The Office of Federal Contract Compliance Programs (OFCCP) has limited the time federal contractors have to respond to a predetermination notice (PDN) from the agency from 30 calendar days of receiving the notice to 15 calendar days, according to a new rule published on Aug. 4 in the Federal Register.
PDNs notify contractors of a preliminary finding that the contractor engaged in individual or systemic discrimination.
The new rule will go into effect on Sept. 5.
Michele Hodge, OFCCP’s acting director, said in a statement that the new rule “strengthens our ability to investigate and remedy employment discrimination by modifying a rule from 2020 concerning our procedures.”
In addition to reducing contractors’ time for responding to PDNs by half, the new rule:
- Removes evidentiary requirements for the issuance of PDNs and notices of violation (NOVs) that are issued when the OFCCP identifies discrimination during a compliance review.
- Eliminates the requirement that PDNs be approved by the OFCCP director before issuance.
- Permits the OFCCP to issue NOVs for violations not included in PDNs.
The OFCCP had previously indicated its intention to remove PDN and NOV requirements, which the agency provides to federal contractors when it finds potential violations, in a notice of proposed rulemaking issued in 2022.
2020 Rule Background
Craig Leen, an attorney with K&L Gates in Washington, D.C., was the OFCCP director when the 2020 rule was implemented. He said the rule encoded a number of government reforms, including PDNs, early resolution procedures, qualitative and quantitative evidence guidance, and transparency guidance.
“The original rule was generally well received by the stakeholder community and was extraordinarily effective,” he said. “It was intended to be nonpartisan and was created with significant assistance from the career civil service.”
Leen explained that the underlying idea was that OFCCP spends taxpayer dollars to conduct civil rights audits of federal contractors and thus, the agency should be required to produce a comprehensive audit report in the form of a preliminary determination notice before proceeding with additional enforcement.
This process facilitates early resolutions, ensures contractors know what the OFCCP has found so they can meaningfully respond, and helps ensure the agency develop cases that comply with the requirements of Title VII of the Civil Rights Act, Leen said.
“It was the original 2020 rule that helped reduce discrimination by providing comprehensive guidance as to what constitutes systemic discrimination and being transparent about what was found,” he added. “This ensured that any alleged discrimination that was found could be promptly addressed.”
However, former OFCCP director Jenny Yang, who left her post in March 2023, said in a 2022 blog post that the original rule restricted the agency’s broad enforcement discretion.
She explained that the rule’s “imposition of formulaic proof standards to be applied to every case harms workers by undermining OFCCP’s ability to effectively bring the full range of cases within its authority and remove barriers to equal employment opportunity.”
The proposed modifications would “restore flexibility to [the] OFCCP’s pre-enforcement and conciliation procedures, promote efficiency in resolving cases, strengthen enforcement and promote alignment of the standards governing OFCCP enforcement with Title VII of the Civil Rights Act,” Yang said.
Public comments on the measure when it was first proposed in March 2022 included input from advocacy groups, labor-rights organizations and others. Commenters generally supported the proposed rule, asserting that the 2020 rule imposed unnecessary, burdensome and confusing enforcement standards that did not align with the requirements of Title VII and conflated the first two stages of the OFCCP’s pre-enforcement process, thereby causing delay and wasting resources.
But other commenters asserted that the OFCCP has not demonstrated a need for the rulemaking and believed that 15 calendar days was an inadequate amount of time to provide a response to a PDN.
What Federal Contractors Should Keep in Mind
The new rule keeps the requirement that a PDN be issued as well as the ability to conduct early resolutions. Leen said federal contractors should hold the OFCCP accountable on these two provisions.
“If OFCCP issues a preliminary determination that does not explain or identify material evidence in support of its alleged findings, contractors should ask for that,” he said.
Contractors should also consider citing the standards in the 2020 regulations in responding to preliminary determinations since they are clearly consistent with Title VII, Leen added. He noted that it is critical to remember that the OFCCP does not find discrimination or even a technical violation in most audits, and that most contractors are found to comply.
“It is important [for agency auditors] to be transparent when the OFCCP does find a potential violation, as contractors will want to know what was found and correct any violation,” he said. “It is much better to be transparent at the beginning, show the contractor the disparity that was found, and the conduct or policy that was problematic, as that will allow for an immediate resolution.”