OFCCP & Pay Discrimination:

New Tools and New Rules &

It’s Hard To Be a Government Contractor

Mickey Silberman, Esq. Affirmative Action & OFCCP Practice Group Jackson Lewis P.C. silbermanm@jacksonlewis.com

About the Firm

• Represents management exclusively in every aspect of employment, benefits, labor, and immigration law and related litigation

• More than 750 attorneys in 55 locations nationwide

• Current caseload of over 6,500 litigations and approximately 415 class actions

• Founding member of L&E Global

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About Our Affirmative Action & OFCCP Practice Group

• Our Affirmative Action & OFCCP Audit Defense team of approximately 40 lawyers, statisticians and data analysts prepares over 2,500 affirmative action plans (“AAPs”) annually

• Since 2013, we have defended over 400 OFCCP audits, with a 99.5% success rate. As a law firm, we offer strategic thinking, sophisticated legal representation and attorney-client privilege protections

• We employ seven full-time Ph.D. and Masters-level statisticians devoted to preparing privileged EEO pay analyses

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About Mickey Silberman

MICKEY SILBERMAN is the Chair of the firm’s Affirmative Action & OFCCP Practice. He specializes in EEO and affirmative action compliance and OFCCP defense. He is recognized as a national expert on systemic pay discrimination.

Mickey directs the defense of hundreds of OFCCP systemic pay discrimination investigations throughout the country. He also spends much of his time conducting proactive analyses of clients’ pay systems and other employment processes.

Mickey serves as General Counsel to and on the Executive Committee of the National Industry Liaison Group Board.

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Lawyer’s Disclaimer

The materials contained in this presentation were prepared by the law firm of Jackson Lewis P.C. for the participants’ reference in connection with education seminars presented by Jackson Lewis P.C. Attendees should consult with counsel before taking any actions and should not consider these materials or discussions about these materials to be legal or other advice.

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© 2015 Jackson Lewis P.C.

• Confusion Around Veteran Self-IDs

• Stigma Around Disability Self-IDs

• OFCCP & Pay Discrimination

• It’s Hard To Be a Contractor

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So, What Should We Talk About?

• Statutory definition of “Protected” Veteran

• Recent – and confusing – developments

• OFCCP “Infographic” – see handout

• So, what should we do now?

• Update Self-ID? 7

Defining “Veteran” It’s Not As Easy As It Looks

• Continuing “stigma” around Self-ID • “Fake Cover Letters Expose Discrimination Against Disabled,” New

York Times, November 2, 2015:

http://mobile.nytimes.com/2015/11/02/upshot/fake-cover-letters-expose-discrimination-against-disabled.html?emc=edit_th_20151102&nl=todaysheadlines&nlid=18106300&referer=

• DOL tries to help ... • “Disability Inclusion Starts With You”:

http://www.dol.gov/ofccp/SelfIdVideo.html

• Best practices to encourage Self-ID? 8

Employment Disability Survey How Are We Doing?

OK, Let’s Talk About Pay

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It’s all About the “Wage Gap”

• The President’s top civil rights priority is Pay Discrimination

• President Obama on 1/20/15, “[N]othing helps families make ends meet like higher wages. That’s why this Congress still needs to pass a law that makes sure a woman is paid the same as a man for doing the same work. It’s 2015. It’s time.”

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Males Females Black Females

Hispanic Females

$1.00 77¢ 64¢ 55¢

President’s Top EEO Enforcement Priority

• President Obama has charged the federal agencies – EEOC & OFCCP – with eliminating the wage gap

• The agencies have asked for new “tools in their toolbox” to uncover and eradicate pay discrimination

• The President is giving the agencies these new tools

• And with new tools . . . come new rules

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New Tools, New Rules

• Already Here

• New Scheduling Letter and Item 19

• “Pay Transparency” Rule

• Coming Soon. . .

