Pre-Enforcement Notice and Conciliation Procedures, 16138-16155 [2022-05696]

Agencies

• DEPARTMENT OF LABOR
• Office of Federal Contract Compliance Programs

[Federal Register Volume 87, Number 55 (Tuesday, March 22, 2022)]
[Proposed Rules]
[Pages 16138-16155]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05696]


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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Parts 60-1, 60-2, 60-4, 60-20, 60-30, 60-40, 60-50, 60-300, 
and 60-741

RIN 1250-AA14


Pre-Enforcement Notice and Conciliation Procedures

AGENCY: Office of Federal Contract Compliance Programs, Labor.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: To promote the efficient and effective enforcement of laws and 
regulations applicable to Federal contractors and subcontractors, the 
Office of Federal Contract Compliance Programs (OFCCP) proposes to 
modify regulations that delineate procedures and standards the agency 
follows when issuing pre-enforcement notices and securing compliance 
through conciliation. This proposal would support OFCCP in fulfilling 
its mission to ensure equal employment opportunity.

DATES: To be assured of consideration, comments must be received on or 
before April 21, 2022.

ADDRESSES: You may submit comments, identified by Regulation Identifier 
Number (RIN) 1250-AA14, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: (202) 693-1304 (for comments of six pages or less).
     Mail: Tina T. Williams, Director, Division of Policy and 
Program Development, OFCCP, Room C-3325, 200 Constitution Avenue NW, 
Washington, DC 20210.
    Instructions: Please submit only one copy of your comments by only 
one method. Commenters submitting file attachments on https://www.regulations.gov are advised that uploading text-recognized 
documents, i.e., documents in a native file format or documents that 
have undergone optical character recognition (OCR), enable staff at the 
Department to more easily search and retrieve specific content included 
in your comment for consideration. Please be advised that comments 
received will become a matter of public record and will be posted 
without change to https://www.regulations.gov, including any personal 
information provided. Commenters submitting comments by mail should 
transmit comments early to ensure timely receipt prior to the close of 
the comment period, as the Department continues to experience delays in 
the receipt of mail.
    Docket: For access to the docket to read background documents or 
comments, go to the Federal eRulemaking Portal at https://www.regulations.gov. Copies of this notice of proposed rulemaking will 
be made available, upon request, in the following formats: Large print, 
Braille, audiotape, and disc. To obtain this notice of proposed 
rulemaking in an alternate format, contact OFCCP at the telephone 
numbers or address listed below.

FOR FURTHER INFORMATION CONTACT: Tina T. Williams, Director, Division 
of Policy and Program Development, OFCCP, 200 Constitution Avenue NW, 
Room C-3325, Washington, DC 20210. Telephone: (202) 693-0103.

SUPPLEMENTARY INFORMATION:

[[Page 16139]]

Overview

    OFCCP administers and enforces Executive Order 11246, as amended 
(E.O. 11246); Section 503 of the Rehabilitation Act of 1973, 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, 41 CFR chapter 60. 
Collectively, these laws require Federal contractors and subcontractors 
\1\ 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.
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    \1\ Hereinafter, the term ``contractor'' is used to refer 
collectively to Federal contractors and subcontractors that fall 
under OFCCP's authority, unless otherwise expressly stated. This 
approach is consistent with OFCCP's regulations, which define 
``contract'' to include subcontracts and ``contractor'' to include 
subcontractors.
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    In November 2020, OFCCP published a final rule, ``Nondiscrimination 
Obligations of Federal Contractors and Subcontractors: Procedures to 
Resolve Potential Employment Discrimination'' (the ``2020 rule''),\2\ 
amending its regulations to codify the required use of two notification 
procedures, the Predetermination Notice and the Notice of Violation. 
The 2020 rule requires OFCCP to issue a Predetermination Notice that 
provides contractors with an initial written notice of preliminary 
indicators of discrimination and requests that contractors respond. If 
after providing contractors an opportunity to respond, OFCCP finds a 
violation of an equal opportunity clause,\3\ OFCCP will issue a Notice 
of Violation to the contractor requiring corrective action and inviting 
conciliation through a written agreement. The contractor then has an 
additional opportunity to respond and resolve the matter. Where OFCCP 
and the contractor have been unable to resolve these findings, and 
OFCCP has reasonable cause to believe that a contractor has violated an 
equal opportunity clause, the Director may issue a Show Cause Notice 
requiring the contractor to show cause for why monitoring, enforcement 
proceedings, or other appropriate action to ensure compliance should 
not be instituted. The 2020 rule also provided for an early 
conciliation option for contractors that wish to bypass these notice 
procedures and resolve preliminary indicators of discrimination 
directly through a conciliation agreement.
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    \2\ Nondiscrimination Obligations of Federal Contractors and 
Subcontractors: Procedures to Resolve Potential Employment 
Discrimination, 85 FR 71553 (Nov. 10, 2020). The final rule, which 
took effect on December 10, 2020, was published after OFCCP 
considered comments it received on a notice of proposed rulemaking, 
Nondiscrimination Obligations of Federal Contractors and 
Subcontractors: Procedures To Resolve Potential Employment 
Discrimination, 84 FR 71875 (Dec. 30, 2019).
    \3\ See 41 CFR 60-1.4, 60-4.3, 60-300.5, 60-741.5.
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    In addition to requiring the use of the Predetermination Notice and 
Notice of Violation, the 2020 rule established enforcement standards 
that, as explained in the preamble to the final rule, were not 
``compelled. . . by [Title VII of the Civil Rights Act of 1964] and 
OFCCP case law'' but rather were promulgated ``as an exercise of 
[OFCCP's] enforcement discretion to focus OFCCP's resources on those 
cases with the strongest evidence,'' ``increase the number of 
contractors the agency evaluates,'' and to provide ``guardrails on the 
agency's issuance of pre-enforcement notices.'' \4\
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    \4\ 85 FR 71553, 71554.
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    Upon further review and assessment of the impact of the 2020 rule 
on OFCCP enforcement, OFCCP believes that the 2020 rule's inflexible 
evidentiary requirements mandate overly particularized and confusing 
evidentiary definitions that impede OFCCP's ability to tailor the pre-
enforcement process to the specific facts and circumstances of each 
case, delay information exchange with contractors, and create obstacles 
to remedying discrimination. The 2020 rule's rigid requirements for 
issuing a Predetermination Notice and Notice of Violation in some 
instances exceed what courts have required for proof at trial and run 
counter to the general principle that the evidentiary standard pursuant 
to Title VII of the Civil Rights Act of 1964 (``Title VII'') is a 
flexible one dependent on the unique facts at issue. These heightened 
and overly formulaic evidentiary standards are particularly unsuitable 
at the Predetermination Notice stage of a compliance evaluation, where 
OFCCP provides contractors with preliminary notice of indicators of 
discrimination so that contractors may provide a response to clarify 
and resolve areas of dispute.
    In addition, mandating the same heightened and inflexible 
evidentiary requirements for both the Predetermination Notice and the 
Notice of Violation creates inefficient and duplicative processes, 
which hinders OFCCP's ability to provide contractors with early 
notification of indicators of discrimination found by the agency. 
Moreover, the 2020 rule attempted to codify complex evidentiary issues, 
many of which are inherently open to debate, thus encouraging 
contractors to raise collateral challenges to OFCCP's pre-enforcement 
notice procedures, rather than providing a substantive response to the 
indicators and findings of discrimination.
    Further, the 2020 rule requires that OFCCP disclose to the 
contractor at the pre-enforcement stage the quantitative and 
qualitative evidence relied upon by OFCCP to support indicators or 
findings of discriminatory intent ``in sufficient detail to allow 
contractors to investigate allegations and meaningfully respond.'' \5\ 
While the 2020 rule provided that OFCCP may withhold personally 
identifiable information in certain circumstances, the disclosure of 
qualitative evidence creates a risk that an employer will uncover 
identities of those who experience or report discrimination at this 
investigatory stage of the proceeding, which may have a chilling effect 
on the willingness of victims and witnesses to participate in OFCCP's 
investigation and also potentially lead to retaliation against those 
who report discrimination. Upon careful consideration, OFCCP believes 
that the 2020 regulations negatively impact America's workers by 
delaying the resolution of discrimination findings and constraining 
OFCCP's ability to effectively enforce the full scope of the 
protections that the President and Congress have entrusted to the 
agency.
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    \5\ The 2020 rule also requires OFCCP to demonstrate that the 
unexplained disparity is practically significant and, for disparate 
impact cases, OFCCP must identify the specific policy or practice of 
the contractor causing the adverse impact, unless OFCCP can 
demonstrate that the elements of the contractor's selection 
procedures are incapable of separation for analysis. See 41 CFR 60-
1.33.
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    In this rulemaking, OFCCP proposes to modify the 2020 rule to 
rescind the rigid evidentiary standards and definitions, while 
retaining and refining the required pre-enforcement procedures for 
issuing the Predetermination Notice and the Notice of Violation. 
OFCCP's regulations have included use of the Show Cause Notice since 
the agency's inception.\6\ This proposal will clarify OFCCP's use of 
the Predetermination Notice and the Notice of Violation as pre-
enforcement procedures, similar to the Show Cause Notice regulation, 
which has never

[[Page 16140]]

included the specific type of evidentiary standards the 2020 rule 
introduced. The proposed modifications would allow OFCCP to tailor the 
pre-enforcement process to the specific facts and circumstances of each 
case, consistent with judicial interpretations of the applicable legal 
authorities, which will in turn allow OFCCP to more effectively redress 
unlawful discrimination.
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    \6\ 41 CFR 60-1.28; see also Compliance Responsibility for Equal 
Employment Opportunity, 43 FR 49240, 49247 (Oct. 20, 1978); Revision 
of Chapter, 33 FR 7804, 7810 (May 28, 1968).
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    In addition, to promote greater efficiency in resolving cases, 
OFCCP proposes to modify the 2020 rule's provision that required a 
contractor to provide a response within 30 calendar days of receiving a 
Predetermination Notice.\7\ The proposal returns the Predetermination 
Notice response period to the 15 calendar day period in effect prior to 
the 2020 rule (which OFCCP may extend for good cause).\8\ In the 
proposal, OFCCP also clarifies this provision to state that any 
response must be received by OFCCP within 15 calendar days (absent a 
deadline extension).
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    \7\ 85 FR 71553, 71571-71574, codified at 41 CFR 60-1.33(a)(5), 
60-300.62(a)(5), 60-741.62(a)(5).
    \8\ See Directive 2018-01, Use of Predetermination Notices (Feb. 
27, 2018), available at https://www.dol.gov/agencies/ofccp/directives/2018-01 (last accessed Dec. 5, 2021).
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    OFCCP also proposes to retain the regulatory language regarding 
early resolution, which provides that contractors may waive these 
notice procedures if they enter directly into a conciliation agreement. 
Finally, the proposal would delete the severability clause that applied 
just to certain sections of OFCCP's regulations and replace it with 
severability clauses covering the entirety of each part of OFCCP's 
regulatory scheme.
    The 2020 final rule was the first time OFCCP sought to codify the 
specific forms of evidence that the agency must rely upon during its 
pre-enforcement process. Through this proposal, OFCCP would promote 
consistency by codifying the required use of the Predetermination 
Notice and Notice of Violation when the agency identifies preliminary 
indicators or findings of discrimination, while allowing the agency the 
flexibility to issue appropriate guidance to field staff on the use of 
the procedures. OFCCP would continue to ensure transparency by sharing 
this guidance with the public.
    This proposed rulemaking aims to create a streamlined, efficient, 
and flexible pre-enforcement and conciliation process to ensure OFCCP 
utilizes its resources strategically to advance the agency's mission 
through effective enforcement. OFCCP remains committed to providing 
contractors notice when the agency sees preliminary indicators of 
discrimination during a compliance evaluation, as such notice is 
mutually beneficial for OFCCP and the contractor under review because 
it provides the contractor an opportunity to respond and work to 
resolve the issues.

