Silicon Valley Industry Liaison Group Presents:
Audit Package Preparation:
Best Practices for a Positive Audit
Experience
Myra Cars - Applied Materials, Inc.
Bonnie Corley - OFCCP
Linda Grossman - Consultant
Monty Peralta - Synopsys, Inc.
Joanne Snow - JSA Consulting, Inc.
Eleanor Sue - Sun Microsystems, Inc.
Best Practice # 1
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Don’t panic, but don’t ignore the 30-day
notice
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Alert CEO’s office now re possibility of audit
Take notes of OFCCP phone calls
Prepare and submit the best possible package.
If package will be late, call OFCCP a week before due
date
If you are non-responsive, OFCCP will send
a show-cause notice
Keep current
Best Practice #2
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Make contact and establish a good working
relationship with the Compliance Officer at
the very beginning
Establish the Relationship
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Establish the relationship with OFCCP
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Set and confirm expectations
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Follow-up
Establish the Relationship
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Call the contact person named at the end of the
letter
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Confirm he or she is your contact person
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Make sure you are talking about the same site
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Establish you are his or her contact person
Set and Confirm Expectations
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Submittal is due 30 days from the receipt of the
letter
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Confirm when they expect the package
Confirm the address where the package is to be
sent
Follow Up
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Follow up agreements with an email or letter.
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Once package is sent, follow up with your
contact that they received the package.
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Let your contact know you are available to
answer any questions they may have about your
submittal.
Best Practice # 3
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Understand what you are submitting and
own it
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Company’s responsibility
Work closely with the person who prepares the AAP to
understand the data
Few surprises if you know what you are sending
Be the expert
Best Practice #4
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Be thorough and complete
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Read the scheduling letter carefully, and organize
complete answers to each of the requests on the
itemized list
Submit the desk audit package with a cover letter
explaining what you are providing to make the review
as simple and easy as possible
Best Practice #5
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Prepare and explain your applicant, hire,
promotion and termination data
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How you do this can make the difference between an
on-site review and closure at desk audit
Personnel Activity
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Scheduling letter requires:
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“Data on your employment activity (applicants, hires,
promotions and terminations) for the preceding AAP
year. ... These data shall be presented either by job
group or by job title.”
Personnel Activity
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Regulations require:
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Analysis of your selection process,
including whether selection process eliminates a
significantly higher percentage of minorities or women
than non-minorities or men.
Analyzing Personnel Activity
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Complying with the regulations usually requires
Adverse Impact Analyses--a comparison of the
rate of selection. [OFCCP calls this Impact
Ratio Analysis (IRA).]
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An IRA below 80% is considered Adverse Impact
Adverse Impact does not automatically mean there is
discrimination. It is simply an indicator there could be
a problem.
Adverse Impact Analysis
Example:
10 female engineer hires
100 female engineer applicants
IRA = ____________________________
80 male engineer hires
400 male engineer applicants
IRA =
10%
20%
0.50 = 50% = Adverse Impact
Choices for Audit Submission
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How will you submit the requested personnel
activity data?
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Do you send:
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summaries by job group?
summaries by job title?
Choices for Audit Submission
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How will you submit the requested personnel
activity data?
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Do you send:
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summaries only?
summaries along with your complete adverse impact
analyses?
summaries, but adverse impact analyses only where
IRAs are statistically significant (Two
Standard Deviations or Fisher's Exact)?
Choices for Audit Submission
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Do you send:
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adverse impact analyses for total minorities or minority
subgroups?
explanations of significant adverse impact?
explanations of all adverse impact?
no explanations?
Choices for Audit Submission
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Suggestions:
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Always know what you're sending
Know what it means
Evaluate whether displaying data in a different manner
clarifies apparent "problem areas”
If there's even a hint of a problem, explain it up front in
writing and when you deliver the package to assigned
compliance officer
Choices for Audit Submission
Example:
(Displaying the data by Job Group)
10 minority engineer promotions
100 minority engineers in feeder Job Group
IRA = ____________________________
80 Anglo engineer promotions
400 Anglo engineers in feeder Job Group
IRA =
10% 0.50 = 50% = Adverse Impact
20%
Choices for Audit Submission
Example:
(Displaying the data by title)
10 minorities promoted to Sr. Software Engineers
30 minority entry-level Software Engineers
IRA = __________________________________________
80 Anglos promoted to Sr. Software Engineers
200 Anglo entry-level Software Engineers
IRA =
33%
40%
0.83 = 83% = no Adverse Impact
How to Decide
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Summaries by job group?
 Possibly in a very small company with few
personnel actions
Summaries by job title?
 Then must provide baseline data by job title
Summaries only?
 Possibly in a very small company with few
personnel actions
How to Decide
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Summaries along with your complete adverse
impact analyses?
 Probably
Summaries, but adverse impact analyses only
where IRAs are statistically significant (two
standard deviations or Fisher's Exact)?
 Recommend giving all IRAs or no IRAs
 Including relevant tests of statistical
significance a good idea
What to Explain
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Depends on the situation
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Explanations of significant adverse impact
Explanations of all adverse impact
No explanations
What to Explain
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Examples of possible causes of adverse impact
to be discussed:
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Hiring unusual specialties (e.g., MDs with electrical
engineering degrees plus 3-5 years business
experience)
Lay-off based on elimination of business unit,
company-wide ranking, etc.
