OFCCP in the Biden Administration

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Guy DeSanctis:  Welcome to The Federalist Society’s Teleforum conference call. This afternoon, June 16^th, we discuss OFCCP in the Biden administration. My name is Guy DeSanctis, and I’m Assistant Director of Practice Groups at The Federalist Society. As always, please note that all expressions of opinion are those of the expert on today’s call.

 

Today, we are fortunate to have with us Lauren B. Hicks, Of Counsel, Ogletree, Deakins, Nash, Smoak & Stewart, P.C. After our speaker gives her opening remarks, we will turn to you, the audience, for questions, so be thinking of those as we go along and have them in mind for when we get to that portion of the call. With that, thank you for being with us today. Lauren, the floor is yours.

 

Lauren B. Hicks:  Good afternoon, everyone. Thank you so much for joining us. I am Lauren Hicks with Ogletree, Deakins, and we have a short time here today, so I’m going to get through as many things as we can because there’s much to anticipate in the Biden administration. Briefly, as background, I actually worked for OFCCP for about seven and a half years, and for the last about three, three and a half years, I’ve been working on the contractor side, assisting with navigating the many obligations that federal contractors have.

 

And so I want to talk today about the transition from the Trump administration to the Biden administration, and some of the things we’ve already seen that may be changing, and some things that we anticipate that will change as we move forward in this administration. So first, I think everyone on the phone is probably generally aware that OFCCP has a new director, Jenny Yang, who has very good experience in her background with EEOC.

 

She’s a very competent, very highly skilled in this area, so this is not new to her, right? That’s a little bit of a change from what we’ve had in the past several directors. We’re walking in with a little bit less direct experience in this practice area. She has quite a bit of past experience in the related area of the EO. I anticipate that she will, from a legal standpoint, have a little bit of an easier time transitioning to the program and begin to roll out her policy initiatives.

 

She hasn’t rolled out much yet. She’s, so far, been pretty quiet, but I would expect that to change, right? I think it’s just getting a handle on things. It’s a new agency. It’s a little bit of a difficult agency to get a handle on from an internal perspective. It’s not surprising to me that we haven’t seen anything happen in a flash, but I do expect some things to move forward.

 

That being said, she was in place very quickly. I heard that she was – they’re working with the Department of Labor on Inauguration Day. So that, in and of itself, is pretty unusual, right, to roll in successfully that quickly and get somebody off the ground and running. Typically, speaking, a small agency like OFCCP, it takes many months to have someone in place. Not so, right? And I think everyone should take that as a pretty clear signal from the Biden administration that the mission of this agency is absolutely one of its areas of focus.

 

So what changes are we seeing from the last administration and what are we expecting to see going forward? Well, so far, I don’t think we’re seeing a lot of substantive audit changes. We’ll come back to that. We have seen a little bit of action as far as their messaging changes and unrolling a little bit of the Trump administration initiatives, right?

 

For example, I’m sure most of you on the phone recall that towards the end of the Trump administration, there was Executive Order 13950, which was an anti-diversity type training, anti-unconscious – well, not specifically unconscious bias. It was targeted to unwind some particular types of training that the administration didn’t like. It was rather controversial.

 

The business community, at large, came out against it, and so that was rolled back quite immediately. And we’ll come back to this topic, actually, as we talk about what we may see from this administration with Director Yang and Marty Walsh, what they may have going forward.

 

So we’re seeing some rollbacks of things like that. There are some formal regulatory changes that they’ve signaled, either verbally or maybe in their budget, recent budget proposal of things that they would like to roll back, as well, that maybe they haven’t taken actual steps yet. But we do expect some additional things to roll back or to change, related to religious exemptions, the PDN transparency modeling that was set forward in the last administration. So I expect more of that just generic rollback based on the previous administration. Not a big a surprise and pretty typical from administration to administration.

 

On the more pragmatic side, though, with the audits, I think people are a little bit more surprised to hear that we’re really not seeing, so far, a lot of change, and I think, basically, my – this is just my personal opinion. But my opinion on that is, we didn’t actually see that much change in the audits under the Trump administration, right? They really continued the way the Obama administration was running its audits.