Purpose of the 2020 Rule

    In its 2020 final rule, OFCCP stated an intent to increase clarity 
and transparency for Federal contractors, establish clear parameters 
for OFCCP enforcement proceedings, and enhance the efficient 
enforcement of the law. The 2020 rule identified two primary 
objectives: (1) Increase the number of contractors the agency evaluates 
and (2) focus on resolving stronger cases through the strategic 
allocation of limited agency resources.\9\ As detailed further below in 
this proposed rulemaking, OFCCP reconsidered the 2020 rule and assessed 
its impact on OFCCP enforcement processes and has found that the 2020 
rule's formulaic and inflexible evidentiary standards for pre-
enforcement notices neither assist the agency in strategically 
allocating its limited resources nor enable the agency to evaluate more 
contractors. Instead, the 2020 rule's evidentiary mandates diminish 
OFCCP's ability to provide contractors with early notification of 
indicators of discrimination and unnecessarily divert agency and 
contractor resources away from addressing discrimination by spawning 
time-consuming collateral disputes about the implementation of these 
heightened evidentiary standards. This decreases rather than increases 
the number of contractors that OFCCP can evaluate for compliance with 
equal opportunity laws. OFCCP thus proposes to modify the 2020 rule to 
ensure that OFCCP utilizes its resources strategically to provide 
contractors with an early opportunity to understand and resolve 
indicators or findings of discrimination and to enable the agency to 
protect America's workers by enforcing the full scope of the equal 
opportunity authorities with which it has been entrusted.
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    \9\ 85 FR 71553, 71554.
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Pre-Enforcement Notices

    Historically, OFCCP has issued pre-enforcement notices in 
compliance evaluations (i.e., the Predetermination Notice, Notice of 
Violation, and Show Cause Notice) when the agency is seeking to remedy 
findings of discrimination.\10\ Prior to 2018, the use of the 
Predetermination Notice varied by region and by the type of case. In 
2018, OFCCP issued a directive, requiring the consistent issuance of 
Predetermination Notices for preliminary discrimination findings 
identified during the course of compliance evaluations.\11\
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    \10\ The notices are used at different pre-enforcement stages. 
See FCCM, Chapter 8, Resolution of Noncompliance (last updated Jan. 
7, 2021), available at https://www.dol.gov/agencies/ofccp/manual/fccm/chapter-8-resolution-noncompliance (last accessed Dec. 3, 
2021). OFCCP also uses the Notice of Violation and Show Cause Notice 
to identify other types of potential violations of law, such as 
denial of access or other types of nondiscrimination violations like 
recordkeeping deficiencies.
    \11\ See Directive 2018-01, Use of Predetermination Notices 
(Feb. 27, 2018), available at https://www.dol.gov/agencies/ofccp/directives/2018-01 (last accessed Dec. 5, 2021).
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    A stated goal of the 2020 rule was to provide contractors with 
greater certainty by codifying the historical, then-existing procedures 
for issuing the Predetermination Notice and the Notice of 
Violation.\12\ The preamble to the 2020 rule stated that the 
Predetermination Notice is intended to encourage communication with 
contractors and provide them an opportunity to respond to preliminary 
indicators of discrimination prior to OFCCP deciding to issue a Notice 
of Violation. As set forth in the 2020 rule, if the contractor did not 
respond to the Predetermination Notice or sufficiently rebut the 
preliminary indicators in the Predetermination Notice, OFCCP would 
issue the Notice of Violation to inform the contractor that the agency 
found violations of one or more of the laws it enforces. The Notice of 
Violation also informed the contractor that corrective action would be 
required and invited conciliation through a written agreement.\13\
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    \12\ See 84 FR 71875. Show Cause Notices were already codified 
in OFCCP's regulations prior to the 2020 rule, at 41 CFR 60-1.28, 
60-300.64, 60-741.64.
    \13\ Conciliation agreements were also already codified in 
OFCCP's regulations prior to the 2020 rule, at 41 CFR 60-1.33, 60-
300.62, and 60-741.62--the same sections that the 2020 rule amended 
to include the Predetermination Notice, the Notice of Violation, the 
early conciliation option, and a severability clause specific only 
to that section.
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    Rather than simply codify OFCCP's then-existing procedures for 
issuing the Predetermination Notice and Notice of Violation, the 2020 
rule instead exercised the agency's enforcement discretion to adopt 
rigid standards that the agency had not historically followed for 
issuing these two notices, necessitating that OFCCP alter the content 
of the Predetermination Notice and Notice of Violation from what had 
previously been included in the notices. As detailed further below, 
this rulemaking proposes to retain the

[[Page 16141]]

agency's consistent use of the two pre-enforcement notices while 
rescinding the 2020 rule's rigid evidentiary mandates.
    Prior to the issuance of the 2020 final rule, OFCCP had issued 
subregulatory guidance and internal procedures on the use of the 
Predetermination Notice, as well as the Notice of Violation, through 
the Federal Contract Compliance Manual (FCCM) and agency directives. 
The agency has utilized this guidance to promote transparency and 
consistency, while ensuring the agency has the flexibility to update 
these guidance documents to improve procedures and align with OFCCP's 
strategic enforcement measures. The 2020 rule also codified a new pre-
enforcement procedure available for OFCCP and contractors to expedite 
conciliation by bypassing the Predetermination Notice and Notice of 
Violation procedures and entering directly into a conciliation 
agreement. In this rulemaking, OFCCP retains this expedited 
conciliation process and only proposes changes to that subsection of 
the 2020 rule to clarify the agency's role in pursuing the expedited 
conciliation option.

Evidentiary Standards

    The 2020 rule codified evidentiary standards that OFCCP must meet 
in order to issue a Predetermination Notice and a Notice of Violation. 
Under the 2020 rule, OFCCP's authority to issue a Predetermination 
Notice or Notice of Violation for discrimination cases is limited to 
those situations where OFCCP demonstrates that it has specific forms of 
evidence conforming to the regulatory thresholds requiring quantitative 
(i.e., statistical or other numerical) evidence, practical 
significance, and qualitative evidence of discrimination.\14\ The 2020 
rule differentiates the procedures followed for disparate treatment and 
disparate impact theories of discrimination and provides the 
evidentiary standards OFCCP must meet to issue pre-enforcement notices 
under each legal theory.\15\ The 2020 rule mandates that, upon the 
contractor's request, OFCCP must provide the model and variables used 
in the agency's statistical analysis and an explanation for any 
variable that was excluded from the statistical analysis. The 2020 rule 
also requires OFCCP to explain in detail the basis for its findings in 
pre-enforcement notices.\16\ For the reasons discussed below, this 
rulemaking proposes to rescind these formal evidentiary standards and 
disclosure requirements in the 2020 rule.
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    \14\ 85 FR 71553, 71562-71565.
    \15\ For all cases proceeding under a disparate treatment 
theory, subject to certain enumerated exceptions, the 2020 rule 
establishes that OFCCP is required to provide qualitative evidence 
supporting a finding of discriminatory intent. For all cases 
proceeding under a disparate impact theory, the 2020 rule requires 
OFCCP to identify the policy or practice of the contractor causing 
the adverse impact with factual support demonstrating why such 
policy or practice has a discriminatory effect. 85 FR 71553, 71562-
71565.
    \16\ 85 FR 71553, 71562.
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Definitions

    Finally, the 2020 rule added definitions for ``quantitative 
evidence'' and ``qualitative evidence'' to OFCCP's regulations 
purporting to add greater clarity and certainty as to the types of 
evidence the agency uses to support the issuance of pre-enforcement 
notices.\17\ The term ``qualitative evidence'' is defined to include 
the various types of documents, testimony, and interview statements 
that OFCCP collects during its compliance evaluations relevant to a 
finding of discrimination, and clarified the purposes for which it will 
be used. The term ``quantitative evidence'' establishes the support 
needed for OFCCP to determine that there is a statistically significant 
disparity in a contractor's employment selection or compensation 
outcomes affecting a group protected under OFCCP's laws. The definition 
sets a standard for what OFCCP considers statistically significant.\18\ 
The definition also includes quantitative analyses, such as cohort 
analyses, which are comparisons of similarly situated individuals or 
small groups of applicants or employees that are numerical in nature 
but do not use hypothesis testing techniques. Pursuant to the 2020 
rule, the term ``qualitative evidence'' gives an affirmative, 
descriptive label to the types of evidence that fall into that category 
while the term ``quantitative evidence'' better encapsulates OFCCP's 
analytical evidence given the agency's use of descriptive statistics 
and non-parametric and cohort analyses, in addition to a variety of 
statistical tests based on hypothesis testing.\19\ OFCCP declined to 
add a specific definition for practical significance in the 2020 rule 
because it concluded there is not a settled definition in relevant 
academic literature and a variety of measures may be appropriate to use 
in any given case, instead describing the common types of practical 
significance measures and explaining the metrics the agency would 
customarily use.\20\ In this proposed rulemaking, OFCCP proposes to 
eliminate the definitions for the reasons discussed below.
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    \17\ 85 FR 71553, 71555. The definitions are now codified at 41 
CFR 60-1.3, 60-300.2(t)-(u), and 60-741.2(s)-(t).
    \18\ The definition of quantitative evidence includes this 
standard for statistical significance: ``. . . a disparity in 
employment selection rates or rates of compensation 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. It also includes numerical analysis of similarly situated 
individuals, small groups, or other characteristics, demographics or 
outcomes where hypothesis-testing techniques are not used.'' 41 CFR 
60-1.3, 60-300.2(t)-(u), 60-741.2(s)-(t); see also 85 FR 71553, 
71571-71574.
    \19\ 85 FR 71553, 71556.
    \20\ Id. at 71559-71560.
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Modifications To Promote Effective Enforcement

Rescinding Evidentiary Standards Codified by the 2020 Rule

    The 2020 rule codifies specific evidentiary standards that OFCCP 
must meet in order to issue a Predetermination Notice and a Notice of 
Violation. The preamble to the 2020 rule concedes, however, that these 
standards, applicable to both the Predetermination Notice and the 
Notice of Violation, are not compelled by Title VII or OFCCP case law. 
Indeed, as discussed below, the 2020 rule places certain obligations on 
OFCCP that go beyond what is required by E.O. 11246 to state or prove a 
claim of discrimination or by Title VII for proof of discrimination 
after the completion of the discovery process upon a full evidentiary 
record in litigation.
    The pre-enforcement notice process is intended to place the 
employer on notice of OFCCP's concerns of discrimination. The 
information available to OFCCP during the pre-enforcement notice stage 
of a compliance evaluation is necessarily limited compared to a full 
evidentiary record available to support proof of a violation at trial. 
Thus, imposing proof standards for the agency's initial pre-enforcement 
proceedings that essentially require the agency to be trial ready--and, 
as discussed in more detail below, are even more onerous than are 
required in court to prove a violation under Title VII--is incompatible 
with the investigatory stage of a compliance evaluation.\21\ As set 
forth in OFCCP's

[[Page 16142]]

