August 19, 2014

Presented by:

John C. Fox, Esq. Fox, Wang & Morgan P.C.

San Jose, CA 95111

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I.  The President’s Recent Executive Order Hit Parade A.  Background: What Caused This Executive

Order Explosion

B.  The Catalogue of Executive Orders

C.  OFCCP’s New ANPR Re Compensation Data Collection Reporting Tool

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II.  Compliance Violations OFCCP is Finding With The New 503/VEVRAA Regulations A.  “Listing” vs. “Posting”

B.  Enforcement Begins in Earnest of OFCCP’s March 2014 503/VEVRAA Regulations on January 1, 2015

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1)  The President is now alone, … , so he had to act alone.

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1)  The President is now alone…(cont.) …he is a castaway

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1)  The President is now alone…(cont.) •  The President, a newcomer to national politics,

drew his power from the voters -  Only served 2 years in the Senate -  Had 67% approval ratings 2 years ago -  Only 40% voter approval rating today – new low

-  The President is sinking as we speak

-  60% think country in wrong direction -  54% currently disapprove of President Obama’s job

performance

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1)  The President is now alone…(cont.) •  The President is now a Castaway -  Democrats broke rank with him on OFCCP Tri-Care

coverage -  Many Democrats not inviting The President to

campaign with them -  Hillary -  No chance to pass ENDA LGBT Legislation (failed each

year in last 40, except for one year not introduced at all) -  No chance to pass Lilly Ledbetter sequel “Fair Pay”

legislation

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2)  Mid-term elections coming up in less than 3 months •  What are mid-term elections about? •  Getting the vote out! •  No presidential candidates in race •  How do you get the vote out? -  Galvanize your “base”

•  The President takes a Chicago Alderman approach to politics -  What “bases” did President reward with his EOs?

-  Women -  Gay/Lesbian -  Unions

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2)  Mid-term elections coming up… (cont.)

•  Why are mid-terms a concern?

-  1/3 of Senate up for re-election -  2/3 of Senate seats happen to be Democrats -  Republicans need 6 seats to control the Senate

outright

- The Democratic National Committee has been projecting loss of the Senate for several months now, even before the expected economic slip-back arrives

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PUNCHLINE:

•  If Senate goes Republican, “the music stops” in the White House

•  But, its going to be a rough ride to the end of the presidency

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3)  The President had to act now

•  Too many planes trying to land on the same runway at the same time

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3)  The President had to act now (cont.)

•  It takes OFCCP several years to cycle one regulatory proposal -  How many final regulations has OFCCP produced in

the first 5 ½ years of Obama Administration? -  2 (five months ago)

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4)  The President has gotten a small head start on trying to frame and polish his legacy

•  Wants history to view him as:

-  Enlightened; ahead of his time

-  The galvanizing outsider who steered the herd to new places he knew were good for them

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4)  The President polishing his legacy (cont.)

•  The President who changed and locked in basic systems reforms

•  Obama is deploying the Jimmy Carter approach to government…which was to lock down legal instruments to change government to fix/lock instruments of government

-  Contra: Ronald Reagan: be only a good steward while in office and let your ideals persevere and persist

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5)  New (Dangerous) Policy Development The White House, this Labor Department and this OFCCP believe that:

a)  Federal Kors are step-child federal employees (half brothers and sisters)

b)  Federal Kors make a conscious choice to be federal Kors/sub Kors and “check their rights at the door”

•  “Do as I say or Daddy will take your cell phone away”

•  OFCCP increasingly indignant federal Kors do not roll over and play dead

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5)  New (Dangerous) Policy Development (cont.)

