Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures To Resolve Potential Employment Discrimination, 71875-71887 [2019-27258]
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Federal Register / Vol. 84, No. 249 / Monday, December 30, 2019 / Proposed Rules
related to the 2015 8-hour ozone
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V. Proposed Action
With the exception of interstate
transport provisions of section
110(a)(2)(D)(i)(I) and (II) (prongs 1 and
2) pertaining to contribution to
nonattainment or interference with
maintenance in other states, and PSD
provisions related to major sources
under sections 110(a)(2)(C),
110(a)(2)(D)(i)(II) (prong 3), and
110(a)(2)(J), EPA is proposing to
approve Georgia’s and North Carolina’s
September 24, 2018 and September 27,
2018, SIP submissions for the 2015 8hour ozone NAAQS for the above
described infrastructure SIP
requirements, respectively. EPA is
proposing to approve Georgia’s and
North Carolina’s infrastructure SIP
submissions for certain requirements
related to the 2015 8-hour ozone
NAAQS because the submissions are
consistent with section 110 of the CAA.
VI. Statutory and Executive Order
Reviews
Under the CAA, the Administrator is
required to approve a SIP submission
that complies with the provisions of the
Act and applicable Federal regulations.
See 42 U.S.C. 7410(k); 40 CFR 52.02(a).
Thus, in reviewing SIP submissions,
EPA’s role is to approve state choices,
provided that they meet the criteria of
the CAA. These actions merely propose
to approve state law as meeting Federal
requirements and do not impose
additional requirements beyond those
imposed by state law. For that reason,
these proposed actions:
• Are not significant regulatory
actions subject to review by the Office
of Management and Budget under
Executive Orders 12866 (58 FR 51735,
October 4, 1993) and 13563 (76 FR 3821,
January 21, 2011);
• Are not Executive Order 13771 (82
FR 9339, February 2, 2017) regulatory
actions because SIP approvals are
exempted under Executive Order 12866;
• Do not impose an information
collection burden under the provisions
of the Paperwork Reduction Act (44
U.S.C. 3501 et seq.);
• Are certified as not having a
significant economic impact on a
substantial number of small entities
under the Regulatory Flexibility Act (5
U.S.C. 601 et seq.);
• Do not contain any unfunded
mandate or significantly or uniquely
affect small governments, as described
in the Unfunded Mandates Reform Act
of 1995 (Pub. L. 104–4);
• Do not have Federalism
implications as specified in Executive
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Order 13132 (64 FR 43255, August 10,
1999);
• Are not an economically significant
regulatory actions based on health or
safety risks subject to Executive Order
13045 (62 FR 19885, April 23, 1997);
• Are not significant regulatory
actions subject to Executive Order
13211 (66 FR 28355, May 22, 2001);
• Are not subject to requirements of
Section 12(d) of the National
Technology Transfer and Advancement
Act of 1995 (15 U.S.C. 272 note) because
application of those requirements would
be inconsistent with the CAA; and
• Do not provide EPA with the
discretionary authority to address, as
appropriate, disproportionate human
health or environmental effects, using
practicable and legally permissible
methods, under Executive Order 12898
(59 FR 7629, February 16, 1994).
The SIPs subject to these proposed
actions, are not approved to apply on
any Indian reservation land or in any
other area where EPA or an Indian tribe
has demonstrated that a tribe has
jurisdiction. In those areas of Indian
country, the rule does not have tribal
implications as specified by Executive
Order 13175 (65 FR 67249, November 9,
2000), nor will it impose substantial
direct costs on tribal governments or
preempt tribal law.
List of Subjects in 40 CFR Part 52
Environmental protection, Air
pollution control, Incorporation by
reference, Intergovernmental relations,
Nitrogen dioxide, Ozone, Reporting and
recordkeeping requirements, Volatile
organic compounds.
Authority: 42 U.S.C. 7401 et seq.
Dated: December 12, 2019.
Mary S. Walker,
Regional Administrator, Region 4.
[FR Doc. 2019–27691 Filed 12–27–19; 8:45 am]
BILLING CODE 6560–50–P
DEPARTMENT OF LABOR
Office of Federal Contract Compliance
Programs
41 CFR Parts 60–1, 60–2, 60–300, and
60–741
RIN 1250–AA10
Nondiscrimination Obligations of
Federal Contractors and
Subcontractors: Procedures To
Resolve Potential Employment
Discrimination
Office of Federal Contract
Compliance Programs (OFCCP), Labor.
ACTION: Notice of proposed rulemaking.
AGENCY:
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The Office of Federal Contract
Compliance Programs (‘‘OFCCP’’ or ‘‘the
agency’’) proposes to codify procedures
that the agency currently uses to resolve
potential discrimination and other
material violations of these laws by
federal contractors and subcontractors;
add clarifying definitions to specify the
types of evidence OFCCP will use to
support its discrimination findings; and,
correct the title of OFCCP’s agency
head.
DATES: To be assured of consideration,
comments must be received on or before
January 29, 2020.
ADDRESSES: Comments may be
submitted, identified by Regulatory
Information Number (RIN) 1250–AA10,
by any of the following methods:
• Electronically: The Federal
eRulemaking portal: https://
www.regulations.gov. Follow the
instructions found on that website for
submitting comments.
• Mail, Hand Delivery, or Courier:
Addressed to Harvey D. Fort, Deputy
Director, Division of Policy and Program
Development, Office of Federal Contract
Compliance Programs, 200 Constitution
Avenue NW, Room C–3325,
Washington, DC 20210.
Instructions: Please submit one copy
of your comments by only one method.
For faster submission, we encourage
commenters to transmit their comment
electronically via the
www.regulations.gov website.
Comments that are mailed to the
address provided above must be
postmarked before the close of the
comment period. All submissions
received must include OFCCP’s name
and RIN for this rulemaking. Comments
submitted in response to the notice,
including any personal information
provided, become a matter of public
record and will be posted on
www.regulations.gov. Receipt of
submissions will not be acknowledged;
however, the sender may request
confirmation that a submission was
received by telephoning OFCCP at (202)
693–0103 (voice) or (202) 693–1337
(TTY) (these are not toll-free numbers).
The Department will make all
comments received, including any
personal information provided,
available for public inspection during
normal business hours at Room C–3325,
200 Constitution Avenue NW,
Washington, DC 20210. If you need
assistance to review the comments, the
Department will provide you with
appropriate aids such as readers or print
magnifiers. Copies of this notice may be
obtained in alternative formats (large
print, braille, audio recording) upon
request by calling the numbers listed
SUMMARY:
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Federal Register / Vol. 84, No. 249 / Monday, December 30, 2019 / Proposed Rules
above. To schedule an appointment to
review the comments and/or to obtain
this Notice of Proposed Rulemaking
(NPRM) in an alternate format, please
contact OFCCP at the telephone
numbers or address listed above.
This proposed rule is expected to be
an Executive Order (E.O.) 13771
regulatory action. Details on the
estimated costs of this proposed rule
can be found in the rule’s economic
analysis.
FOR FURTHER INFORMATION CONTACT:
II. Background
OFCCP administers and enforces E.O.
11246, section 503, and VEVRAA, and
their implementing regulations.
Collectively, these laws require federal
contractors to take affirmative action to
ensure equal employment opportunity,
and not discriminate on the basis of
race, color, religion, sex, sexual
orientation, gender identity, national
origin, disability, or status as a protected
veteran. Additionally, E.O. 11246
prohibits a contractor from discharging
or otherwise discriminating against
applicants or employees who inquire
about, discuss, or disclose their
compensation or that of others, subject
to certain limitations.
OFCCP determines whether a federal
contractor has met these legal
obligations during a compliance
evaluation.2 The agency uses a neutral
process to schedule contractors for
compliance evaluations.3 A compliance
evaluation consists of one or any
combination of the following
investigative procedures, as set forth in
OFCCP’s implementing regulations:
Compliance review, offsite review of
records, compliance check, or focused
review.4 With the exception of the
compliance check, the purpose of which
is solely to determine whether the
contractor maintains required records,
OFCCP may find that a contractor
discriminated in hiring, promotion,
termination, compensation, or other
employment practices based on
Harvey D. Fort, Deputy Director,
Division of Policy and Program
Development, Office of Federal Contract
Compliance Programs, 200 Constitution
Avenue NW, Room C–3325,
Washington, DC 20210. Telephone:
(202) 693–0103 (voice) or (202) 693–
1337 (TTY).
SUPPLEMENTARY INFORMATION:
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I. Overview
The goal of this proposed rule is to
provide federal contractors and
subcontractors 1 with greater certainty
about the procedures that OFCCP
follows during compliance evaluations
to resolve employment discrimination
and other material violations found
under Executive Order 11246, as
amended (E.O. 11246); section 503 of
the Rehabilitation Act, as amended, 29
U.S.C. 793 (section 503); and the
Vietnam Era Veterans’ Readjustment
Assistance Act of 1974, as amended, 38
U.S.C. 4212 (VEVRAA); and, their
implementing regulations. The
proposed rule would codify procedures
for two formal notices that OFCCP uses
when the agency finds potential
violations: The Predetermination Notice
(PDN) and the Notice of Violation
(NOV). Since 1988, these procedures
have been embedded in the Federal
Contract Compliance Manual (FCCM),
the primary document used by agency
staff as a procedural framework to
execute quality and timely compliance
evaluations and complaint
investigations. Additionally, the
proposal promotes efficiency by
clarifying that contractors have the
option to expedite OFCCP’s normal
resolution procedures for discrimination
findings by entering directly into a
conciliation agreement prior to issuance
of a PDN or NOV, allowing for
expedited conclusion to OFCCP’s
compliance evaluations. The proposed
rule also clarifies the strength of
evidence agency staff must find before
issuing a PDN or NOV. Finally, the
proposed rule would replace outdated
references to the official title of OFCCP’s
agency head, from ‘‘Deputy Assistant
Secretary’’ to ‘‘Director.’’
1 Hereinafter, the terms ‘‘contractor’’ and ‘‘federal
contractor’’ are used to refer to contractors and
subcontractors with direct federal contracts and/or
federally assisted construction contracts, unless
otherwise expressly stated.
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2 OFCCP also ensures compliance with these laws
by investigating complaints filed by applicants and
employees who believe that a federal contractor
discriminated against them. However, the
resolution procedures for complaints differ from
compliance evaluations and would not be altered
by this proposed rule. For complaint resolution
procedures, see FCCM Chapter 6 and 41 CFR 60–
1.24, 41 CFR 60–300.61, and 41 CFR 60–741.61.
The FCCM is available at https://www.dol.gov/
ofccp/regs/compliance/fccm/fccmanul.htm (last
accessed Aug. 5, 2019).
3 The majority of OFCCP’s compliance
evaluations are for supply and service contractors.
OFCCP increased the number of contractors on its
supply and service scheduling list over the past
three fiscal years, from 801 in FY 2017 to 3,500 in
FY 2019. A description of OFCCP’s current
scheduling methodology for supply and service
contractors is available on the agency’s website at
https://www.dol.gov/ofccp/scheduling/ (last
accessed Aug. 12, 2019). The neutral scheduling
process for construction contractors is currently
under review by OFCCP.
4 See 41 CFR 60–1.20(a), 60–300.60(a) and 60–
741.60(a). The resolution procedures described in
this proposed rule would not apply to compliance
checks.
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information collected during a
compliance evaluation. Such findings,
in most cases, must be supported by
statistical evidence.
Preliminary findings of
discrimination in a compliance
evaluation trigger OFCCP’s resolution
procedures. When OFCCP finds
sufficient evidence of discrimination,
the agency sends a PDN to inform the
contractor of the agency’s preliminary
findings.5 To determine whether the
evidence of discrimination is sufficient
to warrant a PDN, OFCCP considers
whether an employment or
compensation disparity identified
during the compliance evaluation is
both practically and statistically
significant.6 OFCCP uses a number of
tests to determine whether an
employment selection or compensation
practice has enough statistical
significance to support a conclusion of
discrimination.7 The most familiar test
is the standard deviation test. The
standard deviation test represents a
standardized measure of the difference
between two selection rates, and
employment discrimination case law
has adopted confidence levels that are
similar to those accepted among social
scientists. The U.S. Supreme Court has
described an outcome as ‘‘suspect to a
social scientist’’ when a statistic from
‘‘large samples’’ falls more than ‘‘two or
three standard deviations’’ from its
expected value under a null hypothesis
of neutrality.8 The greater the number of
5 See Directive 2018–01, ‘‘Use of
Predetermination Notices (PDN)’’ (Feb. 27, 2018).
OFCCP issued this directive to ensure that PDNs be
used in all compliance evaluations with
preliminary discrimination findings, both
individual and systemic. OFCCP directives are
available at https://www.dol.gov/ofccp/regs/
compliance/directives/dirindex.htm (last accessed
Aug. 5, 2019). Prior to the directive, use of PDNs
was discretionary and reserved for systemic
discrimination findings. See FCCM, Chapter 8,
Resolution of Noncompliance (Oct. 2014) (detailing
the procedures that OFCCP follows for issuing
PDNs).
6 In the EEO context, practical significance refers
to whether an observed disparity in employment
opportunities or outcomes reflects meaningful harm
to the disfavored group. The concept focuses on the
contextual impact or importance of the disparity
rather than its likelihood of occurring by chance.
OFCCP recently published guidance on how it
applies statistical and practical significance to
evaluate compliance evaluations with potential
discrimination. See OFCCP’s Practical Significance
Frequently Asked Questions at https://
www.dol.gov/ofccp/regs/compliance/faqs/Practical
SignificanceEEOFAQs.htm#Q5 (last accessed
October 1, 2019).
7 Some examples of the statistical measures that
OFCCP may use are the Chi square, Fisher’s exact,
Z-test, and standard deviation.
8 See Castaneda v. Partida, 430 U.S. 482, 496 n.17
(1977) (‘‘As a general rule for large samples, if the
difference between the expected value and the
observed number is greater than two or three
standard deviations, then the hypothesis that the
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standard deviations, the less likely the
difference was produced by chance (e.g.,
5.0 standard deviations represents a less
than 1 in 1.7 million probability that the
occurrence happened by chance).
OFCCP conducts regression analyses of
hiring and compensation outcomes
which control for major, measurable
variables, to determine the probability
of hiring and compensation outcomes
occurring by chance. OFCCP will issue
PDNs in matters premised on statistical
evidence only if the variable of interest
is statistically significant and the
probability value (‘‘p value’’) is less than
0.05 (roughly equivalent to two standard
deviations) if there is corroborating
nonstatistical evidence, or 0.01 (roughly
equivalent to three standard deviations)
in the absence of corroborating
nonstatistical evidence.9 This approach
is in keeping with—neither compelled
nor prohibited by—Title VII and OFCCP
case law, which generally holds that
two or more standard deviations is
sufficient to establish a prima facie case
of discrimination.10
Statistical evidence plays a crucial
role in OFCCP’s enforcement. The
proposed rule is intended to provide
jury drawing was random would be suspect to a
social scientist.’’). See also Hazelwood School Dist.
v. United States, 433 U.S. 299, 311 n.17 (1977)
(providing that ‘‘a fluctuation of more than two or
three standard deviations would undercut the
hypothesis that decisions were being made
randomly with respect to race’’).
9 The p value confidence level is similar to the
confidence level associated with the standard
deviation test. A p value of less than 0.05 indicates
that there is a less than five percent likelihood that
an observed disparity occurred by chance, and a
standard deviation of two shows a less than 4.55
percent likelihood that an observed disparity
occurred by chance.
10 See fn 8, supra; see also, e.g., Adams v.
Ameritech Servs., Inc., 231 F.3d 414, 424 (7th Cir.
2000) (‘‘Two standard deviations is normally
enough to . . . giv[e] rise to a reasonable inference
that the hiring was not race-neutral; the more
standard deviations away, the less likely the factor
in question played no role in the decisionmaking
process.’’); Malave v. Potter, 320 F.3d 321, 327 (2d
Cir. 2003) (vacating summary judgment for
employer and instructing district court to determine
whether the plaintiff can show ‘‘a statistically
significant disparity of two standard deviations’’);
Anderson v. Zubieta, 180 F.3d 339–40 (D.C. Cir.
1999) (‘‘Many of the disparities are far in excess of
1.96 standard deviations. Under our case law, this
level of statistical significance is sufficient to
establish a prima facie case of both disparate
treatment and disparate impact.’’ (citations
omitted)); OFCCP v. Bank of America, No. 1997–
OFC–016, slip op. at 9, 2016 WL 2941106 (Dep’t of
Labor Apr. 21, 2016) (‘‘Courts have consistently
found significance in disparities exceeding the two
standard deviation mark. See Hazelwood School
Dist. v. U.S., 433 U.S. 299, 308, n.14 (1977); Adams
v. Ameritech, 231 F.3d 414, 424 (7th Cir.
2000). . . . The more severe the statistical
disparity, the less additional evidence is needed to
prove that the reason was race discrimination. Very
extreme cases of statistical disparity may permit the
trier of fact to conclude intentional race
discrimination occurred without needing additional
evidence.’’ (citations omitted)).
