OFCCP/AFFIRMATIVE ACTION NEWSLETTER FEBRUARY 2009

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1 Published by: NATIONAL EMPLOYMENT LAW INSTITUTE OFCCP/AFFIRMATIVE ACTION NEWSLETTER FEBRUARY 2009 This newsletter is intended to provide an update of developments affecting federal contractors. This issue contains information provided by Mr. Leonard J. Biermann, National Director, Human Resource and Affirmative Action Activities, as a courtesy to those in the employment community who have utilized NELI s affirmative action training services. Mr. Biermann may be reached at NELI at or by at neli@neli.org. NELI s 27th Annual 2009 AFFIRMATIVE ACTION WORKSHOP/BRIEFING SAN FRANCISCO OCT. 7-9 AUSTIN OCT CHICAGO OCT WASHINGTON, D.C. OCT The definitive Workshop on writng AAPs, and comprehensive advanced-level Briefing on developments affecting federal contractors. The Lilly Ledbetter Fair Pay Act Where Do We Go From Here? As our readers are now quite aware, President Barack Obama has signed into law the Lilly Ledbetter Fair Pay Act. It revises not only Title VII of the Civil Rights Act, but also the Age Discrimination in Employment Act, the Rehabilitation Act and the Americans With Disabilities Act. It reverses the holding of the Supreme Court that a plaintiff must show that a specific act of pay discrimination occurred within the prescribed limitation period of 180 days (or 300 days in deferral states) before the filing of a charge. These statutes, as now amended, will allow plaintiffs to file a viable charge if they receive an allegedly discriminatory paycheck, regardless of when the original pay decision was made that is causing the disparity, providing only that such a check was received within the past 180/300 days of the charge. Presumably, the specific act of discrimination that allegedly continues to affect a plaintiff s current pay could have occurred at any time since the plaintiff was first hired, including the act of setting the individual s starting salary. The only limitation would be the effective date of the statute. In the case of Title VII of the Civil Rights Act, most of today s workforce were first employed since the Title became effective in It would also appear, pending subsequent case law to the contrary, that the Act indirectly, at least, supports the use of multiple regression models that incorporate many years of employment activity to determine if race, ethnicity or gender has had a statistically significant impact on compensation. Certainly it is safe to predict that the OFCCP will take this position, and will be emboldened to continue their practice of using regressions to investigate systemic pay discrimination for the purpose of developing a finding. Note, however, that the Act has not amended the limitation of back pay to two years prior to the charge. The OFCCP has adopted that standard as well, limiting its demand for back pay to two years prior to the Notice of an Audit. But findings of discrimination, it would seem, may now be constructed based on evidence using data from the date of hire, or in the case of government contracts, to the date of the contractor s coverage under the Executive Order.

