Multi-Establishment
& Enterprise-Wide
Compliance
NILG Annual Conference
August 29, 2012
Valerie J. Hoffman, Esq.
Christine Hendrickson, Esq.
Seyfarth Shaw’s OFCCP, Affirmative
Action & Diversity Consulting Team
Seyfarth Shaw’s Perspective
• Informed by experiences of more than 300 employment
attorneys representing management
• Handling many of the most significant employment cases
today
• Our practice is national in scope: 10 offices in the US
• Nationally recognized leaders in understanding and
communicating affirmative action compliance and developing
successful affirmative action programs (AAPs)
• Have defended hundreds of OFCCP compliance evaluations
across every region in the US, including major multiestablishment reviews
• Consulting with hundreds of employers about employment
policies and best practices, including selection and pay equity
2 | © 2012 Seyfarth Shaw LLP
Overview
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OFCCP experience
Best practice enterprise-wide self-audit
Practical tips
Sample tools
3 | © 2012 Seyfarth Shaw LLP
OFCCP Focus on Multi-establishment
Contractors
• Targeted industries
►Food Service
►Manufacturing
►Transportation
• Looking for issues that span all establishments under
audit
►policies
►practices
►systems issues (applicant tracking systems)
4 | © 2012 Seyfarth Shaw LLP
OFCCP’s FY 2013 Budget Justification:
“Strategic” Selection Process
• Documents plan to implement "strategic" selection
process
►to prioritize enforcement efforts &
►pinpoint multi-establishment & industry-wide deficiencies &
violations
►formula will find “egregious violators”
►but no specifics given
• “Renewed collaborative enforcement approach with the
Office of the Solicitor (SOL) and other Departmental
agencies," to increase attention
►on contractors with multiple establishments &
►within industries of specific interest
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Expanding Audits to Establishments Not
Tapped for Audit
• Two recent trends
►Asking for information about inclusions & exclusions on
workforce & job group analysis
►Asking about configuration of AAPs if AAP totals don’t match
EEO-1 Report
►Asking about corporate organization
►Sending CSAL letters to locations other than corporate HQs
• BE ALERT! 4th Amendment Concerns
►Question of OFCCP’s authority to expand routine compliance
evaluation to other locations not selected using normal FCSS
system
►Expansion to other locations may only be authorized when a
HQ is selected as CMCE, per 41 CFR 60-2.30
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Focus on Policy/ Practice Issues
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Policies
Application form review
Screening steps
Test validation
Interview notes
Personnel files
Performance evaluations
Termination documentation
Disability accommodation requests & resolution
Listing with Local Office of State Employment Service
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Focus on Systems Issues
• Still lots of issues with inadequacy of applicant tracking
to defend selection decisions
• ATS is centralized so issues are likely to affect multiple
establishments
• Affected class findings
• Almost always at lower levels
• Employers with lots of turnover in laborer, operative or
service worker positions
8 | © 2012 Seyfarth Shaw LLP
Focus on Compensation
• OFCCP’s Advance Notice of Proposed Rulemaking
(ANPRM) for a new Compensation Data Collection Tool,
issued August 10, 2011, sought public comment on
design & implementation of new compensation tool
►OFCCP is “exploring the possibility” of using collected data to
“identify opportunities” for conducting compensation reviews of a
contractor's various establishments nationwide
►Specifically asked for public comment on the categories by
which data could be collected for the purpose of nationwide
multi-establishment reviews across contractor establishments
9 | © 2012 Seyfarth Shaw LLP
But What About Dukes v. Wal-Mart?
• Secretary of Labor Hilda Solis stated after the Supreme
Court’s ruling in Dukes v. Wal-Mart
►“The Wal-Mart decision won't affect our ability to address pay
disparities on a broad scale — even if our lawyers have to tweak
some of their legal arguments based on the reasoning used in
that case.”
►OFCCP not bound by Wal-Mart because specific to private
plaintiff litigation
• Dukes v. Wal-Mart decision: group of 1.5 million female
employees could not sue for gender discrimination as a
class
►because they were unable to demonstrate that Wal-Mart’s
subjective corporate POLICY drove the alleged discriminatory
employment decisions
►Limiting large discrimination class actions but did not kill them
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Dukes v. Wal-Mart: Impact on
HR Decision-making for Federal Contractors
• Subjective HR decisionmaking upheld
► but only within an established framework that includes
► consistent corporate guidance &
► ensures legitimate, nondiscriminatory decisions
• Design subjective decisionmaking processes carefully, with these
key components
► Link to position and job performance
► Mangers closest to performance should make decisions
► Consider appeals process for employees considered (but not
selected) for promotion or training opportunities
• Train mangers on
► processes, with emphasis on EEO/AA obligations &
► on relevant applicant and performance evaluation criteria & how to
apply them consistently
11 | © 2012 Seyfarth Shaw LLP
ABC Company
• Audits of multiple facilities in same year covered by
same OFCCP District Office
• Employer application question: were you dishonorably
discharged from the military?
