On March 25, 2019, the OFCCP released its Corporate Scheduling Announcement List (CSAL) online for public access.  Contractors can access the CSAL here.  The CSAL identifies 3,500 contractor establishments that will be audited by OFCCP, with a portion of those audits being Section 503 focused reviews. Historically, contractors receiving a CSAL received a scheduling letter formally initiating the audit after about 45 days.  The advance notice provided by the CSAL can be a valuable opportunity for contractors to prepare for an upcoming audit, collect the data and documents the contractor will be required to submit to OFCCP within a relatively short period after receipt of the scheduling letter, and identify any potential compliance vulnerabilities that may need to be addressed during the audit process.  Contractors named in the CSAL should consider consulting with experienced counsel to assist in preparing for the forthcoming scheduling letter.

On March 4, 2019 the U.S. District Court for the District of Columbia issued a ruling that immediately reinstated the EEO-1 pay data reporting requirement. The government has not yet appealed or sought to stay the ruling, leaving employers unclear about their EEO-1 reports, which are due by May 31, 2019. On March 18, 2019 the EEOC issued a statement that it would only require the submission of Component 1 data regarding the demographics of employer workforces. Regarding Component 2 pay and hours data addressed in the Court’s ruling, the EEOC has stated only that it “is working diligently on next steps in the wake of the court’s order” and “will provide further information as soon as possible.” After the EEOC issued its statement, the National Women’s Law Center and Labor Council for Latin American Advancement, the plaintiffs in the case challenging the withdrawal of approval for the collection of Component 2 data, filed a motion with the Court asserting that the EEOC’s statement was not compliant with the March 4, 2019 decision and requesting an emergency hearing. The Court requested further briefing from the parties, which must be filed by April 8, 2019. Accordingly, the EEOC is not requiring the submission of Component 2 data for now, but we await further guidance from the Court. With EEO-1 submissions due by May 31, 2019, we will continue to follow these developments closely.

On March 4, 2019 Judge Chutkan of the U.S. District Court for the District of Columbia issued a ruling that immediately reinstated the EEO-1 pay data reporting requirement.  The government has not yet appealed or sought to stay the ruling, leaving employers unclear about their EEO-1 reports, which are due by May 31, 2019. On March 18, 2019 the EEOC issued a statement that it would only require the submission of Component 1 data regarding the demographics of employer workforces.  With respect to the Component 2 pay and hours data addressed in the Court’s ruling, the EEOC has stated only that it “is working diligently on next steps in the wake of the court’s order” and “will provide further information as soon as possible.” After the EEOC issued its statement, the National Women’s Law Center and Labor Council for Latin American Advancement, the plaintiffs in the case challenging the withdrawal of approval for the collection of Component 2 data, filed a motion with the court asserting that the EEOC’s statement was not compliant with the March 4, 2019 decision and requesting an emergency hearing.  At the hearing this morning (March 19, 2019), Judge Chutkan required further briefing from the government and the plaintiffs, which must be filed by April 8, 2019. Accordingly, while the EEOC is not requiring the submission of Component 2 data for now, it is unclear whether the Court will find this approach to be compliant with its prior order.  Nor is it clear what action the Court would take if it finds the EEOC’s statement non-compliant.  With EEO-1 submissions due by May 31, 2019 and seemingly little chance of clarity before April 8, 2019, at the earliest, we will continue to follow these developments closely. UPDATE: While no written order has yet issued, some sources have reported that Judge Chutkan required that the EEOC provide guidance by April 3, 2019 as to whether, when, and how employers will have to submit pay data as part of the 2018 EEO-1 submission.  The plaintiffs will then have until April 8, 2019 to respond to the EEOC’s guidance.