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clarity and transparency in OFCCP’s
methods. OFCCP requests comments for
improving certainty in setting
parameters for statistical evidence,
including methodologies, minimum
sample sizes, data groupings,
methodological limitations, and ways to
improve objectivity.
Before issuing a PDN, the agency also
considers whether nonstatistical
evidence, such as a cohort analysis,
demonstrates an intent to discriminate.
In some cases, however, when statistical
evidence is very strong, OFCCP may
issue the PDN without nonstatistical
evidence. There may be other factors
applicable in a particular case which
explain why OFCCP could not uncover
nonstatistical evidence during its
investigation despite the strength of the
statistical evidence. Additionally,
OFCCP may find similar patterns of
disparity in multiple years or at
multiple establishments of a federal
contractor that warrant issuing a PDN
without nonstatistical evidence. In
practice, as an exercise of enforcement
discretion, OFCCP will pursue matters
where the statistical data are not
corroborated by nonstatistical evidence
of discrimination only if the statistical
evidence is exceptionally strong.11
OFCCP issues the PDN to encourage
communication with contractors and
provide them an opportunity to respond
to preliminary findings prior to the
issuance of a more formal NOV. If a
contractor does not sufficiently rebut
the preliminary findings identified in
the PDN that evidence of unlawful
discrimination exists, OFCCP issues the
NOV to notify the contractor that the
agency found discrimination violations
of one or more of the laws it enforces.
The NOV, also a letter, lists the
corrective actions that are required to
resolve those violations, and invites
conciliation.12 After issuing the NOV,
OFCCP generally pursues a written
conciliation agreement with any
contractor willing to correct the
violation or deficiency identified in the
11 The proposed rule clarifies that, absent
nonstatistical evidence, OFCCP will only pursue a
matter when discrimination is indicated by
statistically significant evidence at the 99 percent
confidence level (i.e., three standard deviations, or
a p value of 0.01 or less). Note, however, that for
multiple findings of discrimination without
nonstatistical evidence present at a given contractor
establishment, or at multiple facilities of the same
contractor, OFCCP may issue a PDN where at least
one finding is supported by statistically significant
evidence at the 99 percent confidence level and
may include additional findings that are supported
by statistically significant evidence at the 95
percent confidence level (i.e., two standard
deviations, or a p value of 0.05 or less) or above.
12 See FCCM Chapter 8, Resolution of
Noncompliance and Key Terms and Phrases (Oct.
2014).
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NOV.13 A conciliation agreement is a
binding written agreement between a
contractor and OFCCP that details
specific contractor commitments,
actions, or both to resolve the violations
set forth in the agreement.14
Conciliation agreements were codified
in OFCCP’s regulations in 1979.15 If the
contractor is unwilling to enter into a
conciliation agreement to correct the
violations, OFCCP issues a show cause
notice (SCN) requiring the contractor to
provide reasons demonstrating why
formal enforcement proceedings by the
Solicitor of Labor or other appropriate
action should not be instituted.16 This
proposed rule would codify the PDN
and NOV as procedures that have
proven effective to remedy findings of
discrimination.17
Similarly, material violations that are
not discriminatory in nature also trigger
OFCCP’s resolution procedures for
compliance evaluations.18 Rather than
initiating resolution with a PDN for
violations that do not involve
discrimination, OFCCP generally begins
the process with a NOV before
proceeding to a conciliation agreement,
or the SCN as a last resort.19 With this
proposed rule, OFCCP would codify use
of the NOV for all material violations.
Additionally, this proposed rule
clarifies that federal contractors have
13 In rare circumstances, OFCCP may determine
that settlement is not appropriate and refer a matter
at this stage directly to the Office of the Solicitor
of Labor to pursue formal enforcement proceedings
rather than pursuing a conciliation agreement. See
41 CFR 60–1.26(b), 60–300.62, 60–300.65(a), 60–
741.62(a). 60–741.65(a).
14 See FCCM, Key Terms and Phrases and 41 CFR
60–1.33, 60–300.62, and 60–741.62.
15 See Compliance Responsibility for Equal
Employment Opportunity, 44 FR 77000 (Dec. 28
1979).
16 See 41 CFR 60–1.28, 60–300.64, and 60–741.64.
See also, FCCM Chapter 8, Resolution of
Noncompliance.
17 The NOV and PDN have been included in the
FCCM since 1988. As an example of their
effectiveness, OFCCP obtained $44 million for more
than 37,000 employees and job seekers between
January 2017 and December 2019 using these
resolution procedures.
18 FCCM Chapter 8F00, When to Use a Notice of
Violation and Chapter 8H00, When to Use a
Conciliation Agreement (Oct. 2014). For example,
OFCCP may issue a NOV and enter into a CA for
failure to maintain records in accordance with 41
CFR 60–1.12, 41 CFR 60–300.80, and 41 CFR 60–
741.80, or for failure to maintain affirmative action
programs as required by 41 CFR part 60–2, 41 CFR
part 60–300, subpart C, and 41 CFR part 60–741,
subpart C.
19 In some instances, OFCCP issues the SCN
without first issuing a NOV for material violations
that are non-discriminatory in nature. See FCCM
Chapter 8D01, When a Show Cause Notice is
Required (Oct. 2014) (explaining that OFCCP issues
the SCN without first issuing a NOV when a
contractor fails to provide the records, information,
or data requested in the scheduling letter and when
the contractor refuses to provide access to its
premises for an onsite review).
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the option to bypass the PDN and NOV
procedures to enter directly into a
conciliation agreement when there are
preliminary findings of material
violations, regardless of whether those
violations involve discrimination. This
option for conciliation may suit
contractors who wish to expedite the
resolution of discrimination or other
material violations. Recently, OFCCP
has sought to incentivize the efficient
resolution of material violations for
multi-establishment federal contractors
with early resolution procedures.20 The
proposed rule would further the
agency’s efforts to improve efficiency,
codifying an expedited option for
resolution that would apply to
compliance reviews in their early stages.
To further these efficiency objectives
and to provide greater certainty to
federal contractors, the proposed rule
also defines ‘‘statistical evidence’’ and
‘‘nonstatistical evidence’’ to clarify the
different types of evidence OFCCP will
use to support a PDN or NOV.
Specifically, statistical evidence should
be based on hypothesis testing related to
the probability of the allegedly
discriminatory outcome occurring by
chance, at the confidence levels
accepted in relevant employment
discrimination case law.21 The standard
deviation represents a standardized
measure of the difference between two
rates. As mentioned above, the greater
the number of standard deviations, the
less likely the difference was produced
by chance (e.g., 5.0 standard deviations
represents a less than 1 in 1.7 million
probability that the occurrence
happened by chance). In support of an
OFCCP discrimination PDN or NOV, a
statistician can conclude that a variable
of interest is statistically significant if,
controlling for major, measurable
variables, a disparity exists that is
greater than two standard deviations
(equivalent to a p value of less than 0.05
and a confidence value of 95 percent or
higher). As noted in the proposed
regulatory text and preamble discussion
regarding predetermination notices, for
matters without nonstatistical evidence,
OFCCP will only pursue matters if the
statistical evidence shows a disparity of
at least three standard deviations or a p
value of .01 or less. The definition of
20 See Directive 2019–02, ‘‘Early Resolution
Procedures’’ (Nov. 30, 2018), available at https://
www.dol.gov/ofccp/regs/compliance/directives/
dirindex.htm (last accessed Sept. 27, 2019). The
proposed rule would not codify OFCCP’s early
resolution procedures per se. It would, however,
allow OFCCP and contractors to explore expedited
conciliation options, such as the early resolution
procedures set forth in Directive 2019–02.
21 Castaneda v. Partida, 430 U.S. 482, 496 n.17
(1977); Hazelwood School Dist. v. United States,
433 U.S. 299, 311 n.17 (1977).
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‘‘statistical evidence’’ provides a
nonexhaustive list of variables
frequently used by employers that
OFCCP’s regression analyses will
control for, as appropriate, in its
analyses. This provides greater clarity to
the contractor community regarding
OFCCP’s analytical methods while
providing OFCCP the flexibility to
exclude variables from its analyses that,
consistent with established statistical
methods, may be inappropriate to
include, such as those that are
discriminatory.
In addition to codifying resolution
procedures, the proposed rule replaces
outdated references to the official title of
OFCCP’s agency head in E.O. 11246
regulations, from ‘‘Deputy Assistant
Secretary’’ to ‘‘Director.’’ OFCCP made
the same change to the regulations
implementing VEVRAA and section 503
through final rules in 2013.22 OFCCP
made this change after the Department
of Labor abolished the Employment
Standards Administration. This
restructuring resulted in the change of
title for OFCCP’s agency head, from
‘‘Deputy Assistant Secretary’’ (reporting
to the head of the Employment
Standards Administration) to ‘‘Director’’
reporting directly to the Secretary of
Labor.
III. Statement of Legal Authority
Issued in 1965, and amended several
times in the intervening years, E.O.
11246 has two principal purposes. First,
it prohibits covered Federal contractors
and subcontractors from discriminating
against employees and applicants
because of race, color, religion, sex,
sexual orientation, gender identity,
national origin, or because they inquire
about, discuss, or disclose their
compensation or that of others subject to
certain limitations. Second, it requires
covered Federal contractors and
subcontractors to take affirmative action
to ensure equal employment
opportunity. The nondiscrimination and
affirmative action obligations of Federal
contractors and subcontractors cover all
aspects of employment.
The requirements in E.O. 11246
generally apply to any business or
organization that (1) holds a single
Federal contract, subcontract, or
federally assisted construction contract
22 Affirmative
Action and Nondiscrimination
Obligations of Contractors and Subcontractors
Regarding Special Disabled Veterans, Veterans of
the Vietnam Era, Disabled Veterans, Recently
Separated Veterans, Active Duty Wartime or
Campaign Badge Veterans, and Armed Forces
Service Medal Veterans, 78 FR 58613 (Sept. 24,
2013), and Affirmative Action and
Nondiscrimination Obligations of Contractors and
Subcontractors Regarding Individuals With
Disabilities, 78 FR 58681 (Sept. 24, 2013).
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in excess of $10,000; (2) has Federal
contracts or subcontracts that combined
total in excess of $10,000 in any 12month period; or (3) holds Government
bills of lading, serves as a depository of
Federal funds, or is an issuing and
paying agency for U.S. savings bonds
and notes in any amount. Supply and
service contractors with 50 or more
employees and a single Federal contract
or subcontract of $50,000 or more also
must develop and maintain an
affirmative action program that
complies with 41 CFR part 60–2.
Construction contractors have different
affirmative action requirements under
E.O. 11246 at 41 CFR part 60–4.
Enacted in 1973, and amended since,
the purpose of section 503 is twofold.
First, section 503 prohibits employment
discrimination on the basis of disability
by Federal contractors and
subcontractors. Second, it requires each
covered Federal contractor and
subcontractor to take affirmative action
to employ and advance in employment
qualified individuals with disabilities.
The requirements in section 503
generally apply to any business or
organization that holds a single Federal
contract or subcontract in excess of
$15,000.23 Contractors with 50 or more
employees and a single Federal contract
or subcontract of $50,000 or more also
must develop and maintain an
affirmative action program that
complies with 41 CFR part 60–741,
subpart C.
Enacted in 1974 and amended in the
intervening years, the purpose of
VEVRAA is twofold. First, VEVRAA
prohibits federal contractors and
subcontractors from discriminating
against employees and applicants
because of status as a protected veteran
(defined by the statute to include
disabled veterans, recently separated
veterans, Armed Forces Service Medal
Veterans, and active duty wartime or
campaign badge veterans).24 Second, it
requires each covered Federal contractor
and subcontractor to take affirmative
action to employ and advance in
employment these veterans. The
requirements in VEVRAA generally
apply to any business or organization
that holds a single Federal contract or
23 Effective October 1, 2010, the coverage
threshold under Section 503 increased from
$10,000 to $15,000, in accordance with the
inflationary adjustment requirements in 41 U.S.C.
1908. See, Federal Acquisition Regulation; Inflation
Adjustment of Acquisition-Related Thresholds, 75
FR 53129 (Aug. 30, 2010).
24 Since the statute was enacted, OFCCP’s
regulations have further defined ‘‘protected
veteran’’ to include ‘‘active duty wartime or
campaign badge veterans.’’ See, 41 CFR 60–300.2(a)
and (q).
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subcontract in excess of $150,000.25
Contractors with 50 or more employees
and a single Federal contract or
subcontract of $150,000 or more also
must develop and maintain an
affirmative action program that
complies with 41 CFR part 60–300,
subpart C.
Pursuant to these laws, receiving a
Federal contract comes with a number
of responsibilities. Contractors are
required to comply with all provisions
of these laws as well as the rules,
regulations, and relevant orders of the
Secretary of Labor. Where OFCCP finds
potential noncompliance concerns
under any of the three laws or their
implementing regulations it utilizes
established procedures to either
facilitate resolution,26 or proceed to
administrative enforcement as necessary
to secure compliance.27 A contractor
found in violation who fails to engage
in appropriate resolution procedures
may have its contracts canceled,
terminated, or suspended and/or may be
subject to debarment after the
opportunity for a hearing.28
IV. Proposed Revisions
This rulemaking proposes to update
outdated references to the head of the
agency from ‘‘Deputy Assistant
Secretary’’ to the correct title of
‘‘Director’’ throughout the entirety of 41
CFR parts 60–1 and 60–2. It also
proposes to add two new definitions
and revise a definition in part 60–1, and
update parts 60–1, 60–300 and 60–741
to codify established policy and
procedures for resolving discrimination
and other material violations.
Revised Sections
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41 CFR Part 60–1—Obligations of
Contractors and Subcontractors
Several sections will be revised
throughout 41 CFR part 60–1 because all
instances of ‘‘Deputy Assistant
Secretary’’ would be replaced with the
term ‘‘Director.’’ The revised sections
would include 41 CFR 60–1.2, 60–1.5,
60–1.7, 60–1.9, 60–1.10, 60–1.21, 60–
1.23, 60–1.24, 60–1.25, 60–1.26, 60–
1.27, 60–1.28, 60–1.29, 60–1.30, 60–
1.31, 60–1.41, 60–1.42, 60–1.43, and 60–
1.46. These revisions would correct part
25 Effective October 1, 2015, the coverage
threshold under VEVRAA increased from $100,000
to $150,000, in accordance with the inflationary
adjustment requirements in 41 U.S.C. 1908. See,
Federal Acquisition Regulation; Inflation
Adjustment of Acquisition-Related Thresholds, 80
FR 38293 (July 2, 2015).
26 FCCM Chapter 8, Directive 2018–01, Directive
2019–02, 41 CFR 60–1.28, 60–1.33, 60–300.62, 60–
300.64, 60–741.62, and 60–741.64.
27 41 CFR 60–1.26, 60–300.65, and 60–741.65.
28 41 CFR 60–1.27, 60–300.66, and 60–741.66.
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60–1 to the current title for the head of
OFCCP.
Subpart A—Preliminary Matters; Equal
Opportunity Clause; Compliance
Reports
Section 60–1.3 Definitions
For this section, the NPRM proposes
to add two definitions and replace a
definition. The term ‘‘Nonstatistical
evidence’’ would be added to codify the
definition OFCCP uses in guidance.29
The term ‘‘Statistical evidence’’ clarifies
the necessary support for OFCCP to
determine that there is a statistically
significant disparity caused by an
employment action or compensation
decision. Both terms are germane to the
resolution procedures that this NPRM
proposes to codify.
OFCCP would also replace the
definition of ‘‘Deputy Assistant
Secretary’’ in this section with the
definition of ‘‘Director’’ published in
OFCCP’s regulations implementing
VEVRAA and section 503.30
Subpart B—General Enforcement;
Compliance Review and Complaint
Procedure
71879
throughout this part with the term
‘‘Director.’’ Specifically, the following
sections will be revised: §§ 60–2.1, 60–
2.2, and 60–2.31. These revisions would
correct part 60–2 to the current title for
the head of OFCCP.
41 CFR Part 60–300—Affirmative Action
and Nondiscrimination Obligations of
Federal Contractors and Subcontractors
Regarding Disabled Veterans, Recently
Separated Veterans, Active Duty
Wartime or Campaign Badge Veterans,
and Armed Forces Service Medal
Veterans
Subpart A—Preliminary Matters; Equal
Opportunity Clause
Section 60–300.2
Definitions
For this section, the NPRM proposes
to add definitions. The terms
‘‘Nonstatistical evidence’’ and
‘‘Statistical evidence’’ would be added
for the same reasons as proposed for
section 60–1.3.
Subpart D—General Enforcement and
Complaint Procedures
Section 60–300.62
Agreements
Conciliation
Section 60–1.33 Conciliation
Agreements
The NPRM proposes to revise § 60–
1.33 by changing the title to ‘‘Resolution
Procedures’’, and incorporating three
new subsections: ‘‘Predetermination
Notice,’’ ‘‘Notice of Violation,’’ and
‘‘Expedited Conciliation Option.’’ The
resolution procedures would be in the
following order: ‘‘Predetermination
Notice,’’ ‘‘Notice of Violation,’’
‘‘Conciliation Agreements’’, and
‘‘Expedited Conciliation Option.’’
