More than three years after the Office of Federal Contract Compliance Programs (“OFCCP”) sought approval for a new Scheduling Letter and Itemized Listing, OFCCP published a notice in the Federal Register on September 30, 2014 revealing that it had received Office of Management and Budget (“OMB”) approval. Yesterday, OFCCP announced that it would not schedule any supply and service compliance evaluations from October 1, 2014 to October 15, 2014 to allow contractors to “become acquainted with the new letter and itemized listing”, but it plans to start using the new Scheduling Letter and Itemized Listing for all audits scheduled after October 15, 2014.

OFCCP sends the Scheduling Letter to contractors at the beginning of an audit to request submission of the contractor’s affirmative action plan and other data within thirty days of the contractor’s receipt of that letter.  The new Scheduling Letter includes a 22-point Itemized Listing that identifies the specific data and information that contractors are required to submit to OFCCP.

As we initially reported, OFCCP published the revised Scheduling Letter and Itemized Listing on May 12, 2011 requesting significant changes from OMB. Many of these changes were approved by OMB in the new Scheduling Letter and Itemized Listing, including:

•  New Veteran and Disability AAPs: Items 7 through 14 of the new Itemized Listing will require contractors to submit their disability and veterans AAPs in accordance with the new rules, including
  • Results of the contractors’ evaluation of their outreach and recruitment efforts for individuals with disabilities and protected veterans;
  • Documentation of all actions taken to comply with the audit and reporting results of their affirmative action efforts for veterans and individuals with disabilities;
  • Documentation of the comparisons of applicants and hires for individuals with disabilities and veterans, including update data if the contractor is more than six months into its plan year when it receives the Scheduling Letter;
  • Utilization analysis analyzing whether the contractor’s current incumbency is at the seven percent goal for each job group for individuals with disabilities and data for first six months of plan year if the contractor receives the Scheduling Letter more than six months into their current plan year; and
  • Documentation of whether the current incumbency of veterans in the contractor’s workforce meets the eight percent hiring benchmark or the benchmark created by the contractor and data for first six months of plan year if the contractor receives the Scheduling Letter more than six months into their current plan year.
• Detailed Minority Data: Contractors will continue to provide personnel transaction data (e.g., applicants, hires, promotions, and terminations) by sex, but they must now submit race and ethnicity information using the five specified race/ethnicity categories (instead of by minority and nonminority).
• Employee-level Compensation Data: Contractors can no longer submit their compensation data in an annualized aggregate format. Instead, contractors will now be required to submit individualized employee compensation data as of the date of the workforce analysis in their AAPs, including the employees job title, job group and EEO-1 category.
• Data on Contract Workers: The new Itemized Listing expands compensation data to include all contract workers, which was previously not required.
• Expanded Definition of Compensation: The definition of compensation in the Itemized Listing that defined compensation as wages, salaries, commissions, and bonuses has been expanded to include hours worked, incentive pay, merit increases, locality pay, and overtime.
• Documentation of Accommodation: Contractors must provide copies of their reasonable accommodation policies as well as documentation showing any accommodation requests and whether those requests were granted.
• Assessment of Personnel Processes for the Disabled: Contractors must now submit copies of their most recent assessments of their personnel process showing, among other things, that they have provided “careful, thorough, and systematic consideration of the job qualifications of applicants and employees with known disabilities for job vacancies filled either by hiring or promotion” and training and ensuring that personnel processes do not stereotype individuals with disabilities.
• Assessment of Physical and Mental Qualifications: Contractors must also submit documentation on their review of all physical and mental job qualification to ensure that, to the extent the qualifications tend to screen out qualified individuals with disabilities, they are job-related and consistent with a business necessity.
• Electronic Versions Required for Most Contractors: Contractors who maintain compensation data in an electronic format must now provide the data electronically (e.g., Microsoft Excel) to OFCCP rather than in paper. The vast majority of contractors will have to submit data in an electronic format because most contractors have compensation data electronically available through their HRIS.

OFCCP justified these changes by pointing to the removal of some of their initial requests in response to comments from the contractor community. For example, the new Scheduling Letter will not include OFCCP’s proposal to require contractors to submit personnel transaction data by both job group and job title. Instead, contractors can continue to submit that data by either job group or job title.  OFCCP also indicated it would be less burdensome for contractor to provide compensation data by employee rather than having to aggregate it for the submission.

Implications

The new Scheduling Letter and Itemized Listing are the latest set of new obligations for federal contractors in a long string of regulatory activity by OFCCP and Presidential Executive Orders over the last few months. In light of these expanded obligations, contractors should prepare now for OFCCP audits, including:

• Conducting privileged analyses of their compensation data in light of the new requirement to submit employee-level compensation data;
• Reviewing and updating accommodation policies for submission to OFCCP;
• Conducting and documenting thorough assessments of the physical and mental qualifications for their positions;
• Electronically tracking requests for accommodation and resolution of those requests to make them easily accessible for audits;
• Conducting and documenting thorough assessments of personnel processes for individuals with disabilities;
• Reviewing veteran and disability AAPs created after March 24, 2014 to make sure they comply with the new requirements for those plans;
• Including contract workers in compensation analyses; and
• Updating the HRIS and ATS to track all items data needed for audit, including all forms of compensation and factors relevant to explaining compensation decisions (e.g., education, experience, time in position, etc.).