New OFCCP Scheduling Letter Creates Additional Burdens for Federal Contractors: Your 5

Insights

8.29.23

The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced on August 25 that it has updated its Supply and Service Scheduling Letter and Itemized Listing – also known as its scheduling letter – in ways that federal contractors will find burdensome and time-consuming. The changes result in an expansion of coverage in both breadth and scope of compliance evaluations conducted by OFCCP, and it applies to supply and service compliance evaluations scheduled on or after August 24, 2023. Here are five steps you can take to ensure you remain in compliance with the revised rules.

What is the Scheduling Letter?

OFCCP issues a “scheduling letter” to inform a federal contractor that they will be audited by the agency through a compliance evaluation. Compliance evaluations are fairly routine for OFCCP, but federal contractors often experience significant disruption to their routines when required to assemble the items required for submission in response to a scheduling letter. The updated Supply and Service Scheduling Letter and Itemized Listing changes several key aspects when it comes to federal contractor obligations.

What Changed and How Do the Revisions Impact Federal Contractors?

There are some significant changes to both the breadth and scope of items that will be required of federal contractors thanks to these changes. In addition to some of the content changes discussed below, OFCCP has also implemented notice and communication changes as well. For example, contractors may now only receive notice of the audit via email with a read receipt request rather than an email communication and a communication via U.S. Certified Mail. Previously, the U.S. Certified Mail notification signaled the beginning of the time period for audit submissions. Additionally, contractors may now complete electronic submission of audit materials through OFCCP’s secure file sharing system, Kiteworks.

Breadth: OFCCP Requires More Documentation

Scope and Breadth Increased for Compensation Data

There are also important changes to Item 19 (compensation). The most significant change is the requirement to provide an additional snapshot of compensation data, covering the workforce analysis from the previous year’s AAP. Thus, the contractor must now provide two years of individual compensation data, instead of only one.

OFCCP also requires the contractor to include “other compensation or adjustments to salary,” making it clear that the information for total, not merely base compensation data, is now a required part of the submission. OFCCP also now mandates the submission of “relevant data on the factors used to determine employee compensation” and “documentation and policies related to the contractor’s compensation practices,” which were previously optional. This greatly expanded request is consistent with OFCCP’s continued focus on compensation disparities.

The agency has also added a new request in the Itemized Listing – Item 22 – which requires the contactor to evaluate its compensation system s as part of its “in-depth analyses of the total employment process.” Contractors will be required to submit documentation that demonstrates when compensation analyses were completed, the number of employees the analysis included, the forms of compensation analyzed, that the compensation was analyzed by gender, race, and ethnicity, and the method used for the compensation analysis.

Scope: OFCCP Expands Approach to Post-Secondary Institutions and Other Contractors With a Campus Setting

One very significant change is to the scope of compliance evaluations. OFCCP added the following language:

If you are a post-secondary institution or Federal contractor with a campus-like setting that maintains multiple AAPs, you must submit the information requested in this scheduling letter for all AAPs developed for campuses, schools, programs, buildings, departments, or other parts of your institution, or company located in [city and state only].

Previously, the scope of a compliance review was limited to a single establishment, as required by the federal regulations. Now, if a scheduling letter is received by any one of several entities in a “campus-like setting,” all affirmative action plans (AAPs) for the entire “campus” – and the documents required for the Itemized Listing – will be required for the submission.

For example, a university campus with a hospital will now be required to submit AAPs and supporting documents for both the University and for the hospital, whenever either one is selected for a compliance evaluation. Likewise, a federal contractor with several operations on its “campus-like setting” will be required to submit AAPs for each facility, whenever any of them are selected for a review. This wider scope may result in larger numbers and, if disparities are identified, in more costly class-type relief.

Another change that will impact post-secondary educational institutions is the new requirement for them to provide three years of IPEDS reports. Item 16 has always required non-academic supply and service contractors to provide EEO-1 Reports for the past three years, but academic institutions file IPEDS reports instead of EEO-1 Reports, so the revision addresses this difference.

Other Changes to the Scheduling Letter

What Should Federal Contractors Do to Prepare for an Audit? Your 5-Step Plan

The changes to the scheduling letter will significantly increase the burden of the response. However, there are a few steps you can take now to reduce the impact on your organization if (or when) you receive an audit notice letter.

Conclusion

We will continue to monitor developments that impact your workplace and provide updates when warranted. Make sure you are subscribed to Fisher Phillips’ Insight System to get the most up-to-date information. For further information, contact the authors of this Insight, your Fisher Phillips attorney, or any attorney in our Affirmative Action and Federal Contractor Compliance Practice Group.

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