• OFCCP: veterans & race-impact
►EEOC concern re race impact
• Held closure of audits until all audits completed
• Same violation cited in each modified Letter of
Compliance
12 | © 2012 Seyfarth Shaw LLP
FedEx Settlement- March 22, 2010
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Multiple locations (23) with individual audits in 15 states
Regularly scheduled audits stretching over 7 years
Aggregated at contractor’s request
Affected class: entry-level workers
Different adverse impact findings in various audits
►females
►males
►Blacks
►Whites
►Native Americans
►Hispanics
►Asians
• “Hiring & selection, recordkeeping” = Applicant tracking
13 | © 2012 Seyfarth Shaw LLP
FedEx Settlement- March 22, 2010
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$3 M
1700 offers
Alleged affected class: 21,635
“ The allegations were based on computer statistical
analysis rather than individual complaints or
investigations. We agree to pay $3 million to avoid what
would have certainly been a prolonged and much more
expensive resolution process. We have and will continue
to review and enhance our hiring practices to promote
FedEx Ground’s commitment to diversity and equal
employment opportunity.”
• –FedEx spokesperson Angela Wheland as reported by
www.law360.com
14 | © 2012 Seyfarth Shaw LLP
Baldor Electric- June 25, 2012
• Alleged affected class: 795 women & minorities
prevented from interviewing (2006 data)
• $2M
• 50 offers for production & labor jobs
• “It was going to be a much lengthier process to fight it
any longer. We don’t admit that we’ve done anything
wrong. This was purely a statistical analysis on their (the
Labor Department’s) part. But it would have been so
long and so much more expensive to fight, it was just
time to be done.”
• – Baldor Electric spokesperson Tracy Long as reported
by www.therepublic.com
15 | © 2012 Seyfarth Shaw LLP
Best practice: Enterprise-wide Self-audit
• Pros
►detect trends
►develop comprehensive strategies & tactics for resolving issues
►good for the business
►prevents more expensive OFCCP remedies (backpay, etc)
• Cons
►discoverable unless attorney-client privileged
►can you fix what you find?
16 | © 2012 Seyfarth Shaw LLP
Types of Enterprise-wide Self-Audits
• Pay equity
►domestic by race & gender
►global by gender only
• AAP goals
►aggregate current AAP goals
►year over year trending
• Adverse impact
►aggregate current AAP findings
►year over year trending
• Retention study
►reasons for termination
• Performance ratings
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Pay Equity- US Operations
• Many do this now
• Different from OFCCP view
• Multiple regression analysis very useful since larger
numbers of employees
• Pay programs usually directed by corporate policy
• Examine base, bonus, other incentive pay, stock
• Variables may be fine tuned to capture
►measures of productivity, e.g. physician’s relative value units or
RVU’s
►specific skills, e.g. technical micro-welding
►certifications, e.g. professional software certifications
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Pay Equity- Global Operations
• By gender only
• Race/ethnicity data may not be collected in certain
countries, e.g. France, Germany
• Consider if there are different pay practices by country
• Cost-of-living adjustments
• Housing, other stipends
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AAP Goals
• Aggregate current AAP goals
►Enable birds-eye view of issues
►Prioritize issues, attention & resources
►Outreach v. employee development
• Year over year trending
►Further prioritization
►Assess whether action plan is working or needs change
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Goals Comparison Sample 2009-2012
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Goals Comparison Sample 2009-2012
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Adverse Impact
• Aggregate current AAP findings
• Year over year trending
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Adverse Impact
Sample 2009-2012
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Adverse Impact
Sample 2009-2012
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Detailed Adverse Impact
Sample 2009-2012
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Detailed Adverse Impact
Sample 2009-2012
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Compensation Female
Sample 2009-2012
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Compensation Female
Sample 2009-2012
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Compensation Minority
Sample 2009-2012
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Compensation Minority
Sample 2009-2012
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Retention Study
• Reasons for termination
►Involuntary v. Voluntary
• Add other characteristics
►Level in organization
►Generation
►Business unit
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Retention Study SampleInvoluntary Terminations
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Retention Study SampleVoluntary Terminations
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Retention Study Sample- Additional
Characteristics of Title & Generation
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Performance Ratings
• STRONG recommendation: conduct under attorneyclient privilege
• Virtually everyone has issues
►Frequently African Americans receive disproportionately lower
ratings
• Can be conducted with pay equity analysis
►Useful to determine if can rely on performance as a reason for
lower or higher compensation
►Frequently women of equal seniority will have equal or better
performance ratings but pay will be lower
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Performance Rating Study- Sample
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Performance Rating Study- Sample
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Questions?
Thank
you!
Valerie J. Hoffman
Partner
Chicago
Direct: (312) 460-5870
Los Angeles - Century City
Direct: (310) 277-5288
vhoffman@seyfarth.com
39 | © 2012 Seyfarth Shaw LLP
Christine Hendrickson
Senior Counsel
Chicago
Direct: (312) 460-5836
chendrickson@seyfarth.com