longstanding regulations in effect since OFCCP's inception, the agency 
will issue a Show Cause Notice to proceed with an enforcement action 
where it has reasonable cause to believe discrimination occurred based 
on the information available through its investigation.\22\ This means 
that, based upon the evidence obtained in the investigation, the agency 
believes discrimination did occur.\23\ This does not require developing 
a full evidentiary record to support proof at trial, but rather 
providing notice of the agency's findings supporting its belief that 
violations occurred and giving the contractor the opportunity to show 
why agency action to ensure compliance should not be instituted.\24\ 
Thus, even this final stage in the pre-enforcement process does not 
impose specific evidentiary regulations or trial-level proof prior to 
the institution of an enforcement action.
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    \21\ See OFCCP v. Oracle, 2017-OFC-00006, 19 (Order Denying 
Cross Motions for Summary Judgment Granting in Part Defendant's 
Alternative Motion for Partial Summary Judgment & Order for 
Additional Briefing on Show Cause Notice & Conciliation, Nov. 25, 
2019) (```Reasonable cause' is something that the [Director of 
OFCCP] is given the discretion to determine[.]''); see also OFCCP v. 
Oracle, 2017-OFC-00006, 8 (Order Granting OFCCP Summary Judgment as 
to Oracle's Affirmative Defenses Related to the Show Cause Notice & 
Conciliation, Dec. 3, 2019) (denying Oracle's argument that if OFCCP 
did not meet the reasonable cause standard for issuing the show 
cause notice, then all of the evidence gathered was gathered in 
violation of the Fourth Amendment stating ``[this argument] presumes 
that the Show Cause Notice has a much more important place than can 
be fairly read into the regulatory scheme'').
    \22\ 41 CFR 60-1.28, 60-300.64, 60-741.64.
    \23\ See, e.g., 42 U.S.C. 2000e-5(b); cf. OFCCP v. Honeywell, 
77-OFC-3, 8-9 (Sec'y of Labor Dec. & Order on Mediation, June 2, 
1993) (comparing the show cause procedure to the reasonable cause 
determination made by the Equal Employment Opportunity Commission 
(EEOC), the ALJ found that the government letter explaining the 
deficiencies found and recommended remedial actions was comparable 
to a reasonable cause determination); U.S. Equal Employment 
Opportunity Commission, ``Definition of Terms,'' available at 
https://www.eeoc.gov/statistics/definitions-terms (last visited Nov. 
8, 2021).
    \24\ 41 CFR 60-1.28, 60-300.64, 60-741.64; cf EEOC v. Keco 
Indus., Inc., 748 F.2d 1097, 1100 (6th Cir. 1984) (EEOC's cause 
determination ``does not adjudicate rights and liabilities; it 
merely places the defendant on notice of the charges'') (citing EEOC 
v. E.I. Dupont de Nemours & Co., 373 F. Supp. 1321, 1338 (D. Del. 
1974)).
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    The Predetermination Notice is the initial written notice in a 
multi-stage notification and information exchange process provided to 
contractors to promote a mutual understanding of the issues and 
facilitate voluntary resolution. Prior to the 2020 regulation, the 
Predetermination Notice served to foster communication with contractors 
about preliminary indicators of discrimination, providing the 
contractor with an early opportunity to understand and respond to 
OFCCP's preliminary findings. This process enables the sharing of 
additional information that may assist OFCCP in resolving the 
preliminary findings or conducting a more refined analysis of the data 
before determining whether to issue a Notice of Violation.
    In order to issue a Predetermination Notice under the 2020 rule, 
OFCCP must meet the same evidentiary standards as required to issue a 
Notice of Violation. As a result, the 2020 rule has created 
inefficiencies and delay in OFCCP's pre-enforcement process. In 
addition, the 2020 rule has in certain respects created higher 
evidentiary requirements for E.O. 11246 matters than Title VII matters, 
which unduly circumscribes OFCCP's ability to prosecute discriminatory 
practices and is contrary to the approach generally followed by OFCCP 
and recognized in relevant case law.\25\
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    \25\ Cf. OFCCP v. Greenwood Mills, Inc., Nos. 00-044, 01-089, 
2002 WL 31932547, at *4 (ARB Final Decision & Order Dec. 20, 2002) 
(``The legal standards developed under Title VII of the Civil Rights 
Act of 1964 apply to cases brought under [E.O. 11246].'').
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    While the 2020 rule purported to ``focus OFCCP's resources on those 
cases with the strongest evidence,'' \26\ upon further reconsideration 
OFCCP believes the rule hindered the agency's ability to focus on those 
cases with the strongest evidence by adopting a formulaic approach to 
evidentiary standards rather than viewing the strength of the evidence 
in light of the particular facts and circumstances at issue in each 
case. OFCCP has concluded that rigid evidentiary standards are 
unnecessary and unduly constrain the agency's broad enforcement 
discretion as to the cases it decides to litigate and those it does 
not.\27\ OFCCP has been diligent in managing its limited resources for 
decades to focus on the strongest cases without the need for blanket 
evidentiary standards. To promote more effective enforcement, OFCCP 
proposes to return to its long-standing practice of focusing agency 
resources without imposing blanket evidentiary standards, pursuing 
those cases supported by strong evidence tailored to the facts of each 
case. Further, OFCCP believes that the 2020 rule has failed to meet its 
objectives of providing clarity and promoting efficiency. As described 
in more detail below, these strict evidentiary standards have instead 
led to delays in resolutions by increasing disagreements between OFCCP 
and contractors about the requirements for Predetermination Notices.
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    \26\ 85 FR 71553, 7155.
    \27\ See generally Heckler v. Chaney, 470 U.S. 821 (1985); 
Andrews v. Consolidated Rail Corporation, 831 F.2d 678, 684 (3rd 
Cir. 1987) (applying Chaney to OFCCP decision to decline enforcement 
under Section 503); Clementson v. Brock, 806 F.2d 1402, 1404 (9th 
Cir. 1986) (applying Chaney to OFCCP decision to decline enforcement 
under VEVRAA).
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    With this proposal, OFCCP would apply Title VII standards to the 
facts and circumstances of each compliance evaluation to provide 
contractors with notice of the nature of OFCCP's concerns.\28\ OFCCP 
proposes to adopt this approach to advance a policy of promoting 
consistency between Title VII and E.O. 11246 and to remove unnecessary 
constraints on the agency's ability to pursue meritorious cases. Taking 
this approach will help OFCCP advance the overriding policy goal of 
promoting nondiscrimination by strengthening the enforcement of federal 
protections under E.O. 11246. OFCCP also would promote transparency and 
consistency by continuing to codify the required use of the 
Predetermination Notice when the agency identifies preliminary 
indicators of discrimination.
---------------------------------------------------------------------------

    \28\ Similarly, for claims related to disability discrimination, 
OFCCP would continue to apply the nondiscrimination standards of the 
Americans with Disabilities Act of 1990 (ADA), as amended, to 
compliance evaluations pertaining to Section 503. See, e.g., 41 CFR 
60-741.1(c)(1), 60-742.4.
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1. ``Quantitative'' and ``Qualitative'' Evidence
    The 2020 rule requires that OFCCP, with only narrow exceptions, 
provide both ``quantitative'' and ``qualitative'' evidence before 
issuing a Predetermination Notice or a Notice of Violation, and 
provides definitions for what constitutes ``quantitative'' and 
``qualitative'' evidence.\29\ These provisions of the 2020 rule depart 
from traditional Title VII standards in two respects. First, Title VII 
does not prescribe the different and specific forms of evidence 
described in the 2020 rule in order to establish a prima facie case of 
discrimination, much less investigatory findings of violation.\30\ 
Interpretive Title VII case law demonstrates that there are multiple 
ways to establish a prima facie case of discrimination, including 
through statistical evidence alone, as long as the

[[Page 16143]]

plaintiff ultimately satisfies its burden of proof.\31\
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    \29\ The 2020 rule definitions are codified at 41 CFR 60-1.3, 
60-300.2(t)-(u), 60-741.2(s)-(t).
    \30\ See Int'l Bhd. of Teamsters v. United States, 431 U.S. 324, 
358 (1977) (``[T]he facts necessarily will vary in Title VII cases, 
and the specification . . . of the prima facie proof required from 
(a plaintiff) is not necessarily applicable in every respect to 
differing factual situations.'' (alterations omitted) (quoting 
McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 n. 13(1973)); 
Adams v. Ameritech Servs., Inc., 231 F.3d 414, 425 (7th Cir. 2000) 
(``No one piece of evidence has to prove every element of the 
plaintiff's case[.]'') (internal citations omitted); Anderson v. 
Douglas & Lomason Co., Inc., 26 F.3d 1277, 1285 (5th Cir. 1994) 
(``If statistical evidence is insufficient to establish 
discriminatory intent, the plaintiffs may bolster their case by 
introducing historical, individual, or circumstantial evidence.'') 
(citing Bernard v. Gulf Oil Corp., 841 F.2d 547, 568 (5th Cir. 
1988)).
    \31\ See Bazemore v. Friday, 478 U.S. 385, 400 (1986) (``Whether 
. . . [statistics] . . . carry the plaintiffs' ultimate burden will 
depend in a given case on the factual context of each case in light 
of all the evidence presented by both the plaintiff and the 
defendant.''); Int'l Bhd. of Teamsters, 431 U.S. at 339 (finding 
that statistics may be used to establish a prima facie case, but 
cautioning that the ``usefulness [of statistics] depends on all of 
the surrounding facts and circumstances'') (internal citations 
omitted); see also Isabel v. City of Memphis, 404 F.3d 404, 412 (6th 
Cir. 2005) (``[W]hen the Supreme Court stated that a plaintiff may 
rely solely on statistical evidence to establish a prima facie case 
of disparate impact . . . it did not say what kind of statistical 
evidence should be relied on. Neither the Supreme Court nor this 
Court has ever limited a plaintiff's choices in Title VII cases 
involving statistical analysis in any way.'') (citing Wards Cove 
Packing Co. v. Atonio, 490 U.S. 642, 656-57 (1989)).
---------------------------------------------------------------------------

    As the U.S. Supreme Court and lower courts have long recognized, 
Title VII requires a case-by-case evaluation of the facts and 
circumstances.\32\ There is no one-size-fits-all blanket formula for 
establishing discrimination. Yet, the 2020 rule circumscribes OFCCP's 
authority to pursue only those cases that meet bright line statistical 
thresholds or rely on specific types of evidence. To be sure, OFCCP 
recognizes the utility of anecdotal evidence in support of 
discrimination cases generally and will continue to make efforts to 
gather such evidence during its compliance evaluations.\33\ However, to 
require as a baseline rule that the agency proffer evidence falling 
within multiple and different categories regardless of the factual 
circumstances of a case--especially at the investigative stage--goes 
beyond well-established Title VII principles. In addition, a number of 
the regulatory requirements impose a standard that is inherently fact 
specific, open to dispute, and ultimately unnecessary to adjudicate at 
this initial stage of the proceeding, including the requirement that 
OFCCP provide ``qualitative evidence supporting a finding of 
discriminatory intent for all cases proceeding under a disparate 
treatment theory'' (emphasis added), subject to certain enumerated 
exceptions. Such disputes created protracted delays in remedying 
violations of the law. Moreover, the 2020 rule requires that OFCCP 
disclose to the contractor at this preliminary stage the quantitative 
and qualitative evidence relied upon by OFCCP to support findings of 
discriminatory intent ``in sufficient detail to allow contractors to 
investigate allegations and meaningfully respond.'' \34\ Mandating the 
disclosure of anecdotal evidence at this pre-determination stage may 
have a chilling effect on the willingness of victims and witnesses to 
participate in OFCCP's investigation due to concerns that an employer 
may uncover their identities, which could lead to retaliation. The 
preamble to the 2020 rule acknowledges that OFCCP may withhold 
``personal identifying information from the description of the 
qualitative evidence if the information is protected from disclosure 
under recognized governmental privileges, or if providing that 
information would otherwise violate confidentiality or privacy 
protections afforded by law;'' yet, even in those circumstances where 
OFCCP may withhold an individual's identity, witnesses may remain 
concerned about the employer's ability to ascertain their identity from 
the anecdotal information provided at this pre-determination stage.
---------------------------------------------------------------------------

    \32\ See Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 995 
n.3 (1988) (noting that the Supreme Court has ``not suggested that 
any particular number of `standard deviations' can determine whether 
a plaintiff has made out a prima facie case in the complex area of 
employment discrimination''); Gay v. Waiters' & Dairy Lunchmen's 
Union, Local No. 30, 694 F.2d 531, 551 (9th Cir. 1982) (``It would 
be improper to posit a quantitative threshold above which 
statistical evidence of disparate racial impact is sufficient as a 
matter of law to infer discriminatory intent, and below which it is 
insufficient as a matter of law.'').
    \33\ See FCCM, Chapter 2E00, Types of Evidence, available at 
https://www.dol.gov/agencies/ofccp/manual/fccm/2e-collecting-information-analysis/2e00-types-evidence (last accessed Dec. 3, 
2021) (explaining that during its compliance evaluations, OFCCP 
seeks a variety of other types of nonstatistical evidence, including 
anecdotal evidence).
    \34\ 85 FR 71564.
---------------------------------------------------------------------------

    As such, OFCCP proposes to rescind the 2020 rule requirement to 
provide both ``quantitative'' and ``qualitative'' evidence before 
issuing a Predetermination Notice or Notice of Violation. As described 
above, disputes over this requirement resulted in protracted delays for 
remedying violations. Eliminating this unnecessary, rigid requirement 
allows the agency more flexibility, better ensures prompt resolutions, 
and strengthens its ability to protect workers and enforce the law. 
Eliminating this requirement also allows OFCCP to better align its 
enforcement with Title VII evidentiary standards.
    Because OFCCP is proposing to rescind this requirement, the 
definitions of ``quantitative evidence'' and ``qualitative evidence'' 
included in the 2020 rule to support the evidentiary scheme would no 
longer be necessary. Even when evaluated outside of the 2020 rule's 
evidentiary framework, upon further consideration, OFCCP now believes 
these definitions, and particularly the definition for ``qualitative 
evidence,'' to be confusing, overly particularized, and inconsistent 
with the general principle that the Title VII evidentiary standard is a 
flexible one dependent on the unique facts at issue.\35\ First, the 
2020 rule's definition of ``qualitative evidence'' begins with a series 
of lengthy, highly specific examples that may not be present in many 
systemic discrimination cases. Although the 2020 rule stated that 
qualitative evidence ``includes but is not limited to'' these examples, 
some contractors now assert that OFCCP must present evidence of these 
highly specific examples in its cases, creating delays to OFCCP's pre-
enforcement conciliation procedures. However, the 2020 rule's first 
example--``biased statements, remarks, attitudes, or acts based upon 
membership in a protected class, particularly when made by a decision 
maker involved in the action under investigation''--includes the sort 
of direct, ``smoking gun'' evidence that, while certainly probative of 
discrimination, is ``rarely found in today's sophisticated employment 
world.'' \36\ The next example--evidence about ``misleading or 
contradictory information'' given by an employer to an employee or 
applicant ``in circumstances suggesting discriminatory treatment''--
also describes narrow factual scenarios that may not be present in many 
cases, substantially limiting the utility of the definition. The 
``qualitative evidence'' definition is also overly focused on evidence 
of discriminatory intent in disparate treatment cases. Even though it 
includes one example related to disparate impact cases--evidence 
related to ``the business necessity (or lack thereof) of a challenged 
policy or practice''--that example is problematic because it is: (1) A 
category of evidence that is the employer's burden to demonstrate, 
after the agency establishes a prima facie case; \37\ and (2) not the 
only sort of ``qualitative'' evidence that plaintiffs typically 
introduce or rely upon in the course of a disparate impact case.\38\

