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The 2018 Outlook for the OFCCP

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No Time to Rest on Your Laurels

The 2018 Outlook for the OFCCP after the First Year of the Trump Administration

With the new year, comes new possibilities at the OFCCP. With the Trump administration poised to implement their new budget and policy, this year could bring as drastic a change to the OFCCP as any we’ve seen. And as compliance professionals, we need to be
prepared. To assist, here are a few of the most pressing potential changes we could see implemented in 2018.

Doing How Much More with $10 Million Less?

To the surprise of many in the industry, the Trump administration proposed merging the EEOC and OFCCP as a means to make the government more efficacious, yet in September, the Senate quietly nixed the idea in its 2018 appropriation[1].

This was only the beginning when it came to the finances of the OFCCP. The Trump administration’s 2018 request is $18 million less than the 2017 OFCCP budget of $106 million. However, Congress recently restored some money to bring the budget back up to $94.5 million.

But where will these savings come from? Any good business owner knows that to improve the budgetary position of the OFCCP, they can decrease costs or increase revenues. The concern for practitioners in the private sector is that the course of action pursued by the OFCCP could drastically affect our companies.

“Likely to Have Some Impact”

The first cost on the chopping block? You already guessed. Bloomberg reports that the OFCCP has begun a “buyout” and “early out” program with the hopes of reducing staff of about 131 full-time investigation employees for a total of 440. As part of the budget appropriation submitted by the Senate, the OFCCP was directed to submit a plan to “consolidate and right-size the agency.” This is not a trend started by Mr. Trump. Over the previous six years, the OFCCP has eliminated 200 jobs and has fewer than 550 employees heading into 2018.

This begs the obvious question of how the reduced staffing will affect contractor audits. Bloomberg quotes a former senior attorney with the DOL’s Office of the Solicitor that speculated “[w]hether the shrinking budget means fewer compliance officers, closure of some district offices, reduced on-sites and/or fewer new audits, enforcement will continue and OFCCP will likely focus on deeper audits of contractors.” My feeling is that the quoted attorney has good instincts.

‘Management’ vs. ‘Enforcement’

We know that in a given year, the OFCCP will audit between 1 to 2 percent of the 200,000 federal contractors. But the Obama administration made some significant changes to the auditing approach that bore fruit, in terms of financial settlements collected, for the first time this year.

Under President Clinton, the OFCCP developed tiered enforcement of labor law provisions through a system called “active case management.” The OFCCP applied filters to the data submitted by contractors and instituted audits based on the data. The “OFCCP then began for the first time to decide when not to go on-site and when to stop pursuing investigative leads instead of looking at every issue in details. Back pay collections almost doubled. The George Bush Administration which followed tinkered with the filters begun in the Clinton Administration. Back pay collections almost tripled, even with reduced headcounts.”

The Obama administration changed course implementing “active case enforcement” at the OFCCP in 2011 in which OFCCP employees would audit fewer contractors more intensely. Back pay collected by the OFCCP decreased in the first few years after implantation, but to the shock of many, hit a record in 2017 with at least $23.1 million collected so far. There is plenty of debate if this year’s number is an aberration, or a sign that the Obama “active case enforcement” plan is superior[2], and this certainly isn’t the forum to adjudicate that controversy. But in terms of a 2018 outlook, HR professionals should deduce that because the deep dive technique was so productive for the OFCCP this year, it is quite possible it will be continued into 2018, despite what the politics of the Trump administration may have you think.

The Thin Line Between Love and Hate

Jay-Anne B. Casuga makes a terrific point that it is not necessarily true that less spending at the OFCCP will lead to less hassle for contractors. If you happen to be a contractor that comes under audit, how pleasant could this experience be if the staff is operating at 80% capacity? It likely won’t be more efficient in any case.

The agency is also responsible for publishing training and compliance material to help contractors navigate the labor laws throughout the year. Given that these materials cost money to develop, one must worry about the future investments in contractor education. Practically speaking, HR professionals may need to pick up the slack and be a bit more vigilant with self-compliance in 2018.

[1] The proposed merger of the EEOC and the OFCCP may not be as simple as first presumed. The acting Director of the OFCCP in August of 2017, sent a letter to the Office of Management and Budget explaining that an act of Congress was necessary to merge the two departments due to the statutory language of the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act.

[2] It is interesting, for example, that the Obama administration’s enforcement efforts increased the year before leaving office with no reelection campaign.

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