December 5, 2013

HOUSE SUBCOMMITTEE HOLDS HEARING ON RECENT OFCCP ACTIONS

The U.S. House of Representatives’ Committee on Education and the Workforce held a hearing on December 4, 2013 entitled “Examining Recent Actions by the Office of Federal Contract Compliance Programs.” The hearing was organized by the Subcommittee on Workforce Protections, which is chaired by Representative Tim Walberg (R-MI). As noted in a previous post, the hearing was scheduled to address the committee’s concerns regarding the effects of OFCCP’s new regulations on the federal contractor community. The Committee offered a live webcast of the hearing, in addition to the seating capacity in the main room. The hearing was well attended by a variety of federal contractors and support organizations, including DCI staff.

Five witnesses testified at the hearing: OFCCP Director, Ms. Patricia Shiu, Mr. David Fortney representing the HR Policy Association, Mr. Thomas C. Shanahan representing the University of North Carolina, Mr. Brian Fitzgerald President and CEO of the Easter Seals New Jersey, and Mr. Curt Kirschner representing the American Hospital Association. The witnesses were each able to give a five minute testimony, which was then followed by questions from Subcommittee members. The following six Subcommittee members participated in asking questions of the witnesses: Rep. Tim Walberg (R-MI), Rep. Joe Courtney (D-CT), Rep. Todd Rokita (R-IN), Rep. John Kline (R-MN), Rep. Marcia Fudge (D-OH), and Rep. Larry Bucshon (R-IN).

In the opening remarks, Chairman Walberg stated that the OFCCP failed to address the concerns brought to the committee about the proposed regulations, and that the committee should be working with OFCCP to “streamline this regulatory mess.” Chairman Walberg went on to state that the OFCCP is doing less with more. Chairman Walberg also took his introduction time to state that he introduced separate legislation, H.R. 3633, to ensure that doctors and hospitals are not automatically considered federal contractors for receiving reimbursement through federal health care programs. Ranking Member Courtney provided an opening highlighting the lengthy rulemaking process followed for the new regulations, the 200,000 jobs for veterans and the 500,000 jobs for individuals with disabilities that the new regulations could provide, and noted the high current unemployment rate of recent veterans. Ranking Member Courtney stated that these new regulations work with other veteran hiring efforts recently enacted, and the “non-punitive, aspirational goals” included in the new regulations are in line with these other efforts.

In her testimony, Director Shiu provided a brief overview of the major achievements of OFCCP over the past five years, including approximately $57 million in back pay and make-whole remedies. Director Shiu went on to assert that the new VEVRAA and 503 regulations clarify expectations and include “aspirational” metrics that will be a win-win. She briefly touched on the VEVRAA hiring benchmark and the 503 utilization goal, stating that OFCCP would work with contractors if metrics are not met. Director Shiu concluded by remarking that OFCCP listened to the feedback received during the rulemaking process, as evidenced by the changes made to the final regulations compared with the NPRM versions.

Mr. David Fortney specifically addressed two main concerns with the new regulations. First, he expressed concern that the utilization goal would become a quota, especially if contractors enter into a conciliation agreement for not achieving the goal and are required to meet a percentage under the conciliation agreement. Mr. Fortney cited an OFCCP settlement with G-A Masonry as an example of required veteran hiring targets. Secondly, he raised a concern about asking applicants for disability status prior to a job offer on the basis that it may violate the ADA, noting that OFCCP has been unwilling to commit to file amicus briefs for contractors if they are sued for violating the ADA in order to meet the new 503 regulation requirements.

Mr. Shanahan highlighted the burden of compliance in terms of individual resources, system updates, recordkeeping obligations, and the extended and intense requirements often associated with compliance evaluations.

Mr. Fitzgerald provided support for the new regulations, repeating a phrase used earlier by Director Shiu, “what gets measured gets done.” Mr. Fitzgerald emphasized that even the new benchmarks and goals do not guarantee a job, but instead ensure that federal contractors are actively recruiting veterans and individuals with disabilities. He shared a personal experience that as a veteran himself, he also encountered difficulties transferring his skills into the civilian workforce.

Mr. Kirschner stated that OFCCP previously did not seek to include hospitals and doctors who received reimbursement from federally funded healthcare options. However, he noted that this was no longer the OFCCP’s practice. Mr. Kirschner highlighted that hospitals are already covered by other non-discrimination obligations enforced by other agencies, and that the federal agencies that manage those federal healthcare programs (OPM and DoD) have stated that receiving this reimbursement does not make the hospital or doctor a federal contractor.

Rep. Kline opened the questioning period by specifically asking Director Shiu if the OFCCP would join a contractor as an amici in the event of a lawsuit based on the pre-offer disability status invitation. Director Shiu stated she would discuss this with the solicitors. He also asked if the national percentage of protected veterans was taken into account when choosing to establish the 8% hiring benchmark, which corresponds to the percentage of all veterans. Director Shiu indicated that they looked at a variety of data and that she understands “most” veterans are also protected; however, she conceded that a specific number or percentage to substantiate “most” does not currently exist.

Rep. Rokita asked several questions with two basic prongs. The first prong involved determining if contractors would be held accountable for not achieving a target number outlined in a conciliation agreement. Director Shiu stated that not meeting a target alone would not result in enforcement action. The second prong addressed whether the agency is more or less efficient today than in the previous administration and focusing on more general budgetary matters.

Rep. Bucshon expressed serious concerns about asking individuals to self-identify with a disability. He drew comparisons with asking women about plans to have a family as part of a pre-offer job interview, and asked what would happen if there were lawsuits stemming from any individual who was asked the question and subsequently rejected for a position. Director Shiu asserted that the rejection would require additional proof of intent to discriminate, using the example that a pregnant woman who applies for and is rejected for a position was not necessarily rejected for being pregnant.

Rep. Fudge emphasized that the regulations went through the rulemaking process and that they cannot be changed. She provided Director Shiu with an opportunity to clarify earlier responses and expressed confusion about the purpose and utility of the hearing.

Rep. Courtney clarified that Mr. Kirschner’s concern is not specifically related to the new regulations, but instead related to Chairman Walberg’s separately introduced legislation. As such, Mr. Kirschner’s concern centers on hospitals being considered, on a case-by-case basis, to be federal contractors because of federal funds received from federally managed healthcare programs. Rep. Courtney also asked Mr. Fitzgerald to explain how he thinks the new regulations will help veterans.

Throughout the hearing, both Republican and Democrat Subcommittee members, as well as the invited witnesses expressed commitment to recruiting and hiring both qualified veterans and individuals with disabilities. Chairman Walberg and Ranking Member Courtney closed the meeting. In his closing remarks, Chairman Walberg focused on the additional documents and answers still needed from the agency, as well as the issue of OFCCP jurisdiction over hospitals receiving reimbursement from federally managed healthcare programs. In his closing remarks, Ranking Member Courtney remained optimistic about the potential benefit from the new regulations, but also stated that enforcement is a legitimate concern and that contractors should receive more guidance about how these regulations will be enforced. Both indicated that additional meetings are on the horizon. Stay tuned.

A link to the hearing webcast and submitted testimony can be found at http://edworkforce.house.gov/calendar/eventsingle.aspx?EventID=362696

by Kristen Pryor, M.S., HR Analyst and Yesenia Avila, M.P.S., HR Analyst, DCI Consulting Group

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DCI Consulting is a risk management human resources consulting firm strategically located in Washington, D.C.

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