Navigating Federal Contractor Compliance in the New Administration

ACC National Capital Region Presented by:

Connie N. Bertram Partner, Proskauer Rose LLP

Bart C. Barré Assistant General Counsel, Northrop Grumman

Jason S. Capili Director, E&C, Ethics & Business Conduct PricewaterhouseCoopers

October 13, 2017

Introduction

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General Trends, But No Real Guidance (at least at the Federal level) • Anticipate continued focus on pay equity, particularly in certain

targeted industries - Have been willing to flex their muscle in seeking data - States and localities continue to step into the breech

• Continued challenges presented by: - Data accuracy, accessibility and privacy issues - The “Gig Economy” - Compliance by subcontractors and agents

• Recommend a holistic approach that: - Understands the constellation of EEO and AA obligations - Identifies and empowers relevant stakeholders - Identifies and addresses the “hot spots” in your organization through an

effective self-audit program - Harmonizes contractors’ internal diversity and AA goals and obligations

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The OFCCP and Pay Equity • Sources of obligations:

- Part of non-discrimination obligations addressed in enforcement audits - Relatively new pay transparency and prohibitions on “gag order” policies

• Major focus of most compliance audits, particularly in the technology, finance and service industries

• Directive 307 gives OFCCP the flexibility to employ almost any statistical tool or approach

• Although less funding is available, focus unlikely to change in compliance audits

• Hopefully, additional or new guidance on the standards will be provided

• Unclear whether SOL or DOJ will be willing to pursue enforcement proceedings

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Scenario 1 – Managing the Scope of Pay Equity Audits You are involved in a compliance audit for your AAP issued January 1, 2015. After responding to the initial scheduling letter, the CO requests extensive data concerning the compensation of your employees, including the compensation history of every employee employed during the plan year. Some of your employees have worked for you for 30+ years. Also, the factors that are relevant to pay (one of OFCCP’s standard requests) are in various databases and files, some in paper form.

After your employees spend 4 weeks reviewing files and collecting data, the CO seeks updated compensation information for all of your employees employed since the end of the plan year. These requests seek information concerning all forms of compensation, including variable pay and stock options. You anticipate that it will take four employees a full month to collect this additional data. How do you approach this request?

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Do You Fight?

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Or, Do You Conciliate?

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Practice Pointers: Navigating OFCCP Pay Equity Audits

• Make certain that you identify and document all factors that are considered in setting all forms of pay

• For each factor, you need to be able to: - Prove that it was considered for all employees in the job group; - Prove how it was applied; and - Present the data or other evidence that backs it up

• Make certain that all categories of pay and all relevant pay factors are populated, accessible, accurate and secure within your systems

• Identify appropriate pay analysis groups, with a heavy focus on the factors, pay ranges and types of pay involved

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Managing Data (and Making Your Life a Lot Easier)

Factor Field Example Degree 1 = Less than BA/BS

2 = BA/BS 3 = MBA or other Masters 4 = JD 5 = PhD

Years of Prior Relevant Experience

Number of Years (potentially with a cap)

Performance Convert evaluation ratings into numbers

Market rate Have a rate or range associated with relevant positions

Seniority Date of hire (or date or re-hire + years of prior experience)

Work location Specify assigned work location or region

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Practice Pointers: Navigating OFCCP Pay Equity Audits

• Such reviews should: • Be conducted on a privileged basis • Slice and dice the company into the categories of pay groups

that would be considered by OFCCP, EEOC or the Courts • Analyze and isolate all factors that impact pay • Should analyze all forms of pay (base and variable) • Use multiple regression analysis methodologies employed by

OFCCP, EEOC and Courts • Be rigorous and address not only pay inequity, but its causes

• Fix problems before the OFCCP does

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Other Pay Audit and Equity Challenges

• Onboarding employees obtained through an acquisition

• Green/red-circled employees

• Self-selected steering

• Management of additional obligations imposed by states/localities

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Scenario 2 - Managing the Gig Economy You received a certified letter from the OFCCP conducting an investigation into allegations of mistreatment by coworkers and direct line management by a company worker, specifically a hostile work environment, disability-related discrimination, and retaliation. The letter asks you to provide within 30 days of the letter date performance reviews, internal company investigation findings, and other employment related detail for the worker and noted coworkers and line management. You only became aware of the letter within 10 days of the filing deadline.