 

They, yes, had some high-level policy changes, but I think those were mostly to connect with or try to seem friendlier to the business community. But from a pragmatic standpoint, the audits themselves really weren’t operating in a materially different way. I think the biggest difference was that towards the end of the administration, they started doing focused audits. And I don’t know if anyone on the phone had the pleasure of going through those, but that was where they focused on a specific area of the law and didn’t really do the whole full-scale audit that we typically see when they come under a compliance review.

Well, again, that’s another thing the Biden administration has already signaled that it is done with. It removed some from its scheduling list that remains out there, and then it has indicated in its proposed budgeting that it doesn’t seem to intend to resume those. Why, you ask? Well, they didn’t get them any wins, right?

 

To the Agency, they like to see discrimination dollars as really how they measure their success. It’s not the only way, but it’s—I think in my opinion—their primary measure of success, also, maybe, technical violations, things like that. And these focused reviews just were not bringing that for them.

 

So in other words, they didn’t have any teeth. They weren’t creating a lot of flash. So I think the focused reviews are probably gone, and we can anticipate not seeing a lot of that going forward. But as far as the full audits, the full reviews, those were operating in basically the same manner through the Trump administration that they were in the Obama administration.

 

And I had a client recently feel like the sky was falling because, for example, if you practice in this area, you know that a hot area for the Agency has been and will continue to be compensation, and in a particular audit, the Agency was running a whole workforce analysis on compensation, and the client was in a panic, saying, “Well, look what this administration is doing.” But that’s been going on, right? That was going on under Obama. That’s been going on under Trump.

 

In other words, if you’re not as familiar with how that works, oftentimes, we on the business side would like to break the pay-analysis groupings. You might call them a variety of things, but the groups that we’re looking at, for compensation purposes, we would like to drive them smaller, and more granular, and more tied together for using legitimate, relevant criteria.

 

The Agency likes to keep it very broad, and they’ve been doing that now for this administration and the last two. That’s not going to change. That’s not to say they’ve been successful with that. That’s not to say it’s the most legally meaningful analysis. I wouldn't make any of those suggestions, but from a practical standpoint, are they going to run them in the audits? Yes, they are. I think they will keep running them in the audits.

 

So for you all, on the phone, if you know that you are on the scheduling list, or you come out in the next scheduling list—which, by the way, I believe will be around July—I’m certainly expecting a new scheduling list in pretty short order. I know many offices are completely out of cases, at this point, so that’s usually the time they try and issue a new list.

 

If you’re on that list, I’m sure you’re used to prepping for these well, but certainly anticipate that there will be continued heavy focus on compensation. Though, again, I don’t think that’s any change from what we’ve been seeing the last several years. And other than that, the audits are functionally moving the same way. No big surprises in the audits.

 

One of the more frequent questions that I get asked is, why are the audits so slow? They’ve continued to be slow I think – just under the last administration they were slow. They’re going to keep being slow under the Biden administration. That’s just the way it is. They may have sped up a little bit in the last administration, particularly, because of those focused reviews, which I think they were able to get through a little faster. But for the most part, there’s a lot of reasons. We could have a whole separate call on why the audits go very slowly.

 

But for your purposes, just know that it’s incentives, right, within the agency. There’s not a lot of incentives to move cases to closure with a lot of great speed. So that’s not something they focus on. I think it will probably continue to be that way under the Biden administration. So expect that when you get an audit, it’s going to drag on for a substantial length of time, would be my expectation, and that you may see them start to dig a little deeper on some of the more technical things than perhaps they were doing under the Trump administration.

 

Beyond the audit, I think a big question that’s hanging out there with the audits is, what can we expect as far as enforcement? Now, I don’t think the audit’s changed substantially under the Trump administration, but one thing that was substantially different was they did not pursue a significant amount of enforcement litigation, right? They only filed a handful of cases in the entire Trump administration; although, there were some hanging out there from the Obama administration that they did move forward.

 

What can we anticipate? I think unquestionably, we will go back to seeing more litigation from the Agency. I think that’s unquestionably going to happen. There has been some discussion, and I think it’s an interesting question. The amount of settlements wasn’t really down at all in the last administration.