Employers who thought that they had received a respite from the U.S. Equal Employment Opportunity Commission’s proposed requirement to report information about employees' pay and hours worked when submitting their annual EEO-1 forms received a surprise on March 4, 2019, when the U.S. District Court for the District of Columbia resuscitated the revamped EEO-1 reporting obligation. The additional data reporting requirement — which was first proposed by the EEOC in 2016 — had been stayed since Aug. 29, 2017, after the Office of Management and Budget vacated its prior approval of the new EEO-1 form. U.S. District Judge Tanya Chutkan vacated that stay and reinstated the reporting obligation. Although the EEOC filing portal has not yet opened for the current filing period, this ruling may leave employers scrambling to meet the upcoming May 31, 2019, EEO-1 submission deadline. EEO-1 Pay and Hours Worked Data Collection: On and Off Again Title VII of the Civil Rights Act of 1964 requires employers to keep and preserve records relevant to a determination of the occurrence of unlawful employment practices and authorizes the EEOC to mandate that employers produce reports of such records. Since 1966, the EEOC has required that employers with 100 or more employees file an EEO-1 form on an annual basis reporting the number of employees by job category, race, sex and ethnicity. Certain government contractors and first-tier subcontractors with 50 or more employees and a contract in excess of $50,000 are also subject to this requirement. Employers subject to the EEO-1 requirement who do business at one single establishment are required to submit a single EEO-1 report, while multi-establishment employers must submit separate reports for the headquarters and each establishment and a consolidated report including all employees. In 2016, as part of an interagency initiative to combat pay discrimination, the EEOC announced that it would add a second “component” to the EEO-1, pursuant to which employers would be required to report the total number of full- and part-time employees by demographic category in each of 12 pay bands for each EEO-1 job category and also the aggregate hours worked by all of the employees in each pay band. The OMB approved the new EEO-1 data collection, as required by the Paperwork Reduction Act, or PRA, just over a month before the 2016 presidential election and one day after the EEOC submitted it to the OMB for review. In doing so, the OMB disregarded a groundswell of comments from employers contending that the cost of assembling and reporting this information would be burdensome and the utility of the information for its stated purpose of investigating potential pay discrimination would be limited. Under the PRA, the OMB can revisit and stay prior approvals of agency data reporting requirements under certain circumstances. On Aug. 29, 2017, the OMB initiated a review of the new EEO-1 reporting requirement and stayed its prior approval. The OMB justified its change of course by noting the EEOC’s post-approval publication of data file specifications for employers to use when submitting the EEO-1 data and also asserted that the data collection would be “unnecessarily burdensome” and “lack practical utility.” Two public interest groups that advocate for pay equity, the National Women’s Law Center, or NWLC, and Labor Council for Latin American Advancement, or LCLAA, subsequently filed suit in the U.S. District Court for the District of Columbia challenging the OMB’s action. Legal Challenge to the Stay: Revised EEO-1 On Again? The NWLC and LCLAA, filed suit against the OMB, EEOC and other federal defendants asserting that the OMB’s 2017 decision to stay the new EEO-1 reporting requirement was arbitrary and capricious and should therefore be overturned. Judge Chutkan agreed. After finding that the NWLC and LCLAA had standing and that the 2017 stay was a final agency action subject to judicial review, the court analyzed whether the OMB’s decision comported with its PRA regulations. The court found that the data file specification published by the EEOC after the new EEO-1 form’s approval did not meaningfully affect the nature or burden of the data collection and had in fact been expressly contemplated by the EEOC’s notices and prior submissions to the OMB. Accordingly, the court dismissed this justification as a mere “technicality.” Similarly, the court found that the OMB’s second justification for its revocation of its approval of the EEO-1 form — that the initial burden estimate had been incorrect — was speculative and not supported by any reasoned analysis. The court further criticized the OMB for departing from the reasoning behind its prior, 2016 approval of the new EEO-1 form without providing any factual or legal analysis to explain its change in position. For these reasons, the court found the OMB’s decision to be arbitrary and capricious. The court then turned to the question of the proper remedy its decision required. Rather than remanding the issue to the OMB to repair the identified deficiencies in its analysis, the court vacated the stay issued on Aug. 29, 2017, effectively reinstating the OMB’s prior approval of the revised EEO-1 form. What Happens Next? So where does this leave employers? Originally, the additional EEO-1 requirements had been slated to commence in March 2018, but prior to the court’s decision, the requirements had been indefinitely stayed from going into effect. On Feb. 1, 2019, the EEOC extended the deadline