When preparing the submission, you learn the complainant is a contingent worker from an approved vendor and is a former veteran with post-traumatic stress syndrome. The other noted coworkers are a mix of other contingent workers and company employees and managers. Also, a review of a related internal investigation findings show it was conducted solely by the company’s human resources team and employment attorneys.

How should you proceed and position your submission to the OFCCP?

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Scenario 3 - Managing Agents and Subcontractors Your company uses a boutique search firm recommended by senior managers to identify targets for open, hard-to-fill technology positions. The search firm reaches out directly to senior managers, presenting their referrals for their consideration. The senior managers demand that HR bring these referred candidates in for an interview.

However, the recruiting team, using the company’s applicant tracking system, has already posted the position, required all of the candidates to complete applications (including voluntary disclosures), screened the candidates, and identified a diverse set of candidates who should be interviewed.

How should the boutique search firm’s referrals be considered for this position?

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Practical Pointers

• Contractors are responsible for compliance by their retained agents and subcontractors - Recruiters and staffing agencies - Vendors for postings, including VETS postings

• Centralize responsibility for managing vendors and agents

• Only use vendors and agents who have signed annual vendor agreements that clearly spell out their compliance obligations and give them the tools to comply

• For recruiters, require recruiter portal in your ATS

• Monitor their compliance through certifications and periodic compliance audits

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Scenario 4 – Harmonizing Your Internal Diversity Goals and OFCCP Goals

• Your CEO returns from a summit with other C-suite executives. She learns that a direct competitor has adopted a “Rooney” rule approach with recruiting and selecting interview slates. Your CEO wants you to help develop a similar practice for the company. After explaining the legal risks, she says “make it happen.”

• What do you do?

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Practical Pointers

• If challenged, would be required to show history of discrimination or underrepresentation in the industry generally

• Goals and diversity initiatives should be consistent with the qualified applicant pool, using appropriate pools (which may not be census data)

• Real dangers to interviewing or selecting candidates who are not qualified or not as qualified as the other candidates

• Other diversity efforts – particularly those that are developed with the input of the hiring managers – generally more effective

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Holistic Compliance that Works Like a . . .

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The Keys to Seamless Compliance

• Understand the (potentially conflicting) compliance obligations that apply to your industry and organization

• Identify your fearless leader and identify and empower all of the key stakeholders key to compliance

• The AAP is just the beginning . . .

• Identify your compliance “hot spots” through self-audit process and address them

• Understand your operations and databases and make them work for you

• But, go beyond the numbers and understand what your managers are really doing

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Our predictions

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Your Presenters

• Head of the DC Labor & Employment Practice

• Co-Head of the Whistleblowing & Retaliation, and Government Contractor Compliance Relations Groups

• Has defended complex employment, whistleblower, trade secret and restrictive covenant litigation across the United States

• Named Top Employment Lawyer in DC by Legal Times, Washingtonian, and Washington Business Journal and Washington DC Power Player, and ranked by Chambers USA

Connie N. Bertram Proskauer Rose LLP cbertram@proskauer.com (202) 416-6810

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Your Presenters

• Assistant General Counsel at Northrop Grumman

• Head of Law Department’s Labor & Employment Law Function

• Responsible for all aspects of global labor/employment law, including OFCCP/AAP/Compliance areas

• Member of company’s Human Resources Policy Council

Bart C. Barré Northrop Grumman bart.barre@ngc.com (703) 280-4024

Northrop Grumman is a leading global security company providing innovative systems, products and solutions in autonomous systems, cyber, C4ISR, strike, and logistics and modernization to customers worldwide.

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Your Presenters • Director at PricewaterhouseCoopers, leader of

AA/EEO and other workplace compliance, governance, and risk strategies

• 20 years of diverse industry experience and a 100% success rate with defending workplace-related government audits

• National industry speaker on strategic compliance and risk management, focused on intersections of diversity and inclusion, employment, and government contracting

• Co-leader of Mercer Workforce Opportunity Network’s Corporate Leaders in Equal Employment Opportunity

Jason S. Capili PricewaterhouseCoopers jason.s.capili@pwc.com (646) 471-8953

October 13, 2017

Navigating Federal Contractor Compliance in the New Administration ACC National Capital Region Presented by:

Connie N. Bertram Partner, Proskauer Rose LLP

Bart C. Barré Assistant General Counsel, Northrop Grumman

Jason S. Capili Director, E&C, Ethics & Business Conduct PricewaterhouseCoopers

October 13, 2017