• Equal Pay Report

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People Don’t Know

What They Don’t Know

About Pay

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Applicants & Employees . . . Don’t Know What They Don’t Know

• “Pay Transparency” Rule • Cannot discriminate against applicants or employees for asking about, discussing or disclosing pay information

• Goes well beyond NLRB – includes applicants and supervisors

• Final rule – September 11, 2015 • Effective January 11, 2016 14

Applicants & Employees . . . Don’t Know What They Don’t Know

• “Pay Transparency” Rule (Cont.) • Contracts entered into or modified on or after January

11, 2016

• Update employee manuals and handbooks with mandatory nondiscrimination provision

• Post mandatory nondiscrimination provision conspicuously for employees and applicants

• EO Clause incorporated by reference into contracts, so no change needed

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The Government . . . Doesn’t Know What They Don’t Know • Proposed Annual “Equal Pay Report”

Requirement • Submit W-2 wages for all employees, every

year, every location • Must also submit race, gender, and hours

worked • Final rule expected by end of 2015 • OFCCP will use annual Equal Pay Reports to

select employers for audits/investigations

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Why W-2s? A Shift Toward Total Comp

• Employers are changing the way they pay their employees

• Trend toward more bonuses/incentive comp and lower pay increases

• “One-Time Bonuses and Perks Muscle Out Pay Raises for Workers,” New York Times, May 25, 2015:

• http://www.nytimes.com/2015/05/26/business/one-time-bonuses-and-perks-muscle-out-pay-raises-for-workers.html?hp&action=click&pgtype=Homepage&module=second-column-region&region=top-news&WT.nav=top-news&_r=0

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How Do We Prepare for This?

• Multiple systems will be needed to produce data

• Are your systems ready?

• Increase your 2016 budget for system changes and new reporting requirements

• Conduct privileged pay analyses to identify and address disparities before submission of Equal Pay Reports

• Think “total comp” or “total rewards,” not just base pay

• Use results to strategically present data in Equal Pay Report

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Privileged & Proactive Pay Analyses

• In audits, OFCCP is asking for your proactive pay analyses and self audits, including those prepared by third-parties

• Must take steps in every pay analysis to establish privilege to protect the analyses from disclosure

• Are non-attorney statisticians doing your pay analyses?

• If so, work with attorney to “cloak” the analyses in privilege

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The Sliding Scale of Privilege

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Not Privileged Argument for Privilege Privileged No Attorney Involvement In-House Counsel (on surface) In-House Counsel (substance) Outside Counsel (on surface) Outside Counsel (substance)

The Government (continued) . . . Doesn’t Know What They Don’t Know

The New Scheduling Letter’s Item 19:

From Base Comp to Total Comp

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Item 19 Detailed Pay Data On Total Comp

• Pay Data under the Old Letter:

• “Item 11” of the Scheduling Letter • Summary base pay grouped as employer

chose

• OFCCP had very few systemic pay cases

• This has all changed . . .

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Item 19 Requires

• For each employee:

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• Base Salary/Wage Rate

• Overtime • Bonuses • Commissions • Merit Increase • Incentive Pay

• Locality Pay • Date of Hire • Hours Worked • Job Title • EEO-1 • Job Group

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New Item 19 Submission Empl ID # Job Title Race Gender JG Base Pay DOH Bonus

Merit Increase Comm. OT

Incentive Comp

87 Business Manager 1 M 2A $100,000 1/1/09 $22,000 $3,000 - - -

94 Business Manager 1 F 2A $100,000 4/1/02 $6,000 $3,000 - - -

80 Business Manager 3 F 2A $90,000 5/1/15 $3,000 - - - -

41 Sales Associate 1 M 4A $40,000 6/1/06 $5,000 $800 $68,765 - -

52 Sales Associate 2 M 4A $40,000 8/1/07 $5,000 $800 $66,124 - -

59 Sales Associate 4 F 4A $40,000 2/1/03 $5,000 $800 $26,452 - -

49 Sales Associate 1 F 4A $32,000 5/1/14 $3,000 $400 $22,653 - -

67 Sales Associate 3 F 4A $32,000 3/1/15 - - $2,385 - -

98 Driver 5 M 7A $62,400 8/1/01 $800 $1,040 - $14,040 $9,000

58 Driver 1 F 7A $54,800 9/1/06 $800 $1,040 - $780 $2,500

What Do All These Changes Mean for Us?