This revised section would bring the
resolution procedures described in the
regulations in line with the
longstanding resolution procedures that
OFCCP utilizes. The update would
codify use of the PDN to resolve
discrimination violations, would codify
the use of the NOV and an expedited
conciliation option to resolve
discrimination and other material
violations, and would codify the types
of evidence necessary to find
discrimination violations for a PDN or
NOV.
The NPRM proposes to revise section
60–300.62 in the same manner as
section 60–1.33: changing the title to
‘‘Resolution Procedures,’’ and
incorporating three new subsections:
‘‘Predetermination Notice,’’ ‘‘Notice of
Violation,’’ and ‘‘Expedited Conciliation
Option.’’ The resolution procedures
would be in the following order:
‘‘Predetermination Notice,’’ ‘‘Notice of
Violation,’’ ‘‘Conciliation Agreements,’’
and ‘‘Expedited Conciliation Option.’’
41 CFR Part 60–2—Affirmative Action
Programs
All instances of ‘‘Deputy Assistant
Secretary’’ and ‘‘DAS’’ will be replaced
Subpart D—General Enforcement and
Complaint Procedures
29 Directive
2018–05, ‘‘Analysis of Contractor
Compensation Practices During a Compliance
Evaluation’’ (Aug. 24, 2018), available at https://
www.dol.gov/ofccp/regs/compliance/directives/
dirindex.htm (last accessed May 16, 2019).
30 41 CFR parts 60–300 and 60–741, respectively.
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41 CFR Part 60–741—Affirmative Action
and Nondiscrimination Obligations of
Federal Contractors and Subcontractors
Regarding Individuals With Disabilities
Subpart A—Preliminary Matters; Equal
Opportunity Clause
Section 60–741.2
Definitions
For this section, the NPRM proposes
to add definitions. The terms
‘‘Nonstatistical evidence’’ and
‘‘Statistical evidence’’ would be added
for the same reasons as proposed for
section 60–1.3.
Section 60–741.62
Agreements
Conciliation
The NPRM proposes to revise section
60–741.62 in the same manner as
section 60–1.33: changing the title to
‘‘Resolution Procedures,’’ and
incorporating three new subsections:
‘‘Predetermination Notice,’’ ‘‘Notice of
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Violation,’’ and ‘‘Expedited Conciliation
Option.’’ The resolution procedures
would be in the following order:
‘‘Predetermination Notice,’’ ‘‘Notice of
Violation,’’ ‘‘Conciliation Agreements,’’
‘‘Remedial Benchmarks,’’ and
‘‘Expedited Conciliation Option.’’
Executive Order 12866 (Regulatory
Planning and Review) and Executive
Order 13563 (Improving Regulation
and Regulatory Review)
Under Executive Order 12866, OMB’s
Office of Information and Regulatory
Affairs (OIRA) determines whether a
regulatory action is significant and,
therefore, subject to the requirements of
Executive Order 12866 and OMB
review. Section 3(f) of Executive Order
12866 defines a ‘‘significant regulatory
action’’ as an action that is likely to
result in a rule that: (1) Has an annual
effect on the economy of $100 million
or more, or adversely affects in a
material way a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local or tribal governments or
communities (also referred to as
economically significant); (2) creates
serious inconsistency or otherwise
interferes with an action taken or
planned by another agency; (3)
materially alters the budgetary impacts
of entitlement grants, user fees, or loan
programs, or the rights and obligations
of recipients thereof; or (4) raises novel
legal or policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in Executive
Order 12866. The Office of Management
and Budget has determined that this
proposed rule is a significant regulatory
action under Executive Order 12866 and
has reviewed the proposed rule.
Executive Order 13563 directs
agencies to propose or adopt a
regulation only upon a reasoned
determination that its benefits justify its
costs; tailor the regulation to impose the
least burden on society, consistent with
obtaining the regulatory objectives; and
in choosing among alternative
regulatory approaches, select those
approaches that maximize net benefits.
Executive Order 13563 recognizes that
some benefits are difficult to quantify
and provides that, where appropriate
and permitted by law, agencies may
consider and discuss qualitatively
values that are difficult or impossible to
quantify, including equity, human
dignity, fairness, and distributive
impacts.
The Need for the Regulation
The proposed regulatory changes are
needed to provide certainty regarding
the procedures that OFCCP follows
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during compliance evaluations to
resolve employment discrimination and
other material violations. The proposed
rule is designed to codify procedures for
two formal notices, the PDN and the
NOV, used by OFCCP when the agency
finds potential violations. The proposal
promotes efficiency by clarifying that
contractors have the option to expedite
OFCCP’s normal resolution procedures
for discrimination findings by entering
directly into a conciliation agreement
prior to issuance of a PDN or NOV,
allowing for a quicker conclusion to
OFCCP’s compliance evaluations.
Resources Managers (SOC 11–3121) is
$60.91.33 The Department adjusted this
wage rate to reflect fringe benefits such
as health insurance and retirement
benefits, as well as overhead costs such
as rent, utilities, and office equipment.
The Department used a fringe benefits
rate of 46 percent 34 and an overhead
rate of 17 percent,35 resulting in a fully
loaded hourly compensation rate for
Human Resources Managers of $99.28
($60.91 + ($60.91 × 46 percent) +
($60.91 × 17 percent)).
Discussion of Impacts
In this section, the Department
presents a summary of the costs
associated with the clarified procedures
proposed in this notice of proposed
rulemaking. The Department
determined that there are approximately
420,000 entities registered in the
General Services Administration’s
System for Award Management (SAM)
database.31 Entities registered in the
SAM database consist of contractor
firms, and other entities such as state
and local governments and other
organizations that are interested in
federal contracting opportunities, and
other forms of federal financial
assistance. The total number of entities
in the SAM database fluctuates and is
posted on a monthly basis. The current
database includes approximately
420,000 entities. Thus, the Department
determines that 420,000 entities are a
reasonable representation of the number
of entities that may or may not be
affected by the proposed rule. This SAM
number, however, likely results in an
overestimation for two reasons: The
system captures firms that do not meet
the jurisdictional dollar thresholds for
the three laws that OFCCP enforces, and
it captures contractor firms for work
performed outside the United States by
individuals hired outside the United
States, over which OFCCP does not have
authority. On the other hand, there is at
least one reason to believe that the data
may result in an underestimation
because SAM data does not include all
subcontractors.32
The estimated labor cost to
contractors is reflected in Table 1,
below. The mean hourly wage of Human
The Department acknowledges that 5
CFR 1320.3(b)(1)(i) requires agencies to
include in the burden analysis for a new
information collection requirement the
estimated time it takes for contractors to
review and understand the instructions
for compliance. To minimize the
burden, OFCCP will publish compliance
assistance materials such as a fact sheet
and answers to frequently asked
questions.
The Department believes that human
resources managers at each contractor
firm would be the employees
responsible for understanding the new
regulation. Therefore, the Department
estimates that it will take a minimum of
30 minutes (1⁄2 hour) for a human
resources manager at each contractor
firm to either read the proposed rule, or
read the compliance assistance
materials provided by OFCCP to learn
more about the codified procedures.
Consequently, the estimated burden for
rule familiarization is 210,000 hours
(420,000 contractor firms × 1⁄2 hour).
The Department calculates the total
estimated cost of rule familiarization as
$20,848,800 (210,000 hours × $99.28/
hour) in the first year, which amounts
to a 10-year annualized cost of
$2,372,928 at a discount rate of 3
percent (which is $5.65 per contractor
firm) or $2,774,206 at a discount rate of
7 percent (which is $6.61 per contractor
firm). The Department seeks public
comments regarding the estimated
number of firms that would review this
rule, the estimated time to review the
rule, and whether human resources
31 U.S. General Services Administration, System
for Award Management, data released in monthly
files, available at https://www.sam.gov (last
accessed Aug. 13, 2019). The SAM database is an
estimate with the most recent download of data
occurring August 2019.
32 However, this underestimation may be partially
offset because of the overlap among contractors and
subcontractors; a firm may have a subcontract on
some activities but have a contract on others and
thus in fact be included in the SAM data.
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Cost of Rule Familiarization
33 BLS, Occupational Employment Statistics,
Occupational Employment and Wages, May 2018,
https://www.bls.gov/oes/current/oes_nat.htm (last
accessed Aug. 13, 2019).
34 BLS, Employer Costs for Employee
Compensation, https://www.bls.gov/ncs/data.htm.
Wages and salaries averaged $24.26 per hour
worked in 2017, while benefit costs averaged
$11.26, which is a benefits rate of 46 percent.
35 Cody Rice, U.S. Environmental Protection
Agency, ‘‘Wage Rates for Economic Analyses of the
Toxics Release Inventory Program,’’ (June 10, 2002),
https://www.regulations.gov/document?D=EPA-HQOPPT-2014-0650-0005 (last accessed Aug. 13,
2019).
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managers would be the most likely staff
members to review the rule. Table 1,
below, reflects the estimated regulatory
familiarization costs for the proposed
rule.
TABLE 1—REGULATORY
FAMILIARIZATION COST
Total number of contractors ............
Time to review rule .........................
Human Resources Managers fully
loaded hourly compensation .......
Regulatory familiarization cost in
the first year .................................
Annualized cost with 3 percent discounting .......................................
Annualized cost per contractor with
3 percent discounting ..................
Annualized cost with 7 percent discounting .......................................
Annualized cost per contractor with
7 percent discounting ..................
420,000
30 minutes
$99.28
$20,848,800
$2,372,928
$5.65
$2,774,206
$6.61
The proposed rule does not include any
additional costs because it adds no new
requirements. The perpetual annualized
cost at 7 percent discounting is
$1,068,622 in 2016 dollars.
Cost Savings
The Department expects contractors
impacted by the rule will experience
cost savings. Specifically, the clarity
provided in the new definitions, as well
as the clarity of OFCCP’s procedures
related to resolution of material
violations, provides certainty to
contractors of what is required as well
as an option for contractors to more
expeditiously resolve the violations.
If the proposed rule increases clarity
for federal contractors, this impact most
likely will yield cost savings to
taxpayers (if contractor fees decrease
because they do not need to engage
third party representatives to interpret
OFCCP’s procedures and requirements).
In addition, by increasing clarity for
both contractors and for OFCCP
enforcement, the proposed rule may
reduce the number and costs of
enforcement proceedings by making it
clearer to both sides at the outset what
is required by the regulation.
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Benefits
Executive Order 13563 recognizes that
some rules have benefits that are
difficult to quantify or monetize but are
nevertheless important, and states that
agencies may consider such benefits.
This rule has equity and fairness
benefits, which are explicitly recognized
in Executive Order 13563. The NPRM is
designed to achieve these benefits by:
• Supporting more effective
enforcement of the prohibition against
employment discrimination;
• Increasing fairness for contractors
by providing more transparency and
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certainty on the agency’s resolution
procedures;
• Providing more efficient remedies
to workers victimized by employment
discrimination by effectuating
corporate-wide corrective actions in
conciliation agreements that may reach
more victims than standard
establishment-based conciliation
agreements; and
• Facilitating a more efficient option
for contractors to resolve potential
discrimination by providing notice of
OFCCP’s preliminary findings earlier in
the compliance review process.
Analysis of Rulemaking Alternatives
In addition to the approach proposed
in the NPRM, OFCCP considered
alternative approaches. OFCCP
considered leaving its resolution
procedures described only in agency
subregulatory guidance. Though OFCCP
codified ‘‘conciliation agreements’’ in
1979, the agency’s other resolution
procedures, namely the PDN and NOV,
have only been explained in
subregulatory guidance. Maintaining the
status quo has led OFCCP to
inconsistent use of the PDN across
agency offices, creating inefficiencies
and leading to greater uncertainty for
federal contractors. Though the agency
has taken recent subregulatory measures
to increase consistency and certainty,
codifying these agency resolution
procedures would have a stronger
impact and promote more efficient
enforcement of Executive Order 11246
than the status quo alternative.
OFCCP also considered revising its
resolution procedures, but decided to
codify them without modification.
Creating new procedures would create
new costs to train agency staff and
familiarize contractors on the new
procedures. Additionally, the
longstanding procedures have proven
effective as a means for the agency to
communicate its findings to contractors
and providing contractors an
opportunity to respond, facilitating
greater understanding and ultimately
resolution. OFCCP seeks comments on
other possible alternatives that would
minimize the impact of this NPRM
while still accomplishing the goals of
this rule.
Regulatory Flexibility Act and
Executive Order 13272 (Consideration
of Small Entities)
The Regulatory Flexibility Act of 1980
(RFA), 5 U.S.C. 601 et seq., establishes
‘‘as a principle of regulatory issuance
that agencies shall endeavor, consistent
with the objectives of the rule and
applicable statutes, to fit regulatory and
informational requirements to the scale
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71881
of the business organizations and
governmental jurisdictions subject to
regulation.’’ Public Law 96–354. The
RFA requires agencies to consider the
impact of a proposed regulation on a
wide-range of small entities including
small businesses, not-for-profit
organizations, and small governmental
jurisdictions.
Agencies must review whether a
proposed or final rule would have a
significant economic impact on a
substantial number of small entities. See
5 U.S.C. 603. If the rule would, then the
agency must prepare a regulatory
flexibility analysis as described in the
RFA.36
However if an agency determines that
the rule would not be expected to have
a significant economic impact on a
substantial number of small entities,
then the head of the agency may so
certify and the RFA does not require a
regulatory flexibility analysis See 5
U.S.C. 605. The certification must
include a statement providing the
factual basis for this determination and
the reasoning should be clear.
The Department must determine the
compliance costs of this proposed rule
on small contractor firms, and whether
these costs will be significant for a
substantial number of small contractor
firms (i.e., small firms that enter into
contracts with the federal government).
If the estimated compliance costs for
affected small contractor firms are less
than 3 percent of small contractor firms’
revenues, the Department considers it
appropriate to conclude that this
proposed rule will not have a significant
economic impact on small contractor
firms.
A threshold of 3 percent of revenues
has been used in prior rulemakings for
the definition of significant economic
impact. See, e.g., 79 FR 60634 (October
7, 2014, Establishing a Minimum Wage
for Contractors) and 81 FR 39108 (June
15, 2016, Discrimination on the Basis of
Sex). This threshold is also consistent
with that sometimes used by other
agencies. See, e.g., 79 FR 27106 (May
12, 2014, Department of Health and
Human Services rule stating that under
its agency guidelines for conducting
regulatory flexibility analyses, actions
that do not negatively affect costs or
revenues by more than 3 percent
annually are not economically
significant). The Department believes
that its use of a 3 percent of revenues
significance criterion is appropriate.
A standard definition of ‘‘substantial’’
impact has not been established;
however, the EPA provided a
determination chart to decide whether a
36 Id.
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substantial impact exists. If the
percentage of all small entities subject to
the rule that are experiencing a given
economic impact (in this case 3 percent
of revenue or greater) is greater than or
equal to 15 percent of all entities within
that industry, then the economic impact
should be considered substantial. The
Department has used a threshold of 15
percent of small entities in prior
rulemakings for the definition of
substantial number of small entities.
See, e.g., 79 FR 60633 (October 7, 2014,
Establishing a Minimum Wage for
Contractors). According to the Small
Business Administration’s (SBA’s)
Guide for Government Agencies: How to
Comply with the Regulatory Flexibility
Act, the determination of what
constitutes a substantial number of
small entities is open to interpretation,
and is primarily dependent on the size
of the industry.37 Analysts should
determine both the total number and
percentage of regulated small entities
experiencing significant economic
impacts when determining whether a
substantial number of small entities may
be significantly affected.38
To analyze the proposed rule’s impact
on small contractor firms, the
Department used as data sources the
SBA’s Table of Small Business Size
Standards 39 and the U.S. Census
Bureau’s Statistics of U.S. Businesses
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37 Small Business Administration, A Guide for
Government Agencies: How to Comply with the
Regulatory Flexibility Act (August 2017), https://
www.sba.gov/sites/default/files/advocacy/How-toComply-with-the-RFA-WEB.pdf.
38 Final Guidance for EPA Rulewriters: Regulatory
Flexibility Act (November 2006), section 2.7.2,
https://www.epa.gov/sites/production/files/201506/documents/guidance-regflexact.pdf (last
accessed Sept. 27, 2019).
39 See https://www.sba.gov/sites/default/files/
files/Size_Standards_Table.pdf (last accessed Sept.
27, 2019).
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(SUSB).40 Since federal contractors are
not limited to specific industries, the
Department assessed the impact of this
proposed rule across 19 industrial
classifications. Because data limitations
do not allow the Department to
determine which of the small firms
within these industries are federal
contractors, the Department assumes
that these small firms are not
significantly different from the small
federal contractors that will be directly
affected by the proposed rule.
The Department used the following
steps to estimate the cost of the
proposed rule per small contractor firm
as measured by a percentage of total
annual receipts. First, the Department
used Census SUSB data that
disaggregates industry information by
firm size in order to perform a robust
analysis of the impact on small
contractor firms. The Department
applied the SBA small-business size
standards to the SUSB data to determine
the number of small firms in the
affected industries. Then the
Department used receipts data from the
SUSB to calculate the cost per firm as
a percentage of total receipts by dividing
the estimated first year cost and the
annualized cost per firm discounted at
a 7 percent rate by the average annual
receipts per firm. The methodology and
results of two industries (construction
and management of companies and
enterprises) are presented in Tables 2
and 3.
