On November 30, 2018, the Office of Federal Contract Compliance Programs (OFCCP) issued Directive 2019-02, Early Resolution Procedures, which establishes OFCCP’s general guidelines to promote early and efficient supply-and-service compliance.
- When is an early resolution appropriate?
- How does the agency define “early” in its timeline of a review?
- Is a contractor precluded from the entering into an ERCA if it has already been notified of the agency’s findings in a PDN or an NOV?
- Does an ERCA that includes a scheduling exemption relieve a contractor from complying with its annual ongoing OFCCP requirements of ensuring equal employment opportunity?
- How does an ERCA interact with an existing Functional Affirmative Action Plan agreement?
- Can a single establishment review be resolved with an ERCA?
- What percentage of the workforce has to be covered by analysis, monitoring, and reporting in an ERCA?
- How does OFCCP’s review of the contractor’s employment policies and practices pivot from the establishment level to a corporate-wide review?
- Can ERP apply if the contractor is not timely in its response to a scheduling letter?
- How does the current exemption in the scheduling methodology interact with the five-year scheduling exemption that may be included in an ERCA?
- Will information discussed during the ERP be confidential, and not used against the contractor if ERP is not successful?
- How and when does OFCCP gather qualitative evidence when resolution occurs during the “early” stages of a review?
- What is the basis for “negotiated subsets” of covered establishments? Under what parameters can subsets be negotiated?
- What progress reports are envisioned by ERP?
- Will OFCCP receive data as part of the reporting obligation?
- What happens if a contractor breaches an ERCA?
- Does OFCCP review the self-audit that the contractor conducts of all its other facilities?
- Are the contractor’s progress reports protected from FOIA requests?
- Will all establishments covered by an ERCA be listed on OFCCP’s National Pre-Award Registry?
1. When is an early resolution appropriate?
As codified by OFCCP’s final rule Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination, if a contractor under review wishes to bypass the agency’s standard notice and resolution procedures, it can voluntarily opt to enter directly into a conciliation agreement prior to the issuance of a Pre-determination Notice (PDN) or Notice of Violation (NOV). OFCCP may inform a contractor of this expedited conciliation option but cannot require or insist the contractor select it.
2. How does the agency define “early” in its timeline of a review?
An Early Resolution Conciliation Agreement (ERCA) typically emerges from a neutrally scheduled supply-and-service compliance review. In the first two years of the program, ERCAs were executed even to resolve aged cases. However, under Directive 2019-02, an “early” resolution is one that occurs prior to the agency’s issuing a PDN or an NOV. An ERCA may be executed as early as following completion of the desk audit.
3. Is a contractor precluded from the entering into an ERCA if it has already been notified of the agency’s findings in a PDN or an NOV?
The agency prefers to encourage resolution as early as possible. However, given that OFCCP selects contractor establishments for review, there will be instances in which a number of the contractor’s establishments are undergoing compliance reviews and some of the reviews are more advanced than others. OFCCP remains committed to global settlements even if they involve an establishment that has already received a PDN or an NOV.
4. Does an ERCA that includes a scheduling exemption relieve a contractor from complying with its annual ongoing OFCCP requirements of ensuring equal employment opportunity?
No. Most ERCAs include a five-year scheduling exemption from regularly scheduled compliance evaluations for the contractor’s establishments covered by the ERCA. However, the scheduling exemption does not relieve the contractor from its annual OFCCP requirements of ensuring equal employment opportunity through affirmative action and nondiscrimination across its entire workforce, including monitoring up-to-date affirmative action programs (AAPs) that assess compensation for neutrality. In addition, most ERCAs stipulate analysis, monitoring, and reporting requirements that are ancillary to the affirmative action and nondiscrimination obligations of all federal contractors. OFCCP retains the right to investigate complaints of discrimination at establishments covered by the ERCA.
5. How does an ERCA interact with an existing Functional Affirmative Action Plan agreement?
If a contractor enters into an ERCA covering one or more Functional Affirmative Action Plan (FAAP) agreements, the ERCA language and stipulations will control. In particular, where groupings and aggregations are not aligned between a FAAP and an ERCA, the contractor’s modeling and reporting obligations will be governed by the ERCA.
6. Can a single establishment review be resolved with an ERCA?
Yes. Many contractors—such as universities—might have only one establishment, or very few establishments, and an ERCA is an available resolution option for such contractors. However, for those contractors with multiple similar establishments, OFCCP prefers incorporating as many establishments as practicable into the ERCA. One of the primary goals of ERP is to leverage the agency’s resources by resolving issues corporate-wide. Expanding the contractor’s self-analysis across a broader section of its workforce gives the agency some assurance that any systemic problems will be identified and addressed.
7. What percentage of the workforce has to be covered by analysis, monitoring, and reporting in an ERCA?
The agency prefers that the analysis, monitoring, and reporting cover the majority of the workers (or positions) employed in the establishments covered by the ERCA and receiving the scheduling exemption. The agency will consider the contractor’s past compliance record, the strength and age of current violations, and the likelihood of future reviews under neutral scheduling in negotiating the ERCA’s coverage with the contractor. Consideration will also be given to the similarity of jobs falling under uniform personnel policies and practices.
8. How does OFCCP’s review of the contractor’s employment policies and practices pivot from the establishment level to a corporate-wide review?
