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SEPTEMBER 2018

 

In This Issue:

OFCCP Issues Several New Directives and Compliance Assistance for Federal Contractors

By Ryan Orr, JD, HR and Compliance Consultant
Cascade Employers Association
[email protected]

We haven’t heard much out of the OFCCP since the Trump Administration took office. August, however, saw a slew of directives and steps taken to provide new compliance assistance to federal contractors. Let’s take a look at each item to see how it will affect us moving forward.

Affirmative Action Program (AAP) Verification Initiative

If you’re a federal contractor or subcontractor – this is important.

Is updating your AAP each year a high priority item in your organization? When it is finally updated, does it get discussed with management, and does executive leadership talk about the results and how it may inform the organization’s policies, procedures, and practices?

OFCCP thinks the answer to this question is no, and they may be correct, given that 85% of federal contractors who are sent an audit scheduling letter cannot produce an updated affirmative action plan within 30 days.

And why would contractors prioritize this? The only way OFCCP would know if a contractor was not in compliance is if it is selected for an audit, which is statistically unlikely. Given all the other competing priorities in an organization, AAPs understandably take a backseat.

Soon, that will no longer be the case.

One of the most important new initiatives from OFCCP is the Affirmative Action Verification Program, which is essentially a way of ensuring that federal contractors actually do their AAP each year. OFCCP envisions the verification will initially require a contractor certification that the plan is completed. Eventually, OFCCP will perform compliance checks on the contractor. And finally, OFCCP anticipates requiring annual submission of contractor AAPs. OFCCP intends to tie this verification process to their audit scheduling, and contractors who have not certified or submitted their AAPs will be more likely to be selected for an audit.

This is a monumental change for organizations that do not treat their AAP as a priority.

Compensation Practices Initiative

OFCCP also issued a directive regarding compensation. The directive intends to do three things. First, it is supposed to offer more clarity/transparency in how OFCCP conducts compensation evaluations. Second, OFCCP intends to offer greater compliance resources and tools to assist contractors in compensation compliance and conducting self-audits. Finally, OFCCP intends to revise its own procedures to improve consistency and efficiency when conducting compliance evaluations. More specifically, OFCCP expects to give contractors additional guidance on how similarly-situated employees are determined, how to create pay analysis groups, how to conduct statistical analysis and modeling, and other compensation best practices.

Focused Compliance Reviews

The third directive is aimed at creating a new focused review program. Contractors selected for a focused review would have OFCCP arrive onsite to review things like organization policies and practices; interview managers responsible for EEO implementation; interview employees; evaluate hiring and compensation data; review disability accommodation requests and accommodations made; and ensure compliance with veteran anti-discrimination obligations.

Contractor Recognition Programs

If all these new directives seem onerous toward contractors, OFCCP also wants to issue gold stars for contractors that are instituting and developing best practices. OFCCP feels there is value in public recognition because many contractors could learn and improve upon their practices if an all-star contractor’s practices are publicly known.

Religious Exemption

In light of recent case law, OFCCP issued a directive reminding itself that faith-based organizations have a right to compete on a level playing field for federal contracts, etc. To that end, the OFCCP directive reminds its employees that:

  • They "cannot act in a manner that passes judgment upon or presupposes the illegitimacy of religious beliefs and practices" and must "proceed in a manner neutral toward and tolerant of . . . religious beliefs."
  • They cannot "condition the availability of [opportunities] upon a recipient’s willingness to surrender his [or her] religiously impelled status."
  • "[A] federal regulation’s restriction on the activities of a for-profit closely held corporation must comply with [the Religious Freedom Restoration Act]."
  • They must permit "faith-based and community organizations, to the fullest opportunity permitted by law, to compete on a level playing field for . . . [Federal] contracts."
  • They must respect the right of "religious people and institutions . . . to practice their faith without fear of discrimination or retaliation by the Federal Government."

Revised Compliance Guidance

Finally, to help contractors with their compliance obligations, OFCCP intends to make substantial revisions to much of its compliance guidance, including its FAQs and small business guide. So keep checking their website for updates on these materials, as we should see them improve over the coming months.

For help with your federal contracting obligations, including affirmative action plans and audits, give us a call.

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DOL Issues Insightful Wage and Hour Opinion Letters

By Ryan Orr, JD, HR and Compliance Consultant
Cascade Employers Association
[email protected]

After a 9-year hiatus, DOL has been on a tear this year issuing several new wage and hour opinion letters to help guide employers. While some of these address very specific situations, others are important clarifications or reminders for many employers.

