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On November 19, 2020, the Office of Federal Contract Compliance Programs (OFCCP) published the above-titled final rule to establish clear parameters for OFCCP resolution procedures and enhance the efficient enforcement of equal employment opportunity laws. The OFCCP’s goal is to increase the number of contractors it can evaluate and improve its allocation of agency resources toward the resolution of stronger cases.

To achieve this, the final rule introduces procedures that will increase the transparency of OFCCP’s operations so that contractors and OFCCP can resolve potential violations through a clear, mutual understanding of the issues. The final rule improves the OFCCP’s efficiency by allowing it to pursue resolution of stronger cases early in the compliance evaluation process through the new Predetermination Notice (PDN) procedures and early resolution conciliation option. Importantly, the final rule establishes consistent parameters for findings and preliminary findings of discrimination, and provides contractors with more certainty as to OFCCP’s operative standards for compliance evaluations and the agency’s issuance of pre-enforcement notices.

OFCCP will utilize the following resolution procedures:

1. Predetermination Notices will be issued when compliance evaluations result in sufficient evidence to support a preliminary finding of disparate treatment and/or disparate impact discrimination. The final rule requires the OFCCP to provide sufficient detailed evidence in its PDN to permit meaningful response from the contractor.
2. Notices of Violation will be issued when cases do not resolve after the issuance of the PDN. These Notices must address all relevant concerns and defenses raised by the contractor in response to the PDN and identify corrective actions for compliance.
3. Conciliation Agreements will be used when it is determined that settlement (as opposed to referral to enforcement) is appropriate. The Agreement will identify the violations and necessary remedial actions required for the contractor to come into compliance.
4. Expedited Conciliation Options permit contractors to voluntarily bypass the aforementioned procedure by entering into a Conciliation Agreement prior to the issuance of a PDN or Notice of Violation. Although the OFCCP may make contractors aware of this process, it is voluntary and may only be initiated by the contractor.

Prior to initiating these resolution procedures, the strict evidentiary standards identified in the final rule must be satisfied. In order to issue a PDN in a disparate impact case, OFCCP must:

1. Provide quantitative evidence;
2. Demonstrate the unexplained disparity is practically significant; and
3. Identify the specific policy or practice causing the adverse impact, unless OFCCP can demonstrate that the elements of the contractor’s selection procedures are incapable of separation for analysis.

Similarly, to issue a PDN in a disparate treatment case, OFCCP must:

1. Provide quantitative evidence;
2. Demonstrate that unexplained disparities are practically significant; and
3. Provide qualitative evidence that in combination with other evidence supports a finding of discriminatory intent caused by the disparate treatment.

However, in disparate treatment cases (only), three limited exceptions to the aforementioned evidentiary requirements will apply:

1. Qualitative evidence alone is sufficient to support a preliminary finding of disparate treatment and an OFCCP resolution notice;
2. A disparity between a favored and a disfavored group that is extraordinarily compelling may, by itself, support a preliminary finding of disparate treatment and an OFCCP resolution notice;
3. If there is quantitative evidence that is practically significant, but the contractor has denied access to sources of evidence that may be relevant to a preliminary finding of disparate treatment, OFCCP may issue a pre-enforcement notice.

In summary, the final rule clarifies the procedures and standards the OFCCP will use in evaluating cases and issuing resolution notices, but does not alter existing contractor compliance requirements.

The final rule itself discusses the above in much greater detail.

Meredith S. Campbell Chair, Employment and Labor Group
Shulman Rogers mcampbell@shulmanrogers.com | T 301.255.0550