 

So I think there’s some allegation, right, that maybe because of the way the audits were handled, or maybe the way the settlement negotiations were handled, something like that, contractors may have been actually more willing to settle under the last administration. I don't know if that’s true. Maybe, it is; maybe, it isn’t. And there is some suggestion that that’s part of the reason there was not a lot of litigation. Perhaps, that’s true.

 

I would expect the Agency to go back to taking a little bit tougher stance if you do find yourself in a situation where they’ve issued a predetermination notice, or a PDN as they call it, or a notice of violations, right, back to maybe the Obama-era policies, where they will only accept “make-whole relief,” and they won’t budge off of that as they see it—whatever they calculate that amount to be—and they won’t budge from that stance. So potentially more litigation for that reason as well. I don't know what to anticipate.

 

One significant area of unknown there—no one on the phone will probably be surprised to hear—is compensation. So compensation has been the bane of existence to both the contractors and to OFCCP, I think, over the last decade. The Agency believes that there is significant pay gap, that’s based on research, a variety of things, and that they have not been able to successfully target it. And their experts at the high level, which is largely run still by Bob Lajeunesse, if you’re familiar with him. Maybe, you’ve heard him speak at something like the NILG or had a case where you’ve worked with him.

 

But they really believe in broad-based compensation analysis, rather than cohort or smaller similarly situated type analysis. They really like the bigger numbers, bigger reviews, and reasonable minds can go back and forth, I guess, on them pushing that. But I think it’s worthy of noting, right, that in the last administration, the Agency had a couple of very significant legal losses in the realm of compensation of Analogic and Oracle.

 

And so I think it’s a big unknown, right? We don’t yet know what they’re going to do moving forward. Is it just more of the same? Are they going to keep filing the same thing? Are they going to start maybe doing some more granular-type analysis? And we just don’t know. Compensation is incredibly legally difficult, and without boring you with all the details, it’s incredibly difficult for them also from an internal standpoint. There’s a multitude of reasons for that. It crosses over the investigatory skills, to the legal skills, to the statistical skills, and just separations of skillsets, and a lot of other things, plus the time and resources, right?

 

Compensation—unlike hiring, which happens in a very small period of time with a defined set of decision makers, generally speaking, over a concrete period—compensation, as we all know, is just significantly more complex. It goes back over a much longer and varied time period and has more varied factors.

 

And for this reason, it’s just difficult for them to do a really meaningful or thorough legal investigation. It continues to be a little bit of a challenge for them. So I’m not sure what we can expect from them going forward as far as whether they will try and tailor those a little bit more narrowly, or maybe, they’re going to say, “No, we still think we’re right.” And I’ve heard them take that position, just for what it’s worth.

 

I do know that they have held a position that those are just nonbinding. There were some minor things they can work around, and they can continue on their path of trying to do these very broad analysis. So I’m not sure what to anticipate moving forward, but that’s certainly going to be an area for us to watch.

 

It’s worth noting that the Biden administration just put out its proposal, right? This is not in place, but it’s a proposal for budget for next year, and probably everyone on the phone is generally familiar, but it’s worth noting that these rarely happen the way the administration asks for them, right?

 

And certainly, I don’t know that under the current situation with Congress that we would expect that. But it is, I think, very important to note that they asked for a 33 percent increase in the Agency’s budget. That’s massive. I’m not even sure that we can adequately cover how significant that would be, right, if they actually got that. Now, they won’t, I don’t think. But it’s important to note that again the Biden administration is placing very high emphasis on the priorities of this civil rights agency. They believe in the mission, and they’re not going to sideline this just because it’s a small agency.

 

What do we expect realistically to happen? I don't know. Certainly, they are going to prioritize head count. They’ve made that clear in their proposed budget. If you’ve done a little bit of research on Jenny Yang, she had the same philosophy at EEOC, that they needed to increase their head count, as well, to be effective, and frankly right now, OFCCP’s head count is very, very small. It’s one of the many, many reasons that your compliance reviews are moving very slowly. They just have very few people. They’ve shrunk, and shrunk, and shrunk for the better part of a decade now.