Retail or Service Establishment Exemption

One of these letters (FLSA2018-21) discusses the retail establishment overtime exemption. The retail establishment overtime exemption exempts employees from overtime if they meet the following three criteria:

  1. The employee works at a retail or service establishment;
  2. The employee’s regular rate of pay exceeds 1.5x the applicable minimum wage in the weeks the employee works overtime; and
  3. More than half the employee’s earnings in the week are commission.

The employees in question worked for a company that sells a technology platform to online and retail merchants that allows them to accept credit cards from their customers either online, in-person, or from a mobile device. DOL found this to be a retail establishment because their product was for everyday use by the customer, not resold, and the company did not sell a high number of product to any particular customer. It emphasized that the end-user can be a commercial entity and still meet the requirement.

This letter serves as a reminder that the retail exemption is not limited only to retailers who sell to individual consumers. Many businesses that sell end-user products could potentially qualify for this exemption.

Employee Health Activities

Another letter (FLSA2018-20) looked at whether certain wellness activities, including fitness and educational activities, should be paid time. Participation in the activities was voluntary, off-duty, not related to the employee’s job, and the employer received no direct financial benefit from the activity.

Even though promoting employee wellness does provide obvious indirect benefits to an employer, DOL found that these activities are primarily for the employee’s benefit. That, combined with their voluntary and off-duty nature and lack of relation to the employee’s job, made these activities that the employer was not required to compensate.

The takeaway here is that employers can plan voluntary recreational or educational activities without having to also pay an employee as though they are working.

Breaks Related to FMLA or ADA

A third letter (FLSA2018-19) answered the question of whether additional breaks required under FMLA should be compensable. DOL reasoned that, while rest breaks of up to 20 minutes during the day have typically been found to be for the employer’s benefit and should be compensable, frequent breaks related to an employee’s medical condition are for the employee’s benefit and are not compensable. While the letter specifically answered the question of FMLA, it also looked at cases that discussed ADA accommodation breaks. Therefore, this rule would apply in disability accommodation settings as well.

To sum it up, wage and hour aficionados likely find no surprises in the opinions set out in these letters, but they serve as important reminders about the principals of wage and hour law and how they may apply to our own organization’s practices.

For questions about wage and hour issues or to schedule a wage and hour audit with us (before BOLI schedules one with you), give us a call.

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Hot Compliance Question

By Ryan Orr, JD, HR and Compliance Consultant
Cascade Employers Association
[email protected]

Question: We typically perform pre-employment criminal background checks. With one new employee, we forgot to get it done prior to her first day of work. Can we still run the criminal background check? What do we do if we find out that she does have a criminal record?

Answer:  You can still run the criminal background check as long as the employee has authorized the check, and if done through a third-party company, all required FCRA disclosures are provided.

If you find out that the employee has a criminal conviction, you would need to run through the same analysis you would have done if you learned of the conviction pre-employment. That analysis requires you to consider the age of the conviction, the severity of the conviction, and how related the conviction is to the job being performed. If you determine that the employee has been convicted of a crime that would have disqualified her from being hired in the first place, that would be a lawful reason to terminate the employee.

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HR Stats You Should Know

By Jenna Reed, JD, General Counsel and Director, Compliance Services
Cascade Employers Association
[email protected]

According to a study by Glassdoor, organizations that spend time investing in their overall candidate experience improve the quality of new hires by 70%. It’s no secret how difficult it is to attract and hire great talent in today’s market, so now is a great time to evaluate your candidate experience.

Critically assess your process, from your social media presence before a job even gets posted through the onboarding process. Do you know where and how candidates are looking? Do you know how they’re applying? What part of your process is driving candidates away? When and why are candidates dropping out of the process? What do people most enjoy about your process?

These are just some of the important questions you need to be asking and answering to determine if your candidate experience isn’t competitive. If you know it’s time to take a look at your process, contact us. Lisa Matthews, our new Talent Acquisition Consultant, is your inside guru on all things related to recruitment and the candidate experience.

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VETS-4212 Reporting Open

By Ryan Orr, JD, HR and Compliance Consultant
Cascade Employers Association
[email protected]

[NOTE: This article contains a correction from a previous version that stated that the $150,000 VETS-4212 coverage was the aggregate amount of contracts. The $150,000 threshold is actually met only if a contractor has at least one contract that totals $150,000 or more.  We apologize for any confusion this may have caused.]

Just a quick reminder for all the federal contractors out there (who have individual contracts of $150,000 or more). The filing period for VETS-4212 is now open. Contractors must file their report by September 30, 2018.

For this 2018 report, contractors have the option of using the same pay period picked for their EEO-1 report (i.e. a pay period in October, November, or December 2017) or a pay period in July or August 2018.

For questions about your federal contracting obligations, please give us a call.

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