Scheduling letters to federal contractors go out soon. Is your company ready for an audit by the OFCCP?

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A thousand or more federal contractor and subcontractor establishments will receive audit scheduling letters in the next few weeks because they have been picked for a compliance review by the government...

A thousand or more federal contractor and subcontractor establishments will receive audit scheduling letters in the next few weeks because they have been picked for a compliance review by the government—and it is not too late to make sure affirmative action plans are ready for close scrutiny.

Federal contractors and subcontractors are subject to review by the Office of Federal Contract Compliance Programs (OFCCP), which oversees federal contractors and subcontractors and enforces federal anti-discrimination laws. OFCCP audits are conducted to make sure federal contractors and subcontractors have in place non-discriminatory employment practices.

Beginning March 19, 2018, the OFCCP will mail scheduling letters to service and supply contractors to start the auditing process. The letter notifies contractors that they have been scheduled for a compliance review and requests access to their affirmative action plans and any supporting data. Many contractor establishments selected for an audit may have already received what are called corporate scheduling announcement letters (CSALs).  The CSALs were sent last month and aim to give contractors a heads up that one or more of their establishments made the list generated by the Federal Contractor Selection System.  Importantly, contractors that did not receive a CSAL may still be scheduled for compliance reviews. And if contractors received a CSAL for one location, the OFCCP may still conduct a compliance review at another location.

The stakes are high. If a company fails to comply even after being given ample time to do so, it can lose its government contract, lose future contracting opportunities, or be ordered to pay compensation to victims of discrimination. So what should a company do?

Alert local managers and human resources personnel. 

First, a company should check with its local offices to see if they received a CSAL, as the announcements sent in February went to particular contractor establishments, not to corporate headquarters. As an alternative, a company can e-mail OFCCP-DPO-Scheduling@dol.gov to find out if a CSAL was sent to a local establishment.  Also, local managers and HR personnel need to know to be on the lookout for a scheduling letter from the Department of Labor starting March 19.

Begin preparing for a compliance review immediately. 

If a local office or the HR department did receive a CSAL, or receives a scheduling letter this month, a company should begin preparing for the compliance review immediately. A company has 30 days from the date it receives the scheduling letter to submit its affirmative action plan to the OFCCP, which does not generally grant extensions for routine business reasons and likely would limit any extensions for other reasons to no more than 15 days. At minimum:

• Affirmative action plans should be reviewed closely to make sure that they contain the information that will be requested by the OFCCP and that the information is up to date.
• Other materials that may be submitted to the OFCCP should be scrutinized to determine if they will raise issues during the desk audit, which is the OFCCP’s first step in the process. The outcome of the desk audit determines if the OFCCP will either close the case or perform an onsite review.
• A review of outreach efforts should occur, and a company should prepare for discussions regarding the results of those efforts.
• A company should make sure it has conducted a review of compensation practices and compensation decisions in preparation for providing such information to the OFCCP.

After this internal review of employment practices, a company quickly should complete any tasks required to bring it into compliance with the federal affirmative action regulations.  The outcome of an OFCCP compliance review can be drastically improved with preparation and corrective actions—even if it is last-minute. Even after the OFCCP audit, if a company is found to be in violation, the OFCCP generally will attempt to resolve any issues by preparing compliance evaluation closure letters or conciliation agreements meant to apprise the company of the violation and give it a certain amount of time to correct it. However, to avoid the cost of a lengthy OFCCP compliance review process, a company should do what it can now to address any employment practices that might raise a red flag with the OFCCP.

Some good news: The OFCCP has stated that no more than 10 establishments of a single contractor will be placed on the scheduling list in 2018.  Also, no more than four establishments of a single employer may receive audit scheduling letters out of a single OFCCP district office.  In addition, the OFCCP has expanded its prior policy so that now no establishment with a compliance review that closed in the past five years will be part of the current scheduling list.

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