for submission of 2019 EEO-1 data until May 31, 2019 due to the recent government shutdown. According to the EEOC’s website, the 2018 EEO-1 survey will open for submission on March 18, 2019, but as of March 14, 2019, the EEOC had not provided any guidance regarding the effect of the court’s decision or what information employers will be required to submit by May 31, 2019. Because the EEO-1 salary and hours reporting requirements never went into effect prior to the OMB’s 2017 stay, many if not most employers have not been preparing to collect this data for submission in the 2018 EEO-1 report. As commentators noted during the EEOC’s and OMB’s 2016 approval of the new EEO-1 form, many employers do not maintain the types of demographic data traditionally collected by the EEO-1 and the newly required wage and hour data in the same systems. If employers must comply with the new EEO-1 reporting requirements by May 31, 2019, there will be a scramble to collect and collate data from disparate human resources and payroll databases. Employers would be well advised to begin this process immediately, in light of the challenges of identifying, collecting and preparing wage and hour data for production to the government. Aside from the practical burden of compiling this data and preparing the required report, employers now also face renewed risk that the data reported on an EEO-1 form will be used in support of discrimination claims. While this risk has always been at least notionally present, as EEO-1 reports are always requested and reviewed by the Office of Federal Contract Compliance Programs in its compliance reviews and can be requested in discovery by employees, the inclusion of compensation data increases the threat that these reports can pose in the hands of an adversarial government agency or plaintiff. The district court’s decision may not be the final word in this matter, however. The government could appeal the decision and seek a stay of the decision while the case is before the U.S. Court of Appeals for the D.C. Circuit. Given that the EEO-1 filing period opens in mere days and the deadline is only a few months away, any delay by the government in seeking or obtaining a stay would heighten the present uncertainty. Another possibility is that the EEOC could delay the onset of the requirement for employers to provide the additional information in recognition of employers’ reliance on the OMB’s 2017 stay and the fact that the EEOC itself may be unprepared to begin accepting this information. With no guidance to date, however, it is uncertain whether the EEOC will postpone the deadline for both components of the EEO-1, only the new reporting requirement, or would allow the new requirement to remain in place as scheduled. Notably, the EEOC only has two of its five commissioners in place and lacks a quorum to take certain actions. The court’s decision is surely a shock to the system for employers who are subject to the EEO-1 reporting requirement. Regardless of what happens next, such employers would be wise to begin collecting the required EEO-1 pay and hours data immediately and preparing for the new requirements to remain in place beyond the 2018 reporting period.

In Wadler v. Bio-Rad Laboratories, Inc., the U.S. Court of Appeals for the Ninth Circuit adopted a limited, plain meaning construction of the types of reports that are protected by the Sarbanes-Oxley Act’s (SOX) whistleblower provision and in the process partially reversed an $11 million jury verdict in favor of a corporate general counsel. In Wadler, a corporation’s general counsel believed that the corporation was violating the Foreign Corrupt Practices Act’s (FCPA) bribery prohibition and recordkeeping requirements and reported his findings to the corporation’s board.  After an outside investigation found no evidence of an FCPA violation, the corporation terminated the general counsel’s employment.  The general counsel filed SOX and other claims against the corporation alleging, among other things, that he was retaliated against for reporting the suspected FCPA violation.  The general counsel subsequently prevailed at trial. The Ninth Circuit reversed the judgment in favor of the general counsel as to his SOX claims because his reporting of alleged FCPA violations was not protected activity under SOX.  The Court found that SOX only protects employees who report violations of specific statutes, of which FCPA is not one.  The district court had ruled that FCPA fell into the category of “any rule or regulation of the Securities and Exchange Commission,” which is identified in SOX, because FCPA is an amendment of and codified in the Securities and Exchange Act and is enforced by the SEC.  But, the Ninth Circuit held that under plain meaning construction of SOX, an SEC “rule or regulation” encompassed only administrative rules or regulations and not a statute like FCPA.  The Ninth Circuit also rejected the general counsel’s argument that the remedial purpose of SOX – i.e., to clamp down on corporate misconduct – required a broader interpretation of what constituted protected activity. Since Section 806 of SOX was enacted in 2002, federal courts have generally adopted expansive interpretations of the scope of protected activities. This Ninth Circuit decision is one of several recent federal decisions which instead limit protected activities to complaints concerning the specific statutes, rules, and regulations enumerated in SOX.Stay tuned to Polsinelli at Work for further updates.

