OFCCP Audit Readiness 101

Sarah Wallach
Jun 22, 2016

OFCCP audit

If you are a federal contractor or a subcontractor, receiving an audit scheduling letter in the mail from the Office of Federal Contract Compliance Programs (OFCCP) may be one of your biggest fears. It’s easy to know enough about them to dread them, but do you really know what an OFCCP audit would entail?

To help, we’ve put together this quick and easy guide to explain what you really need to do know about this process and help you proactively prepare your organization.

How are organizations selected by the OFCCP?

The OFCCP has stated that the agency uses primarily the Federal Contractor Selection System (FCSS) designed to predict systemic discrimination.  Information from FCSS is derived from annual EEO-1 submissions and sources such as IPEDS (Integrated Postsecondary Education Data System) for audit selection.  However, establishments can also be selected for audit based on an individual complaint or as part of the pre-award process to clear an employer for a federal contract award.

What are the steps in a compliance audit?

  1. OFCCP Audit Request and Initial Material Collection
    Initially, you’ll be notified of your selection for an audit by a scheduling letter that will arrive in the mail. From notification, you have 30 days to provide the OFCCP with the materials requested in the itemized listing included in the scheduling letter. Be prepared –don’t assume that you’ll have the full 30 days to complete your submission. At times, the letter is not received right away by the person in charge of the affirmative action program at the site, which leaves the appropriate team members with fewer than 30 days to respond to the request for information.

    In the past, the OFCCP issued a Corporate Scheduling Announcement Letter (CSAL) to provide organizations with even more advanced notice, prior to receiving the 30-day scheduling letter, of an impending audit in the upcoming scheduling cycle. Now, the OFCCP has not issued a CSAL in about two years, so receiving this courtesy advanced notice of sites that could be selected for a compliance review is not a given. Consequently, it is even more important for companies to proactively prepare for an audit by having all documentation required by the scheduling letter readily accessible.

    The OFCCP does offer the option to request an extension beyond the initial 30 days.  Still, an on-time submission is highly recommended. The OFCCP may grant an extension, but the contractor forfeits the opportunity to gain a letter of compliance and the extension may only be for a few extra days. Pat Shiu, Director of OFCCP has stated that a large percentage of contractors fail to submit their audits on time.
  2. OFCCP Desk Audit
    Once this information is submitted, the OFCCP will conduct a desk audit of your submitted materials to determine if an on-site audit review is required; this determination is based on whether or not they find any indicators of potential discrimination in your initial documentation. A full desk audit is a comprehensive analysis of all of a contractor’s written AAPS – Executive Order 11246 (EO 11246), Section 503 of the Rehabilitation Act of 1973 (Section 503) and the Vietnam Era Veteran’s Readjustment Assistance Act of 1974 (VEVRAA) and supporting documentations. These analyses include, but are not limited to, an impact ratio analysis, compensation analysis, review of outreach and recruiting, and assessment of the reasonableness and acceptability of each AAP.
  3. Potential On-Site Audit
    If all goes well, the desk audit will be closed and you will receive a letter indicating that no violations were present. Moving forward, the location that was audited will not be open to another audit for two years.

    However, if the OFCCP does find initial evidence of potentially discriminatory practices during the desk audit, an on-site review may be conducted at your location. During this process, they will conduct a more detailed analysis which may require additional information on compensation, personnel, and policies or procedures. Also, it is not unusual for the OFCCP to conduct interviews with HR staff members, managers, and/or employees who fall into protected categories covered by the affirmative action programs

What is the OFCCP looking for during a compliance audit?

In addition to statistical and anecdotal evidence of discrimination, indicators of potential discrimination/violation also include, but are not limited to, patterns of individual discrimination, patterns of systemic discrimination, patterns of major technical violations such as recordkeeping deficiencies or failure to maintain an AAP, and noncompliance with other labor and employment laws that may relate to violations of the laws enforced by OFCCP.

The OFCCP is currently focusing on pay equity, and it has been investing in additional resources and processes to more thoroughly analyze a contractor’s pay practices.  These efforts are in line with the administration’s focus on eliminating pay difference between women and men.  In addition to pay equity, audits’ focus has now shifted more to the Section 503 and VEVRAA affirmative action plans.  Contractors should pay more attention to the obligations listed under Section 503 and VEVRAA, its recordkeeping requirements, and the annual evaluation process that is required by both regulations.

How can I prepare my organization for an OFCCP audit?

First, it’s important to understand what the OFCCP is focused on at the moment. For example, an area that has received a lot of attention lately is the way accommodation requests are handled; this includes requests from applicants and employees with disabilities as well as requests for accommodations due to religious beliefs and practices. In the fiscal year 2015, 26,968 complaints were filed with the EEOC regarding disability discrimination and 3,502 complaints were filed regarding religious discrimination[1]. The EEOC and OFCCP have a Memorandum of understanding (MOU) to share information between the two agencies, so these complaints may indirectly trigger an audit.

Furthermore, in order to avoid an expensive conciliation agreement which can result in thousands or even millions of dollars in back pay and other financial reparations, preparing for an OFCCP audit requires strong attention to detail, and among many things, maintaining employee data properly is key. You’ll need to collect race and gender data consistently and ensure that EEO-1 codes are regularly reviewed and accurate.

Beyond your data, proper documentation of the hiring process, from initial posting of a position all the way through your final decision on the applicant, is also very important. Interviewers should be trained on what should and should not be written down as interview notes, as this information can be discoverable in the event of both an OFCCP audit as well as an EEOC investigation.

Our Audit Readiness Checklist can also help your organization prepare; download it here.  

Want to better prepare your organization for OFCCP audits and protect your organization from risk? Register for our upcoming Audit Readiness Webinar on June 28! Register here.

[1] "EEOC Releases Fiscal Year 2015 Enforcement and Litigation Data." EEOC Releases Fiscal Year 2015 Enforcement and Litigation Data. U.S. Equal Employment Opportunity Commission, 11 Feb. 2016. Web. 06 June 2016.

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