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1)   Minimum Wage, EO 13658, amends nothing (February 12, 2014; 79 FR 9851-February 20, 2014)

2)   Non-Retaliation for Disclosure of Compensation Information, EO 13665, amending EO 11246 (April 8, 2014; 79 FR 20749-April 11, 2014) -  No OFCCP implementing regulations proposed yet

3)   “Presidential Memorandum” [directing OFCCP to issue compensation data collection tool] amending nothing (April 8, 2014) -  ANPR August 8, 2014

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4)   Equal Employment Opportunity [LGBT], EO 13672 amending EO 11478 and 11246 (July 21, 2014; 79 FR 42971-July 23, 2014)

-  No OFCCP regulations proposed yet

5)   Fair Pay and Safe Workplaces [Labor Law Compliance Certifications for K Bids], EO 13673 (July 31, 2014; 79 FR 45309-August 5, 2014) amending nothing

-  Look most likely to DOL (not OFCCP) to issue omnibus regulations AND through F.A.R.s

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§  WARNING: Two more acronyms to learn:

-EPR (Equal Pay Report)

-OIS (Objective Industry Standard)

Friday August 8, 2014

79 Federal Register 46562-46606 (44 pages)

“Government Contractors, Requirement To Report Summary Data on Employee Compensation”

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§ Amends ONLY 41 CFR § 60-1.7 (Reports and other required information)

§ Repeats standard EEO-1 filing requirement

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(b) Equal Pay Report. (1) EPR requires Kors and SubKors >100 employees to provide “summary data” on:

§  compensation paid to Ees “by sex, race, ethnicity, specified job categories, and other relevant data points,” and

§  in format and manner required by OFCCP

§  NOTE: 100 employee limit reduces “covered” Kors by about 80,000 to only about 21,000

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§ Must be filed by each: ◦  Prime Kor and first tier SubKor required to file the

EEO-1 Report(s)/IPEDs -  Not all covered federal SubKors

◦  With > 100 employees, ◦  A K, SubK, or purchase order > $50,000 or more that covers a period of at least 30 days, including modifications

-  Spot sales not covered -  Beware open-ended supply Ks -  Practice tip: Audit/classify your Ks

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§ Must be filed by the date specified in the report § Proposed calendar year reports due in first quarter

of calendar year = March 31st (as supplemental columns to EEO-1)

§ Good idea to split comp filing from regular EE0-1 filing date?

§ Must submit electronically through a promised OFCCP web-based filing system (absent hardship waiver)

§ Beware “the cloud”

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§ Confidentiality: “OFCCP will treat information contained in the Equal Pay Report as confidential to the maximum extent the information is exempt from public disclosure under the Freedom of Information Act, 5 U.S.C. 552.” § Kor argument: confidential/sensitive/release would

subject Kor to commercial harm

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§  “OFCCP may publish aggregate information based on compensation data collected from” the EPR

§  “…such as ranges or averages by industry, labor market, or other groupings,”

§  “but only in such a way as not to reveal any particular establishment’s or individual employee’s data.”

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§ Why? Articulated purpose? §  Ostensibly to “assist Kors” to know they pay below

industry standard and jolt them into policy decision to pay higher wages

§  Real purpose: §  Help unions win union organizing drives and

negotiate higher wages §  Create higher “prevailing wage” reports to increase

wages among Service Contract Act employers

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§  OFCCP will use the reports only to select Kors for audit §  OFCCP will not analyze your compensation on merits

from your EE0-1 reporting

§  OFCCP’s audit lists will thus further balkanize into: §  All covered federal Kors < 100 Ees §  All covered federal Kors > 100 Ees §  Universities §  Construction §  Corporate HQ (CMCE)

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“For purposes of selecting contractors for compliance evaluations using the Equal Pay Report data, OFCCP proposes to focus primarily on a strategy that ranks contractors against the objective standards, and then prioritizes compliance evaluations of those contractors and subcontractors who have larger race or gender pay gaps than what is typically reported in the industry as measured by the objective industry standard described in the section above. …”

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“Those contractors and subcontractors who report patterns with the greatest deviation from the applicable standard would have the highest likelihood of selection for further investigation under this approach. Under its usual compliance evaluation procedures, the agency would then examine their detailed compensation data and practices to make a determination about the contractors’ actual compliance. OFCCP specifically proposes comparing average pay differences across contractors who are in the same industry within EEO-1 job categories. …”