[[Page 16144]]

Finally, the definition includes ``whether the contractor has otherwise 
complied with its non-discrimination obligations'' as a type of 
permissible qualitative evidence. Upon reconsideration, OFCCP has 
concerns that this provision could easily be misinterpreted to mean 
that when a contractor complies with some of its nondiscrimination 
obligations, it somehow lessens the weight of evidence of noncompliance 
with other nondiscrimination obligations. Accordingly, OFCCP proposes 
to remove the two definitions added in the 2020 rule. OFCCP will 
continue to evaluate its cases in line with well-established Title VII 
evidentiary standards and will continue to provide compliance 
assistance and other guidance materials on these standards as 
appropriate.\39\
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    \35\ Int'l Bhd. of Teamsters, 431 U.S. at 358.
    \36\ Thomas v. Eastman Kodak Co., 183 F. 3d 38, 58 n.12 (1st 
Cir. 1999) (citing Hodgens v. Gen. Dynamics Corp., 144 F.3d 151, 171 
n. 13 (1st Cir. 1998)).
    \37\ 42 U.S.C. 2000e-2(k)(1)(A)(i); see also Ricci v. DeStefano, 
557 U.S. 557, 578 (2009) (``An employer may defend against liability 
[for disparate impact discrimination] by demonstrating that the 
practice is `job-related for the position in question and consistent 
with business necessity.' ''); Wards Cove Packing Co., 490 U.S. at 
659 (``[T]he employer carries the burden of producing evidence of a 
business justification for his employment practice.'').
    \38\ By way of example, because a plaintiff in disparate impact 
cases must, where possible, identify the particular employment 
practice that is causing the adverse impact, see 42 U.S.C. 2000e-
2(k)(1)(B)(i), it is commonplace for a plaintiff to introduce 
testimony or interview statements from expert witnesses or company 
officials regarding its selection or compensation system that would 
provide necessary context and help to identify the particular 
employment practice at issue. Similarly, evidence regarding less 
discriminatory alternative employment practices is a common feature 
in disparate impact cases. 42 U.S.C. 2000e-2(k)(1)(A)(ii).
    \39\ OFCCP applies ADA standards to compliance evaluations 
pertaining to Section 503. See supra at n. 28.
---------------------------------------------------------------------------

2. Practical Significance
    Practical significance refers to whether an observed disparity in 
employment opportunities or outcomes reflects meaningful harm to the 
disfavored group, focusing on the contextual impact or importance of 
the disparity rather than its likelihood of occurring by chance.\40\ 
For allegations included in a Predetermination Notice and Notice of 
Violation, the 2020 rule requires that OFCCP demonstrate practical 
significance, and the preamble includes quantitative ranges for various 
measures indicating whether it is ``likely'' or ``unlikely'' that 
practical significance is present.\41\
---------------------------------------------------------------------------

    \40\ Practical Significance in EEO Analysis Frequently Asked 
Questions, Question #1 (last updated Jan. 15, 2021), available at 
www.dol.gov/agencies/ofccp/faqs/practicalsignificance (last accessed 
Dec. 5. 2021). See also 85 FR 71553, 71559.
    \41\ 85 FR 71556.
---------------------------------------------------------------------------

    Whether Title VII specifically requires a finding of practical 
significance is an unsettled question. The text of Title VII contains 
no specific requirement that practical significance must be 
demonstrated.\42\ Of the circuit courts that have expressly addressed 
the issue, three have concluded that Title VII does not require a 
showing of practical significance.\43\ For example, in Jones v. City of 
Boston, the First Circuit explicitly held that a plaintiff's failure to 
demonstrate practical significance could not preclude that plaintiff 
from relying on evidence of statistical significance to establish a 
prima facie case of disparate impact.\44\ In doing so, the Court noted 
that the requirements a plaintiff must otherwise meet under Title VII 
``secure most of the advantages that might be gained'' from a test of 
practical significance.\45\ First, the ``need to show statistical 
significance will eliminate small impacts as fodder for litigation . . 
. because proving that a small impact is statistically significant 
generally requires large samples sizes, which are often unavailable.'' 
\46\ Second, the subsequent steps required for a plaintiff to 
successfully recover under Title VII provide an additional safeguard in 
that the employer may rebut the prima facie case.\47\ Similarly, in 
Stagi v. National Railroad Passenger Corp., the Third Circuit 
explicitly declined to require a showing of practical significance, and 
instead required only that the plaintiffs meet the well-established 
thresholds for statistical significance in order to meet their prima 
facie case.\48\
---------------------------------------------------------------------------

    \42\ See Elliot Ko, Big Enough to Matter: Whether Statistical 
Significance or Practical Significance Should Be the Test for Title 
VII Disparate Impact Claims, 101 Minn. L.R. 869, 889 (2016) (``Title 
VII does not require plaintiffs to prove that an employment practice 
had a `large' impact on a protected class. Title VII just requires 
plaintiffs to prove that `a particular employment practice' had a 
disparate impact on a protected class.... Title VII only requires 
proof of a `disparate impact,' not proof of a `very' disparate 
impact that is large enough to warrant societal or moral 
condemnation.'').
    \43\ Jones v. City of Boston, 752 F.3d 38 (1st Cir. 2014); 
Apsley v. Boeing Co., 691 F.3d 1184 (10th Cir. 2012); Stagi v. Nat'l 
R.R. Passenger Corp., 2010 WL 3273173 (3d Cir. Aug. 16, 2010).
    \44\ Jones, 752 F.3d at 53.
    \45\ Id.
    \46\ Id. (internal citations omitted).
    \47\ Id. (internal citations omitted).
    \48\ Stagi, 2010 WL 3273173 at *5 (citing Castaneda v. Partida, 
430 U.S. 482, 496 n.17 (1977)); see also Meditz v. City of Newark, 
658 F.3d 364, 372 (3d Cir. 2011) (using only a measure of 
statistical significance to determine whether plaintiff established 
a prima facie case of disparate impact).
---------------------------------------------------------------------------

    Other circuit courts have considered measures of practical 
significance in determining whether a plaintiff in a disparate impact 
case has satisfied a prima facie case.\49\ These cases have generally 
adopted a holistic approach to the evidence required in a given case 
depending on the facts at issue.\50\ However, unlike with statistical 
significance, courts have not similarly coalesced around uniform 
quantitative measures for what constitutes sufficient practical 
significance. Consequently, the 2020 rule did not specify which measure 
of many available options OFCCP should utilize as a threshold for 
practical significance during its compliance evaluations of selection 
and compensation procedures. As OFCCP has stated in its Frequently 
Asked Questions published even prior to the 2020 rule, the agency 
utilizes a variety of measures for evaluating practical significance as 
appropriate to the employment issue under review and the specific facts 
of each case.\51\
---------------------------------------------------------------------------

    \49\ Brown v. Nucor Corp., 785 F.3d 895, 908, 935 (4th Cir. 
2015); Isabel v. City of Memphis, 404 F.3d 404, 412, 418 (6th Cir. 
2005); Ensley Branch of NAACP v. Seibels, 31 F.3d 1548, 1555 (11th 
Cir. 1994); Waisome v. Port Auth. of N.Y. & N.J., 948 F.2d 1370, 
1376 (2d Cir. 1991); Clady v. County of Los Angeles, 770 F.2d 1421, 
1428-29 (9th Cir. 1985); Fisher v. Procter & Gamble Mfg. Co., 613 
F.2d 527, 545 (5th Cir. 1980).
    \50\ Ko, supra n. 42, at 881-84.
    \51\ See Practical Significance in EEO Analysis Frequently Asked 
Questions (last updated Jan. 15, 2021), at https://www.dol.gov/agencies/ofccp/faqs/practical-significance (last accessed Dec. 5, 
2021).
---------------------------------------------------------------------------

    As part of its enforcement discretion, OFCCP has historically 
utilized practical significance measures where appropriate in 
compliance evaluations based on the specific facts of the case without 
the need for regulations. In addition, the particular ranges that were 
discussed in the preamble of the 2020 rule may not be appropriate in 
all cases depending on the other evidence that exists. It also remains 
unsettled whether Title VII requires a finding of practical 
significance, and, if so, what level of practical significance is 
sufficient and appropriate to the process under review. Accordingly, 
OFCCP believes it is not advisable to attempt to regulate the standards 
for practical significance, and proposes to remove the requirement to 
demonstrate practical significance before issuing a Predetermination 
Notice or Notice of Violation. Moving forward, however, OFCCP would 
still consider practical significance measures where appropriate as 
part of a holistic evaluation of the cases it investigates along with 
statistical significance and all other evidence gathered in the course 
of the investigation.

Addressing Barriers to Enforcement Created by the 2020 Rule

    OFCCP believes that rescinding the inflexible evidentiary standards 
would also advance OFCCP's policy goal of alleviating duplicative and 
inefficient processes created by the 2020 rule that undermine effective 
enforcement of equal employment opportunity laws. For instance, the 
Predetermination Notice originally served to foster communication with 
contractors about preliminary indicators of discrimination. However, at 
the preliminary stage, these rigid evidentiary standards also invite

[[Page 16145]]

additional delay by engendering disputes about the scope of evidence 
contractors must provide and whether OFCCP has satisfied the rule's 
heightened requirements. The 2020 rule's regulatory standards thus 
serve to prevent OFCCP from providing early communication of 
preliminary indicators of discrimination and delays the prompt 
resolution of these preliminary indicators and the exchange of more 
information to perform additional analysis. Pursuant to the 2020 rule, 
to issue the Predetermination Notice, OFCCP must meet the same 
evidentiary standards that the agency must meet to issue a Notice of 
Violation. As a result, the 2020 rule conflates a notice that is 
intended to convey preliminary indicators of discrimination (the 
Predetermination Notice) with a notice intended to inform the 
contractor that corrective action is required and to invite 
conciliation through a written agreement (the Notice of Violation). 
OFCCP believes that conflating these two notices by requiring 
duplicative evidentiary standards unnecessarily consumes resources and 
delays OFCCP's ability to timely raise preliminary indicators of 
discrimination. As the two notices were originally meant to serve 
separate, unique purposes, this rulemaking proposes to restore the 
function of the Predetermination Notice to convey preliminary 
indicators of discrimination and foster the exchange of information and 
communication toward efficient resolution.
    To retain the Predetermination Notice and distinguish it from the 
Notice of Violation, OFCCP proposes to modify the 2020 rule to enable 
the agency to streamline the compliance evaluation process and issue 
the Predetermination Notice earlier where appropriate. OFCCP will issue 
a Predetermination Notice describing the preliminary indicators of 
discrimination and any other potential violations OFCCP has identified, 
asking the contractor to respond. In some circumstances, this may be 
after the agency has completed the desk audit and prior to the on-site 
review,\52\ while in other cases, depending on the facts and 
circumstances, the agency will issue the Predetermination Notice after 
OFCCP has begun an on-site review and obtained the information 
necessary to identify preliminary indicators of discrimination.
---------------------------------------------------------------------------

    \52\ OFCCP compliance reviews proceed in three stages: Desk 
audit, on-site review, and off-site analysis. See 41 CFR 60-
1.20(a)(1), 60-300.60(a), 60-741.60(a).
---------------------------------------------------------------------------

    To promote greater efficiency in resolving cases, OFCCP proposes to 
modify the 2020 rule's provision which required a contractor to provide 
a response within 30 calendar days of receiving a Predetermination 
Notice. The proposal will return the Predetermination Notice response 
period to the 15-calendar-day period in effect prior to the 2020 rule 
(which OFCCP may extend for good cause).\53\ In the proposal, OFCCP 
also clarifies this provision to state that any response must be 
received by OFCCP within 15 calendar days (absent a deadline 
extension).
---------------------------------------------------------------------------

    \53\ See Directive 2018-01, Use of Predetermination Notices 
(Feb. 27, 2018), available at https://www.dol.gov/agencies/ofccp/directives/2018-01 (last accessed Dec. 5, 2021).
---------------------------------------------------------------------------

