1. No category

March 2015
Practice Group(s):
Labor, Employment
and Workplace Safety
New OFCCP Regulations Require Action by
Employers
By Caleb D. Wood and Benjamin J. Gerber
Overview
The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”)
is rapidly moving forward on many sweeping new regulations and initiatives that require
immediate attention by federal contractors and subcontractors. Human resources leaders
and compliance officers of federal contractors will want to closely follow these developments
in order to timely prepare their companies’ policies and practices to comply when these
regulations take effect.
1. Prohibited Employment Discrimination Extended to Sexual Orientation
On July 21, 2014, President Obama signed Executive Order 13672, adding sexual
orientation and gender identity to the list of categories protected from discrimination, and
amended Executive Order 11246, updating the Sex Discrimination Guidelines to include
sexual orientation and gender identity.
Executive Order 13672
On December 3, 2014, the OFCCP announced the Final Rule prohibiting discrimination
based on sexual orientation and gender identity. The Final Rule becomes effective April 8,
2015 and will apply to federal contractors who hold contracts entered into or modified after
that date. Importantly, the Final Rule does not require contractors to: (1) establish goals
related to sexual orientation or gender identity; (2) invite voluntary self-identification of sexual
orientation or gender identity; (3) engage in data collection; or (4) engage in other affirmative
action activities based on sexual orientation or gender identity, in contrast to a federal
contractor’s affirmative action obligations with regard to women and minorities. Executive
Order 13672 and the new Final Rule are in addition to the updated guidelines adding sexual
orientation and gender identity as a form of sex discrimination.
Amendment to Executive Order 11246
On January 30, 2015, the OFCCP published proposed updates to the Sex Discrimination
Guidelines under Executive Order 11246, setting forth its interpretations and rules for
complying with President Obama’s amendment. The proposed updates adopt the Equal
Employment Opportunity Commission’s (“EEOC”) application of Title VII with respect to
lesbian, gay, bisexual, and transgender workers. Notably, the updates find unlawful sex
discrimination when employees receive adverse treatment because of (1) genderstereotyped assumptions about family caretaking responsibilities; (2) refusal to conform to
gender norms and expectations about appearance, attire, and behavior; and (3)
discrimination based on their gender identity.
New OFCCP Regulations Require Action by Employers
Human resources managers and compliance officers should become familiar with the
updated discrimination guidelines and should update the following workplace materials to
reflect the new prohibition and provide updated materials to employees:
• Employee handbooks;
• EEOC policy initiatives;
• Affirmative action plans; and
• Equal opportunity taglines used in job advertisements.
2. Federal Contractors Required to Disclose Annual Report on Equal Pay
In response to President Obama’s memorandum entitled “Advancing Pay Equality Through
Compensation Data Collection,” the OFCCP proposed a regulation that requires qualifying
contractors to annually submit summary employee compensation data by sex, race, and
ethnicity. The public comment period on the regulation closed on January 5, 2015. Once
the regulation becomes effective, federal government contractors and subcontractors with
more than 100 employees and a federal contract or subcontract amounting to $50,000 or
more will be required to submit an annual report to the OFCCP on employee compensation.
The report must include the following information organized by race, ethnicity, and sex:
• The total number of workers within a specific EEO-1 job category;
• Total W-2 wages for all workers in each job category; and
• Total hours worked by all employees in each job category.
The report will not collect any individual pay information. The information collected will be
aggregated by industry and then published. The OFCCP will implement a secure Webbased portal for reporting and maintaining compensation information and enforce the
reporting requirement. The OFCCP is proposing a reporting window of January 1 through
March 31.
The regulation is designed to improve federal contractors’ and subcontractors’ voluntary
compliance with laws prohibiting pay discrimination and other unlawful pay practices. The
data submitted will be used to improve the efficiency and effectiveness of the OFCCP’s
enforcement of labor and employment laws and allow the agency to focus its resources on
reviewing contractors with potential pay disparities.
Human resources and compliance managers should review their existing employee pay
report databases to ensure a capability to generate information needed to comply with the
upcoming regulation. An internal evaluation will help prevent any compliance problems upon
OFCCP review and facilitate any necessary employee compensation adjustments.
3. Federal Contractors Required to Report Adverse Labor and Employment
Law Decisions and Disclose Employee Pay
The upcoming regulation related to the Fair Pay and Safe Workplaces Executive Order (E.O.
