August 8, 2013

New DOL Head Renews Push For Contractor Regs

From: Law360

By Dietrich Knauth

The U.S. Department of Labor has submitted two affirmative action rules for contractors to the Office of Management and Budget, which attorneys are taking as a sign the department’s new leadership is looking to jump-start an ambitious regulatory agenda that stalled during President Barack Obama’s first term.

The Office of Federal Contractor Compliance Programs, the DOL division charged with regulating federal contractors’ employment and affirmative action practices, asked the OMB last week to approve two rules aimed at boosting affirmative action hires of veterans and disabled workers.

The affirmative action rule for veterans was proposed in April 2011, and the disability rule eight months later. But both stalled on their way to finalization, slowed in part by the departure of former DOL Secretary Hilda Solis and OMB regulatory chief Cass Sunstein. Now that Thomas Perez has been confirmed as labor secretary and Howard Shelanski as head of the Office of Information and Regulatory Affairs, attorneys expect the DOL to resume an aggressive push when it comes to its regulatory agenda.

The two rules are part of an ambitious regulatory agenda that includes a revised audit policy putting more emphasis on pay equity for women, as well as what’s known as the persuader activity rule. This rule, which would narrow the advice exemption to the Labor-Management Reporting and Disclosure Act, could saddle law firms with new reporting requirements.

“These might be the first ones out of the gate, if you will, but certainly the persuader rule and others are sure to follow,” said Ilyse Schuman, co-chair of Littler Mendelson PC’s Workplace Policy Institute.

What form the final affirmative action rules took is not yet known, and the OMB’s review process typically takes 30 to 90 days, she said. But the OFCCP and OMB should be well aware of the “consternation” the rules have caused among contractors, who say they would be burdensome and ineffective, according to Schuman.

“I think that looking at the public comments that were submitted, the OFCCP would see how unpopular these regulations are,” she said.

Communication between contractors and the OFCCP have been terse and sometimes tense under the Obama administration and OFCCP Director Pat Shiu. At the annual National Industry Liaison Group Inc. conference last week, which brought together contractors, attorneys and OFCCP officials, Shiu left the proposed rules unmentioned, even though the agency had submitted the final versions to the OMB the day the conference began.

If the rules closely resemble the OFCCP’s proposal, contractors can expect added record-keeping and data collection burdens, despite their complaints to OFCCP that the expensive data collection will do little to help increase the actual hiring of veteran or disabled workers.

“The OFCCP appears to be committed to moving contractors to more substantial outreach, recruiting and record-keeping obligations, despite the hue and cry that it has heard from the contractor community,” said Valerie Hoffman, head of Seyfarth Shaw LLP’s affirmative action and OFCCP compliance group. “We are hopeful that the OFCCP at least has modified the portions of the proposed regulations that are completely unworkable, like requiring 7 percent disability goal for each job group, regardless of industry and job duties.”

The veterans proposal would require contractors to set veteran hiring goals; to compile additional data on hiring decisions, including reports on why qualified veterans were not hired; and to keep relevant records for five years. The disabled worker rule would require similar documentation, data collection and outreach, and would set a goal of hiring a 7 percent disabled workforce in every job category within a company.

Both rules place a premium on data collection and outreach efforts, in part because census data doesn’t capture disabled and veteran status in the same way it does for women and minorities.

The disability rule relies on employees self-reporting their disabilities, which runs counter to the Americans With Disabilities Act and could rub some workers the wrong way, attorneys said.

Under the proposed rule, disabled workers will be asked to self-identify prior to job offers, after job offers and during an annual survey of employees. Disabled employees could be undercounted if they resist self-reporting, which could cause false alarms in OFCCP audits and enforcement actions.

“While the 7 percent goal is, like the other affirmative action goals, not a quota, and failure to meet it won’t be the principal basis of an allegation of discrimination, OFCCP may attempt to extend its pursuit of disparate impact discrimination to veterans and persons with disabilities,” Hoffman said. “Because there will likely be many significant challenges to obtaining accurate self-identification data, contractors would likely face unfounded allegations of hiring discrimination from OFCCP.”

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