    After OFCCP issues a Predetermination Notice, where the contractor 
does not sufficiently rebut the preliminary indicators of 
discrimination, and OFCCP finds a violation of one or more of its equal 
opportunity clauses,\54\ OFCCP will issue a Notice of Violation to the 
contractor identifying the violations, describing the recommended 
corrective actions, and inviting conciliation through a written 
agreement. OFCCP proposes changes to the Notice of Violation regulation 
similar to the changes proposed for the Predetermination Notice, to 
remove barriers to resolution. For the Notice of Violation regulatory 
provision, the proposed changes make clear that OFCCP can include 
additional violations in a subsequent Show Cause Notice without 
amendment to the Notice of Violation to prevent enforcement delays. The 
proposed changes to the Notice of Violation regulation also clearly 
state that OFCCP will provide contractors an opportunity to conciliate 
additional violations identified in the Show Cause Notice. The proposal 
contains similar changes in the Predetermination Notice provision, 
allowing OFCCP to add additional violations in a subsequent Notice of 
Violation or Show Cause Notice without amending the Predetermination 
Notice. The proposed changes provide that OFCCP may issue a Show Cause 
Notice where OFCCP has reasonable cause to believe that a contractor 
has violated the equal opportunity clause. The proposed changes also 
clarify that the agency may issue a Show Cause Notice without first 
issuing a Predetermination Notice or Notice of Violation when the 
contractor has failed to provide access to its premises for an on-site 
review, or refuses to provide access to witnesses, records, or other 
information.
---------------------------------------------------------------------------

    \54\ 41 CFR 60-1.4, 60-4.3, 60-300.5, 60-741.5.
---------------------------------------------------------------------------

    These proposed changes stem from OFCCP's experience implementing 
the 2020 rule as well as its policy judgment on how OFCCP can 
strengthen enforcement of its requirements and promote consistency with 
Title VII. The 2020 rule stated that key objectives included promoting 
more effective enforcement, increasing the number of contractors that 
the agency evaluates, and increasing fairness for contractors by 
providing more transparency and certainty on the agency's resolution 
procedures.\55\ However, the 2020 rule has not met these objectives. 
The 2020 rule instead resulted in time-consuming disputes with 
contractors over the application of the new requirements. For example, 
upon receipt of the Predetermination Notice, contractors have disputed 
the application of the 2020 rule's evidentiary requirements, causing 
additional delay that diverts resources from the central issue of 
resolving indicators and findings of discrimination. Additionally, 
several contractors have argued that the anecdotal evidence that OFCCP 
shared to support its case failed to meet the ``qualitative evidence'' 
definition included in the 2020 rule. Other contractors have argued 
that the qualitative evidence that OFCCP provided was insufficient 
because the agency failed to disclose the identity of the interviewees 
who provided relevant statements at the Predetermination Notice stage. 
Contractors have also disputed whether OFCCP met the required threshold 
for practical significance under the 2020 rule, arguing that the agency 
has failed to meet the threshold or even disagreeing with the 2020 
rule's standard altogether. In each of these cases, the disputes raised 
by contractors have delayed OFCCP's completion of compliance 
evaluations. These delays would not have occurred but for the 2020 rule 
and its rigid evidentiary requirements for a Predetermination Notice 
that are prone to dispute and in some respects go beyond what is 
required for proof of discrimination under Title VII. OFCCP proposes 
modifications to these pre-enforcement notice and conciliation 
procedures to streamline the issuance of these notices by removing 
inefficiency and delay caused by the 2020 rule.
---------------------------------------------------------------------------

    \55\ 85 FR 71553, 71554-71569.
---------------------------------------------------------------------------

Restoring Flexibility to OFCCP's Procedures

    This proposed rulemaking also seeks to restore flexibility to 
OFCCP's pre-enforcement notice and conciliation

[[Page 16146]]

procedures. OFCCP needs flexibility in its investigatory and 
conciliation procedures to effectively resolve employment 
discrimination. In January of 2021, the Equal Employment Opportunity 
Commission (EEOC) published a final rule concerning its conciliation 
procedures.\56\ The U.S. Congress subsequently passed a law \57\ to 
disapprove and annul the EEOC rule, based on concerns similar to those 
underlying this proposed rulemaking, such as the increase in employer 
litigation about the process, the delay of resolution of discrimination 
claims, and mandated disclosures unfairly weighting the process in 
favor of employers and subjecting workers to heightened risk of 
retaliation, as reflected in the Congressional Record.\58\ The 
Congressional Record also includes a statement from President Biden's 
administration \59\ and a letter submitted by the Leadership Conference 
on Civil and Human Rights signed by 24 civil rights organizations.\60\ 
The supportive statements and letter all cited to a unanimous decision 
by the Supreme Court in Mach Mining, LLC v. EEOC that described the 
wide latitude that Title VII gives EEOC to conciliate in pursuit of 
voluntary compliance with the law.\61\ EEOC's experience with the 
conciliation process is instructive. Before the Court's decision in 
Mach Mining, employers routinely raised time-consuming challenges to 
whether EEOC satisfied its discretionary conciliation requirements. For 
example, the workers in Mach Mining--women alleged to have been 
excluded from coal mining jobs on the basis of sex--were forced to wait 
nine years after the first charge was filed for relief after years of 
litigation over procedural challenges to the conciliation process. 
EEOC's now-rescinded January 2021 conciliation rulemaking sought to 
codify rigid standards that would enable employers to shift the focus 
away from the core issue of whether discrimination occurred and instead 
attempt to avoid liability by pursuing resource intensive satellite 
proceedings over whether discretionary conciliation processes had been 
satisfied. As stated by Representative Scott in support of overturning 
this EEOC rule, EEOC ``must have discretion to use whatever informal 
means of settlement are appropriate'' instead of applying a rigid 
conciliation process ``across the board, one-size-fits-all, in every 
case of workplace discrimination.'' \62\ This authority to have 
administrative discretion in conciliation was directly granted to EEOC 
by Congress,\63\ confirmed by a unanimous opinion from the U.S. Supreme 
Court,\64\ re-affirmed by Congress through the annulment of EEOC's 
conciliation procedures rule,\65\ and recognized by the current 
President of the United States.\66\
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    \56\ Update of Commission's Conciliation Procedures, 86 FR 2974 
(Jan. 14, 2021), annulled. Before it was annulled, the rule amended 
the EEOC's procedures governing its conciliation process for charges 
alleging violations of Title VII, the ADA, the Genetic Information 
Nondiscrimination Act, and/or the Age Discrimination in Employment 
Act. The EEOC rule implemented requirements regarding the 
information EEOC must provide in preparation for and during 
conciliation about the factual and legal bases for the Commission's 
position and findings for charges where it has found reasonable 
cause.
    \57\ President Biden signed the joint resolution of Congress 
into law on June 30, 2021. See Commission's Conciliation Procedures, 
Public Law 117-22, June 30, 2021, 135 Stat 294.
    \58\ See 167 Cong. Rec. H3110-H3111 (daily ed. June 24, 2021). 
(``[T]he rule incentivizes employers to focus litigation on whether 
the EEOC failed to satisfy the rule's new requirements instead of 
whether the employer engaged in unlawful discrimination'' (statement 
of Rep. Scott); also, the ``. . . [EEOC rule] threatens to delay or 
potentially deny justice for individuals who face workplace 
discrimination'' (statement of Rep. Bonamici).
    \59\ 167 Cong. Rec. H3110, 3111 (daily ed. June 24, 2021) 
(noting that repealing the conciliation rule would, inter alia, 
remove ``onerous and rigid new procedures;'' nullify ``unnecessary 
and burdensome standards that would likely result in increased 
charge backlogs, and lengthier charge investigation, resolution and 
litigation times;'' give EEOC ``the flexibility to tailor 
settlements to the facts and circumstances of each case;'' and 
``ensure that justice for workers subject to discrimination is not 
delayed, or potentially denied, due to costly and time-consuming 
collateral litigation'') (Statement of Administration Policy).
    \60\ 167 Cong. Rec. H3110, 3112 (daily ed. June 24, 2021) 
(``Instead of ensuring that discrimination charges are resolved 
fairly, the EEOC's final rule imposes several new obligations and 
disclosures that: significantly weight the conciliation process in 
favor of employers; delay justice and increase the likelihood of 
harm to working people; divert scarce EEOC staff time and resources 
away from investigating discrimination; and contravene controlling 
U.S. Supreme Court precedent.'') (Letter from the Leadership 
Conference on Civil and Human Rights).
    \61\ Mach Mining, LLC v. EEOC, 575 U.S. 480, 492 (2015) (``Every 
aspect of Title VII's conciliation provision smacks of flexibility. 
To begin with, the EEOC need only `endeavor' to conciliate a claim, 
without having to devote a set amount of time or resources to that 
project. [42 U.S.C.] Sec.  2000e-5(b). Further, the attempt need not 
involve any specific steps or measures; rather, the Commission may 
use in each case whatever `informal' means of `conference, 
conciliation, and persuasion' it deems appropriate.'').
    \62\ See 167 Cong. Rec. H3110-H3111 (daily ed. June 24, 2021) 
(statement of Rep. Scott).
    \63\ 42 U.S.C. 2000e-5(b) (``If the Commission determines after 
such investigation that there is reasonable cause to believe that 
the charge is true, the Commission shall endeavor to eliminate any 
such alleged unlawful employment practice by informal methods of 
conference, conciliation, and persuasion.'').
    \64\ Mach Mining, LLC, 575 U.S. at 480.
    \65\ Joint Resolution Providing for congressional disapproval 
under chapter 8 of title 5, United States Code, of the rule 
submitted by the Equal Employment Opportunity Commission relating to 
``Update of Commission's Conciliation Procedures''. COMMISSION'S 
CONCILIATION PROCEDURES, PL 117-22, June 30, 2021, 135 Stat 294.
    \66\ 167 Cong. Rec. H3110, 3111 (daily ed. June 24, 2021) 
(Statement of Administration Policy).
---------------------------------------------------------------------------

    OFCCP has similar discretion to conciliate compliance under E.O. 
11246, Section 503, and VEVRAA \67\--to right the wrong of employment 
discrimination. When OFCCP determines that a Federal contractor is 
deficient in its compliance with E.O. 11246, Section 503, or VEVRAA, 
OFCCP must make ``reasonable efforts'' to secure compliance through 
conciliation and persuasion,\68\ under the procedures set forth in 
Chapter 60 of the U.S. Code of Federal Regulations,\69\ the FCCM,\70\ 
and subregulatory guidance.\71\ OFCCP views the Title VII flexibility 
principle cited by Congress as similarly vital to OFCCP's work in 
securing compliance with E.O. 11246, Section 503, and VEVRAA. As such, 
OFCCP proposes to clarify that the ``reasonable efforts'' standard it 
must satisfy when attempting to secure compliance with its laws should 
be interpreted consistently with the Title VII language requiring EEOC 
to ``endeavor to eliminate any such alleged unlawful employment 
practice by informal methods of conference, conciliation, and 
persuasion,'' to ensure OFCCP has the same flexibility in the 
administration of its laws as that recognized under Title VII by 
Congress and the U.S. Supreme Court for EEOC.
---------------------------------------------------------------------------

    \67\ 41 CFR 60-1.20(b) (noting that if ``deficiencies are found 
to exist, OFCCP shall make reasonable efforts to secure compliance 
through conciliation and persuasion''). OFCCP has identical 
discretion under VEVRAA and Section 503. See 41 CFR 60-300.60(b), 
60-741.60(b).
    \68\ See 41 CFR 60-1.20(b), 60-300.60(b), 60-741.60(b).
    \69\ 41 CFR 60-1.33, 60-300.62, 60-741.62.
    \70\ See FCCM, Chapter 8, Resolution of Noncompliance, available 
at https://www.dol.gov/agencies/ofccp/manual/fccm/chapter-8-resolution-noncompliance (last accessed Dec. 3, 2021).
    \71\ See, e.g., Directive 2018-01, Use of Predetermination 
Notices, (Feb. 27, 2018), available at https://www.dol.gov/agencies/ofccp/directives/2018-01 (last accessed Dec. 5, 2021); ``Practical 
Significance in EEO Analysis Frequently Asked Questions'' (last 
updated Jan. 15, 2021), available at https://www.dol.gov/agencies/ofccp/faqs/practical-significance (last accessed Dec. 5, 2021).
---------------------------------------------------------------------------

    The 2020 rule's codification of OFCCP's resolution procedures \72\ 
imposes hurdles to the effective exercise of OFCCP's enforcement 
discretion. With this proposed rule, OFCCP seeks to restore the 
flexibility it had prior to December 10, 2020, applying Title VII 
standards to the facts and circumstances of each compliance evaluation, 
while preserving certainty and transparency for Federal contractors by 
requiring the

[[Page 16147]]

use of a Predetermination Notice and Notice of Violation.\73\
---------------------------------------------------------------------------

    \72\ 41 CFR 60-1.33, 60-300.62, 60-741.62.
    \73\ As noted previously, supra at n. 28, OFCCP would continue 
to apply ADA standards to compliance evaluations pertaining to 
Section 503.
---------------------------------------------------------------------------

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 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 of 
the Rehabilitation Act of 1973 is twofold. First, Section 503 prohibits 
employment discrimination on the basis of disability by Federal 
contractors. Second, it requires each covered Federal contractor 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.\74\ 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.
---------------------------------------------------------------------------

    \74\ 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).
---------------------------------------------------------------------------

    Enacted in 1974 and amended in the intervening years, 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). It also 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 subcontract in excess of $150,000.\75\ 
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.
---------------------------------------------------------------------------

    \75\ 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).
---------------------------------------------------------------------------

    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 
noncompliance under any of the three laws or their implementing 
regulations, it utilizes established procedures to either facilitate 
resolution or proceed to administrative enforcement as necessary to 
secure compliance. A contractor found in violation who fails to correct 
violations of OFCCP's regulations may, after the opportunity for a 
hearing, have its contracts canceled, terminated, or suspended and/or 
may be subject to debarment.