13673) will require federal contractors and subcontractors to disclose all labor violations
within the last three years. Effective sometime in 2016, the regulation will require federal
contractors and subcontractors to report findings of serious, repeated, willful, or pervasive
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New OFCCP Regulations Require Action by Employers
violations. Violations include civil judgments, arbitral awards, and administrative merits
determinations related to equal employment opportunity, workplace safety, wage and hour,
employment standards, and labor laws. The regulation is expected to impose consequences
on repeat offenders. The regulation also places limits on the use of arbitration agreements
by federal contractors and provides transparency about employee pay.
Each contractor bidding on a new contract of $500,000 or more must disclose whether it has
had any findings of labor or employment violations rendered against it in the previous three
years. If it has a prior violation, a contractor must inform its relevant contracting officer of its
efforts to correct any violation or improve compliance with labor and employment laws. The
government’s contracting officer will take into account these disclosures in determining
whether to award new contracts to the contractor. During performance under the contract,
the contractor must update every six months its labor and employment law compliance
disclosures. If the contractor reports a violation while performing the contract, contracting
officers have the power to terminate the contract and refer the contractors for suspension
and disbarment.
Under the proposed regulation, contractors with new contracts of $1 million or more are
prohibited from requiring an employee to submit to pre-dispute arbitration clauses for claims
covered under Title VII of the Civil Rights Act of 1964 or any tort claim relating to sexual
assault or harassment. A contractor may enter into arbitration clauses concerning these
claims only after the dispute arises and with the voluntary consent of the employee.
In addition, the new regulation will require each contractor with a contract of $500,000 or
more to make a disclosure each pay period of certain payroll information to each employee
for whom the contractor is required to maintain wage records under the Fair Labor Standards
Act or other related laws.
The disclosure must include the following information:
• The employee’s pay;
• The employee’s regular and overtime hours worked; and
• All additions to or deductions made from pay.
Contractors are not required to provide the amount of overtime hours worked if an employee
is exempt from receiving overtime pay.
Human resources and compliance managers should compile and review their labor and
employment violation history to ensure accuracy in the required disclosures and review their
employment policies and agreements to ensure that any pre-dispute arbitration agreements
are modified to comply with the proposed regulations. The designation of a person to track
necessary policy revisions and check for new developments will help prevent compliance
issues when the regulation becomes effective in 2016.
4. Federal Contractors Required to Solicit Veteran Status from Applicants
and Employees
Recent changes to the Vietnam Era Veterans Readjustment Assistance Act of 1974
(“VEVRAA”) and Section 503 of the Rehabilitation Act of 1973 were made in an effort to
improve hiring and employment of veterans and people with disabilities. Effective March 24,
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New OFCCP Regulations Require Action by Employers
2014, federal contractors must alter the manner in which they solicit veteran status and
permit self identification of disability from their applicants and employees.
Solicitation of Veteran Status
Contractors must solicit veteran status in the following manner:
• Pre-offer: Contractor must ask only whether the applicant is protected by VEVRAA; and
• Post-offer: Contractor must ask for specific veteran status (disabled, recently separated,
active wartime or campaign badge, armed forces service metal, or protected veteran who
prefers not to designate his or her classification).
Invitation to Self Identify Disability
Contractors must provide to their applicants the opportunity to self identify their disability and
at five-year intervals thereafter after becoming employees. In addition, contractors must
invite all of their current employees to self identify their disability by March 24, 2015.
To implement these changes, human resources and compliance mangers must alter their
veteran status solicitations to the pre- and post-offer limitations and must invite their
applicants to self identify their disability. Furthermore, managers must invite all current
employees to self identify their disability by the March 24, 2015 deadline. A disability selfidentification form recommended by the OFCCP may be located at
http://www.dol.gov/ofccp/regs/compliance/sec503/Self_ID_Forms/SelfIDForms.htm.
Authors:
Caleb D. Wood
[email protected]
+1.214.939.5495
Benjamin J. Gerber
[email protected]
+1.214.939.5945
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New OFCCP Regulations Require Action by Employers
This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in
regard to any particular facts or circumstances without first consulting a lawyer.
© 2015 K&L Gates LLP. All Rights Reserved.
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