In sum, the increased first year cost
and annualized cost of compliance
resulting from the proposed rule are de
minimis relative to the revenue at small
contractor firms no matter their size. All
of the industries had a first year cost
and annualized cost per firm as a
40 See https://www.census.gov/data/tables/2012/
econ/susb/2012-susb-annual.html (last accessed
Sept. 27, 2019).
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percentage of receipts of less than 3
percent. For instance, the first year cost
for the construction industry is
estimated to range from 0.00 percent of
revenue for firms that have average
annual receipts of approximately $35.3
million to 0.09 percent of revenue for
firms that have average annual receipts
below $52,000. Likewise, the
annualized cost for the construction
industry is estimated to range from 0.00
percent of revenue for firms that have
average annual receipts of
approximately $35.3 million to 0.01
percent of revenue for firms that have
average annual receipts below $52,000.
Management of companies and
enterprises is the industry with the
highest relative first year costs, with a
range of 0.00 percent for firms that have
average annual receipts of
approximately $2.3 million to 0.15
percent for firms that have average
annual receipts below $31,000. With
respect to the annualized costs for the
management of companies and
enterprises industry, the impact as a
percentage of revenue ranges from 0.00
percent for firms that have average
annual receipts of approximately $2.3
million to 0.02 percent for firms that
have average annual receipts below
$31,000.
Therefore, the Department does not
expect this rule to have a significant
economic impact on a substantial
number of small entities. The
annualized cost at a discount rate of 7
percent for rule familiarization is $6.61
per entity ($46.39 in the first year)
which is far less than 1 percent of the
annual revenue of the smallest of the
small entities affected by the proposed
rule. Accordingly, OFCCP certifies that
the proposed rule would not have a
significant economic impact on a
substantial number of small entities.
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BILLING CODE 4510–CM–C
authority of the Paperwork Reduction
Act.
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Paperwork Reduction Act
The Paperwork Reduction Act of 1995
requires that OFCCP consider the
impact of paperwork and other
information collection burdens imposed
on the public. See 44 U.S.C. 3507(d). An
agency may not collect or sponsor the
collection of information or impose an
information collection requirement
unless the information collection
instrument displays a currently valid
OMB control number. See 5 CFR
1320.5(b)(1).
OFCCP has determined that there is
no new requirement for information
collection associated with this proposed
rule. The information collection
contained in the existing Executive
Order 11246 regulations are currently
approved under OMB Control Number
1250–0001 (Construction Recordkeeping
and Reporting Requirements) and OMB
Control Number 1250–0003
(Recordkeeping and Reporting
Requirements—Supply and Service).
Consequently, this proposed rule does
not require review by the Office of
Management and Budget under the
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Unfunded Mandates Reform Act of
1995
For purposes of the Unfunded
Mandates Reform Act of 1995, 2 U.S.C.
1532, this proposed rule does not
include any Federal mandate that may
result in excess of $100 million in
expenditures by state, local, and tribal
governments in the aggregate or by the
private sector.
Executive Order 13132 (Federalism)
OFCCP has reviewed this proposed
rule in accordance with Executive Order
13132 regarding federalism, and has
determined that it does not have
‘‘federalism implications.’’ This rule
will not ‘‘have substantial direct effects
on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various levels of government.’’
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Executive Order 13175 (Consultation
and Coordination With Indian Tribal
Governments)
This proposed rule does not have
tribal implications under Executive
Order 13175 that requires a tribal
summary impact statement. The
proposed rule does not have substantial
direct effects on one or more Indian
tribes, on the relationship between the
Federal Government and Indian tribes,
or on the distribution of power and
responsibilities between the Federal
Government and Indian tribes.
List of Subjects
41 CFR Parts 60–1 and 60–2
Administrative practice and
procedure, Civil rights, Discrimination,
Employment, Equal employment
opportunity, Government contracts,
Government procurement, Labor.
41 CFR Parts 60–300 and 60–741
Administrative practice and
procedure, Civil rights, Discrimination,
Employment, Equal employment
opportunity, Government contracts,
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Government procurement, Individuals
with disabilities, Labor, Veterans.
Craig E. Leen,
Director, Office of Federal Contract
Compliance Programs.
For the reasons stated in the
preamble, the Office of Federal Contract
Compliance Programs proposes to
amend 41 CFR parts 60–1, 60–2, 60–
300, and 60–741 as follows:
PART 60–1 [AMENDED]
1. The authority citation for part 60–
1 continues to read as follows:
■
Authority: Sec. 201, E.O. 11246, 30 FR
12319, 3 CFR, 1964–1965 Comp., p. 339, as
amended by E.O. 11375, 32 FR 14303, 3 CFR,
1966–1970 Comp., p. 684, E.O. 12086, 43 FR
46501, 3 CFR, 1978 Comp., p. 230, E.O.
13279, 67 FR 77141, 3 CFR, 2002 Comp., p.
258 and E.O. 13672, 79 FR 42971.
2. In part 60–1, remove the words
‘‘Deputy Assistant Secretary’’ and
adding in their place the word
‘‘Director’’.
■ 3. Amend § 60–1.3 by removing the
definition for ‘‘Deputy Assistant
Secretary’’ and adding definitions for
‘‘Director’’, ‘‘Nonstatistical evidence’’
and ‘‘Statistical evidence’’ in
alphabetical order to read as follows:
■
§ 60–1.3
Definitions.
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*
*
*
*
*
Director means the Director, Office of
Federal Contract Compliance Programs
of the United States Department of
Labor, or his or her designee.
*
*
*
*
*
Nonstatistical evidence may include
testimony about biased statements,
remarks, attitudes, or acts based upon
membership in a protected class;
differential treatment through review of
comparators, cohorts, or summary data
reflecting differential selections,
compensation and/or qualifications;
testimony about individuals denied or
given misleading or contradictory
information about employment or
compensation practices; testimony
about the extent of discretion or
subjectivity involved in making
employment decisions; or other
anecdotal or supporting evidence.
*
*
*
*
*
Statistical evidence means hypothesis
testing, controlling for the major,
measureable parameters and variables
used by employers (including, as
appropriate, other demographic
variables, test scores, geographic
variables, performance evaluations,
years of experience, quality of
experience, years of service, quality and
reputation of previous employers, years
of education, years of training, quality
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and reputation of credentialing
institutions, etc.), related to the
probability of outcomes occurring by
chance and/or analyses reflecting
statements concluding that a difference
in employment selection rates or
compensation decisions is statistically
significant by reference to any one of
these statements:
(1) The disparity is two or more times
larger than its standard error (i.e., a
standard deviation of two or more);
(2) The Z statistic has a value greater
than two; or
(3) The probability value is less than
0.05.
*
*
*
*
*
■ 4. Revise section 60–1.33 to read as
follows:
§ 60–1.33
Resolution Procedures.
(a) Predetermination Notice. If a
compliance review or other review by
OFCCP indicates preliminary findings
of discrimination, OFCCP will only
issue a predetermination notice after
first considering these factors: Whether
the unexplained disparity is both
practically and statistically significant
(as described in this part’s definition of
‘‘Statistical evidence’’) and, where
relevant, whether nonstatistical
evidence demonstrates an intent to
discriminate. If OFCCP cannot
corroborate statistical evidence with
nonstatistical evidence, OFCCP will
issue a predetermination notice only
when the statistical evidence is
significant at a confidence level of 99%
or higher, which equates to three or
more standard deviations or a p value of
0.01 or less. A contractor must respond
to a predetermination notice within 15
calendar days of receipt of the notice,
which OFCCP may extend for good
cause.
(b) Notice of Violation. If a
compliance review or other review by
OFCCP indicates preliminary findings
of discrimination or other material
violations of the equal opportunity
clause, OFCCP may issue a notice of
violation to provide notice to the
contractor requiring corrective action
and inviting conciliation through a
written agreement. For discrimination
violations, OFCCP may issue the notice
of violation following issuance of a
predetermination notice if the
contractor does not respond or provide
a sufficient response within 15 calendar
days of receipt of the notice, unless
OFCCP has extended the
predetermination notice response time
for good cause shown.
(c) Conciliation Agreement. If a
compliance review, complaint
investigation or other review by OFCCP
or its representative indicates a material
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71885
violation of the equal opportunity
clause, and
(1) If the contractor, subcontractor or
bidder is willing to correct the
violations and/or deficiencies, and
(2) If OFCCP or its representative
determines that settlement (rather than
referral for consideration of formal
enforcement) is appropriate, a written
agreement shall be required. The
agreement shall provide for such
remedial action as may be necessary to
correct the violations and/or
deficiencies noted, including, where
appropriate (but not necessarily limited
to), remedies such as back pay and
retroactive seniority.
(d) Expedited Conciliation Option. A
contractor may waive the procedures set
forth in paragraphs (a) and/or (b) of this
section to enter directly into a
conciliation agreement.
PART 60–2—AFFIRMATIVE ACTION
PROGRAMS
5. The authority citation for part 60–
2 continues to read as follows:
■
Authority: Sec. 201, E.O. 11246, 30 FR
12319, E.O. 11375, 32 FR 14303, as amended
by E.O. 12086, 43 FR 46501, and E.O. 13672,
79 FR 42971.
§ 60–2.1
[Amended]
6. Amend § 60–2.1 by removing the
words ‘‘Deputy Assistant Secretary’’ and
adding in their place ‘‘Director’’.
■
§ 60–2.2
[Amended]
7. Amend § 60–2.2 by removing the
words ‘‘Deputy Assistant Secretary’’ and
adding in their place ‘‘Director’’.
■
§ 60–2.31
[Amended]
8. Amend § 60–2.31 by removing the
words ‘‘Deputy Assistant Secretary’’ and
adding in their place ‘‘Director.’’
■
PART 60–300—AFFIRMATIVE ACTION
AND NONDISCRIMINATION
OBLIGATIONS OF FEDERAL
CONTRACTORS AND
SUBCONTRACTORS REGARDING
DISABLED VETERANS, RECENTLY
SEPARATED VETERANS, ACTIVE
DUTY WARTIME OR CAMPAIGN
BADGE VETERANS, AND ARMED
FORCES SERVICE MEDAL VETERANS
9. The authority citation for part 60–
300 continues to read as follows:
■
Authority: 29 U.S.C. 793; 38 U.S.C. 4211
and 4212; E.O. 11758 (3 CFR, 1971–1975
Comp., p. 841).
10. Amend section 60–300.2 by
adding definitions for ‘‘Nonstatistical
evidence’’ and ‘‘Statistical evidence’’ in
alphabetical order to read as follows:
■
§ 60–300.2
Definitions.
*
*
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Nonstatistical evidence may include
testimony about biased statements,
remarks, attitudes, or acts based upon
membership in a protected class;
differential treatment through review of
comparators, cohorts, or summary data
reflecting differential selections,
compensation and/or qualifications;
testimony about individuals denied or
given misleading or contradictory
information about employment or
compensation practices; testimony
about the extent of discretion or
subjectivity involved in making
employment decisions; or other
anecdotal or supporting evidence.
*
*
*
*
*
Statistical evidence means hypothesis
testing, controlling for the major,
measureable parameters and variables
used by employers (including, as
appropriate, other demographic
variables, test scores, geographic
variables, performance evaluations,
years of experience, quality of
experience, years of service, quality and
reputation of previous employers, years
of education, years of training, quality
and reputation of credentialing
institutions, etc.), related to the
probability of outcomes occurring by
chance and/or analyses reflecting
statements concluding that a difference
in employment selection rates or
compensation decisions is statistically
significant by reference to any one of
these statements:
(1) The disparity is two or more times
larger than its standard error (i.e., a
standard deviation of two or more);
(2) The Z statistic has a value greater
than two; or
(3) The probability value is less than
0.05.
*
*
*
*
*
■ 11. Revise section 60–300.62 to read
as follows:
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§ 60–300.62
Resolution Procedures.
(a) Predetermination Notice. If a
compliance review or other review by
OFCCP indicates preliminary findings
of discrimination, OFCCP will only
issue a predetermination notice after
first considering these factors: Whether
the unexplained disparity is both
practically and statistically significant
(as described in this part’s definition of
‘‘Statistical evidence’’) and, where
relevant, whether nonstatistical
evidence demonstrates an intent to
discriminate. If OFCCP cannot
corroborate statistical evidence with
nonstatistical evidence, OFCCP will
issue a predetermination notice only
when the statistical evidence is
significant at a confidence level of 99%
or higher, which equates to three or
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more standard deviations or a p value of
0.01 or less. A contractor must respond
to a predetermination notice within 15
calendar days of receipt of the notice,
which OFCCP may extend for good
cause.
(b) Notice of Violation. If a
compliance review or other review by
OFCCP indicates preliminary findings
of discrimination or other material
violations of the equal opportunity
clause, OFCCP may issue a notice of
violation to provide notice to the
contractor requiring corrective action
and inviting conciliation through a
written agreement. For discrimination
violations, OFCCP may issue the notice
of violation following issuance of a
predetermination notice if the
contractor does not respond or provide
a sufficient response within 15 calendar
days of receipt of the notice, unless
OFCCP has extended the
predetermination notice response time
for good cause shown.
(c) Conciliation Agreement. If a
compliance review, complaint
investigation or other review by OFCCP
or its representative indicates a material
violation of the equal opportunity
clause, and
(1) If the contractor, subcontractor or
bidder is willing to correct the
violations and/or deficiencies, and
(2) If OFCCP or its representative
determines that settlement (rather than
referral for consideration of formal
enforcement) is appropriate, a written
agreement shall be required. The
agreement shall provide for such
remedial action as may be necessary to
correct the violations and/or
deficiencies noted, including, where
appropriate (but not necessarily limited
to), remedies such as back pay and
retroactive seniority.
(d) Expedited Conciliation Option. A
contractor may waive the procedures set
forth in paragraphs (a) and/or (b) of this
section to enter directly into a
conciliation agreement.
PART 60–741—AFFIRMATIVE ACTION
AND NONDISCRIMINATION
OBLIGATIONS OF FEDERAL
CONTRACTORS AND
SUBCONTRACTORS REGARDING
INDIVIDUALS WITH DISABILITIES
12. The authority citation for part 60–
741 continues to read as follows:
■
Authority: 29 U.S.C. 705 and 793; E.O.
11758 (3 CFR, 1971–1975 Comp., p. 841).
13. Amend section 60–741.2 by
adding definitions for ‘‘Nonstatistical
evidence’’ and ‘‘Statistical evidence’’ in
alphabetical order to read as follows:
■
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§ 60–741.2
Definitions.
*
*
*
*
*
Nonstatistical evidence may include
testimony about biased statements,
remarks, attitudes, or acts based upon
membership in a protected class;
differential treatment through review of
comparators, cohorts, or summary data
reflecting differential selections,
compensation and/or qualifications;
testimony about individuals denied or
given misleading or contradictory
information about employment or
compensation practices; testimony
about the extent of discretion or
subjectivity involved in making
employment decisions; or other
anecdotal or supporting evidence.
*
*
*
*
*
Statistical evidence means hypothesis
testing, controlling for the major,
measureable parameters and variables
used by employers (including, as
appropriate, other demographic
variables, test scores, geographic
variables, performance evaluations,
years of experience, quality of
experience, years of service, quality and
reputation of previous employers, years
of education, years of training, quality
and reputation of credentialing
institutions, etc.), related to the
probability of outcomes occurring by
chance and/or analyses reflecting
statements concluding that a difference
in employment selection rates or
compensation decisions is statistically
significant by reference to any one of
these statements:
(1) The disparity is two or more times
larger than its standard error (i.e., a
standard deviation of two or more);
(2) The Z statistic has a value greater
than two; or
(3) The probability value is less than
0.05.
*
*
*
*
*
■ 14. Revise section 60–741.62 to read
as follows:
§ 60–741.62
Resolution Procedures.
(a) Predetermination Notice. If a
compliance review or other review by
OFCCP indicates preliminary findings
of discrimination, OFCCP will only
issue a predetermination notice after
first considering these factors: Whether
the unexplained disparity is both
practically and statistically significant
(as described in this part’s definition of
‘‘Statistical evidence’’) and, where
relevant, whether nonstatistical
evidence demonstrates an intent to
discriminate. If OFCCP cannot
corroborate statistical evidence with
nonstatistical evidence, OFCCP will
issue a predetermination notice only
when the statistical evidence is
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significant at a confidence level of 99%
or higher, which equates to three or
more standard deviations or a p value of
0.01 or less. A contractor must respond
to a predetermination notice within 15
calendar days of receipt of the notice,
which OFCCP may extend for good
cause.
(b) Notice of Violation. If a
compliance review or other review by
OFCCP indicates preliminary findings
of discrimination or other material
violations of the equal opportunity
clause, OFCCP may issue a notice of
violation to provide notice to the
contractor requiring corrective action
and inviting conciliation through a
written agreement. For discrimination
violations, OFCCP may issue the notice
of violation following issuance of a
predetermination notice if the
contractor does not respond or provide
a sufficient response within 15 calendar
days of receipt of the notice, unless
OFCCP has extended the
predetermination notice response time
for good cause shown.
