The Office of Federal Contract Compliance Programs (OFCCP) recently released its fiscal year 2011 budget request, along with its performance statistics for fiscal year 2009 and its enforcement initiatives for 2010. The message is clear: OFCCP is better funded, more sophisticated, and more motivated than ever to aggressively enforce affirmative action rules. Government contractors should plan accordingly.
A Look Back at 2009
Highlights of OFCCP's activities in 2009 include:
- Completed compliance evaluations for 3,917 contractors;
- Conciliation agreements entered into with nearly 700 contractors;
- Financial settlements with 94 contractors for back pay that totaled $9,314,978; and
- Twenty cases referred to the Office of the Solicitor for litigation
Two of OFCCP's largest settlements were with Gerber Products Company nationally and DAL Global Services LLC in Denver, Colorado. In August 2009, Gerber entered into a conciliation agreement in which it agreed to pay $900,000 to settle findings by OFCCP of hiring discrimination against 1,912 rejected minority and female applicants, and make 61 jobs available to the affected class. After a compliance evaluation, OFCCP made its case primarily by relying on a pre-employment test given to entry level workers that OFCCP felt was not properly validated for selecting entry-level workers.
In November 2009, DAL Global Services LLC, a wholly owned subsidiary of Delta Airlines Inc., agreed to settle findings of hiring discrimination against 110 rejected Asian, black, white and female job applicants. Under terms of a conciliation agreement, DAL Global Services will pay a total of $100,000 in back pay and interest to the 110 applicants and will provide 18 ramp agent positions to the class members.
Increased Enforcement in 2010 and beyond
Government contractors should brace for more audits and more settlements like those described above, as there will be a marked increase in enforcement efforts by the OFCCP in the coming years. OFCCP will receive a budget of $103 million for fiscal year 2010 under the appropriations legislation signed by President Obama on December 16, 2009. This amount is an increase of over $21 million from the fiscal year 2009 budget allotment of $82.1 million. For 2011, OFCCP has requested $113 million, a $10 million increase over 2010. With this increase in budget, OFCCP is in the process of significantly increasing its workforce and plans to increase the number of compliance evaluations by 20% in 2010.
Focus on ARRA beneficiaries
Federal government contractors and subcontractors that are recipients of stimulus funds under the American Recovery and Reinvestment Act of 2009 (ARRA) will be specifically targeted for aggressive enforcement efforts by OFCCP. OFCCP has recently transferred or hired 47 additional employees to conduct ARRA-related compliance evaluations. OFCCP completed 59 ARRA-related compliance evaluations, resulting in 13 conciliation agreements including one conciliation resolving alleged compensation discrimination against an African-American male totaling $24,894 in back pay.
OFCCP has stated that ARRA compliance evaluations, unlike compliance evaluations for non-ARRA contractors, will consist of full desk audits and onsite reviews, even if the desk audit reveals no indicators of potential discrimination. Also, stimulus money recipients will not enjoy the two-year moratorium on follow-on audits provided to other federal contractors. Rather, ARRA-funded contractors can be audited in back–to–back years. Finally, prior to an award of an ARRA contract of $10 million or more, OFCCP requires a pre-award clearance from the potential contractor, with includes both a desk and on-site audit.
Action Item for Government Contractors
In light of the OFCCP's renewed focus on compliance and enforcement efforts, government contractors would be well advised to get prepared. 2010 is a good time to take stock of affirmative action plans and to conduct internal reviews of compliance with OFCCP requirements. The consequences of non-compliance can be serious: fines, negative publicity, potential civil lawsuits, and even debarment for severe cases. Diligent compliance analysis, under the direction of an attorney to preserve privilege and anticipate likely audit concerns, can assist not only in improving overall compliance, but also in assuring that the company is getting the most out of its human resources program.