Interns returning to college (in future exclude "contract
employees" from AAP)
What to Explain
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Examples of possible causes (cont’d):
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Competitive promotions only (provide any written
materials explaining program & "applicant" data as
baseline)
In-line promotions based on years of education or
experience completed (provide written materials and
actual baseline data)
Best Practice #6
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Analyze and understand what the
compensation data mean
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Review your compensation data regularly - not just at
OFFCP audit time.
For regular internal audit purposes as well as for the
the Desk Audit, look at compensation the same way
the agency does and go a step further.
Remember Attorney-client privilege when conducting
internal audits on sensitive data.
Scheduling Letter: Item #11
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Even if you don’t use this compensation report
internally, prepare the annualized compensation
report as directed in Item #11 of the Scheduling
Letter
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Even though a third party may have created the
report, understand what you are submitting
before sending it in
Item # 11, Example
Male
Female
Minorities
African
Americans
Asian
Americans
Hispanic
Americans
210/
16,527,580
40/
2,480,610
100/
6,643,010
10/
787,490
80/
5,130,640
10/
724,880
Caucasians
150/
12,365,180
Item #11, What Does it Mean?
Average
Salary Men
Average
Salary
Women
Average
Salary
Minorities
Average
Salary
Caucasians
78,702.76
62,015.25
66,430
82,435
Statistical Tests
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Let the experts and/or the software do it
If you use them, understand what the data show
Examples of statistical tests:
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t-Test and Rank Sum
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Multiple Regression Analysis
Cohort Salary Analysis
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This is an easy test anyone can perform
internally using Excel software
It makes good business sense as well as good
EEO sense
It is recommended that it be conducted by job
title and, if appropriate, by organizational unit –
particularly if different organizations pay
differently because of non-discriminatory factors
Cohort Salary Analysis (cont.)
Employee
Name or ID
#
Job Title
Salary
Gender
Ethnicity
Date of Hire
Location of
Work Site
Department
Supervisor
Date
Entering
Job Title
College
Degrees
Years of
Experience
in Job
Perform.
Rating
Cohort Salary Analysis (cont.)
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Sort by Job Title and, then, by Salary - low to
high
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Highlight individuals who appear lower- paid
and, then, move on to determining Equal Pay
Act reasons for the low salaries
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Examples: Merit, Seniority, Quality/Quantity of
Work and Geographic location of the job
Cohort Salary Analysis (cont.)
Salary
Gender
Ethnicity
Date of Hire
Location of
Work Site
55,224
F
H
2/13/1998
Chicago
58,488
F
A
1/2/2002
California
64,000
F
W
12/1/2001
California
68,950
M
A
4/19/1996
Washington
DC
71,195
M
W
7/19/2002
California
From the Department of Labor
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Dol.gov/esa/regs/compliance/ofccp/compdata.htm
Wage differentials are not discriminatory or
unlawful when based on neutral job-related factors
Analysis of comp data is a useful tool to ensure
fairness in compensation
Problems, where identified, can be corrected
Analysis may be conducted without “expert” or
outside assistance
From the Department of Labor
(cont.)
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The OFCCP strongly encourages Federal
contractors to conduct analyses of their
compensation systems in accordance with the
self-audit responsibilities under E.O. 11246, in
order to eliminate or prevent discriminatory
policies and practices in this very important
aspect of employment
From your HR Department
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We want to attract and retain the best qualified
people
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We want this to be a great place to work for
those people
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We want our good employees to refer other
highly talented people for employment
Conclusion
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We may be on the same page in intent even if
not always in method or conclusion
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If we can do our homework, document our good
efforts, and communicate with the other, maybe
we can reach the same conclusion (i.e. “fair
compensation practices”)
Best Practice #7
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Go the extra mile
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Company information
Good faith efforts
Postings
Tabs, binders, colors
Detailed cover letter
Hand deliver, if reasonable
Others?
Best Practice #8
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Be certain to explain unusual business
activity (conditions)
For example
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Company is facing bankruptcy,
Closed a product line and laid off all those employees
Acquired another company
Discuss this in the narrative and let the auditor
know as well
Best Practice #9
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Carefully review and analyze all data
submitted for six-month update
If you are more than six months into the new
plan year, follow the instructions in the Itemized
Listing B
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You will need updated reports on your progress
towards goals in your current AAP and personnel
activity for the most recent six months
Possible Other Factors
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Review carefully all the differences in summary
data between the plan documents and the
current data
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Explain significant differences - not only in terms
of personnel activity, but also in terms of
changes made to reporting methodologies, job
groups, etc.
Other Factors (cont.)
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Were there changes in your organizational
structure, job groups, organizations included in
the plan?
Are all job titles resident in the same job groups
as in the Plan at the beginning of the year?
Are there other changes that may make review
of your updated data confusing?
If the answer is “Yes”
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Explain the differences and try to compare
apples with apples, or. . .
Simply clarify the reason for changes
In any event, it is recommended that you NOT
submit the results without clarifying changes that
have occurred that affect the updated reports
Best Practice #10
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Formulate goals for individual minority
groups as well as total minorities - even if
you don’t submit these analyses with the
plan documents for Desk Audit
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Many attorneys advise against their clients submitting
goals for individual minority groups
There are differing views
Best Practice #11
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Audience - anything to add?
Silicon Valley Industry Liaison Group
www.svilg.com
Thank you for joining us today.