2 Impact on contractors. Given all of this, a contractor s first impulse may be to conduct its own multiple regression analyses of compensation in order to identify any problem areas, correct those that show potential discrimination, and have at hand the appropriate defenses for any other differences based on race, ethnicity or gender that the OFCCP might later identify in a compliance review. That may well be the appropriate direction. But contractors should be very cautious before initiating such a course of action. Pay regressions are very complex and costly. Further, even when well constructed and implemented properly, they can lead to false negatives. None should be attempted without the supervision of a well-trained statistician who also has experience in supporting litigation and giving testimony. Even then, regressions are very fragile. Changing only one variable, or slight changes in the composition of the job groups, can dramatically modify the results. Because of hiring, promotion and discharge, the composition of a job group can change in a very short time period and that can cause statistically different results. Thus, making decisions to increase certain salaries based on a single regression study may later be found to be unsupportable as new data are generated, or the model is modified. Further, making salary changes for specific individuals based on their race, ethnicity or gender can be very difficult to constrain within the workplace. In any event, the regression analysis should always be conducted under the direction of an attorney to protect attorney-client and work product privileges. A sample test study may be preferred, perhaps limited to certain job titles of organizational units. President Obama Issues Three New Executive Orders Shortly after signing the Ledbetter Fair Pay Act, President Obama, on January 20, 2009, issued three Executive Orders relating to organized labor. They are described below. The Non-Displacement of Qualified Workers Under Service Contracts. This Order requires government service contractors to offer jobs to qualified workers of a predecessor contractor when a contract changes hands. The purpose of the Order is to reduce disruption to the delivery of services and provide the federal government the benefits of an experienced and trained workforce that is familiar with the federal government s personnel, facilities, and requirements. The Order gives qualified employees the right to priority consideration for vacancies created when the succeeding contractor is filling jobs. The Order places enforcement authority with the Secretary of Labor, who is empowered to issue final regulations. Further, the Secretary has enforcement authority to debar non-complying contractors for up to three years. The Order is basically a renewal and expansion of Executive Order issued by President Clinton in 1994 and revoked by President Bush s Executive Order in President Clinton s Executive Order applied only to public buildings maintenance work, while President Obama s Order applies to all service contracts. The Notification of Employee Rights Under Federal Labor Laws. This Order simply reverses the Order of President Bush that required federal contractors to notify employees that they can restrict the use of their union dues to avoid such dues being used for political purposes. Its affect is to abolish the requirement for contractors to display the Beck Poster. Economy in Government Contracting. This Order requires executive branch contracting agencies to treat as unallowable the costs of any activities undertaken to persuade employees whether employees of the recipient of the federal disbursements or of any other entity to exercise or not to

3 exercise, or concerning the manner of exercising, the right to organize and bargain collectively through representatives of the employees own choosing. Like the first Order discussed above, a similar attempt to control allowable costs in the context of union organizing efforts was initiated by regulation during the closing days of the Clinton Administration, but was immediately stayed by the Bush Administration and later revoked. Impact on contractors. As might be expected, the first and third of these Orders have received the majority of comment, particularly from the management bar and employer associations. The Non-Displacement of Qualified Workers Order is criticized by some in that it limits a contractor s ability to choose the best-qualified worker for open positions. There is also an issue raised over the subjectivity of the qualified standard. Who may be considered a qualified candidate by the contracting agency may be considered an unqualified candidate by the employer. Concern is raised that appeals over this issue may consume considerable administrative time and monies. The Economy in Government Contracting Order is criticized by the same sources. In a press release issued by the Chamber of Commerce, the Chamber stated that the new Executive Order runs counter to the fundamental values of free speech, hindering the right of employees to hear from their employers about the vital decision of whether or not to join a union. Questions have also been raised concerning the right of contractors to communicate management s side in an organizational campaign, even if the company does not seek reimbursement for the time and effort involved. Lastly, some members of the management bar along with others raise the issue of the fine line that can exist between communications with employees that may be necessary in the performance of their work as opposed to communication relevant to union organizing. In any event, these Orders have been issued in final, and will be implemented by appropriate new regulations and revisions to the Federal Requisition Regulations. All of the Orders are effective immediately. E-Verify Delayed Regulation Again On June 11, 2008, President George Bush issued Executive Order 13465, amending Executive Order of President William Clinton. President Bush s Order requires the use of the E-Verify System by contractors of federal executive agencies. Previous to this Order, the congressionally created E-Verify System was a voluntary system of checking the legal status of applicants for employment and could be used by any United States employer. Congress designed it for use as a test, and limited the duration of the Act to a specific short period of time. On November 14, 2008, the Department of Defense, the General Services Administration and the National Aeronautics and Space Administration issued final rules implementing the Executive Order requirements, to be effective on January 15, The Obama Administration put a hold on the effective date, for further review, and that delay has again been extended, this time to May 21, Accordingly, NELI has delayed its scheduled teleconference until early May. The Department of Homeland Security has graciously agreed to stand ready to present at NELI s teleconference, once we know when the requirement for federal contractors to use the E-Verify System will take effect. Look for an from NELI in the coming weeks. We will also post the date on our website once the scheduling is known. What Is New At The OFCCP. As this Newsletter goes to press, the Senate is expected to vote February 24 on the nomination of Rep. Hilda Solis (D-Calif) to be labor secretary after a motion