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“While EEO-1 categories are far too broad to identify pay discrimination at the individual employer level with precision, they are practical and useful for setting enforcement priorities by comparing across employers based on summary data. As explained further in this section, the agency also plans to consider how other data sources may provide information on firm or employee characteristics that would help refine and improve OFCCP’s ability to use Equal Pay Report data to rank contractors and prioritize compliance evaluations. …”

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“Under the approach proposed by OFCCP, using an objective industry standard, the goal is not simply to identify absolute differences in pay, which may be explained in any particular case by a variety of legitimate factors. Rather, it is to identify contractors with pay differences that substantially depart from the objective industry standard, reducing the likelihood that legitimate factors explain all of the difference.”

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§ Usual OFCCP Recordkeeping requirements: 41 CFR 60-1.12(a) “Requirements for bidders or prospective contractors—(1) Certifications and representations of compliance with the requirements of Executive Order 11246 and its implementing regulations. Each agency shall require each bidder or prospective prime contractor and proposed subcontractor, where appropriate, to represent by a statement in the bid or in writing at the outset of negotiations for the contract:

Cont. on next page.

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(i) Whether it has participated in any previous contract or subcontract subject to the Equal Opportunity Clause in § 60-1.4(a);

(ii) Whether it is currently required to develop affirmative action programs as prescribed under the regulations in this chapter and to file reports set forth in this section;

(iii) And, if so, whether it developed the affirmative action programs;

[FOX NOTE: See (iii) above and 18 U.S.C. 1001]

Cont. on next page.

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(iv) Whether it has filed with the Joint Reporting Committee all reports due under the applicable filing requirement; and

[FOX NOTE: Trying to cure those Kors who fail/refuse to file EE0-1 reports]

(v) Whether it currently holds a Federal contract or subcontract that requires the filing of an Equal Pay Report(s) with OFCCP, and whether it filed an Equal Pay Report with OFCCP for the most recent reporting period, as prescribed by paragraph (b) of this section.”

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Sanctions: Failure to file timely, complete and accurate reports, and certifications and representations as required under this section constitutes a violation of Executive Order 11246 and its implementing regulations that may subject the contractor to the sanctions

NOTE: Ostensible debarment threat

-  Why does the threat fail, though?

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When are comments due?

November 6, 2014

POLL 1: Does your company want this ANPR to become a Final Regulation, or is it hoping it never gets published in final form?

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1)  Failure to List Available Jobs

◦  41 CFR Section 60-300.5 ◦  Kor must prove “listing,” not “posting”

2)  Internalize the numerous changes by reading ONLY needed forms, analyses, clauses, notices, etc.

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Reminder: OFCCP exercised its prosecutory discretion to “phase in” not just first AAP after March 24, 2014 effective date of regulations but also all of Subpart C.

-  So, must have new compliant AAPs and self-IDs at time of first AAP AFTER March 24, 2014

Poll 2: When does your company have to first comply with OFCCP’s new Subpart C regulations?

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POLL 3: Answer if Subpart C is already applicable to your company:

My company is currently compliant with the new 503/VEVRAA Subpart C requirements. POLL 4: Answer if Subpart C is not yet applicable to your company:

My company will be ready to comply in all respects with the new 503/VEVRAA Subpart C requirements when applicable to my company.

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Fox, Wang & Morgan is making available to DirectEmployers members, in digital form and at a special discount price not elsewhere available, all approximately 120 pages, almost 40 forms, revised AAPs, notices, clauses, evaluations, audits, surveys, etc. you need to comply: $2,000. Available now. Contact: Thuy Vu: (408)844-2352; Tvu@foxwangmorgan.com to order now. Please mention that you are a DE member to receive the discounted price. (Vendors will be charged a small additional royalty for use of the forms with each client)

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QUESTIONS?

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THANK YOU!