Proposed Revisions

    This rulemaking proposes to amend 41 CFR parts 60-1, 60-300, and 
60-741 by removing unnecessary and confusing evidentiary standards and 
definitions that the 2020 rule requires, while retaining and refining 
the pre-enforcement procedures for issuing the Predetermination Notice 
and the Notice of Violation. The proposed revisions would enable OFCCP 
to apply Title VII standards to the facts and circumstances of each 
compliance evaluation and clarify that OFCCP's conciliation standards 
align with the flexibility and enforcement discretion afforded under 
Title VII for endeavoring to secure compliance through conciliation. 
The rulemaking would also amend each part's regulatory provision on 
Show Cause Notices, relocating the provision to the same section as the 
other codified pre-enforcement notices and codifying when OFCCP will 
amend the Show Cause Notice consistent with current practice.
    The rulemaking further proposes to amend 41 CFR parts 60-1, 60-2, 
60-4, 60-20, 60-30, 60-40, 60-50, 60-300, and 60-741. The 2020 rule 
added the first severability clause to OFCCP's regulations, but it only 
applies to the resolution procedures sections for each of OFCCP's legal 
authorities (i.e., 41 CFR 60-1.33, 60-300.62, and 60-741.42).\76\ OFCCP 
has determined that, if there is a severability clause in any part of 
its regulations, it should apply to all of its regulations, rather than 
just certain specific sections. Thus, OFCCP proposes to include a 
severability clause in each part of its regulations, such that if a 
court of competent jurisdiction found any provision(s) of the part to 
be invalid, it would not affect any other provision of the part or 
chapter. The severability clauses currently only applicable to 41 CFR 
60-1.33, 60-300.62, and 60-741.42 would be removed.
---------------------------------------------------------------------------

    \76\ In addition, OFCCP's 2020 final rule relating to the E.O. 
11246 religious exemption included a severability clause that 
applied only to provisions within 41 CFR 60-1.5. Implementing Legal 
Requirements Regarding the Equal Opportunity Clause's Religious 
Exemption, 85 FR 79324, 79372 (Dec. 9, 2020), codified at 41 CFR 60-
1.5(f). OFCCP has proposed to rescind that rule, including the 
severability clause. 86 FR 62115 (Nov. 9, 2021).
---------------------------------------------------------------------------

Revised Sections

41 CFR PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

Subpart A--Preliminary Matters; Equal Opportunity Clause; Compliance 
Reports

Section 60-1.3 Definitions
    The NPRM proposes to amend Sec.  60-1.3 by removing the definitions 
for ``Qualitative evidence'' and ``Quantitative evidence.'' These 
definitions operate in tandem with the evidentiary standards that are 
currently creating hurdles to the effective enforcement of OFCCP laws 
and would be rendered unnecessary by other proposed changes to this 
part.

[[Page 16148]]

Subpart B--General Enforcement; Compliance Review and Complaint 
Procedure

Section 1.20 Compliance Evaluations
    The NPRM proposes to clarify the ``reasonable efforts'' standard in 
Sec.  60-1.20(b) that OFCCP must satisfy when attempting to secure 
compliance through conciliation, to make clear that OFCCP's 
conciliation standards align with Title VII.
Section 1.28 Show Cause Notices
    The NPRM proposes to remove and reserve Sec.  60-1.28, to relocate 
``Show cause notices'' to Sec.  60-1.33 with the other pre-enforcement 
notices in this part.
Section 60-1.33 Resolution Procedures
    The NPRM proposes to revise Sec.  60-1.33 by changing the title to 
``Pre-enforcement notice and conciliation procedures''; removing 
unnecessary regulatory standards impeding OFCCP's ability to resolve 
preliminary indicators and findings of discrimination; incorporating a 
relocated subsection on Show Cause Notices to improve regulatory 
organization; clarifying OFCCP's use of the Show Cause Notice including 
when a contractor denies access to its premises, to witnesses, or to 
records; making general clarifying edits to improve procedural efficacy 
including OFCCP's role in the early conciliation option; and removing 
the severability clause specific to this section.

Subpart C--Ancillary Matters

Section 60-1.48 Severability
    The NPRM proposes to add Sec.  60-1.48, a severability clause.

41 CFR PART 60-2--AFFIRMATIVE ACTION PROGRAMS

Subpart C--Miscellaneous

Section 60-2.36 Severability
    The NPRM proposes to add Sec.  60-2.36, a severability clause.

41 CFR PART 60-4--CONSTRUCTION CONTRACTORS--AFFIRMATIVE ACTION 
REQUIREMENTS

Section 60-4.10 Severability
    The NPRM proposes to add Sec.  60-4.10, a severability clause.

41 CFR PART 60-20--DISCRIMINATION ON THE BASIS OF SEX

Section 60-20.9 Severability
    The NPRM proposes to add Sec.  60-20.9, a severability clause.

41 CFR PART 60-30--RULES OF PRACTICE FOR ADMINISTRATIVE PROCEEDINGS TO 
ENFORCE EQUAL OPPORTUNITY UNDER EXECUTIVE ORDER 11246

GENERAL PROVISIONS

Section 60-30.38 Severability
    The NPRM proposes to add Sec.  60-30.38, a severability clause.

41 CFR PART 60-40--EXAMINATION AND COPYING OF OFCCP DOCUMENTS

Subpart A--General

Section 60-40.9 Severability
    The NPRM proposes to add Sec.  60-40.9, a severability clause.

41 CFR PART 60-50--GUIDELINES ON DISCRIMINATION BECAUSE OF RELIGION OR 
NATIONAL ORIGIN

Section 60-50.6 Severability
    The NPRM proposes to add Sec.  60-50.6, a severability clause.

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
    The NPRM proposes to amend Sec.  60-300.2 by removing the 
definitions for ``Qualitative evidence'' and ``Quantitative evidence.'' 
These definitions would be rendered unnecessary by other proposed 
changes to this part.

Subpart D--General Enforcement and Complaint Procedures

Section 60-300.60 Compliance Evaluations
    The NPRM proposes to clarify the ``reasonable efforts'' standard in 
Sec.  60-300.60 (b) that OFCCP must satisfy when attempting to secure 
compliance through conciliation, to make clear that OFCCP's 
conciliation standards align with Title VII.
Section 60-300.62 Resolution Procedures
    The NPRM proposes to revise Sec.  60-300.62 by changing the title 
to ``Pre-enforcement notice and conciliation procedures''; removing 
unnecessary regulatory standards impeding OFCCP's ability to resolve 
preliminary indicators and findings of discrimination; incorporating a 
relocated subsection on Show Cause Notices to improve regulatory 
organization; clarifying OFCCP's use of the Show Cause Notice including 
when a contractor denies access to its premises, to witnesses, or to 
records; making general clarifying edits to improve procedural efficacy 
including OFCCP's role in the early conciliation option; and removing 
the severability clause specific to this section.
Section 60-300.64 Show Cause Notices
    The NPRM proposes to remove and reserve Sec.  60-300.64, to 
relocate ``Show cause notices'' to Sec.  60-300.62 with the other pre-
enforcement notices in this part.

Subpart E--Ancillary Matters

Section 60-300.85 Severability
    The NPRM proposes to add Sec.  60-300.85, a severability clause.

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
    The NPRM proposes to amend Sec.  60-741.2 by removing the 
definitions for ``Qualitative evidence'' and ``Quantitative evidence.'' 
These definitions would be rendered unnecessary by other proposed 
changes to this part.

Subpart D--General Enforcement and Complaint Procedures

Section 60-741.60 Compliance Evaluations
    The NPRM proposes to clarify the ``reasonable efforts'' standard in 
Sec.  60-741.60 (b) that OFCCP must satisfy when attempting to secure 
compliance through conciliation, to make clear that OFCCP's 
conciliation standards align with Title VII.
Section 60-741.62 Resolution Procedures
    The NPRM proposes to revise Sec.  60-741.62 by changing the title 
to ``Pre-enforcement notice and conciliation procedures''; removing 
unnecessary regulatory standards impeding OFCCP's ability to resolve 
preliminary indicators and findings of discrimination; incorporating a 
relocated subsection on

[[Page 16149]]

Show Cause Notices to improve regulatory organization; clarifying 
OFCCP's use of the Show Cause Notice including when a contractor denies 
access to its premises, to witnesses, or to records; making general 
clarifying edits to improve procedural efficacy including OFCCP's role 
in the early conciliation option; and removing the severability clause 
specific to this section.
Section 60-741.64 Show Cause Notices
    The NPRM proposes to remove and reserve Sec.  60-741.64, to 
relocate ``Show cause notices'' to Sec.  60-741.62 with the other pre-
enforcement notices in this part.

Subpart E--Ancillary Matters

Section 60-741.84 Severability
    The NPRM proposes to add Sec.  60-741.84, a severability clause.

Regulatory Procedures

Executive Order 12866 (Regulatory Planning and Review) and Executive 
Order 13563 (Improving Regulation and Regulatory Review)

    Under Executive Order 12866 (E.O. 12866), the Office of Management 
and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) 
determines whether a regulatory action is significant and, therefore, 
subject to the requirements of E.O. 12866 and OMB review. Section 3(f) 
of E.O. 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 E.O. 12866. This 
proposed rulemaking has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
E.O. 12866. OMB has reviewed this proposal.
    Executive Order 13563 (E.O. 13563) directs agencies to 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. E.O. 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.

A. Need for Rulemaking

    OFCCP believes that the 2020 rule created rigid constraints that 
are not required by Title VII and/or impede the agency's effective 
enforcement of E.O. 11246, Section 503, and VEVRAA. This has delayed 
information exchange with contractors and created obstacles to a timely 
resolution of preliminary indicators and findings of discrimination and 
greater compliance. The 2020 rule has also resulted in time-consuming 
collateral disputes over the implementation of the rule's regulatory 
standards--diverting limited agency and contractor resources away from 
resolving concerns of discrimination. This diversion of resources and 
delay in the pre-enforcement process will reduce rather than increase 
the number of contractors that OFCCP is able to evaluate for 
compliance.
    This NPRM aims to create a streamlined, efficient, and flexible 
process to ensure OFCCP utilizes its limited resources as strategically 
as possible to advance the agency's mission. In a return to prior 
agency policy, OFCCP will apply Title VII standards to the facts and 
circumstances of each compliance evaluation, including during the pre-
enforcement notice and conciliation stages. Doing so will remove 
unnecessary constraints that impede effective enforcement by limiting 
the agency's enforcement discretion, and prevent delays in case 
resolutions due to the 2020 rule. Removing the blanket regulatory 
requirements will also allow OFCCP to pursue enforcement in cases that, 
albeit actionable under Title VII, are more difficult to pursue under 
the 2020 rule. OFCCP remains committed to providing contractors early 
notice when the agency identifies preliminary indicators of systemic 
discrimination during a compliance evaluation. Such notice is mutually 
beneficial for OFCCP and the contractor under review because it 
provides the contractor with an earlier opportunity to respond to 
potential issues before OFCCP makes a determination on violations. 
Providing earlier notice to contractors can result in the prompt and 
mutually satisfactory resolution of cases, which minimizes unnecessary 
burdens on contractors and agency staff. Going forward, OFCCP would 
provide updated guidance to its compliance officers on the pre-
enforcement procedures. This guidance would reflect current case law, 
provide OFCCP needed flexibility, and be available to the public to 
promote transparency.

