exists▫ Up to date? Accurate?

▫ Reflective of current practices?

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Recommendation #6 – Comp Analyses• For non-audits (routine AAPs), continue to run

these simply because despite all the activity by OFCCP on comp, most compensation audits wind up focusing on specific job titles and the company’s ability to explain pay variations within the job title

• Under the protection of attorney-client privilege (and if you have the budget)▫Self-evaluate the variables in a regression

analysis• How should you submit data at the desk audit?• What data should you submit at the desk audit?

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Recommendation #7 - CBAs

•Ensure that company labor relations officers know about your need to produce this information in OFCCP audits

•Develop a mechanism to keep track of all “policy statements, employee notices or handbooks” that “implement, explain or elaborate” on the CBA.

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Recommendation #8 – Leave Policies• Identify relevant leave policies• Who “owns” the handbook and its updates? Ensure that the

“owner” of the process and/or the updates on your company intranet know about your need for this information in an OFCCP audit

• If you maintain your policies on your company Intranet, how easy or hard would it be to pdf the relevant pages as part of an audit? If time consuming, make a pdf of them, now.

• Are they current?• Are they accurate?• Keep in mind that because AAPs go one year back (and in

an audit OFCCP is entitled to 2 years back), you need to keep track of policies that were in effect at the time of the data capture and personnel actions

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Recommendation #9 - VETS Reports

2011 Filing Cycle

• Contractors will have the ability to view the reports that they submitted and will not be able to view those of other contractors. Copies may be printed using the VETS100 online reporting application by the end user only.

• Hard copies for contractors other than the submitting contractor can be obtained only through a Freedom of Information Act (FOIA) request. Please go to the US DOL's FOIA homepage for instructions on how to do this at: www.dol.gov/dol/foia/.

2010 Filing Cycle or Earlier

• Copies of previously submitted reports for the 2010 filing cycle or earlier are not available in the VETS100 online reporting application. They can only be obtained through a Freedom of Information Act (FOIA) request. Please go to the US DOL's FOIA homepage for instructions on how to do this at: www.dol.gov/dol/foia/.

• Submit your FOIA requests, now.

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VETS forms for the last two years:Copies / Viewing of Filings

Recommendation #10 – Track Accommodations• Who “owns” the accommodation process,

now?• Limited to ADA accommodations, or broader?• Note: Itemized Listing 13 asks only for

accommodations granted; it does not ask for all accommodations requested

• Ensure that the accommodation process owners know that “records of accommodations granted” will be needed for a desk audit submission

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Recent Significant Developments at OFCCP

August 30, 2012

John C. Fox, Esq.Fox, Wang & Morgan P.C.160 W Santa Clara StreetSuite 700San Jose, CA 95113

Battle Front 1: THE BIG PICTURE

1. It remains all (and almost ONLY) about failure to hire Entry-level, unskilled Production Labor (95% of OFCCP’s historic back pay collections)

2. Compensation audits are very expensive to defend these days, but are not producing much back pay.

3. OFCCP’s Construction Program has found no unlawful discrimination in 20 years. Program is in shambles, and suddenly becoming unnecessarily very burdensome in audits.

4. OFCCP’s Section 503 program has found very little unlawful discrimination in the 20 years since the ADA became law. (OFCCP’s 503 program used to be robust, but is now in shambles. EEOC is now annually collecting hundreds of millions of back-pay $ in ADA settlements/judgments/verdicts. Should OFCCP’s controversial proposed regulations go to final, compliance costs will increase by hundreds of thousands of dollars/yr for most federal contractors.)

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Battle Front 1: THE BIG PICTURE (Cont.)5. OFCCP’s VEVRAA program lacks unlawful

discrimination authority, has produced very little back-pay over the decades as a result, or jobs for veterans, and is in disarray despite the strong desire of contractors to hire veterans.

6. Most of us are slogging through terribly lengthy audits which don’t matter much, but are increasingly expensive and frustrating to defend.

7. Vendor profits are up; contractor satisfaction is down; the high pace of OFCCP turnover of its personnel and the cost-benefit ratio of OFCCP continue to be lively subjects of discussion.

Battle Front 3: Regulatory Revisions: Full Stop

April 2012 Review Of OFCCP’s July 2011 “To-Do” List1.Publish Advance Notice of Proposed Rulemaking (ANPRM) re

“Compensation Data Collection Tool”: by July 2011 (Done: August 10, 2011)2.Publish a Notice of Proposed Rulemaking (NPRM) re Section

503: by August 2011 (Done: December 9, 2011)● This proposal “ripped the fabric” of trust, in my

observation, between OFCCP and the contractor community which perceived this proposal to cover-up hundreds of millions of dollars of costs and thus tore at OFCCP’s integrity and sense of partnership.

● Note: Applied Economics Strategies, LLC, founded by a former Bush Administration appointee, issued a report on July 19, 2012 estimating OFCCP’s Section 503 regulation would cost in fact, $5.9 Billion with an annual recurring cost of $2.68 Billion per year.

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Battle Front 4: Litigation

46Battle Front 4: Litigation (Cont.)

Battle Front 5: Audits

I. OFCCP has issued several new audit instructions (Cont.)B. Substance changes (Cont.)

9. Contractor outreach to the Disabled and Protected Veterans communities which satisfied Clinton/Bush Administrations suddenly no longer compliant

So, what is required this month?▫OFCCP is not enforcing proposed regulations▫Subjective, how deep is your relationship with your

newbie Compliance Officer?

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Battle Front 5: Audits (Cont.)III. New Audit Protocols In Chicago (Cont.)

▫ MWRO now finishing the 830 audits (in FY 2012) MWRO had scheduled on June 3, 2011 (in FY 2011) and which OFCCP National Office formally pulled back on June 17, 2011 This action conflicts with OFCCP’s

announced intent to retire each year’s audit list at end of each Fiscal Year Why? This is not a legal problem, in my

judgment.

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The Fox OFCCP Report• For my monthly “Fox OFCCP Report”, you may ask the

Local Job Network to put you on a free subscriber’s list: http://www.localjobnetwork.com/articles

or• Simply type “Fox Wang” in your Internet browser and go to

our Law Firm’s Blog Spot.

• For Today’s Power Points:1. Put “Fox Wang” in your browser (

www.foxwangmorgan.com/)2. Select: “Publications” on landing page3. Select: 2012 NILG (John C. Fox) Power Points• USERNAME: = fwm1one• PASSWORD = fwm2two

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Appendix