 

So them staffing back up is not really surprising. I think what is an area to watch is, how much do they staff up and where? Where are they allocating those resources? Frankly, I think both the Obama administration and the Trump administration, in my opinion, overly prioritized adding administrative-type folks in D.C. They really did not emphasize adding the case workers or the compliance officers who are out in the field doing the actual audit work.

 

And so it will be a really interesting area to watch, to see whether this administration changes course a little bit and actually begins to staff the folks doing the case work or if they continue to staff more administrative-type folks in D.C. Something to keep an eye on.

 

What else do we know about their priorities? Well, we are expecting something to come on what they call the affirmative action verification initiative. Now, that wasn’t a new thing under the Biden administration, right? That’s actually been brewing for quite some time. It was an initiative that was born out of a GAO audit that, at least, took place – I don’t remember when the findings came out if it was Trump or Obama. But the investigation by GAO took place in the Obama administration, and they made some recommendations that the Agency needed to change several things.

 

And one of them has been this nagging issue for the Agency that it only audits a very miniscule number of federal contractors annually, and I’m sure if you all were not on mute, someone would immediately chime in with a “Yeah, well, why does it audit the exact same ones over and over again?” Again, I think that’s a legitimate concern, both inside the agency and out. But regardless they audit this very tiny number of federal contractors each year, and everyone agrees that they would like the Agency to be more impactful. It’s not very impactful because of its small reach.

 

And so one of the solutions that it has put forward, under the last administration, they said, “Okay. Well, we’re going to propose this affirmative action verification initiative wherein we will require some type of annual certification by the contractors, that they have completed their affirmative action obligations.” Now, contractors should be making that certification annually, in essence anyway, in sam.gov, just for larger federal contracting issues. But we don’t know exactly what form this is going to take or what it’s going to look like. It could be a whole lot of not much, just a quick little report.

 

On the other hand, it could be somewhat substantial, just depending on what they require. For example, there are maybe contractors out there who take the position that only one or two locations, or entities, or federal contractors, and perhaps the report has to be filed by the parent, and I’m making this up entirely. This is a complete hypothetical. But maybe, they say, “Okay. You have to file by the parent, and you have to certify each facility that you have and whether or not it is specifically in compliance, right?” So it’s a force some hands there. I can imagine various scenarios like that where it could be a little bit of a challenge.

 

The bigger issue is that the Agency intends, in the long run – we’ll see if it happens. The intent of the Agency, in the long run, is that contractors would file their actual AAPs and maybe data with the agency annually. Now, they’re, I think, a long way away from that. I don't know definitively, but that’s a big technology leap for them. Just to get an annual certification is a big technology leap for them.

 

And by the way, if I have any construction contractor friends on the phone, they’re trying to implement basically the same thing with construction or a similar type program with construction so that there are some types of more awareness and more certifications required in that lane as well. And while I’m mentioning construction, I will just say, back to the budget, very briefly, construction seemed to have played a large role in their budgeting request, and so if I do have construction contractor friends on the phone, it sounds like the Agency is finally going to pick back up that lane that they’ve dropped to the side for the last few years after they had some legal challenges with the way they’re scheduling was conducted.

 

But, anyway, the verification initiative, in the long run, I think the Agency’s goal is to collect those AAPs. I personally would be very shocked if the Agency had the technology rolling at the minute to be able to do that. That’s a big technology leap for them. But it’s an area to watch.

 

That’s something that was proposed under the Trump administration, and since the Biden administration has been in, they did put up a little webpage that says AAP verification initiative coming soon, right? And technology seems to be mentioned in the budget, so it’s clearly the initiative they’re moving forward with, and it seems to be only a matter of time as to when they roll it out, and we’ll see more specificity, what is required and when, but definitely an area to watch.

 

What initiative can we anticipate from this administration? Well, I think if you put into perspective the current status of American culture, the significance of post-George Floyd, BLM, post-#MeToo, all the cultural things that have happened in the last handful of years, I think that this administration is going to try and see where they can possibly expand some, what I will call, a little bit more DNI-type initiatives.

