For the first time since 1996, the U.S. House of Representatives Education and Workforce Committee held an oversight hearing to review the impact of OFCCP’s recent regulatory actions.
The regulations up for discussion in the hearing held in April, 2012, included the agency’s proposed changes to four of its enforcement regulations:
- Requiring establishment of numerical targets for veterans’ employment and impose sweeping new obligations related to documenting the identification, recruitment, and treatment of veterans;
- Broad new compensation reporting requirements for contractors;
- OFCCP’s move to requestpermission from OMB to vastly expand the scope and amount of data requested of contractors at the outset of compliance evaluations; and
- The imposition of a 7-percent hiring goal for individuals with disabilities and impose sweeping new obligations related to documenting the identification, recruitment and treatment of individuals with disabilities.
In addition to these proposed rule changes, the witnesses noted OFCCP’s intent to make major changes to its construction industry regulations and sex discrimination guidelines in the near future.
Both proponents and opponents of the rules testified at the hearing. Some of the topics discussed and the individuals representing the contractor community at the hearing were:
Economic impact and goals. Jeffrey Norris, president of the Equal Employment Advisory Council, testified that OFCCP has underestimated the potential economic impact of its proposed regulations. Namely, said Norris, OFCCP included inaccurate counts of the number of covered contractor establishments; completely omitted certain critical compliance requirements; inaccurately assessed the ease with which certain workforce data can be extracted from contractor computer systems; and made “wholly unrealistic estimates of the time required for contractors to accomplish prescribed new responsibilities.”
With regard to the agency’s proposed 7-percent numeric hiring goals for veterans and individuals with disabilities, Norris did not mince words. The problem with the proposed rule, said Norris, “is that there are no reliable ‘availability’ data for veterans and individuals with disabilities comparable to that provided through Census data for women and minorities.” And the proposed rules address this shortcoming in “two different, and equally ineffective, ways,” according to Norris.
“Real life” economic and other burdens. Dana Bottenfield, director of HRIS, Employment, and Immigration at St. Jude’s Children’s Research Hospital, gave a “real world” view on the process of establishing and maintaining affirmative action plans (AAP). At a minimum, AAPs take an average of 300 to 600 man-hours per year; the average cost of which is $58,000 per year, said Bottenfield. If audited, another 200 to 400 man-hours can be added to the mix—which cost the hospital an additional $37,000 the last time it was audited in 2009.
Bottenfield outlined the laborious process of creating an AAP, pulling data, and reporting and generating the hospital’s AAP (which is more than 450 pages in length). In short, she testified, “creating an AAP is not merely running a few reports and submitting the results to the OFCCP. It’s an intensive process that St. Jude must take seriously or else face penalties.”
Contract coverage and audits. Alissa A. Horvitz, Esq., shareholder in the Washington DC office of Littler Mendelson, P.C. (OFCCP Practice Group), testified that the dollar threshold on contract coverage should be raised due to the “onerous recordkeeping and subcontractor flow-down obligations” imposed by OFCCP. Horovitz noted that under the current contract thresholds, smaller contractors have become “incredibly frustrated” because being a government contractor has become “so overwhelmingly burdensome under the existing regulatory framework ….”
Furthermore, Horvitz advocated for audit exemptions for companies that do not have contracts worth at least $1 million in the first year working with the government in an effort to increase contracting competition and allow smaller businesses to realize a profit margin before they experience the financial burdens of an audit.
Interestingly, OFCCP was not invited to testify, so it did not. Unfortunately, no specific “outcome” is expected from the hearing.
To see the full text of hearing testimony, go to the Education & Workforce Committee’s website at www.edworkforce.house.gov.