(c) Conciliation Agreement. If a
compliance review, complaint
investigation or other review by OFCCP
or its representative indicates a material
violation of the equal opportunity
clause, and
(1) If the contractor, subcontractor or
bidder is willing to correct the
violations and/or deficiencies, and
(2) If OFCCP or its representative
determines that settlement (rather than
referral for consideration of formal
enforcement) is appropriate, a written
agreement shall be required. The
agreement shall provide for such
remedial action as may be necessary to
correct the violations and/or
deficiencies noted, including, where
appropriate (but not necessarily limited
to), remedies such as back pay and
retroactive seniority.
(d) Remedial benchmarks. The
remedial action referenced in paragraph
(c) of this section may include the
establishment of benchmarks for the
contractor’s outreach, recruitment,
hiring, or other employment activities.
The purpose of such benchmarks is to
create a quantifiable method by which
the contractor’s progress in correcting
identified violations and/or deficiencies
can be measured.
(e) Expedited Conciliation Option. A
contractor may waive the procedures set
forth in paragraphs (a) and/or (b) of this
section to enter directly into a
conciliation agreement.
[FR Doc. 2019–27258 Filed 12–27–19; 8:45 am]
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DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 430, 433, 447, 455, and
457
[CMS–2393–N]
RIN 0938–AT50
Medicaid Program; Medicaid Fiscal
Accountability Regulation; Supplement
and Extension of Comment Period
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule; supplement and
extension of comment period.
AGENCY:
This document extends the
comment period for the proposed rule
entitled ‘‘Medicaid Program; Medicaid
Fiscal Accountability Regulation’’ that
appeared in the November 18, 2019
Federal Register. The comment period
for the proposed rule, which would end
on January 17, 2020, is extended 15
days to February 1, 2020. We
additionally note that based on public
comments received on this proposed
rule, we will adjust the effective dates
of our policies to allow for adequate
implementation timelines, as
appropriate.
DATES: The comment period for the
proposed rule published November 18,
2019 (84 FR 63722), is extended to 5
p.m., eastern daylight time, on February
1, 2020.
ADDRESSES: You may submit comments
as outlined in the November 18, 2019
proposed rule (84 FR 63722). Please
choose only one method listed.
FOR FURTHER INFORMATION CONTACT:
Andrew Badaracco, (410) 786–4589,
Richard Kimball, (410) 786–2278, and
Daniil Yablochnikov, (410) 786–8912,
for Medicaid Provider Payments,
Supplemental Payments, Upper
Payment Limits, Provider Categories,
Intergovernmental Transfers, and
Certified Public Expenditures.
Timothy Davidson, (410) 786–1167,
Jonathan Endelman, (410) 786–4738,
and Stuart Goldstein, (410) 786–0694,
for Health Care-Related Taxes, ProviderRelated Donations, and Disallowances.
Lia Adams, (410) 786–8258, Charlie
Arnold, (404) 562–7425, Richard Cuno,
(410) 786–1111, and Charles Hines,
(410) 786–0252, for Medicaid
Disproportionate Share Hospital
Payments and Overpayments.
Jennifer Clark, (410) 786–2013 and
Deborah McClure, (410) 786–3128, for
Children’s Health Insurance Program
(CHIP).
SUMMARY:
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71887
In the
‘‘Medicaid Program; Medicaid Fiscal
Accountability Regulation’’ proposed
rule that appeared in the November 18,
2019 Federal Register (84 FR 63722), we
solicited public comments on proposed
policies that aim to promote
transparency by establishing new
reporting requirements for states to
provide CMS with certain information
on supplemental payments to Medicaid
providers, including supplemental
payments approved under either
Medicaid state plan or demonstration
authority, and on applicable upper
payment limits. Additionally, the
proposed rule would establish
requirements to ensure that state plan
amendments proposing new
supplemental payments are consistent
with the proper and efficient operation
of the state plan and with efficiency,
economy, and quality of care. This
proposed rule addresses the financing of
supplemental and base Medicaid
payments through the non-federal share,
including states’ uses of health carerelated taxes and bona fide providerrelated donations, as well as the
requirements necessary to properly
implement the non-federal share of any
Medicaid payment.
Since the issuance of the proposed
rule, we have received inquiries from a
variety of stakeholders, including
healthcare provider organizations and
industry representatives requesting an
extension to the comment period. We
also recognize that the comment period
for the proposed rule crosses over
several federal holidays, which may
hinder the ability of the public to
provide meaningful comment on the
proposed rule. In order to maximize the
opportunity for the public to provide
meaningful input to CMS, we believe
that it is important to allow additional
time for the public to prepare comments
on the proposed rule. In addition, we
believe that granting an extension to the
public comment period in this instance
would further our overall objective to
obtain public input on the proposed
provisions to promote transparency and
oversight on payments made in the
Medicaid program. Therefore, we are
extending the comment period for the
proposed rule for an additional 15 days.
While we believe it is in the best
interest of the public and our proposed
policies to extend the comment period
for this proposed rule, we also
acknowledge that stakeholders require
appropriate implementation timelines
that could be impacted by this
extension. Therefore, we note that we
will take this comment period extension
into account in determining the
effective date(s) of the policies in any
SUPPLEMENTARY INFORMATION:
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]]>Agencies
[Federal Register Volume 84, Number 249 (Monday, December 30, 2019)]
[Proposed Rules]
[Pages 71875-71887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27258]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Office of Federal Contract Compliance Programs
41 CFR Parts 60-1, 60-2, 60-300, and 60-741
RIN 1250-AA10
Nondiscrimination Obligations of Federal Contractors and
Subcontractors: Procedures To Resolve Potential Employment
Discrimination
AGENCY: Office of Federal Contract Compliance Programs (OFCCP), Labor.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Office of Federal Contract Compliance Programs (``OFCCP''
or ``the agency'') proposes to codify procedures that the agency
currently uses to resolve potential discrimination and other material
violations of these laws by federal contractors and subcontractors; add
clarifying definitions to specify the types of evidence OFCCP will use
to support its discrimination findings; and, correct the title of
OFCCP's agency head.
DATES: To be assured of consideration, comments must be received on or
before January 29, 2020.
ADDRESSES: Comments may be submitted, identified by Regulatory
Information Number (RIN) 1250-AA10, by any of the following methods:
Electronically: The Federal eRulemaking portal: https://www.regulations.gov. Follow the instructions found on that website for
submitting comments.
Mail, Hand Delivery, or Courier: Addressed to Harvey D.
Fort, Deputy Director, Division of Policy and Program Development,
Office of Federal Contract Compliance Programs, 200 Constitution Avenue
NW, Room C-3325, Washington, DC 20210.
Instructions: Please submit one copy of your comments by only one
method. For faster submission, we encourage commenters to transmit
their comment electronically via the www.regulations.gov website.
Comments that are mailed to the address provided above must be
postmarked before the close of the comment period. All submissions
received must include OFCCP's name and RIN for this rulemaking.
Comments submitted in response to the notice, including any personal
information provided, become a matter of public record and will be
posted on www.regulations.gov. Receipt of submissions will not be
acknowledged; however, the sender may request confirmation that a
submission was received by telephoning OFCCP at (202) 693-0103 (voice)
or (202) 693-1337 (TTY) (these are not toll-free numbers).
The Department will make all comments received, including any
personal information provided, available for public inspection during
normal business hours at Room C-3325, 200 Constitution Avenue NW,
Washington, DC 20210. If you need assistance to review the comments,
the Department will provide you with appropriate aids such as readers
or print magnifiers. Copies of this notice may be obtained in
alternative formats (large print, braille, audio recording) upon
request by calling the numbers listed
[[Page 71876]]
above. To schedule an appointment to review the comments and/or to
obtain this Notice of Proposed Rulemaking (NPRM) in an alternate
format, please contact OFCCP at the telephone numbers or address listed
above.
FOR FURTHER INFORMATION CONTACT: Harvey D. Fort, Deputy Director,
Division of Policy and Program Development, Office of Federal Contract
Compliance Programs, 200 Constitution Avenue NW, Room C-3325,
Washington, DC 20210. Telephone: (202) 693-0103 (voice) or (202) 693-
1337 (TTY).
SUPPLEMENTARY INFORMATION:
I. Overview
The goal of this proposed rule is to provide federal contractors
and subcontractors \1\ with greater certainty about the procedures that
OFCCP follows during compliance evaluations to resolve employment
discrimination and other material violations found under Executive
Order 11246, as amended (E.O. 11246); section 503 of the Rehabilitation
Act, as amended, 29 U.S.C. 793 (section 503); and the Vietnam Era
Veterans' Readjustment Assistance Act of 1974, as amended, 38 U.S.C.
4212 (VEVRAA); and, their implementing regulations. The proposed rule
would codify procedures for two formal notices that OFCCP uses when the
agency finds potential violations: The Predetermination Notice (PDN)
and the Notice of Violation (NOV). Since 1988, these procedures have
been embedded in the Federal Contract Compliance Manual (FCCM), the
primary document used by agency staff as a procedural framework to
execute quality and timely compliance evaluations and complaint
investigations. Additionally, the proposal promotes efficiency by
clarifying that contractors have the option to expedite OFCCP's normal
resolution procedures for discrimination findings by entering directly
into a conciliation agreement prior to issuance of a PDN or NOV,
allowing for expedited conclusion to OFCCP's compliance evaluations.
The proposed rule also clarifies the strength of evidence agency staff
must find before issuing a PDN or NOV. Finally, the proposed rule would
replace outdated references to the official title of OFCCP's agency
head, from ``Deputy Assistant Secretary'' to ``Director.''
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\1\ Hereinafter, the terms ``contractor'' and ``federal
contractor'' are used to refer to contractors and subcontractors
with direct federal contracts and/or federally assisted construction
contracts, unless otherwise expressly stated.
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This proposed rule is expected to be an Executive Order (E.O.)
13771 regulatory action. Details on the estimated costs of this
proposed rule can be found in the rule's economic analysis.
II. Background
OFCCP administers and enforces E.O. 11246, section 503, and VEVRAA,
and their implementing regulations. Collectively, these laws require
federal contractors to take affirmative action to ensure equal
employment opportunity, and not discriminate on the basis of race,
color, religion, sex, sexual orientation, gender identity, national
origin, disability, or status as a protected veteran. Additionally,
E.O. 11246 prohibits a contractor from discharging or otherwise
discriminating against applicants or employees who inquire about,
discuss, or disclose their compensation or that of others, subject to
certain limitations.
OFCCP determines whether a federal contractor has met these legal
obligations during a compliance evaluation.\2\ The agency uses a
neutral process to schedule contractors for compliance evaluations.\3\
A compliance evaluation consists of one or any combination of the
following investigative procedures, as set forth in OFCCP's
implementing regulations: Compliance review, offsite review of records,
compliance check, or focused review.\4\ With the exception of the
compliance check, the purpose of which is solely to determine whether
the contractor maintains required records, OFCCP may find that a
contractor discriminated in hiring, promotion, termination,
compensation, or other employment practices based on information
collected during a compliance evaluation. Such findings, in most cases,
must be supported by statistical evidence.
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\2\ OFCCP also ensures compliance with these laws by
investigating complaints filed by applicants and employees who
believe that a federal contractor discriminated against them.
However, the resolution procedures for complaints differ from
compliance evaluations and would not be altered by this proposed
rule. For complaint resolution procedures, see FCCM Chapter 6 and 41
CFR 60-1.24, 41 CFR 60-300.61, and 41 CFR 60-741.61. The FCCM is
available at https://www.dol.gov/ofccp/regs/compliance/fccm/fccmanul.htm (last accessed Aug. 5, 2019).
\3\ The majority of OFCCP's compliance evaluations are for
supply and service contractors. OFCCP increased the number of
contractors on its supply and service scheduling list over the past
three fiscal years, from 801 in FY 2017 to 3,500 in FY 2019. A
description of OFCCP's current scheduling methodology for supply and
service contractors is available on the agency's website at https://www.dol.gov/ofccp/scheduling/ (last accessed Aug. 12, 2019). The
neutral scheduling process for construction contractors is currently
under review by OFCCP.
\4\ See 41 CFR 60-1.20(a), 60-300.60(a) and 60-741.60(a). The
resolution procedures described in this proposed rule would not
apply to compliance checks.
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Preliminary findings of discrimination in a compliance evaluation
trigger OFCCP's resolution procedures. When OFCCP finds sufficient
evidence of discrimination, the agency sends a PDN to inform the
contractor of the agency's preliminary findings.\5\ To determine
whether the evidence of discrimination is sufficient to warrant a PDN,
OFCCP considers whether an employment or compensation disparity
identified during the compliance evaluation is both practically and
statistically significant.\6\ OFCCP uses a number of tests to determine
whether an employment selection or compensation practice has enough
statistical significance to support a conclusion of discrimination.\7\
The most familiar test is the standard deviation test. The standard
deviation test represents a standardized measure of the difference
between two selection rates, and employment discrimination case law has
adopted confidence levels that are similar to those accepted among
social scientists. The U.S. Supreme Court has described an outcome as
``suspect to a social scientist'' when a statistic from ``large
samples'' falls more than ``two or three standard deviations'' from its
expected value under a null hypothesis of neutrality.\8\ The greater
the number of
[[Page 71877]]
standard deviations, the less likely the difference was produced by
chance (e.g., 5.0 standard deviations represents a less than 1 in 1.7
million probability that the occurrence happened by chance). OFCCP
conducts regression analyses of hiring and compensation outcomes which
control for major, measurable variables, to determine the probability
of hiring and compensation outcomes occurring by chance. OFCCP will
issue PDNs in matters premised on statistical evidence only if the
variable of interest is statistically significant and the probability
value (``p value'') is less than 0.05 (roughly equivalent to two
standard deviations) if there is corroborating nonstatistical evidence,
or 0.01 (roughly equivalent to three standard deviations) in the
absence of corroborating nonstatistical evidence.\9\ This approach is
in keeping with--neither compelled nor prohibited by--Title VII and
OFCCP case law, which generally holds that two or more standard
deviations is sufficient to establish a prima facie case of
discrimination.\10\
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\5\ See Directive 2018-01, ``Use of Predetermination Notices
(PDN)'' (Feb. 27, 2018). OFCCP issued this directive to ensure that
PDNs be used in all compliance evaluations with preliminary
discrimination findings, both individual and systemic. OFCCP
directives are available at https://www.dol.gov/ofccp/regs/compliance/directives/dirindex.htm (last accessed Aug. 5, 2019).
Prior to the directive, use of PDNs was discretionary and reserved
for systemic discrimination findings. See FCCM, Chapter 8,
Resolution of Noncompliance (Oct. 2014) (detailing the procedures
that OFCCP follows for issuing PDNs).
\6\ In the EEO context, practical significance refers to whether
an observed disparity in employment opportunities or outcomes
reflects meaningful harm to the disfavored group. The concept
focuses on the contextual impact or importance of the disparity
rather than its likelihood of occurring by chance. OFCCP recently
published guidance on how it applies statistical and practical
significance to evaluate compliance evaluations with potential
discrimination. See OFCCP's Practical Significance Frequently Asked
Questions at https://www.dol.gov/ofccp/regs/compliance/faqs/PracticalSignificanceEEOFAQs.htm#Q5 (last accessed October 1, 2019).
\7\ Some examples of the statistical measures that OFCCP may use
are the Chi square, Fisher's exact, Z-test, and standard deviation.
\8\ See Castaneda v. Partida, 430 U.S. 482, 496 n.17 (1977)
(``As a general rule for large samples, if the difference between
the expected value and the observed number is greater than two or
three standard deviations, then the hypothesis that the jury drawing
was random would be suspect to a social scientist.''). See also
Hazelwood School Dist. v. United States, 433 U.S. 299, 311 n.17
(1977) (providing that ``a fluctuation of more than two or three
standard deviations would undercut the hypothesis that decisions
were being made randomly with respect to race'').
\9\ The p value confidence level is similar to the confidence
level associated with the standard deviation test. A p value of less
than 0.05 indicates that there is a less than five percent
likelihood that an observed disparity occurred by chance, and a
standard deviation of two shows a less than 4.55 percent likelihood
that an observed disparity occurred by chance.
\10\ See fn 8, supra; see also, e.g., Adams v. Ameritech Servs.,
Inc., 231 F.3d 414, 424 (7th Cir. 2000) (``Two standard deviations
is normally enough to . . . giv[e] rise to a reasonable inference
that the hiring was not race-neutral; the more standard deviations
away, the less likely the factor in question played no role in the
decisionmaking process.''); Malave v. Potter, 320 F.3d 321, 327 (2d
Cir. 2003) (vacating summary judgment for employer and instructing
district court to determine whether the plaintiff can show ``a
statistically significant disparity of two standard deviations'');
Anderson v. Zubieta, 180 F.3d 339-40 (D.C. Cir. 1999) (``Many of the
disparities are far in excess of 1.96 standard deviations. Under our
case law, this level of statistical significance is sufficient to
establish a prima facie case of both disparate treatment and
disparate impact.'' (citations omitted)); OFCCP v. Bank of America,
No. 1997-OFC-016, slip op. at 9, 2016 WL 2941106 (Dep't of Labor
Apr. 21, 2016) (``Courts have consistently found significance in
disparities exceeding the two standard deviation mark. See Hazelwood
School Dist. v. U.S., 433 U.S. 299, 308, n.14 (1977); Adams v.