The regulations are, I think, the bare minimum, right? They’re very burdensome to comply with, but they don’t get into the things that we really think about now in the DEI context to bring about more equity, more inclusion, those types of things. So it would not surprise me in the slightest—and this is what I’m anticipating—if this administration doesn’t focus on moving in that direction. I think, maybe, in a very simplistic item, for example, is something exactly the opposite of Executive Order 13950, right?

 

So we had Executive Order 13950, the combating race and sex stereotyping initiative under the Trump administration, that’s now deceased. But I could see this administration going in the opposite direction and saying, “No, no, no. Federal contractors, we want to mandate more training,” or “We want to mandate a specific type of training.” Maybe, it’s an unconscious bias training. It could be something different, right? So that’s just my speculation, but I think it’s a quite reasonable speculation.

 

And then I do think because of Jenny Yang’s background—and again this is just my speculation—I think we’re going to see an administration that is probably more regulatory focused versus just compliance and/or continued enforcement focused. So I think she will consider ways to be impactful, and if she thinks she can pass some regulations to expand in either DEI areas, like I was just discussing, or to give some of the regulations a little bit more teeth, because of course there’s always a nagging issue within the Agency of maybe there being lack of teeth in some of them. I think she’ll do that, right? So I think it wouldn't surprise me if that weren’t what they were focused on and working towards bigger more significant things in addition to just moving the enforcement forward.

 

On the enforcement, I would make a really quick note that knowing how the agency works – it takes many years to build up discrimination cases, and I think the Trump administration cleared out most of the pipeline, so don’t be surprised if this year rolls through, and by the end of this year, the discrimination dollars are way down, right, that you should not take that as any type of indication, however, that the Agency is going more lax or that they are not going to enforce, things like that.

 

I think quite the opposite, but just understanding that these cases take many years to develop. And so there’s going to be a lag because I do think – and I don’t know. Obviously, I don’t have access, but from what I do know, in my practice, things like that, I suspect that the pipeline is probably down. I think they settled so many cases that there’s probably not a lot left hanging out there for this administration to come in and knock off and get some dollar-win, as they might see it. Yeah. Expect that this year may be a little quieter on the dollar front, but you should not take that as a signal of anything whatsoever, other than just a practical signal.

 

Other quick high-level things, regarding the audits, right now the offices—OFCCP offices I should say—are still operating virtually, which means if you have one of those cases that requires an onsite, or the Agency elects to do an onsite, they’re still conducting those virtually, which have been, in my opinion, pretty fluid, pretty harmless. They’re significantly less burdensome, I think, than doing real onsite.

 

How long can we anticipate that to continue? I don’t think we know the answer to that question. The Agency is still not back. It doesn’t seem to be in any rush to get its employees back. So I think, for now, we can anticipate continued virtual onsite. In addition to that, of course, they’re not going to be doing these focused reviews. So there just won’t be as many reviews that require an onsite, period, going forward. And I think they’ve perfected, right – I think they’ve realized that some of the things that they felt they had to go onsite for, they were able to obtain just as successfully virtually.

 

Other audit issues, they’ve been giving us, since COVID hit, much more generous timeframes to submit the desk audit and other things. So far, that seems to be continuing. Obviously, I don’t think it’ll go on forever, but I’m surprised it’s gone on frankly as long as it has. So don’t be shocked if and when we start seeing those timeframes tighten back up, and you have to get your desk audits together a little bit faster. I would say don’t be lulled into a sense of security that you’ll have a lot of time to get things prepared.

 

I just want you to know the Agency has continued to be very gracious and flexible with timeframes as a general rule. The Agency has already taken initiative to backtrack on contractor compliance efforts. Probably, if you’re on the phone, you probably don’t need a lot of compliance assistance from the Agency, but it’s something that they had done more of in the last administration, and we tend see a little bit more of in republican administrations, and now they’ve already backed off that, closed some portals that were available, so on and so forth. So I think they’re going to continue to be quiet on that front.

 

It'll be interesting to see how much they start to engage with the community, right? They were very engaged with the community in the last administration, the business community. I would expect to pivot back towards more Obama-era policies, where they try to engage more directly with the worker community, try and drum up more compliance coming into OFCCP.