B. Discussion of Impacts

    In this section, OFCCP presents a summary of the costs associated 
with the modifications in this proposed rulemaking. OFCCP utilizes the 
Employment Information Report (EEO-1) data, which identifies the number 
of supply and service contractors that could be scheduled for a 
compliance evaluation and thus impacted by the proposed modification. 
The EEO-1 Report must be filed by covered Federal contractors who: (1) 
Have 50 or more employees; (2) are prime contractors or first-tier 
subcontractors; and (3) have a contract, subcontract, or purchase order 
amounting to $50,000 or more. OFCCP schedules only contractors who meet 
those thresholds for compliance evaluations. The number of supply and 
service contractors possibly impacted by the proposed modification is 
24,251.\77\
---------------------------------------------------------------------------

    \77\ OFCCP obtained the total number of supply and service 
contractors from the most recent EEO-1 Report data available, which 
is from fiscal year (FY) 2018.
---------------------------------------------------------------------------

    OFCCP also utilizes USASpending data, which identifies the number 
of construction contractors that could be scheduled for a compliance 
evaluation and thus impacted by the proposed modification. The 
USASpending data accounts for all construction contractors with 
contracts greater than $10,000 who meet the thresholds for compliance 
evaluations. The number of construction contractors possibly impacted 
by the proposed modification is 12,362.\78\
---------------------------------------------------------------------------

    \78\ OFCCP obtained the total number of construction 
establishments (12,609) from FY 2019 USASpending data, available at 
https://www.usaspending.gov/#/download_center/award_data_archive 
(last accessed Dec. 8, 2021). The agency then used the ratio of 
contractor establishments to contractor firms (1.02) from US Census 
Bureau data, available at https://www.census.gov/data/tables/2017/econ/economic-census/naics-sector-23.html (last accessed Dec. 8, 
2021). 12,609/1.02 = 12,362 construction contractors.
---------------------------------------------------------------------------

    While OFCCP acknowledges that all Federal contractors may learn 
their EEO requirements in order to comply with the laws that OFCCP 
enforces, only those contractors scheduled for a compliance evaluation 
are directly impacted by the proposed modification.

[[Page 16150]]

Scheduled contractors are likely to have a need to know the pre-
enforcement procedures because they may need to interact with OFCCP. 
The total number of contractors possibly impacted by the proposed 
modification is 36,613.\79\
---------------------------------------------------------------------------

    \79\ 24,251 supply and service contractors + 12,362 construction 
contractors = 36,613 contractors.
---------------------------------------------------------------------------

    OFCCP has determined that either a Human Resources Manager (SOC 11-
3121) or a Lawyer (SOC 23-1011) would review the proposed modification. 
OFCCP estimates that 50 percent of the reviewers would be human 
resources managers and 50 percent would be in-house counsel. Thus, the 
mean hourly wage rate reflects a 50/50 split between human resources 
managers and lawyers. The mean hourly wage of a human resources manager 
is $64.70 and the mean hourly wage of a lawyer is $71.59.\80\ 
Therefore, the average hourly wage rate is $68.15 (($64.70 + $71.59)/
2). OFCCP 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. OFCCP uses a fringe 
benefits rate of 46 percent \81\ and an overhead rate of 17 
percent,\82\ resulting in a fully loaded hourly compensation rate of 
$111.08 ($68.15 + ($68.15 x 46 percent) + ($68.15 x 17 percent)). The 
estimated labor cost to contractors is reflected in Table 1, below.
---------------------------------------------------------------------------

    \80\ BLS, Occupational Employment Statistics, Occupational 
Employment and Wages, May 2020, available at www.bls.gov/oes/current/oes_nat.htm (last accessed Dec. 8, 2021).
    \81\ BLS, Employer Costs for Employee Compensation, available at 
www.bls.gov/ncs/data.htm (last accessed Dec. 8, 2021). Wages and 
salaries averaged $26.53 per hour worked in December 2020, while 
benefit costs averaged $12.07, which is a benefits rate of 46 
percent.
    \82\ Cody Rice, U.S. Environmental Protection Agency, ``Wage 
Rates for Economic Analyses of the Toxics Release Inventory 
Program,'' (June 10, 2002), available at www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005 (last accessed Dec. 8, 2021).

                                               Table 1--Labor Cost
----------------------------------------------------------------------------------------------------------------
                                                                                                   Fully loaded
          Major occupational groups           Average  hourly   Fringe benefit   Overhead rate        hourly
                                                 wage rate           rate                          compensation
----------------------------------------------------------------------------------------------------------------
Human Resources Managers and Lawyers........          $68.15              46%              17%          $111.08
----------------------------------------------------------------------------------------------------------------

1. Cost of Rule Familiarization

    OFCCP acknowledges that 5 CFR 1320.3(b)(1)(i) requires agencies to 
include in the burden analysis for a proposed rulemaking 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 regarding the proposed rule, once final.
    OFCCP believes that a human resources manager or lawyer will take a 
minimum of 30 minutes (\1/2\ hour) to read the proposed rule or read 
the compliance assistance materials provided by OFCCP. Consequently, 
the estimated burden for rule familiarization is 18,307 hours (36,613 
contractor firms x \1/2\ hour). OFCCP calculates the total estimated 
cost of rule familiarization as $2,033,542 (18,307 hours x $111.08/
hour) in the first year, which amounts to a 10-year annualized cost of 
$231,450 at a discount rate of 3 percent (which is $6.32 per contractor 
firm) or $270,589 at a discount rate of 7 percent (which is $7.39 per 
contractor firm). Table 2, below, reflects the estimated regulatory 
familiarization costs for the proposed rule.

                Table 2--Regulatory Familiarization Cost
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total number of contractors...............  36,613.
Time to review rule.......................  30 minutes.
Human Resources Managers fully loaded       $111.08.
 hourly compensation.
Regulatory familiarization cost in the      $2,033,542.
 first year.
Annualized cost with 3 percent discounting  $231,450.
Annualized cost per contractor with 3       $6.32.
 percent discounting.
Annualized cost with 7 percent discounting  $270,589.
Annualized cost per contractor with 7       $7.39.
 percent discounting.
------------------------------------------------------------------------

2. Benefits
    E.O. 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 proposed rule has 
equity and fairness benefits, which are explicitly recognized in E.O. 
13563. The proposal is designed to achieve these benefits by:
     Supporting more effective enforcement of OFCCP's equal 
opportunity laws by eliminating procedural inefficiencies and 
heightened evidentiary standards created by the 2020 rule;
     Facilitating earlier and more efficient resolutions;
     Ensuring greater certainty and consistency in case 
resolutions by maintaining adherence to Title VII and OFCCP case law 
standards;
     Promoting transparency by codifying the required use of 
the Predetermination Notice when the agency identifies preliminary 
indicators of discrimination;
     Allowing OFCCP to tailor the pre-enforcement process to 
the specific facts and circumstances of each case, consistent with 
judicial interpretations of the applicable legal authorities, which 
will in turn allow OFCCP to more effectively redress unlawful 
discrimination;
     Advancing a policy of promoting consistency between Title 
VII and E.O. 11246 and removing unnecessary constraints on the agency's 
ability to pursue meritorious cases. This approach will help OFCCP 
advance the overriding policy goal of promoting nondiscrimination by 
strengthening the enforcement of federal protections under E.O. 11246;

[[Page 16151]]

     Reducing time-consuming disputes over unnecessary 
standards; and
     Furthering the strategic allocation of agency resources.

C. Alternatives

    In addition to the approach proposed, OFCCP also considered 
alternative approaches. OFCCP considered modifying the 2020 rule to 
rescind the entirety of the rule except the correction to OFCCP's 
agency head title. OFCCP also considered modifying the 2020 rule by 
eliminating the Predetermination Notice entirely since it currently 
functions as a procedural redundancy. However, OFCCP determined that 
retaining both pre-enforcement notices in the regulatory text while 
rescinding the inflexible evidentiary requirements for the 
Predetermination Notice and Notice of Violation allows the contractor 
and OFCCP to engage in earlier discussions that can lead to more 
efficient resolutions.
    OFCCP also considered maintaining the current regulations 
established in the 2020 rule. However, as discussed earlier in this 
preamble, OFCCP determined that creating a rigid regulatory process to 
govern its pre-enforcement compliance evaluation process is 
incompatible with the flexibility needed for effective enforcement. 
Moreover, the 2020 rule places certain obligations on OFCCP at this 
preliminary stage that go beyond the substantive legal requirements 
that E.O. 11246, Title VII, and interpretive case law require to state 
a claim and prove discrimination at a much later stage, upon a full 
evidentiary record. OFCCP has determined that imposing such rigid and 
heightened standards early in its pre-enforcement proceedings unduly 
constrains its ability to pursue claims of discrimination. The 2020 
rule also created an inefficient process where OFCCP's Predetermination 
Notice (intended to convey preliminary indicators of discrimination) 
and the Notice of Violation (intended to inform the contractor that 
corrective action is required and to invite conciliation through a 
written agreement) were largely duplicative. Further, the mandating of 
regulatory requirements for making inherently fact specific 
determinations, invites time-consuming disputes over the application of 
the rule's requirements. Modifying the 2020 regulations would help 
restore the enforcement discretion and flexibility OFCCP needs to 
facilitate compliance through conciliation by providing pre-enforcement 
notice of preliminary discrimination indicators and findings, and 
applying Title VII to the facts and circumstances of each compliance 
evaluation. OFCCP is proposing modification of the regulatory text to 
create a more streamlined and effective process for the agency to 
communicate preliminary indicators to contractors, provide contractors 
an opportunity to respond, notify contractors of violations, and 
ultimately facilitate greater understanding to obtain resolution 
through conciliation.

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 businesses, organizations, and governmental jurisdictions 
subject to regulation.'' Public Law 96-354, 2(b). The RFA requires 
agencies to consider the impact of a regulatory action on a wide range 
of small entities, including small businesses, nonprofit organizations, 
and small governmental jurisdictions.
    Agencies must review whether a regulatory action would have a 
significant economic impact on a substantial number of small entities. 
See 5 U.S.C. 603. If the regulatory action would, then the agency must 
prepare a regulatory flexibility analysis as described in the RFA. See 
id. However, if the agency determines that the regulatory action 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 provide the factual basis for this 
determination.
    The proposed rule will not have a significant economic impact on a 
substantial number of small entities. The first year cost for small 
entities at a discount rate of 7 percent for rule familiarization is 
$51.91 per entity which is far less than 1 percent of the annual 
revenue of the smallest of the small entities affected by the proposal. 
Accordingly, OFCCP certifies that the proposed modification will not 
have a significant economic impact on a substantial number of small 
entities.

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 would be no new requirement for 
information collection associated with this proposed rulemaking. The 
information collections contained in the existing E.O. 11246, Section 
503, and VEVRAA regulations are currently approved under OMB Control 
Number 1250-0001 (Construction Recordkeeping and Reporting 
Requirements), OMB Control Number 1250-0003 (Recordkeeping and 
Reporting Requirements--Supply and Service), OMB Control Number 1250-
0004 (Office of Federal Contract Compliance Programs Recordkeeping and 
Reporting Requirements Under the Vietnam Era Veterans' Readjustment 
Assistance Act of 1974, as Amended), and OMB Control Number 1250-0005 
(Office of Federal Contract Compliance Programs Recordkeeping and 
Reporting Requirements Under Rehabilitation Act of 1973, as Amended 
Section 503). Consequently, this proposal does not require review by 
OMB 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 would 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 would not 
have ``federalism implications.'' The proposed regulatory action would 
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 would not have tribal implications under 
Executive Order 13175 that would require a tribal summary impact 
statement. The proposal would not ``have substantial direct effects on 
one or more Indian

[[Page 16152]]

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 Part 60-1

    Administrative practice and procedure, Civil rights, Employment, 
Equal employment opportunity, Government contracts, Government 
procurement, Investigations, Labor, Reporting and recordkeeping 
requirements.

41 CFR Part 60-2

    Equal employment opportunity, Government procurement, Reporting and 
recordkeeping requirements.

41 CFR Part 60-4

    Construction industry, Equal employment opportunity, Government 
procurement, Reporting and recordkeeping requirements.

41 CFR Part 60-20

    Civil rights, Equal employment opportunity, Government procurement, 
Labor, Sex discrimination, Women.

41 CFR Part 60-30

    Administrative practice and procedure, Civil rights, Equal 
employment opportunity, Government contracts, Government procurement, 
Government property management, Individuals with Disabilities, 
Reporting and recordkeeping requirements, Veterans.

41 CFR Part 60-40

    Freedom of information, Reporting and recordkeeping requirements.

41 CFR Part 60-50

    Equal employment opportunity, Government procurement, Religious 
discrimination, Reporting and recordkeeping requirements.

41 CFR Parts 60-300 and 60-741

    Administrative practice and procedure, Civil rights, Employment, 
Equal employment opportunity, Government contracts, Government 
procurement, Individuals with disabilities, Investigations, Labor, 
Reporting and recordkeeping requirements, Veterans.

Jenny R. Yang,
Director, Office of Federal Contract Compliance Programs.

    For the reasons stated in the preamble, the OFCCP proposes to amend 
41 CFR parts 60-1, 60-2, 60-4, 60-20, 60-30, 60-40, 60-50, 60-300, and 
60-741 as follows:

PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

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.


Sec.  60-1.3   [Amended]

0
2. Amend Sec.  60-1.3 by removing the definitions for ``Qualitative 
evidence'' and ``Quantitative evidence''.
0
3. Amend Sec.  60-1.20 by revising paragraph (b) to read as follows:


Sec.  60-1.20   Compliance evaluations.