Ameritech, 231 F.3d 414, 424 (7th Cir. 2000). . . . The more severe
the statistical disparity, the less additional evidence is needed to
prove that the reason was race discrimination. Very extreme cases of
statistical disparity may permit the trier of fact to conclude
intentional race discrimination occurred without needing additional
evidence.'' (citations omitted)).
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Statistical evidence plays a crucial role in OFCCP's enforcement.
The proposed rule is intended to provide clarity and transparency in
OFCCP's methods. OFCCP requests comments for improving certainty in
setting parameters for statistical evidence, including methodologies,
minimum sample sizes, data groupings, methodological limitations, and
ways to improve objectivity.
Before issuing a PDN, the agency also considers whether
nonstatistical evidence, such as a cohort analysis, demonstrates an
intent to discriminate. In some cases, however, when statistical
evidence is very strong, OFCCP may issue the PDN without nonstatistical
evidence. There may be other factors applicable in a particular case
which explain why OFCCP could not uncover nonstatistical evidence
during its investigation despite the strength of the statistical
evidence. Additionally, OFCCP may find similar patterns of disparity in
multiple years or at multiple establishments of a federal contractor
that warrant issuing a PDN without nonstatistical evidence. In
practice, as an exercise of enforcement discretion, OFCCP will pursue
matters where the statistical data are not corroborated by
nonstatistical evidence of discrimination only if the statistical
evidence is exceptionally strong.\11\
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\11\ The proposed rule clarifies that, absent nonstatistical
evidence, OFCCP will only pursue a matter when discrimination is
indicated by statistically significant evidence at the 99 percent
confidence level (i.e., three standard deviations, or a p value of
0.01 or less). Note, however, that for multiple findings of
discrimination without nonstatistical evidence present at a given
contractor establishment, or at multiple facilities of the same
contractor, OFCCP may issue a PDN where at least one finding is
supported by statistically significant evidence at the 99 percent
confidence level and may include additional findings that are
supported by statistically significant evidence at the 95 percent
confidence level (i.e., two standard deviations, or a p value of
0.05 or less) or above.
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OFCCP issues the PDN to encourage communication with contractors
and provide them an opportunity to respond to preliminary findings
prior to the issuance of a more formal NOV. If a contractor does not
sufficiently rebut the preliminary findings identified in the PDN that
evidence of unlawful discrimination exists, OFCCP issues the NOV to
notify the contractor that the agency found discrimination violations
of one or more of the laws it enforces.
The NOV, also a letter, lists the corrective actions that are
required to resolve those violations, and invites conciliation.\12\
After issuing the NOV, OFCCP generally pursues a written conciliation
agreement with any contractor willing to correct the violation or
deficiency identified in the NOV.\13\ A conciliation agreement is a
binding written agreement between a contractor and OFCCP that details
specific contractor commitments, actions, or both to resolve the
violations set forth in the agreement.\14\ Conciliation agreements were
codified in OFCCP's regulations in 1979.\15\ If the contractor is
unwilling to enter into a conciliation agreement to correct the
violations, OFCCP issues a show cause notice (SCN) requiring the
contractor to provide reasons demonstrating why formal enforcement
proceedings by the Solicitor of Labor or other appropriate action
should not be instituted.\16\ This proposed rule would codify the PDN
and NOV as procedures that have proven effective to remedy findings of
discrimination.\17\
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\12\ See FCCM Chapter 8, Resolution of Noncompliance and Key
Terms and Phrases (Oct. 2014).
\13\ In rare circumstances, OFCCP may determine that settlement
is not appropriate and refer a matter at this stage directly to the
Office of the Solicitor of Labor to pursue formal enforcement
proceedings rather than pursuing a conciliation agreement. See 41
CFR 60-1.26(b), 60-300.62, 60-300.65(a), 60-741.62(a). 60-741.65(a).
\14\ See FCCM, Key Terms and Phrases and 41 CFR 60-1.33, 60-
300.62, and 60-741.62.
\15\ See Compliance Responsibility for Equal Employment
Opportunity, 44 FR 77000 (Dec. 28 1979).
\16\ See 41 CFR 60-1.28, 60-300.64, and 60-741.64. See also,
FCCM Chapter 8, Resolution of Noncompliance.
\17\ The NOV and PDN have been included in the FCCM since 1988.
As an example of their effectiveness, OFCCP obtained $44 million for
more than 37,000 employees and job seekers between January 2017 and
December 2019 using these resolution procedures.
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Similarly, material violations that are not discriminatory in
nature also trigger OFCCP's resolution procedures for compliance
evaluations.\18\ Rather than initiating resolution with a PDN for
violations that do not involve discrimination, OFCCP generally begins
the process with a NOV before proceeding to a conciliation agreement,
or the SCN as a last resort.\19\ With this proposed rule, OFCCP would
codify use of the NOV for all material violations.
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\18\ FCCM Chapter 8F00, When to Use a Notice of Violation and
Chapter 8H00, When to Use a Conciliation Agreement (Oct. 2014). For
example, OFCCP may issue a NOV and enter into a CA for failure to
maintain records in accordance with 41 CFR 60-1.12, 41 CFR 60-
300.80, and 41 CFR 60-741.80, or for failure to maintain affirmative
action programs as required by 41 CFR part 60-2, 41 CFR part 60-300,
subpart C, and 41 CFR part 60-741, subpart C.
\19\ In some instances, OFCCP issues the SCN without first
issuing a NOV for material violations that are non-discriminatory in
nature. See FCCM Chapter 8D01, When a Show Cause Notice is Required
(Oct. 2014) (explaining that OFCCP issues the SCN without first
issuing a NOV when a contractor fails to provide the records,
information, or data requested in the scheduling letter and when the
contractor refuses to provide access to its premises for an onsite
review).
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Additionally, this proposed rule clarifies that federal contractors
have
[[Page 71878]]
the option to bypass the PDN and NOV procedures to enter directly into
a conciliation agreement when there are preliminary findings of
material violations, regardless of whether those violations involve
discrimination. This option for conciliation may suit contractors who
wish to expedite the resolution of discrimination or other material
violations. Recently, OFCCP has sought to incentivize the efficient
resolution of material violations for multi-establishment federal
contractors with early resolution procedures.\20\ The proposed rule
would further the agency's efforts to improve efficiency, codifying an
expedited option for resolution that would apply to compliance reviews
in their early stages.
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\20\ See Directive 2019-02, ``Early Resolution Procedures''
(Nov. 30, 2018), available at https://www.dol.gov/ofccp/regs/compliance/directives/dirindex.htm (last accessed Sept. 27, 2019).
The proposed rule would not codify OFCCP's early resolution
procedures per se. It would, however, allow OFCCP and contractors to
explore expedited conciliation options, such as the early resolution
procedures set forth in Directive 2019-02.
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To further these efficiency objectives and to provide greater
certainty to federal contractors, the proposed rule also defines
``statistical evidence'' and ``nonstatistical evidence'' to clarify the
different types of evidence OFCCP will use to support a PDN or NOV.
Specifically, statistical evidence should be based on hypothesis
testing related to the probability of the allegedly discriminatory
outcome occurring by chance, at the confidence levels accepted in
relevant employment discrimination case law.\21\ The standard deviation
represents a standardized measure of the difference between two rates.
As mentioned above, the greater the number of standard deviations, the
less likely the difference was produced by chance (e.g., 5.0 standard
deviations represents a less than 1 in 1.7 million probability that the
occurrence happened by chance). In support of an OFCCP discrimination
PDN or NOV, a statistician can conclude that a variable of interest is
statistically significant if, controlling for major, measurable
variables, a disparity exists that is greater than two standard
deviations (equivalent to a p value of less than 0.05 and a confidence
value of 95 percent or higher). As noted in the proposed regulatory
text and preamble discussion regarding predetermination notices, for
matters without nonstatistical evidence, OFCCP will only pursue matters
if the statistical evidence shows a disparity of at least three
standard deviations or a p value of .01 or less. The definition of
``statistical evidence'' provides a nonexhaustive list of variables
frequently used by employers that OFCCP's regression analyses will
control for, as appropriate, in its analyses. This provides greater
clarity to the contractor community regarding OFCCP's analytical
methods while providing OFCCP the flexibility to exclude variables from
its analyses that, consistent with established statistical methods, may
be inappropriate to include, such as those that are discriminatory.
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\21\ Castaneda v. Partida, 430 U.S. 482, 496 n.17 (1977);
Hazelwood School Dist. v. United States, 433 U.S. 299, 311 n.17
(1977).
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In addition to codifying resolution procedures, the proposed rule
replaces outdated references to the official title of OFCCP's agency
head in E.O. 11246 regulations, from ``Deputy Assistant Secretary'' to
``Director.'' OFCCP made the same change to the regulations
implementing VEVRAA and section 503 through final rules in 2013.\22\
OFCCP made this change after the Department of Labor abolished the
Employment Standards Administration. This restructuring resulted in the
change of title for OFCCP's agency head, from ``Deputy Assistant
Secretary'' (reporting to the head of the Employment Standards
Administration) to ``Director'' reporting directly to the Secretary of
Labor.
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\22\ Affirmative Action and Nondiscrimination Obligations of
Contractors and Subcontractors Regarding Special Disabled Veterans,
Veterans of the Vietnam Era, Disabled Veterans, Recently Separated
Veterans, Active Duty Wartime or Campaign Badge Veterans, and Armed
Forces Service Medal Veterans, 78 FR 58613 (Sept. 24, 2013), and
Affirmative Action and Nondiscrimination Obligations of Contractors
and Subcontractors Regarding Individuals With Disabilities, 78 FR
58681 (Sept. 24, 2013).
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III. Statement of Legal Authority
Issued in 1965, and amended several times in the intervening years,
E.O. 11246 has two principal purposes. First, it prohibits covered
Federal contractors and subcontractors from discriminating against
employees and applicants because of race, color, religion, sex, sexual
orientation, gender identity, national origin, or because they inquire
about, discuss, or disclose their compensation or that of others
subject to certain limitations. Second, it requires covered Federal
contractors and subcontractors to take affirmative action to ensure
equal employment opportunity. The nondiscrimination and affirmative
action obligations of Federal contractors and subcontractors cover all
aspects of employment.
The requirements in E.O. 11246 generally apply to any business or
organization that (1) holds a single Federal contract, subcontract, or
federally assisted construction contract in excess of $10,000; (2) has
Federal contracts or subcontracts that combined total in excess of
$10,000 in any 12-month period; or (3) holds Government bills of
lading, serves as a depository of Federal funds, or is an issuing and
paying agency for U.S. savings bonds and notes in any amount. Supply
and service contractors with 50 or more employees and a single Federal
contract or subcontract of $50,000 or more also must develop and
maintain an affirmative action program that complies with 41 CFR part
60-2. Construction contractors have different affirmative action
requirements under E.O. 11246 at 41 CFR part 60-4.
Enacted in 1973, and amended since, the purpose of section 503 is
twofold. First, section 503 prohibits employment discrimination on the
basis of disability by Federal contractors and subcontractors. Second,
it requires each covered Federal contractor and subcontractor to take
affirmative action to employ and advance in employment qualified
individuals with disabilities. The requirements in section 503
generally apply to any business or organization that holds a single
Federal contract or subcontract in excess of $15,000.\23\ Contractors
with 50 or more employees and a single Federal contract or subcontract
of $50,000 or more also must develop and maintain an affirmative action
program that complies with 41 CFR part 60-741, subpart C.
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\23\ Effective October 1, 2010, the coverage threshold under
Section 503 increased from $10,000 to $15,000, in accordance with
the inflationary adjustment requirements in 41 U.S.C. 1908. See,
Federal Acquisition Regulation; Inflation Adjustment of Acquisition-
Related Thresholds, 75 FR 53129 (Aug. 30, 2010).
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Enacted in 1974 and amended in the intervening years, the purpose
of VEVRAA is twofold. First, VEVRAA prohibits federal contractors and
subcontractors from discriminating against employees and applicants
because of status as a protected veteran (defined by the statute to
include disabled veterans, recently separated veterans, Armed Forces
Service Medal Veterans, and active duty wartime or campaign badge
veterans).\24\ Second, it requires each covered Federal contractor and
subcontractor to take affirmative action to employ and advance in
employment these veterans. The requirements in VEVRAA generally apply
to any business or organization that holds a single Federal contract or
[[Page 71879]]
subcontract in excess of $150,000.\25\ Contractors with 50 or more
employees and a single Federal contract or subcontract of $150,000 or
more also must develop and maintain an affirmative action program that
complies with 41 CFR part 60-300, subpart C.
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\24\ Since the statute was enacted, OFCCP's regulations have
further defined ``protected veteran'' to include ``active duty
wartime or campaign badge veterans.'' See, 41 CFR 60-300.2(a) and
(q).
\25\ Effective October 1, 2015, the coverage threshold under
VEVRAA increased from $100,000 to $150,000, in accordance with the
inflationary adjustment requirements in 41 U.S.C. 1908. See, Federal
Acquisition Regulation; Inflation Adjustment of Acquisition-Related
Thresholds, 80 FR 38293 (July 2, 2015).
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Pursuant to these laws, receiving a Federal contract comes with a
number of responsibilities. Contractors are required to comply with all
provisions of these laws as well as the rules, regulations, and
relevant orders of the Secretary of Labor. Where OFCCP finds potential
noncompliance concerns under any of the three laws or their
implementing regulations it utilizes established procedures to either
facilitate resolution,\26\ or proceed to administrative enforcement as
necessary to secure compliance.\27\ A contractor found in violation who
fails to engage in appropriate resolution procedures may have its
contracts canceled, terminated, or suspended and/or may be subject to
debarment after the opportunity for a hearing.\28\
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\26\ FCCM Chapter 8, Directive 2018-01, Directive 2019-02, 41
CFR 60-1.28, 60-1.33, 60-300.62, 60-300.64, 60-741.62, and 60-
741.64.
\27\ 41 CFR 60-1.26, 60-300.65, and 60-741.65.
\28\ 41 CFR 60-1.27, 60-300.66, and 60-741.66.
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IV. Proposed Revisions
This rulemaking proposes to update outdated references to the head
of the agency from ``Deputy Assistant Secretary'' to the correct title
of ``Director'' throughout the entirety of 41 CFR parts 60-1 and 60-2.
It also proposes to add two new definitions and revise a definition in
part 60-1, and update parts 60-1, 60-300 and 60-741 to codify
established policy and procedures for resolving discrimination and
other material violations.
Revised Sections
41 CFR Part 60-1--Obligations of Contractors and Subcontractors
Several sections will be revised throughout 41 CFR part 60-1
because all instances of ``Deputy Assistant Secretary'' would be
replaced with the term ``Director.'' The revised sections would include
41 CFR 60-1.2, 60-1.5, 60-1.7, 60-1.9, 60-1.10, 60-1.21, 60-1.23, 60-
1.24, 60-1.25, 60-1.26, 60-1.27, 60-1.28, 60-1.29, 60-1.30, 60-1.31,
60-1.41, 60-1.42, 60-1.43, and 60-1.46. These revisions would correct
part 60-1 to the current title for the head of OFCCP.
Subpart A--Preliminary Matters; Equal Opportunity Clause; Compliance
Reports
Section 60-1.3 Definitions
For this section, the NPRM proposes to add two definitions and
replace a definition. The term ``Nonstatistical evidence'' would be
added to codify the definition OFCCP uses in guidance.\29\ The term
``Statistical evidence'' clarifies the necessary support for OFCCP to
determine that there is a statistically significant disparity caused by
an employment action or compensation decision. Both terms are germane
to the resolution procedures that this NPRM proposes to codify.
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\29\ Directive 2018-05, ``Analysis of Contractor Compensation
Practices During a Compliance Evaluation'' (Aug. 24, 2018),
available at https://www.dol.gov/ofccp/regs/compliance/directives/dirindex.htm (last accessed May 16, 2019).
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OFCCP would also replace the definition of ``Deputy Assistant
Secretary'' in this section with the definition of ``Director''
published in OFCCP's regulations implementing VEVRAA and section
503.\30\
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\30\ 41 CFR parts 60-300 and 60-741, respectively.
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Subpart B--General Enforcement; Compliance Review and Complaint
Procedure
Section 60-1.33 Conciliation Agreements
The NPRM proposes to revise Sec. 60-1.33 by changing the title to
``Resolution Procedures'', and incorporating three new subsections:
``Predetermination Notice,'' ``Notice of Violation,'' and ``Expedited
Conciliation Option.'' The resolution procedures would be in the
following order: ``Predetermination Notice,'' ``Notice of Violation,''
``Conciliation Agreements'', and ``Expedited Conciliation Option.''
This revised section would bring the resolution procedures
described in the regulations in line with the longstanding resolution
procedures that OFCCP utilizes. The update would codify use of the PDN
to resolve discrimination violations, would codify the use of the NOV
and an expedited conciliation option to resolve discrimination and
other material violations, and would codify the types of evidence
necessary to find discrimination violations for a PDN or NOV.