The scope of the analysis will expand when a contractor agrees to resolve and review problem areas on a corporate-wide basis. When negotiating what the ancillary analysis, monitoring, and reporting will include, it is helpful if the contractor can provide structural data for the entire workforce. For instance, data showing employment counts across a variety of job titles, families, and groups is useful in identifying appropriate pay analysis groups and control variables for compensation analyses.
9. Can ERP apply if the contractor is not timely in its response to a scheduling letter?
OFCCP intends for ERP to provide contractors a way to resolve problems early and efficiently. Generally, OFCCP requests contractor information that is readily available in electronic format. If the contractor needs more time to submit the information, then OFCCP can agree to a reasonable extension. If it appears that a contractor is using the ERP process to intentionally delay the evaluation, however, OFCCP may terminate the ERP discussions, proceed with the compliance evaluation, and, if warranted, issue a Show Cause Notice (SCN) based on denial of access.
10. How does the current exemption in the scheduling methodology interact with the five-year scheduling exemption that may be included in an ERCA?
As noted above, most ERCAs include a five-year scheduling exemption from regularly scheduled compliance evaluations for the contractor’s establishments covered by the ERCA. Separate and apart from the ERCA exemption, an additional exemption may be available depending on the scheduling methodology in place upon the expiration of the agreement. For example, OFCCP’s current practice is to grant a scheduling exemption for a two‐year period following the date that monitoring under a conciliation agreement is completed. Therefore, any ERCA expiring at the time of publication of these FAQs would be followed by an additional two-year scheduling exemption.
11. Will information discussed during the ERP be confidential, and not used against the contractor if ERP is not successful?
The same guarantee of confidentiality applies to ERP conciliations as during a normal conciliation. If an ERP negotiation fails, the review will revert to focusing on the issues identified at the neutrally scheduled establishment(s) only.
12. How and when does OFCCP gather qualitative evidence when resolution occurs during the “early” stages of a review?
The preliminary steps of a compliance review include gathering information by conducting interviews with company officials, which provides context for the review and may produce initial anecdotal evidence. Additionally, OFCCP examines data in both a systemic and non-systemic fashion. As in the normal conciliation process, OFCCP considers anecdotal evidence when engaging the contractor in ERP conciliation and proposing remedies. If the contractor declines to engage in ERP, OFCCP will resume the review and continue gathering evidence as usual.
13. What is the basis for “negotiated subsets” of covered establishments? Under what parameters can subsets be negotiated?
A negotiated subset may include establishments with factors in common across the establishments under review, such as being impacted by a particular policy or having common job functions or lines of business. The subsets will be determined in discussions with the contractor.
14. What progress reports are envisioned by ERP?
Over a five-year period, OFCCP typically expects to receive both AAP reports and progress reports: semi-annual progress reports for high-frequency selection issues, or annual reports for compensation or low-frequency selection issues. The contractor will also report the findings of its analysis or consultant reports, and any corrective actions. The reports should also include counts of applicants, employees, and establishments covered by monitoring and reporting so that OFCCP has a record of the impact and efficacy of the ERCA.
15. Will OFCCP receive data as part of the reporting obligation?
The ERP Directive states that contractors “will provide OFCCP with all supporting documents and information reasonably related to such a review.” Since the intent of ERP is for contractors to engage in a comprehensive self-review, OFCCP does not envision receiving replication data in every instance. However, some replication data may be warranted where OFCCP has reservations about the scope, accuracy, or reliability of the proposed monitoring. The ERCA will specify the data the contractor is expected to provide to OFCCP.
16. What happens if a contractor breaches an ERCA?
If the contractor violates the ERCA, OFCCP will follow the same procedures that apply when a regular compliance agreement is breached, as spelled out at 41 CFR 60-1.34. These procedures include a 15-day notice and opportunity to respond except in cases where delay would result in irreparable injury. If OFCCP finds that the contractor violated the ERCA, the five-year scheduling exemption will be void, and OFCCP may bring an enforcement action per the terms of 41 CFR 60-1.34.
17. Does OFCCP review the self-audit that the contractor conducts of all its other facilities?
Yes. For each facility covered by the ERCA, the contractor is required to report the results of its analyses, findings, and any corrective actions that resulted from a detailed compensation model or selection and placement analysis. OFCCP will review and, in some cases, replicate the analysis of the self-audit. The contractor’s progress reports will enable the agency to monitor the ERCA, results achieved, and ongoing compliance.
18. Are the contractor’s progress reports protected from FOIA requests?
If both the contractor and OFCCP deem the reports confidential, and the information is “commercial” in nature, they may be protected from disclosure under Exemption 4 of the Freedom of Information Act (FOIA). Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356 (2019). If the contractor customarily keeps the information in the reports private or closely held, the contractor should provide such reports to OFCCP marked as “Confidential.” In the event of a FOIA request, OFCCP will treat any such documents received as confidential documents to the extent permissible by law.
19. Will all establishments covered by an ERCA be listed on OFCCP’s National Pre-Award Registry?
No. The number and location of establishments covered by the monitoring and reporting of an ERCA may evolve over the five-year period. Therefore, only the establishment(s) originally reviewed (and receiving a closure letter) will be included on the National Pre-Award Registry.
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.
Last updated on December 29, 2020