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OFCCP regulations can be cumbersome, expensive for employers

OFCCP regulations can be cumbersome, expensive for employers

WASHINGTON—Federal contractors, already dealing with cumbersome and expensive regulations and procedures from the U.S. Department of Labor's Office of Federal Contract Compliance Programs, face prospects of additional regulatory action, say observers.

The OFCCP is responsible for enforcing the affirmative action and nondiscrimination obligations of federal contractors and subcontractors. Nearly one-quarter of U.S. workers are employed by a company that does business with the federal government, according to the OFCCP.

Observers say the 47-year-old agency's actions reflect the Obama administration's policy, as well as the approach of its director, Patricia A. Shiu. A DOL spokesman could not be reached for comment.

Employers' complaints about the OFCCP include:

• Pending regulation that requires establishing goals for hiring veterans and the disabled, which observers say is unrealistic;

• Demands for significant amounts of data, even before an audit is launched;

• More aggressive enforcement activities by the agency; and

• An effort to extend its authority to health care providers.

Jeffrey A. Norris, president of the Washington-based Equal Employment Advisory Council, which represents large employers, said his member companies are committed to complying with nondiscrimination requirements and have successfully worked with the OFCCP in the past.

What is different now, said Mr. Norris, is that instead of providing general guidance and standards that have a “fair amount of flexibility,” the agency is attempting to impose prescriptive, mandatory requirements “that have been deemed to be unnecessary for 30 years.”


At an April 18 hearing before the House of Representatives Committee on Education and the Workforce, Dana C. Bottenfield, director of human resources information systems, employment and immigration at St. Jude Children's Research Hospital in Memphis, Tenn., said the OFCCP has set standards that “require that we have the perfect mix of gender and racial groups for every job category. It is an impossible standard to meet...and every year, the burdens continue to increase as new regulatory requirements must be met.”

Michael. J. Eastman, executive director, labor law policy, at the U.S. Chamber of Commerce in Washington, said the OFCCP “needs to have a more even-handed approach to enforcement.”

Molly Kurt, of counsel at law firm Husch Blackwell L.L.P. in Kansas City, Mo., said, “Audits seem to go on for a long time with extended periods of silence from the OFCCP, and then there's a sudden communication from them asking for a lot of information in a short period of time.”

Alissa A. Horvitz, a shareholder with Littler Mendelson P.C. in Washington, said the OFCCP “has come down very hard on government contracts when the records they maintain don't fully and completely explain every minutia that occurs during the hiring process.”

Under proposed regulation, which many expect to be imposed relatively unchanged, federal contractors and qualified subcontractors are required to set a goal of having 7% of their workforce be people with disabilities. A similar proposed regulation would require federal contractors to establish goals for hiring veterans, although there is not a fixed percentage.


Observers say that, among other provisions, the proposals call for employers to establish “linkage agreements” with OFCCP-specified veterans and disabled referral agencies to assist them in the hiring process, which they say will be highly inefficient. The EEAC has recommended creation of a national job bank instead.

With the additional administrative burdens it is calling for, the OFCCP is throwing off the balance between employer obligations and results, said Mickey Silberman, managing partner with Jackson Lewis L.L.P. in Denver. Final regulations have yet to be issued.

In addition to already requesting more information initially than previously had been required and making its audits much tougher, the agency is asking the Office of Management and Budget for approval to significantly increase the data that federal contractors must submit, say observers.

It also has been seeking more detailed compensation data and has asked for the OMB's permission to require a new compensation data collection report.

“Compensation is not easily evaluated, and any summary-type report is going to lead to many false positives,” said Valerie Hoffman, a partner with Seyfarth Shaw L.L.P. in Los Angeles.

The OFCCP also has been much more aggressive in its enforcement activities, say observers. In March, for instance, it reached a $3 million agreement with two FedEx Corp. units over hiring discrimination charges, although one of the units said that, despite its agreement to the settlement, “the DOL's settlement was not supported by the law.”

Observers say the agency also is seeking to increase its authority. It has sought to establish authority over Florida Hospital in Orlando, Fla., on the basis of the hospital's role as a network provider for TRICARE, the health care program for uniformed service members, retirees and their families.

The move has been opposed by the Washington-based American Hospital Assn., among others. Health care providers are awaiting the DOL's Administrative Review Board's ruling, in which an administrative law judge's ruling in OFCCP's favor is being appealed, say observers.

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