41 CFR Part 60-2--Affirmative Action Programs
All instances of ``Deputy Assistant Secretary'' and ``DAS'' will be
replaced throughout this part with the term ``Director.'' Specifically,
the following sections will be revised: Sec. Sec. 60-2.1, 60-2.2, and
60-2.31. These revisions would correct part 60-2 to the current title
for the head of OFCCP.
41 CFR Part 60-300--Affirmative Action and Nondiscrimination
Obligations of Federal Contractors and Subcontractors Regarding
Disabled Veterans, Recently Separated Veterans, Active Duty Wartime or
Campaign Badge Veterans, and Armed Forces Service Medal Veterans
Subpart A--Preliminary Matters; Equal Opportunity Clause
Section 60-300.2 Definitions
For this section, the NPRM proposes to add definitions. The terms
``Nonstatistical evidence'' and ``Statistical evidence'' would be added
for the same reasons as proposed for section 60-1.3.
Subpart D--General Enforcement and Complaint Procedures
Section 60-300.62 Conciliation Agreements
The NPRM proposes to revise section 60-300.62 in the same manner as
section 60-1.33: changing the title to ``Resolution Procedures,'' and
incorporating three new subsections: ``Predetermination Notice,''
``Notice of Violation,'' and ``Expedited Conciliation Option.'' The
resolution procedures would be in the following order:
``Predetermination Notice,'' ``Notice of Violation,'' ``Conciliation
Agreements,'' and ``Expedited Conciliation Option.''
41 CFR Part 60-741--Affirmative Action and Nondiscrimination
Obligations of Federal Contractors and Subcontractors Regarding
Individuals With Disabilities
Subpart A--Preliminary Matters; Equal Opportunity Clause
Section 60-741.2 Definitions
For this section, the NPRM proposes to add definitions. The terms
``Nonstatistical evidence'' and ``Statistical evidence'' would be added
for the same reasons as proposed for section 60-1.3.
Subpart D--General Enforcement and Complaint Procedures
Section 60-741.62 Conciliation Agreements
The NPRM proposes to revise section 60-741.62 in the same manner as
section 60-1.33: changing the title to ``Resolution Procedures,'' and
incorporating three new subsections: ``Predetermination Notice,''
``Notice of
[[Page 71880]]
Violation,'' and ``Expedited Conciliation Option.'' The resolution
procedures would be in the following order: ``Predetermination
Notice,'' ``Notice of Violation,'' ``Conciliation Agreements,''
``Remedial Benchmarks,'' and ``Expedited Conciliation Option.''
Executive Order 12866 (Regulatory Planning and Review) and Executive
Order 13563 (Improving Regulation and Regulatory Review)
Under Executive Order 12866, OMB's Office of Information and
Regulatory Affairs (OIRA) determines whether a regulatory action is
significant and, therefore, subject to the requirements of Executive
Order 12866 and OMB review. Section 3(f) of Executive Order 12866
defines a ``significant regulatory action'' as an action that is likely
to result in a rule that: (1) Has an annual effect on the economy of
$100 million or more, or adversely affects in a material way a sector
of the economy, productivity, competition, jobs, the environment,
public health or safety, or State, local or tribal governments or
communities (also referred to as economically significant); (2) creates
serious inconsistency or otherwise interferes with an action taken or
planned by another agency; (3) materially alters the budgetary impacts
of entitlement grants, user fees, or loan programs, or the rights and
obligations of recipients thereof; or (4) raises novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in Executive Order 12866. The Office of
Management and Budget has determined that this proposed rule is a
significant regulatory action under Executive Order 12866 and has
reviewed the proposed rule.
Executive Order 13563 directs agencies to propose or adopt a
regulation only upon a reasoned determination that its benefits justify
its costs; tailor the regulation to impose the least burden on society,
consistent with obtaining the regulatory objectives; and in choosing
among alternative regulatory approaches, select those approaches that
maximize net benefits. Executive Order 13563 recognizes that some
benefits are difficult to quantify and provides that, where appropriate
and permitted by law, agencies may consider and discuss qualitatively
values that are difficult or impossible to quantify, including equity,
human dignity, fairness, and distributive impacts.
The Need for the Regulation
The proposed regulatory changes are needed to provide certainty
regarding the procedures that OFCCP follows during compliance
evaluations to resolve employment discrimination and other material
violations. The proposed rule is designed to codify procedures for two
formal notices, the PDN and the NOV, used by OFCCP when the agency
finds potential violations. The proposal promotes efficiency by
clarifying that contractors have the option to expedite OFCCP's normal
resolution procedures for discrimination findings by entering directly
into a conciliation agreement prior to issuance of a PDN or NOV,
allowing for a quicker conclusion to OFCCP's compliance evaluations.
Discussion of Impacts
In this section, the Department presents a summary of the costs
associated with the clarified procedures proposed in this notice of
proposed rulemaking. The Department determined that there are
approximately 420,000 entities registered in the General Services
Administration's System for Award Management (SAM) database.\31\
Entities registered in the SAM database consist of contractor firms,
and other entities such as state and local governments and other
organizations that are interested in federal contracting opportunities,
and other forms of federal financial assistance. The total number of
entities in the SAM database fluctuates and is posted on a monthly
basis. The current database includes approximately 420,000 entities.
Thus, the Department determines that 420,000 entities are a reasonable
representation of the number of entities that may or may not be
affected by the proposed rule. This SAM number, however, likely results
in an overestimation for two reasons: The system captures firms that do
not meet the jurisdictional dollar thresholds for the three laws that
OFCCP enforces, and it captures contractor firms for work performed
outside the United States by individuals hired outside the United
States, over which OFCCP does not have authority. On the other hand,
there is at least one reason to believe that the data may result in an
underestimation because SAM data does not include all
subcontractors.\32\
---------------------------------------------------------------------------
\31\ U.S. General Services Administration, System for Award
Management, data released in monthly files, available at https://www.sam.gov (last accessed Aug. 13, 2019). The SAM database is an
estimate with the most recent download of data occurring August
2019.
\32\ However, this underestimation may be partially offset
because of the overlap among contractors and subcontractors; a firm
may have a subcontract on some activities but have a contract on
others and thus in fact be included in the SAM data.
---------------------------------------------------------------------------
The estimated labor cost to contractors is reflected in Table 1,
below. The mean hourly wage of Human Resources Managers (SOC 11-3121)
is $60.91.\33\ The Department adjusted this wage rate to reflect fringe
benefits such as health insurance and retirement benefits, as well as
overhead costs such as rent, utilities, and office equipment. The
Department used a fringe benefits rate of 46 percent \34\ and an
overhead rate of 17 percent,\35\ resulting in a fully loaded hourly
compensation rate for Human Resources Managers of $99.28 ($60.91 +
($60.91 x 46 percent) + ($60.91 x 17 percent)).
---------------------------------------------------------------------------
\33\ BLS, Occupational Employment Statistics, Occupational
Employment and Wages, May 2018, https://www.bls.gov/oes/current/oes_nat.htm (last accessed Aug. 13, 2019).
\34\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. Wages and salaries averaged $24.26 per
hour worked in 2017, while benefit costs averaged $11.26, which is a
benefits rate of 46 percent.
\35\ Cody Rice, U.S. Environmental Protection Agency, ``Wage
Rates for Economic Analyses of the Toxics Release Inventory
Program,'' (June 10, 2002), https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005 (last accessed Aug. 13, 2019).
---------------------------------------------------------------------------
Cost of Rule Familiarization
The Department acknowledges that 5 CFR 1320.3(b)(1)(i) requires
agencies to include in the burden analysis for a new information
collection requirement the estimated time it takes for contractors to
review and understand the instructions for compliance. To minimize the
burden, OFCCP will publish compliance assistance materials such as a
fact sheet and answers to frequently asked questions.
The Department believes that human resources managers at each
contractor firm would be the employees responsible for understanding
the new regulation. Therefore, the Department estimates that it will
take a minimum of 30 minutes (\1/2\ hour) for a human resources manager
at each contractor firm to either read the proposed rule, or read the
compliance assistance materials provided by OFCCP to learn more about
the codified procedures. Consequently, the estimated burden for rule
familiarization is 210,000 hours (420,000 contractor firms x \1/2\
hour). The Department calculates the total estimated cost of rule
familiarization as $20,848,800 (210,000 hours x $99.28/hour) in the
first year, which amounts to a 10-year annualized cost of $2,372,928 at
a discount rate of 3 percent (which is $5.65 per contractor firm) or
$2,774,206 at a discount rate of 7 percent (which is $6.61 per
contractor firm). The Department seeks public comments regarding the
estimated number of firms that would review this rule, the estimated
time to review the rule, and whether human resources
[[Page 71881]]
managers would be the most likely staff members to review the rule.
Table 1, below, reflects the estimated regulatory familiarization costs
for the proposed rule.
Table 1--Regulatory Familiarization Cost
------------------------------------------------------------------------
------------------------------------------------------------------------
Total number of contractors............................. 420,000
Time to review rule..................................... 30 minutes
Human Resources Managers fully loaded hourly $99.28
compensation...........................................
Regulatory familiarization cost in the first year....... $20,848,800
Annualized cost with 3 percent discounting.............. $2,372,928
Annualized cost per contractor with 3 percent $5.65
discounting............................................
Annualized cost with 7 percent discounting.............. $2,774,206
Annualized cost per contractor with 7 percent $6.61
discounting............................................
------------------------------------------------------------------------
The proposed rule does not include any additional costs because it adds
no new requirements. The perpetual annualized cost at 7 percent
discounting is $1,068,622 in 2016 dollars.
Cost Savings
The Department expects contractors impacted by the rule will
experience cost savings. Specifically, the clarity provided in the new
definitions, as well as the clarity of OFCCP's procedures related to
resolution of material violations, provides certainty to contractors of
what is required as well as an option for contractors to more
expeditiously resolve the violations.
If the proposed rule increases clarity for federal contractors,
this impact most likely will yield cost savings to taxpayers (if
contractor fees decrease because they do not need to engage third party
representatives to interpret OFCCP's procedures and requirements). In
addition, by increasing clarity for both contractors and for OFCCP
enforcement, the proposed rule may reduce the number and costs of
enforcement proceedings by making it clearer to both sides at the
outset what is required by the regulation.
Benefits
Executive Order 13563 recognizes that some rules have benefits that
are difficult to quantify or monetize but are nevertheless important,
and states that agencies may consider such benefits. This rule has
equity and fairness benefits, which are explicitly recognized in
Executive Order 13563. The NPRM is designed to achieve these benefits
by:
Supporting more effective enforcement of the prohibition
against employment discrimination;
Increasing fairness for contractors by providing more
transparency and certainty on the agency's resolution procedures;
Providing more efficient remedies to workers victimized by
employment discrimination by effectuating corporate-wide corrective
actions in conciliation agreements that may reach more victims than
standard establishment-based conciliation agreements; and
Facilitating a more efficient option for contractors to
resolve potential discrimination by providing notice of OFCCP's
preliminary findings earlier in the compliance review process.
Analysis of Rulemaking Alternatives
In addition to the approach proposed in the NPRM, OFCCP considered
alternative approaches. OFCCP considered leaving its resolution
procedures described only in agency subregulatory guidance. Though
OFCCP codified ``conciliation agreements'' in 1979, the agency's other
resolution procedures, namely the PDN and NOV, have only been explained
in subregulatory guidance. Maintaining the status quo has led OFCCP to
inconsistent use of the PDN across agency offices, creating
inefficiencies and leading to greater uncertainty for federal
contractors. Though the agency has taken recent subregulatory measures
to increase consistency and certainty, codifying these agency
resolution procedures would have a stronger impact and promote more
efficient enforcement of Executive Order 11246 than the status quo
alternative.
OFCCP also considered revising its resolution procedures, but
decided to codify them without modification. Creating new procedures
would create new costs to train agency staff and familiarize
contractors on the new procedures. Additionally, the longstanding
procedures have proven effective as a means for the agency to
communicate its findings to contractors and providing contractors an
opportunity to respond, facilitating greater understanding and
ultimately resolution. OFCCP seeks comments on other possible
alternatives that would minimize the impact of this NPRM while still
accomplishing the goals of this rule.
Regulatory Flexibility Act and Executive Order 13272 (Consideration of
Small Entities)
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,
establishes ``as a principle of regulatory issuance that agencies shall
endeavor, consistent with the objectives of the rule and applicable
statutes, to fit regulatory and informational requirements to the scale
of the business organizations and governmental jurisdictions subject to
regulation.'' Public Law 96-354. The RFA requires agencies to consider
the impact of a proposed regulation on a wide-range of small entities
including small businesses, not-for-profit organizations, and small
governmental jurisdictions.
Agencies must review whether a proposed or final rule would have a
significant economic impact on a substantial number of small entities.
See 5 U.S.C. 603. If the rule would, then the agency must prepare a
regulatory flexibility analysis as described in the RFA.\36\
---------------------------------------------------------------------------
\36\ Id.
---------------------------------------------------------------------------
However if an agency determines that the rule would not be expected
to have a significant economic impact on a substantial number of small
entities, then the head of the agency may so certify and the RFA does
not require a regulatory flexibility analysis See 5 U.S.C. 605. The
certification must include a statement providing the factual basis for
this determination and the reasoning should be clear.
The Department must determine the compliance costs of this proposed
rule on small contractor firms, and whether these costs will be
significant for a substantial number of small contractor firms (i.e.,
small firms that enter into contracts with the federal government). If
the estimated compliance costs for affected small contractor firms are
less than 3 percent of small contractor firms' revenues, the Department
considers it appropriate to conclude that this proposed rule will not
have a significant economic impact on small contractor firms.
A threshold of 3 percent of revenues has been used in prior
rulemakings for the definition of significant economic impact. See,
e.g., 79 FR 60634 (October 7, 2014, Establishing a Minimum Wage for
Contractors) and 81 FR 39108 (June 15, 2016, Discrimination on the
Basis of Sex). This threshold is also consistent with that sometimes
used by other agencies. See, e.g., 79 FR 27106 (May 12, 2014,
Department of Health and Human Services rule stating that under its
agency guidelines for conducting regulatory flexibility analyses,
actions that do not negatively affect costs or revenues by more than 3
percent annually are not economically significant). The Department
believes that its use of a 3 percent of revenues significance criterion
is appropriate.
A standard definition of ``substantial'' impact has not been
established; however, the EPA provided a determination chart to decide
whether a
[[Page 71882]]
substantial impact exists. If the percentage of all small entities
subject to the rule that are experiencing a given economic impact (in
this case 3 percent of revenue or greater) is greater than or equal to
15 percent of all entities within that industry, then the economic
impact should be considered substantial. The Department has used a
threshold of 15 percent of small entities in prior rulemakings for the
definition of substantial number of small entities. See, e.g., 79 FR
60633 (October 7, 2014, Establishing a Minimum Wage for Contractors).
According to the Small Business Administration's (SBA's) Guide for
Government Agencies: How to Comply with the Regulatory Flexibility Act,
the determination of what constitutes a substantial number of small
entities is open to interpretation, and is primarily dependent on the
size of the industry.\37\ Analysts should determine both the total
number and percentage of regulated small entities experiencing
significant economic impacts when determining whether a substantial
number of small entities may be significantly affected.\38\
---------------------------------------------------------------------------
\37\ Small Business Administration, A Guide for Government
Agencies: How to Comply with the Regulatory Flexibility Act (August
2017), https://www.sba.gov/sites/default/files/advocacy/How-to-Comply-with-the-RFA-WEB.pdf.
\38\ Final Guidance for EPA Rulewriters: Regulatory Flexibility
Act (November 2006), section 2.7.2, https://www.epa.gov/sites/production/files/2015-06/documents/guidance-regflexact.pdf (last
accessed Sept. 27, 2019).
---------------------------------------------------------------------------
To analyze the proposed rule's impact on small contractor firms,
the Department used as data sources the SBA's Table of Small Business
Size Standards \39\ and the U.S. Census Bureau's Statistics of U.S.
Businesses (SUSB).\40\ Since federal contractors are not limited to
specific industries, the Department assessed the impact of this
proposed rule across 19 industrial classifications. Because data
limitations do not allow the Department to determine which of the small
firms within these industries are federal contractors, the Department
assumes that these small firms are not significantly different from the
small federal contractors that will be directly affected by the
proposed rule.
---------------------------------------------------------------------------
\39\ See https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf (last accessed Sept. 27, 2019).
\40\ See https://www.census.gov/data/tables/2012/econ/susb/2012-susb-annual.html (last accessed Sept. 27, 2019).
---------------------------------------------------------------------------
The Department used the following steps to estimate the cost of the
proposed rule per small contractor firm as measured by a percentage of
total annual receipts. First, the Department used Census SUSB data that
disaggregates industry information by firm size in order to perform a
robust analysis of the impact on small contractor firms. The Department
applied the SBA small-business size standards to the SUSB data to
determine the number of small firms in the affected industries. Then
the Department used receipts data from the SUSB to calculate the cost
per firm as a percentage of total receipts by dividing the estimated
first year cost and the annualized cost per firm discounted at a 7
percent rate by the average annual receipts per firm. The methodology
and results of two industries (construction and management of companies
and enterprises) are presented in Tables 2 and 3.