 

I’ll just make a quick note—probably again, everyone on the phone understands this—but OFCCP, in addition to its audits or compliance reviews, it can handle complaints from workers, just like EEOC. Although, they’re significantly worse than EEOC complaints, in my opinion, because they mandate an onsite. So they are just going to be significantly more burdensome, as a general rule, than if the same person had filed with EEOC.

 

They only handle a small number of those a year because OFCCP is not well known to workers, right? An average person has never heard of OFCCP, so they just don’t get the same volume of complaints that EEOC gets. But nonetheless, I think we’ll see in this administration, like we saw in the Obama administration, the Agency really likes complaints and likes being a resource for workers, and so it will not surprise me if they do more worker outreach to try and increase their number of complaints.

And I don't know that we’re going to see any action on this, so I’m not trying to stir up anyone to be concerned at this particular moment. The sky is not falling. But as a practitioner in this area, my biggest area of focus, or when I’m thinking about things that could happen going forward, in addition to the AAP verification initiative, which could be very basic or could be highly burdensome, depending on what gets implemented in the future.

 

But the other thing I continue to think about a lot is pay reporting. Will the Agency come up with some kind of pay reporting, maybe, to parallel what we saw previously on the EEO-1 Component 2. Or could they even push for something more dramatic, right? I can see a progressive administration saying, “No, no, that wasn’t going to be very effective anyway. We want to do more detailed reporting, or we want to require something more significant.” Could it be some more pay transparency? I don't know.

 

But I think it’s an area to watch, and I think everyone who’s in this area should continue to be very diligent in your compensation practices, and your equity analysis, and making sure you’re really staying on top of those because there’s just no question that this administration will continue to focus on those things. And the states are continuing to add on, piling on as we move along through the years, so just an area to watch. And with that, I think I’m going to stop talking and open it up for questions.

 

Guy DeSanctis:  Thank you for that. We’ll now go to audience questions. In the meantime, I guess, one question to start us off: if we’re able to tell – or are we able to tell what the Agency’s enforcement priorities are based on, the newly released proposed budget in the Biden administration?

 

Lauren B. Hicks:  Yes. I think a little bit. I think some of the budget as well, as other initiatives they’ve already rolled out, signal to me that they are likely to try and push jurisdictional-based issues. We haven’t seen much of that for several years. And again, the agency has continued to plague and perplex them that there are contractors out there that they know are flying under the radar, either because they don’t identify as a federal contractor on the EEO-1s or they’re only a subcontractor.

 

There’s a multitude of reasons that this happens, but I do expect that with all the resources that they’re trying to build up that they will try and target some more jurisdictional-type issues. We may see them trying to get back into various healthcare-type issues. So I think we will see more jurisdictionally and then probably continue to push for compensation, would be the other one, where they head, which is a big unknown at this moment, I think, about which direction they head in compensation.

 

Guy DeSanctis:  Thank you for that answer. Is there anything else you’d like to discuss in the meantime or anything?

 

Lauren B. Hicks:  I will just make a note, while we’re waiting to see if there are any questions that, again, I think the scheduling list is probably eminent, and you should definitely keep an eye out to make sure if you’re on the list and begin prepping those. If you do have one on the list, one or more on the list, prep them immediately. Do not wait. Do not wait for the scheduling letter.

 

Having that notice now is the single best gift I think the Agency could've possibly given to business, and so prepare, prepare, prepare, start early, and make sure that you’re getting things as tight and clean as possible before you make that initial desk audit submission because it’s much, much, much harder if not impossible to clean things up on the backend after it’s already been submitted to the Agency. So, yeah, just take advantage of the scheduling list to prepare as diligently as you can.

 

Guy DeSanctis:  Thank you for that. It appears that we don’t have any more questions, so on behalf of The Federalist Society, I want to thank our expert Lauren Hicks for the benefit of her valuable time and expertise today. And I want to thank our audience for calling in and participating. We welcome listener feedback by email at [email protected]. As always, keep an eye on our website and your emails for announcements about upcoming teleforum calls and virtual events. Thank you all for joining us today. We are adjourned.

     

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.