On January 22, 2019, a new rule went into effect providing much-needed guidance on the definition of “recruitment fees” under the FAR human trafficking prohibition.  Many government contractors may be surprised to learn that a wide range of seemingly-innocent policies requiring employees or applicants to pay (whether upfront, through deduction, or in any other way) the employer for costs relating to hiring, recruitment, or training may now qualify as impermissible “human trafficking” and subject the contractor to potentially rigorous penalties under the FAR. Since March 2015, all federal government contracts and solicitations have included a clause prohibiting human trafficking pursuant to FAR 22.1705 and 52.222-50.  One of the proscribed forms of trafficking-related conduct is charging “recruitment fees” to employees or potential employees.  While “recruitment fees” were previously undefined in the FAR, the new rule makes clear that the term has a sweeping definition, encompassing “fees of any type” that are “associated with the recruiting process.” The rule takes a functional approach and makes clear that the manner, form, or timing of the payment is not relevant.  Charges can be recruitment fees if they are paid up front by the employee or potential employee, deducted from the person’s wages, or even if they are collected by a third-party such as a labor broker, recruiter, staffing firm, or agent.  The rule and its agency commentary are clear, however, that contractors may require employees or applicants to incur charges themselves in connection with the recruiting process, so long as the payment is not made to the contractor or any of its agents. The new rule lists several categories of exemplary recruitment fees, including fees for: Soliciting, identifying, considering, interviewing, referring, retaining, transferring, selecting, training, providing orientation to, skills testing, recommending, or placing employees or potential employees; Advertising; Obtaining labor certifications, visas, or processing applications or petitions; Acquiring photographs and identity or immigration documents, such as passports; Medical examinations and immunizations; Background, reference, and security clearance checks and examinations; The employer’s recruiters, agents, or attorneys; Language interpretation or translation; Government-mandated fees such as border crossing fees, levies, or worker welfare funds; Transportation and subsistence costs; Security deposits, bonds, and insurance; and Equipment charges. Contractors should note that the listed categories are only examples, and other charges “associated with the recruiting process” qualify even if the specific type of charge is not listed. Because every federal government contract prohibits contractors from charging these fees and some require annual certifications and compliance plans, contractors should review their hiring processes to ensure that no such fees are being charged to employees or potential employees, including applicants.  The penalties for non-compliance with the human trafficking clause can range from the suspension of contract payments to contract or subcontract termination or even debarment. Because contractors are responsible under the rule for fees charged by agents like recruiters (or even sub-recruiters), contractors should ensure that their contracts with recruiters, staffing agencies, or others prohibit passing along any recruitment costs to employees or applicants. The need to audit the recruitment process is only the tip of the iceberg of new issues created by the new rule.  In a subsequent blog, Polsinelli will analyze some potential contractor responses to the new, broad definition of “recruitment fees” and other, less obvious implications of the rule.