In sum, the increased first year cost and annualized cost of
compliance resulting from the proposed rule are de minimis relative to
the revenue at small contractor firms no matter their size. All of the
industries had a first year cost and annualized cost per firm as a
percentage of receipts of less than 3 percent. For instance, the first
year cost for the construction industry is estimated to range from 0.00
percent of revenue for firms that have average annual receipts of
approximately $35.3 million to 0.09 percent of revenue for firms that
have average annual receipts below $52,000. Likewise, the annualized
cost for the construction industry is estimated to range from 0.00
percent of revenue for firms that have average annual receipts of
approximately $35.3 million to 0.01 percent of revenue for firms that
have average annual receipts below $52,000. Management of companies and
enterprises is the industry with the highest relative first year costs,
with a range of 0.00 percent for firms that have average annual
receipts of approximately $2.3 million to 0.15 percent for firms that
have average annual receipts below $31,000. With respect to the
annualized costs for the management of companies and enterprises
industry, the impact as a percentage of revenue ranges from 0.00
percent for firms that have average annual receipts of approximately
$2.3 million to 0.02 percent for firms that have average annual
receipts below $31,000.
Therefore, the Department does not expect this rule to have a
significant economic impact on a substantial number of small entities.
The annualized cost at a discount rate of 7 percent for rule
familiarization is $6.61 per entity ($46.39 in the first year) which is
far less than 1 percent of the annual revenue of the smallest of the
small entities affected by the proposed rule. Accordingly, OFCCP
certifies that the proposed rule would not have a significant economic
impact on a substantial number of small entities.
BILLING CODE 4510-CM-P
[[Page 71883]]
[GRAPHIC] [TIFF OMITTED] TP30DE19.000
[[Page 71884]]
[GRAPHIC] [TIFF OMITTED] TP30DE19.001
BILLING CODE 4510-CM-C
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 requires that OFCCP consider
the impact of paperwork and other information collection burdens
imposed on the public. See 44 U.S.C. 3507(d). An agency may not collect
or sponsor the collection of information or impose an information
collection requirement unless the information collection instrument
displays a currently valid OMB control number. See 5 CFR 1320.5(b)(1).
OFCCP has determined that there is no new requirement for
information collection associated with this proposed rule. The
information collection contained in the existing Executive Order 11246
regulations are currently approved under OMB Control Number 1250-0001
(Construction Recordkeeping and Reporting Requirements) and OMB Control
Number 1250-0003 (Recordkeeping and Reporting Requirements--Supply and
Service). Consequently, this proposed rule does not require review by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act.
Unfunded Mandates Reform Act of 1995
For purposes of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.
1532, this proposed rule does not include any Federal mandate that may
result in excess of $100 million in expenditures by state, local, and
tribal governments in the aggregate or by the private sector.
Executive Order 13132 (Federalism)
OFCCP has reviewed this proposed rule in accordance with Executive
Order 13132 regarding federalism, and has determined that it does not
have ``federalism implications.'' This rule will not ``have substantial
direct effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''
Executive Order 13175 (Consultation and Coordination With Indian Tribal
Governments)
This proposed rule does not have tribal implications under
Executive Order 13175 that requires a tribal summary impact statement.
The proposed rule does not have substantial direct effects on one or
more Indian tribes, on the relationship between the Federal Government
and Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.
List of Subjects
41 CFR Parts 60-1 and 60-2
Administrative practice and procedure, Civil rights,
Discrimination, Employment, Equal employment opportunity, Government
contracts, Government procurement, Labor.
41 CFR Parts 60-300 and 60-741
Administrative practice and procedure, Civil rights,
Discrimination, Employment, Equal employment opportunity, Government
contracts,
[[Page 71885]]
Government procurement, Individuals with disabilities, Labor, Veterans.
Craig E. Leen,
Director, Office of Federal Contract Compliance Programs.
For the reasons stated in the preamble, the Office of Federal
Contract Compliance Programs proposes to amend 41 CFR parts 60-1, 60-2,
60-300, and 60-741 as follows:
PART 60-1 [AMENDED]
0
1. The authority citation for part 60-1 continues to read as follows:
Authority: Sec. 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-1965
Comp., p. 339, as amended by E.O. 11375, 32 FR 14303, 3 CFR, 1966-
1970 Comp., p. 684, E.O. 12086, 43 FR 46501, 3 CFR, 1978 Comp., p.
230, E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258 and E.O.
13672, 79 FR 42971.
0
2. In part 60-1, remove the words ``Deputy Assistant Secretary'' and
adding in their place the word ``Director''.
0
3. Amend Sec. 60-1.3 by removing the definition for ``Deputy Assistant
Secretary'' and adding definitions for ``Director'', ``Nonstatistical
evidence'' and ``Statistical evidence'' in alphabetical order to read
as follows:
Sec. 60-1.3 Definitions.
* * * * *
Director means the Director, Office of Federal Contract Compliance
Programs of the United States Department of Labor, or his or her
designee.
* * * * *
Nonstatistical evidence may include testimony about biased
statements, remarks, attitudes, or acts based upon membership in a
protected class; differential treatment through review of comparators,
cohorts, or summary data reflecting differential selections,
compensation and/or qualifications; testimony about individuals denied
or given misleading or contradictory information about employment or
compensation practices; testimony about the extent of discretion or
subjectivity involved in making employment decisions; or other
anecdotal or supporting evidence.
* * * * *
Statistical evidence means hypothesis testing, controlling for the
major, measureable parameters and variables used by employers
(including, as appropriate, other demographic variables, test scores,
geographic variables, performance evaluations, years of experience,
quality of experience, years of service, quality and reputation of
previous employers, years of education, years of training, quality and
reputation of credentialing institutions, etc.), related to the
probability of outcomes occurring by chance and/or analyses reflecting
statements concluding that a difference in employment selection rates
or compensation decisions is statistically significant by reference to
any one of these statements:
(1) The disparity is two or more times larger than its standard
error (i.e., a standard deviation of two or more);
(2) The Z statistic has a value greater than two; or
(3) The probability value is less than 0.05.
* * * * *
0
4. Revise section 60-1.33 to read as follows:
Sec. 60-1.33 Resolution Procedures.
(a) Predetermination Notice. If a compliance review or other review
by OFCCP indicates preliminary findings of discrimination, OFCCP will
only issue a predetermination notice after first considering these
factors: Whether the unexplained disparity is both practically and
statistically significant (as described in this part's definition of
``Statistical evidence'') and, where relevant, whether nonstatistical
evidence demonstrates an intent to discriminate. If OFCCP cannot
corroborate statistical evidence with nonstatistical evidence, OFCCP
will issue a predetermination notice only when the statistical evidence
is significant at a confidence level of 99% or higher, which equates to
three or more standard deviations or a p value of 0.01 or less. A
contractor must respond to a predetermination notice within 15 calendar
days of receipt of the notice, which OFCCP may extend for good cause.
(b) Notice of Violation. If a compliance review or other review by
OFCCP indicates preliminary findings of discrimination or other
material violations of the equal opportunity clause, OFCCP may issue a
notice of violation to provide notice to the contractor requiring
corrective action and inviting conciliation through a written
agreement. For discrimination violations, OFCCP may issue the notice of
violation following issuance of a predetermination notice if the
contractor does not respond or provide a sufficient response within 15
calendar days of receipt of the notice, unless OFCCP has extended the
predetermination notice response time for good cause shown.
(c) Conciliation Agreement. If a compliance review, complaint
investigation or other review by OFCCP or its representative indicates
a material violation of the equal opportunity clause, and
(1) If the contractor, subcontractor or bidder is willing to
correct the violations and/or deficiencies, and
(2) If OFCCP or its representative determines that settlement
(rather than referral for consideration of formal enforcement) is
appropriate, a written agreement shall be required. The agreement shall
provide for such remedial action as may be necessary to correct the
violations and/or deficiencies noted, including, where appropriate (but
not necessarily limited to), remedies such as back pay and retroactive
seniority.
(d) Expedited Conciliation Option. A contractor may waive the
procedures set forth in paragraphs (a) and/or (b) of this section to
enter directly into a conciliation agreement.
PART 60-2--AFFIRMATIVE ACTION PROGRAMS
0
5. The authority citation for part 60-2 continues to read as follows:
Authority: Sec. 201, E.O. 11246, 30 FR 12319, E.O. 11375, 32 FR
14303, as amended by E.O. 12086, 43 FR 46501, and E.O. 13672, 79 FR
42971.
Sec. 60-2.1 [Amended]
0
6. Amend Sec. 60-2.1 by removing the words ``Deputy Assistant
Secretary'' and adding in their place ``Director''.
Sec. 60-2.2 [Amended]
0
7. Amend Sec. 60-2.2 by removing the words ``Deputy Assistant
Secretary'' and adding in their place ``Director''.
Sec. 60-2.31 [Amended]
0
8. Amend Sec. 60-2.31 by removing the words ``Deputy Assistant
Secretary'' and adding in their place ``Director.''
PART 60-300--AFFIRMATIVE ACTION AND NONDISCRIMINATION OBLIGATIONS
OF FEDERAL CONTRACTORS AND SUBCONTRACTORS REGARDING DISABLED
VETERANS, RECENTLY SEPARATED VETERANS, ACTIVE DUTY WARTIME OR
CAMPAIGN BADGE VETERANS, AND ARMED FORCES SERVICE MEDAL VETERANS
0
9. The authority citation for part 60-300 continues to read as follows:
Authority: 29 U.S.C. 793; 38 U.S.C. 4211 and 4212; E.O. 11758 (3
CFR, 1971-1975 Comp., p. 841).
0
10. Amend section 60-300.2 by adding definitions for ``Nonstatistical
evidence'' and ``Statistical evidence'' in alphabetical order to read
as follows:
Sec. 60-300.2 Definitions.
* * * * *
[[Page 71886]]
Nonstatistical evidence may include testimony about biased
statements, remarks, attitudes, or acts based upon membership in a
protected class; differential treatment through review of comparators,
cohorts, or summary data reflecting differential selections,
compensation and/or qualifications; testimony about individuals denied
or given misleading or contradictory information about employment or
compensation practices; testimony about the extent of discretion or
subjectivity involved in making employment decisions; or other
anecdotal or supporting evidence.
* * * * *
Statistical evidence means hypothesis testing, controlling for the
major, measureable parameters and variables used by employers
(including, as appropriate, other demographic variables, test scores,
geographic variables, performance evaluations, years of experience,
quality of experience, years of service, quality and reputation of
previous employers, years of education, years of training, quality and
reputation of credentialing institutions, etc.), related to the
probability of outcomes occurring by chance and/or analyses reflecting
statements concluding that a difference in employment selection rates
or compensation decisions is statistically significant by reference to
any one of these statements:
(1) The disparity is two or more times larger than its standard
error (i.e., a standard deviation of two or more);
(2) The Z statistic has a value greater than two; or
(3) The probability value is less than 0.05.
* * * * *
0
11. Revise section 60-300.62 to read as follows:
Sec. 60-300.62 Resolution Procedures.
(a) Predetermination Notice. If a compliance review or other review
by OFCCP indicates preliminary findings of discrimination, OFCCP will
only issue a predetermination notice after first considering these
factors: Whether the unexplained disparity is both practically and
statistically significant (as described in this part's definition of
``Statistical evidence'') and, where relevant, whether nonstatistical
evidence demonstrates an intent to discriminate. If OFCCP cannot
corroborate statistical evidence with nonstatistical evidence, OFCCP
will issue a predetermination notice only when the statistical evidence
is significant at a confidence level of 99% or higher, which equates to
three or more standard deviations or a p value of 0.01 or less. A
contractor must respond to a predetermination notice within 15 calendar
days of receipt of the notice, which OFCCP may extend for good cause.
(b) Notice of Violation. If a compliance review or other review by
OFCCP indicates preliminary findings of discrimination or other
material violations of the equal opportunity clause, OFCCP may issue a
notice of violation to provide notice to the contractor requiring
corrective action and inviting conciliation through a written
agreement. For discrimination violations, OFCCP may issue the notice of
violation following issuance of a predetermination notice if the
contractor does not respond or provide a sufficient response within 15
calendar days of receipt of the notice, unless OFCCP has extended the
predetermination notice response time for good cause shown.
(c) Conciliation Agreement. If a compliance review, complaint
investigation or other review by OFCCP or its representative indicates
a material violation of the equal opportunity clause, and
(1) If the contractor, subcontractor or bidder is willing to
correct the violations and/or deficiencies, and
(2) If OFCCP or its representative determines that settlement
(rather than referral for consideration of formal enforcement) is
appropriate, a written agreement shall be required. The agreement shall
provide for such remedial action as may be necessary to correct the
violations and/or deficiencies noted, including, where appropriate (but
not necessarily limited to), remedies such as back pay and retroactive
seniority.
(d) Expedited Conciliation Option. A contractor may waive the
procedures set forth in paragraphs (a) and/or (b) of this section to
enter directly into a conciliation agreement.
PART 60-741--AFFIRMATIVE ACTION AND NONDISCRIMINATION OBLIGATIONS
OF FEDERAL CONTRACTORS AND SUBCONTRACTORS REGARDING INDIVIDUALS
WITH DISABILITIES
0
12. The authority citation for part 60-741 continues to read as
follows:
Authority: 29 U.S.C. 705 and 793; E.O. 11758 (3 CFR, 1971-1975
Comp., p. 841).
0
13. Amend section 60-741.2 by adding definitions for ``Nonstatistical
evidence'' and ``Statistical evidence'' in alphabetical order to read
as follows:
Sec. 60-741.2 Definitions.
* * * * *
Nonstatistical evidence may include testimony about biased
statements, remarks, attitudes, or acts based upon membership in a
protected class; differential treatment through review of comparators,
cohorts, or summary data reflecting differential selections,
compensation and/or qualifications; testimony about individuals denied
or given misleading or contradictory information about employment or
compensation practices; testimony about the extent of discretion or
subjectivity involved in making employment decisions; or other
anecdotal or supporting evidence.
* * * * *
Statistical evidence means hypothesis testing, controlling for the
major, measureable parameters and variables used by employers
(including, as appropriate, other demographic variables, test scores,
geographic variables, performance evaluations, years of experience,
quality of experience, years of service, quality and reputation of
previous employers, years of education, years of training, quality and
reputation of credentialing institutions, etc.), related to the
probability of outcomes occurring by chance and/or analyses reflecting
statements concluding that a difference in employment selection rates
or compensation decisions is statistically significant by reference to
any one of these statements:
(1) The disparity is two or more times larger than its standard
error (i.e., a standard deviation of two or more);
(2) The Z statistic has a value greater than two; or
(3) The probability value is less than 0.05.
* * * * *
0
14. Revise section 60-741.62 to read as follows:
Sec. 60-741.62 Resolution Procedures.
(a) Predetermination Notice. If a compliance review or other review
by OFCCP indicates preliminary findings of discrimination, OFCCP will
only issue a predetermination notice after first considering these
factors: Whether the unexplained disparity is both practically and
statistically significant (as described in this part's definition of
``Statistical evidence'') and, where relevant, whether nonstatistical
evidence demonstrates an intent to discriminate. If OFCCP cannot
corroborate statistical evidence with nonstatistical evidence, OFCCP
will issue a predetermination notice only when the statistical evidence
is
[[Page 71887]]
significant at a confidence level of 99% or higher, which equates to
three or more standard deviations or a p value of 0.01 or less. A
contractor must respond to a predetermination notice within 15 calendar
days of receipt of the notice, which OFCCP may extend for good cause.
(b) Notice of Violation. If a compliance review or other review by
OFCCP indicates preliminary findings of discrimination or other
material violations of the equal opportunity clause, OFCCP may issue a
notice of violation to provide notice to the contractor requiring
corrective action and inviting conciliation through a written
agreement. For discrimination violations, OFCCP may issue the notice of
violation following issuance of a predetermination notice if the
contractor does not respond or provide a sufficient response within 15
calendar days of receipt of the notice, unless OFCCP has extended the
predetermination notice response time for good cause shown.
(c) Conciliation Agreement. If a compliance review, complaint
investigation or other review by OFCCP or its representative indicates
a material violation of the equal opportunity clause, and
(1) If the contractor, subcontractor or bidder is willing to
correct the violations and/or deficiencies, and
(2) If OFCCP or its representative determines that settlement
(rather than referral for consideration of formal enforcement) is
appropriate, a written agreement shall be required. The agreement shall
provide for such remedial action as may be necessary to correct the
violations and/or deficiencies noted, including, where appropriate (but
not necessarily limited to), remedies such as back pay and retroactive
seniority.
(d) Remedial benchmarks. The remedial action referenced in
paragraph (c) of this section may include the establishment of
benchmarks for the contractor's outreach, recruitment, hiring, or other
employment activities. The purpose of such benchmarks is to create a
quantifiable method by which the contractor's progress in correcting
identified violations and/or deficiencies can be measured.
(e) Expedited Conciliation Option. A contractor may waive the
procedures set forth in paragraphs (a) and/or (b) of this section to
enter directly into a conciliation agreement.
[FR Doc. 2019-27258 Filed 12-27-19; 8:45 am]
BILLING CODE 4510-CM-P