Equal Pay Report

+ Pay Transparency Requirements

+ Item 19

deep dive “total comp” investigations during audits

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Proactive Analyses on Distinct Components of Pay

Key Takeaways

• New tools . . . new rules • “Pay Transparency” + annual Equal Pay Report

+ Item 19 change the rules of the pay game

• Item 19 gives OFCCP “total comp” to explore

• Do privileged proactive EEO pay analyses • Clearly establish privilege

• Must analyze beyond base pay

o Bonuses, commissions, overtime, etc.

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It’s Hard To Be a Contractor

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The Ever-Changing Contractor Compliance Landscape

• It’s hard to be a federal contractor . . . and it’s about to get harder

• President Obama issued many new Executive Orders increasing burdens on federal contractors

o Will require review and often wide-ranging changes to human resources policies and practices

o Plan for an increase in costs, resources and possibly staffing needed to comply with new requirements

o Possible change to IT infrastructure, including HRIS and Applicant Tracking systems

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© 2015 Jackson Lewis P.C.

Executive Orders and Other Changes

• Minimum Wage – EO 13658

• LGBT Non-Discrimination – EO 13672

• Fair Pay & Safe Workplaces – EO 13673

• Sex Discrimination – Proposed Regulations

• Paid Sick Leave – EO 13706

• “Ban the Box” – Proposed Legislation

• Human Trafficking – New Rule Implementing EO 13627

• Cyber Security Reporting – DoD Interim Rule

• Wage & Hour Requirements o Davis Bacon and Related Acts – Current Legislation o FLSA Exemption Changes – Proposed Legislation

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© 2015 Jackson Lewis P.C.

President Obama Takes the Wheel

• President Obama and Congress have been unable to enact legislation in high-profile areas: o Minimum Wage legislation blocked

o Paycheck Fairness Act stalled

o Employment Non-Discrimination Act (ENDA) impassable

• Result – the President has “taken the wheel” by signing Executive Orders affecting federal contractors o The President has authority to regulate companies that do

business with the federal government

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© 2015 Jackson Lewis P.C.

What’s Already Happened? Minimum Wage

• Executive Order 13658: Federal Contractor Minimum Wage

o $10.10 an hour on new contracts after January 1, 2015

o $10.15 an hour as of January 1, 2016

• What contracts are included?

o Construction contracts covered by the Davis-Bacon Act (DBA)

o Contracts covered by the Service Contract Act (SCA)

o Concessions contracts, including any concessions excluded from the SCA

o Contracts in connection with federal property or lands related to offering services to federal employees, their dependents, or general public

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© 2015 Jackson Lewis P.C.

What’s Already Happened? LGBT Regs

• Executive Order 13672: LGBT Non-Discrimination

o Prohibits discrimination on the basis of sexual orientation and gender identity – effective April 2015

o What must be done?

• Change EEO tagline . . . again?

• Change EO clause in contracts

• “EEO is the Law” poster will soon be updated

o Supplemental “EEO is the Law” poster available . . . Post it now?

• Review Non-Discrimination Policies

o What should be done?

• Outreach and recruitment to LGBT sources

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© 2015 Jackson Lewis P.C.

What’s Going to Happen? “Bad Actors” Reporting

• Executive Order 13673: Fair Pay and Safe Workplaces • Who: Bidders for federal contracts of $500,000

o Contractors and subcontractors

• What: Must report on employment law “violations” o Must report on past 3 years then update every 6 months o If contracts of $1M or more, mandatory pre-dispute arbitration

agreements for Title VII or tort related to sexual assault or harassment are prohibited

• When: Executive Order was signed on July 31, 2014 o Comment period closed August 11, 2015 o Final Rule expected in 2016

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© 2015 Jackson Lewis P.C.