4 to end debate was filed late February 13 by Senate Majority Leader Harry Reid (D-NEV). For the cloture motion to succeed, Reid and congressional supporters will need 60 votes in order to proceed to a final vote on her confirmation. It is expected that Rep. Solis will be confirmed. Other presidential appointees in the Department should be filled within the next few weeks, including the Under Secretary, Solicitor of Labor and Assistant Secretary for Employment Standards. Soon after, a new Director for the OFCCP should be appointed, assuming, of course, that President Obama will not significantly change the Executive Order program. With what is already facing the new Administration, dramatic changes in civil rights programs do not seem likely. Presently, the OFCCP is a mere shell of its former self. Not only is there no Director or Deputy Director, but unlike previous transitions, there are no permanent senior staff members either. Patsy Blackshear, former Director of Program Operations, has left the agency, and the Division of Policy, Planning and Program Development still has no permanent director. Lorenzo Harrison, the Regional Director in New York, has been temporarily assigned to the Headquarters Office to assist in the transition. In the meantime, rumors fly. There is even a rumor that the new Administration (whoever at Labor speaks on its behalf) dislikes the complexity of using regression for compensation analysis and may try to find something more simple. Will the DuBray Method find resurrection? Will there be a return to more emphasis on affirmative action? Every transition is filled with questions. We will all have to await the new team. In the interim, NELI will do its best to stay with the curve, if not ahead of it, and keep you all advised. NELI s 2009 AA Series Briefing We will address each of these issues in our 2009 AA Briefing Series in October. I also want to point out that we have again revised and lengthened our agenda so that on Wednesday we will cover the Basics in the morning and the writing/updating of AAP s in the afternoon. Thursday and Friday will now be devoted to all of the advanced-level issues.

5 Now Available Affirmative Action Workbook The 26th edition of NELI's Affirmative Action Workbook is now available on a searchable CD Rom, as well as in hard copy. This Workbook is intended to serve as a reference guide to non-discrimination and affirmative action regulations and requirements pursuant to Executive Order 11246, as amended, Section 503 of the Rehabilitation Act of 1973, as amended, and the Vietnam Veterans Readjustment Assistance Act of 1974 (38 U.S.C. 4212), as amended. This Workbook is substantially updated and revised to take into account OFCCP s "Affirmative Action Program" Executive Order regulations published in final form on November 13, 2000; its "Compliance Check" Final Rule published on June 22, 2005; its "Internet Applicant Regulations" Final Rule published on October 7, 2005; its "Protected Veterans" Final Rule published on December 1, 2005; its "EO Survey" termination regulation published in final form on September 6, 2006; OFCCP's second set of "Protected Veterans" Final Rules published on August 8, 2007; and other administrative and legal developments since then. Contents: Recent Major Developments at OFCCP and EEOC Recently Published Federal Government Documents Primer on Legal Challenges to Employer Tests Proving and Defending Against an Adverse Impact Claim: OFCCP s New Attack on Employer Selection Systems Protected Veterans Reporting Explained and Untangled High-Level Questions & Answers re: Audits Compensation Data Requests Affirmative Action Resource Manual This Manual is also available on a searchable CD Rom, as well as in hard copy. This Manual is prepared especially for federal contractors and subcontractors, as well as those employers which are not contractors but which wish to develop voluntary Affirmative Action Plans using federal contractor requirements under Executive Order as a model. Experienced Affirmative Action Program writers, planners and managers will also find this Manual useful to update or upgrade existing Affirmative Action Programs and to identify new approaches to affirmative action planning. The chapter containing a Model Affirmative Action Program has been revised and updated to provide a boiler-plate AAP which conforms with all current requirements from the OFCCP. Contents: History of the Executive Order Program Affurmatve Action Program Workbook Miscellaneous Documents re: Affirmative Action Compliance OFCCP Audit Processes, Remedies and Sanctions Instructive Power Points for this Manual. Editor and principal author: John C. Fox, Esq., with Manatt, Phelps & Phillips LLP, Palo Alto, California Please visit our website for more detailed Tables of Contents, and to order your copies today!