With the posting of 2019 CSAL notices possibly imminent, government contractors should prepare for the fact that a portion (approximately 500 out of 3,500 total) of the OFCCP’s FY 2019 compliance evaluations will be Section 503 focused reviews.  Attached is the scheduling letter that will be used for OFCCP’s focused reviews. Unlike the typical OFCCP audit, a focused review will audit contractor’s compliance with the protections for individuals with disabilities under Section 503 of the Rehabilitation Act.  Because Section 503 compliance has not been the focus of many of OFCCP’s recent compliance audits, it is important that contractors should proactively self-audit to ensure they are in compliance with all of the various requirements of Section 503. If a contractor receives a Section 503 focused review scheduling letter, it will have 30 days to collect and provide OFCCP with an array of information about its Section 503 compliance efforts.  In order to effectively respond to and avoid violations, covered government contractors should review their Section 503 compliance to ensure they have the following for their current affirmative action plan year: ·         A current Section 503 affirmative action plan for individuals with disabilities. ·         An assessment of outreach and recruitment efforts for qualified individuals with disabilities.  This assessment is typically prepared separate from the contractor’s affirmative action plan and some vendors and firms do not include this assessment with the Section 503 affirmative action plans they prepare. ·         The actions taken to audit and measure the effectiveness of the contractor’s Section 503 affirmative action plan.  Like the assessment of outreach and recruitment, this usually is separate from the affirmative action plan and may not have been prepared by your vendor or firm. ·         The statistical data collected and retained by the contractor for the total number of job openings and jobs filled, the total number of applicants hired, the total number of applicants with disabilities hired, and the total number of applicants who identify as individuals with disabilities. ·         The contractor’s utilization analysis, evaluating the representation of individuals with disabilities across its job groups or workforce. ·         The contractor’s reasonable accommodation policies and documentation of any accommodation requests received and how the requests were resolved. ·         The contractor’s assessment of its personnel processes and use of physical and mental qualifications. Also, contractors should be prepared to demonstrate, through a walkthrough, that its facilities comply with federal accessibility requirements. We recommend that contractors contact qualified counsel to make sure they are fully prepared to respond to these focused reviews.

On February 1, 2019, the Equal Employment Opportunity Commission (“EEOC”) announced that it would postpone the opening of the submission period for EEO-1 survey responses until “early March 2019” and extend the deadline for submission of EEO-1 data until May 31, 2019.  According to the EEOC, more specific information about the EEO-1 filing schedule will be published “in the coming weeks.”  The full EEOC announcement can be found here. The reason for these postponements is the lapse in the EEOC’s appropriations due to the partial government shutdown.  Because the January 25, 2019 agreement to end the partial government shutdown only funded the affected agencies (including the EEOC) through February 15, 2019, it is possible that the EEO-1 period could again be pushed back if President Trump and Congress cannot reach a longer-term agreement to fund the federal government. The EEO-1 seeks demographic data regarding the workforces of large employers.  Government contractors or first-tier subcontractors with 50 or more employees and a federal contract, subcontract, or purchase order exceeding $50,000 are required to file an EEO-1 report, as are all private employers with more than 100 employees.

Employers may choose to implement arbitration programs to manage the costs and risks of employment-related litigation. Arbitration may minimize negative publicity, and may further assist employers to keep costs low and reduce the availability of class or collective actions. A recent District of Columbia federal court decision shows how implementing a workplace arbitration program can be tricky.  In Jin v. Parsons Corp., 2019 WL 356902 (D.D.C. Jan. 29, 2019), the employer instituted a mandatory arbitration program, and e-mailed all of its employees to ask them to acknowledge receiving the arbitration agreement. The e-mail stated that if the employee did not sign the agreement, continuing employment with the employer would constitute acceptance of the arbitration agreement’s terms. The employer sent the plaintiff employee this e-mail and three follow-up reminders, but he never responded.  Thereafter, the employee sued the employer, alleging age discrimination, and claimed he had never read the e-mails or agreed to arbitrate his claims. The court refused to send the case to arbitration, finding that while a signed arbitration agreement is not necessarily required, the employer needed to offer some evidence that the employee had agreed to arbitrate his claims.  Mere continuing employment was not sufficient evidence of such an agreement where the employer could not prove that the employee knew that his agreement to arbitrate was a condition of employment.  In that situation, the court reasoned, the employee’s failure to dispute the agreement to arbitrate could be explained by his testimony that he did not know that such an agreement even existed. The Jin case highlights some of the challenges employers face when implementing arbitration programs.  The employer tried to implement its program by sending an e-mail and claiming that lack of action would constitute an agreement to arbitrate any claims against the employer.  However, avoiding confronting the employee about his failure to sign the arbitration agreement left the employer without the evidence of consent it needed to enforce the agreement. Implementing a workplace arbitration program can be tricky to get right. Employers with questions regarding arbitration policies – and the risks and benefits associated therewith – would do well to consult with competent counsel.