What Needs to be Disclosed?

• Violations that must be disclosed include –

• “Violations” include administrative merits determinations, arbitral

awards, and civil judgments o What does this mean?

• Consider including “carve out” language in pre-dispute arbitration agreements

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o E.O. 11246 o NLRA o FLSA o Sec. 503 o FMLA o VEVRAA o OSHA o Davis-Bacon Act o ADEA o Service Contract Act o Title VII o AND State Law Equivalents o ADA

© 2015 Jackson Lewis P.C.

Proposed Sex Discrimination Rules

• Proposed Rules published January 30, 2015

• “Regulations” vs. “Guidelines”

• First substantive update since adoption in 1970

• Meant to address “current workplace practices” and “support economic interests of women” and others impacted by sex discrimination

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© 2015 Jackson Lewis P.C.

What’s Next? Paid Sick Leave

• Paid Sick Leave – EO 13706

o Signed September 7, 2015

o Proposed Rule – forthcoming

o Final Rule – due September 30, 2016

• Details:

o 1 hour paid sick leave/30 hours worked

o New/modified contracts after January 1, 2017 to include clause

• Procurement contracts for construction under Davis Bacon Act

• Service Contract Act contracts

• FLSA employees, including exempt employees

• Low contract $$ thresholds 36

© 2015 Jackson Lewis P.C.

What’s Next? Paid Sick Leave

• Used for: (1) illness, injury; (2) diagnosis, care, preventive care; (3) caring for family, family equivalent; and (4) domestic violence care

• Hours may accrue to 56 and must carry over from year to year

• Oral/written request with expected duration made at least 7 days before leave, or as soon as practicable if need unforeseeable

• Limits on ability to seek medical certification – 3 or more days

• Not required to pay accrued leave upon separation

• Interference and discrimination prohibited

o May create FMLA-type interference claims 37

© 2015 Jackson Lewis P.C.

What’s Next? “Ban the Box”

• Currently, 7 states, Washington, D.C., and 26 cities and counties, now have some form of “ban the box” for government contractors or private employers

• Bipartisan bills (S. 2021 & H.R. 3470) introduced September 10, 2015

• Both would prohibit:

o Requests for “criminal history record information” from an applicant for a position “related to work under” a federal contract

o Before making a conditional offer to the applicant

o Unless otherwise required by law or position requires access to classified information or involves sensitive law enforcement or national security duties

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© 2015 Jackson Lewis P.C.

Human Trafficking

• Human Trafficking – EO 13627 o Effective March 2, 2015 for new solicitations only

o Applies to all procurement contracts regardless of $$ value • Applies to contracts for “commercial items” and “COTS” which are not

subject to many FAR requirements

o Implemented by FAR Clause 52.222-50

o Contractors, their employees and their “agents” shall not: • engage in “severe forms of trafficking in persons”;

• procure “commercial sex acts”;

• use “forced labor” in performance of the contract;

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© 2015 Jackson Lewis P.C.

Human Trafficking

• Notify employees and agents of the prohibitions and the corrective action consequences it will take for any violations;

• Include the substance of the Clause in subcontracts and contracts with agents;

• Develop and disseminate policy;

• Establish complaint process;

• Develop Compliance Plan & Certification if:

o Contracts/subcontracts of more than $500,000

o Supplies acquired outside U.S. – except COTS

o Services performed outside U.S.

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© 2015 Jackson Lewis P.C.

Key Takeaways

• Conduct a government contractor compliance audit o Where are the gaps?

• Conduct EEO pay analysis, under privilege

• Anticipate 20% - 30% increase in costs, resources and staffing o Changes to systems?

o Changes to policies?

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© 2015 Jackson Lewis P.C.

Questions?

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New Tools, New Rules . . .

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