* * * * *
    (b) Where deficiencies are found to exist, OFCCP will make 
reasonable efforts to secure compliance through conciliation and 
persuasion, pursuant to Sec.  60-1.33. The ``reasonable efforts'' 
standard shall be interpreted consistently with title VII of the Civil 
Rights Act of 1964 and its requirement that the Equal Employment 
Opportunity Commission ``endeavor to eliminate any such alleged 
unlawful employment practice by informal methods of conference, 
conciliation, and persuasion.'' Before the contractor can be found to 
be in compliance with the order, it must make a specific commitment, in 
writing, to correct any such deficiencies. The commitment must include 
the precise action to be taken and dates for completion. The time 
period allotted shall be no longer than the minimum period necessary to 
effect such changes. Upon approval of the commitment, the contractor 
may be considered in compliance, on condition that the commitments are 
faithfully kept. The contractor shall be notified that making such 
commitments does not preclude future determinations of noncompliance 
based on a finding that the commitments are not sufficient to achieve 
compliance.
* * * * *


Sec.  60-1.28   [Removed and Reserved]

0
4. Remove and reserve Sec.  60-1.28.
0
5. Revise Sec.  60-1.33 to read as follows:


Sec.  60-1.33   Pre-enforcement notice and conciliation procedures.

    (a) Predetermination Notice. If a compliance evaluation by OFCCP 
indicates preliminary indicators of discrimination, OFCCP will issue a 
Predetermination Notice describing the indicators and providing the 
contractor an opportunity to respond. The Predetermination Notice may 
also include other potential violations that OFCCP has identified at 
that stage of the review. After OFCCP issues the Predetermination 
Notice, the agency may identify additional violations and include them 
in a subsequent Notice of Violation or Show Cause Notice without 
amending the Predetermination Notice. OFCCP will provide the contractor 
an opportunity to conciliate additional violations identified in the 
Notice of Violation or Show Cause Notice. Any response to a 
Predetermination Notice must be received by OFCCP within 15 calendar 
days of receipt of the Notice, which deadline OFCCP may extend for good 
cause. If the contractor does not respond or OFCCP determines that the 
contractor's response did not resolve the indicators of discrimination 
in the Predetermination Notice, OFCCP will proceed with the review.
    (b) Notice of Violation. If a compliance evaluation by OFCCP 
indicates a violation of the equal opportunity clause, OFCCP will issue 
a Notice of Violation to the contractor requiring corrective action and 
inviting conciliation through a written agreement. The Notice of 
Violation will identify the violations and describe the recommended 
corrective actions. After the Notice of Violation is issued, OFCCP may 
include additional violations in a subsequent Show Cause Notice without 
amendment to the Notice of Violation. OFCCP will provide the contractor 
an opportunity to conciliate additional violations identified in the 
Show Cause Notice.
    (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 conciliation agreement shall be required. The 
agreement shall provide for such remedial action as may be necessary to 
correct the violations and/or deficiencies identified, including, where 
appropriate (but not limited to), remedies such as back pay, salary 
adjustments, and retroactive seniority.
    (d) Show cause notices. When the Director has reasonable cause to 
believe that a contractor has violated the equal opportunity clause the 
Director may

[[Page 16153]]

issue a notice requiring the contractor to show cause, within 30 days, 
why monitoring, enforcement proceedings, or other appropriate action to 
ensure compliance should not be instituted. OFCCP may issue a Show 
Cause Notice without first issuing a Predetermination Notice or Notice 
of Violation when the contractor has failed to provide access to its 
premises for an on-site review or refused to provide access to 
witnesses, records, or other information. The Show Cause Notice will 
include each violation that OFCCP has identified at the time of 
issuance. Where OFCCP identifies additional violations after issuing a 
Show Cause Notice, OFCCP will modify or amend the Show Cause Notice.
    (e) Expedited conciliation option. OFCCP may agree to waive the 
procedures set forth in paragraphs (a) and/or (b) of this section to 
enter directly into a conciliation agreement with a contractor. OFCCP 
may offer the contractor this expedited conciliation option, but may 
not require or insist that the contractor avail itself of the expedited 
conciliation option.
0
6. Add Sec.  60-1.48 to read as follows:


Sec.  60-1.48   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part.

PART 60-2--AFFIRMATIVE ACTION PROGRAMS

0
7. 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.

0
8. Add Sec.  60-2.36 to read as follows:


Sec.  60-2.36   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part.

PART 60-4--CONSTRUCTION CONTRACTORS--AFFIRMATIVE ACTION 
REQUIREMENTS

0
9. The authority citation for part 60-4 continues to read as follows:

    Authority:  Secs. 201, 202, 205, 211, 301, 302, and 303 of E.O. 
11246, as amended, 30 FR 12319; 32 FR 14303, as amended by E.O. 
12086; and E.O. 13672, 79 FR 42971.

0
10. Add Sec.  60-4.10 to read as follows:


Sec.  60-4.10   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part.

PART 60-20--DISCRIMINATION ON THE BASIS OF SEX

0
11. The authority citation for part 60-20 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
12. Add Sec.  60-20.9 to read as follows:


Sec.  60-20.9   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part.

PART 60-30--RULES OF PRACTICE FOR ADMINISTRATIVE PROCEEDINGS TO 
ENFORCE EQUAL OPPORTUNITY UNDER EXECUTIVE ORDER 11246

0
13. The authority citation for part 60-30 continues to read as follows:

    Authority:  Executive Order 11246, as amended, 30 FR 12319, 32 
FR 14303, as amended by E.O. 12086; 29 U.S.C. 793, as amended, and 
38 U.S.C. 4212, as amended.

0
14. Add Sec.  60-30.38 to read as follows:


Sec.  60-30.38   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part.

PART 60-40--EXAMINATION AND COPYING OF OFCCP DOCUMENTS

0
15. The authority citation for part 60-40 continues to read as follows:

    Authority:  E.O. 11246, as amended by E.O. 11375, and as amended 
by E.O. 12086; 5 U.S.C. 552.

0
16. Add Sec.  60-40.9 to read as follows:


Sec.  60-40.9   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part or chapter.

PART 60-50--GUIDELINES ON DISCRIMINATION BECAUSE OF RELIGION OR 
NATIONAL ORIGIN

0
17. The authority citation for part 60-50 continues to read as follows:

    Authority:  Sec. 201 of E.O. 11246, as amended, 30 FR 12319; 32 
FR 14303, as amended by E.O. 12086; and E.O. 13672, 79 FR 42971.

0
18. Add Sec.  60-50.6 to read as follows:


Sec.  60-50.6   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part.

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
19. 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).


Sec.  60-300.2   [Amended]

0
20. Amend Sec.  60-300.2 by removing the definitions for ``Qualitative 
evidence'' and ``Quantitative evidence.
0
21. Amend Sec.  60-300.60 by revising paragraph (b) to read as follows:


Sec.  60-300.60   Compliance evaluations.

* * * * *
    (b) Where deficiencies are found to exist, OFCCP will make 
reasonable efforts to secure compliance through conciliation and 
persuasion, pursuant to Sec.  60-300.62. The ``reasonable efforts'' 
standard shall be interpreted consistently with title VII of the Civil 
Rights Act of 1964 and its requirement that the Equal Employment 
Opportunity Commission ``endeavor to eliminate any such alleged 
unlawful employment practice by informal methods of conference, 
conciliation, and persuasion.''
* * * * *
0
22. Revise Sec.  60-300.62 to read as follows:


Sec.  60-300.6  2 Pre-enforcement notice and conciliation procedures.

    (a) Predetermination Notice. If a compliance evaluation by OFCCP 
indicates preliminary indicators of discrimination, OFCCP will issue a 
Predetermination Notice describing the indicators and providing the 
contractor an opportunity to respond. The Predetermination Notice may 
also include other potential violations that OFCCP has identified at 
that stage of the review. After OFCCP issues the Predetermination 
Notice, the agency may identify additional violations and include them 
in a subsequent Notice of Violation or Show Cause Notice without 
amending the Predetermination Notice. OFCCP will provide the contractor 
an opportunity to conciliate additional violations identified in the 
Notice of Violation or Show Cause Notice. Any response to a 
Predetermination Notice

[[Page 16154]]

must be received by OFCCP within 15 calendar days of receipt of the 
Notice, which deadline OFCCP may extend for good cause. If the 
contractor does not respond or OFCCP determines that the contractor's 
response did not resolve the indicators of discrimination in the 
Predetermination Notice, OFCCP will proceed with the review.
    (b) Notice of Violation. If a compliance evaluation by OFCCP 
indicates a violation of the equal opportunity clause, OFCCP will issue 
a Notice of Violation to the contractor requiring corrective action and 
inviting conciliation through a written agreement. The Notice of 
Violation will identify the violations and describe the recommended 
corrective actions. After the Notice of Violation is issued, OFCCP may 
include additional violations in a subsequent Show Cause Notice without 
amendment to the Notice of Violation. OFCCP will provide the contractor 
an opportunity to conciliate additional violations identified in the 
Show Cause Notice.
    (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 conciliation agreement shall be required. The 
agreement shall provide for such remedial action as may be necessary to 
correct the violations and/or deficiencies identified, including, where 
appropriate (but not limited to), remedies such as back pay, salary 
adjustments, and retroactive seniority.
    (d) Show cause notices. When the Director has reasonable cause to 
believe that a contractor has violated the equal opportunity clause the 
Director may issue a notice requiring the contractor to show cause, 
within 30 days, why monitoring, enforcement proceedings, or other 
appropriate action to ensure compliance should not be instituted. OFCCP 
may issue a Show Cause Notice without first issuing a Predetermination 
Notice or Notice of Violation when the contractor has failed to provide 
access to its premises for an on-site review or refused to provide 
access to witnesses, records, or other information. The Show Cause 
Notice will include each violation that OFCCP has identified at the 
time of issuance. Where OFCCP identifies additional violations after 
issuing a Show Cause Notice, OFCCP will modify or amend the Show Cause 
Notice.
    (e) Expedited conciliation option. OFCCP may agree to waive the 
procedures set forth in paragraphs (a) and/or (b) of this section to 
enter directly into a conciliation agreement with a contractor. OFCCP 
may offer the contractor this expedited conciliation option, but may 
not require or insist that the contractor avail itself of the expedited 
conciliation option.


Sec.  60-300.64   [Removed and Reserved]

0
23. Remove and reserve Sec.  60-300.64.
0
24. Add Sec.  60-300.85 to read as follows:


Sec.  60-300.85   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part.

PART 60-741--AFFIRMATIVE ACTION AND NONDISCRIMINATION OBLIGATIONS 
OF FEDERAL CONTRACTORS AND SUBCONTRACTORS REGARDING INDIVIDUALS 
WITH DISABILITIES

0
25. 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).


Sec.  60-741.2   April 20, 2022 [Amended]

0
26. Amend Sec.  60-741.2 by removing the definitions for ``Qualitative 
evidence'' and ``Quantitative evidence.''
0
27. Amend Sec.  60-741.60 by revising paragraph (b) to read as follows:


Sec.  60-741.6  0 Compliance evaluations.

* * * * *
    (b) Where deficiencies are found to exist, OFCCP will make 
reasonable efforts to secure compliance through conciliation and 
persuasion, pursuant to Sec.  60-741.62. The ``reasonable efforts'' 
standard shall be interpreted consistently with title VII of the Civil 
Rights Act of 1964 and its requirement that the Equal Employment 
Opportunity Commission ``endeavor to eliminate any such alleged 
unlawful employment practice by informal methods of conference, 
conciliation, and persuasion.''
* * * * *
0
28. Revise Sec.  60-741.62 to read as follows:


Sec.  60-741.62   Pre-enforcement notice and conciliation procedures.

    (a) Predetermination Notice. If a compliance evaluation by OFCCP 
indicates preliminary indicators of discrimination, OFCCP will issue a 
Predetermination Notice describing the indicators and providing the 
contractor an opportunity to respond. The Predetermination Notice may 
also include other potential violations that OFCCP has identified at 
that stage of the review. After OFCCP issues the Predetermination 
Notice, the agency may identify additional violations and include them 
in a subsequent Notice of Violation or Show Cause Notice without 
amending the Predetermination Notice. OFCCP will provide the contractor 
an opportunity to conciliate additional violations identified in the 
Notice of Violation or Show Cause Notice. Any response to a 
Predetermination Notice must be received by OFCCP within 15 calendar 
days of receipt of the Notice, which deadline OFCCP may extend for good 
cause. If the contractor does not respond or OFCCP determines that the 
contractor's response did not resolve the indicators of discrimination 
in the Predetermination Notice, OFCCP will proceed with the review.
    (b) Notice of Violation. If a compliance evaluation by OFCCP 
indicates a violation of the equal opportunity clause, OFCCP will issue 
a Notice of Violation to the contractor requiring corrective action and 
inviting conciliation through a written agreement. The Notice of 
Violation will identify the violations and describe the recommended 
corrective actions. After the Notice of Violation is issued, OFCCP may 
include additional violations in a subsequent Show Cause Notice without 
amendment to the Notice of Violation. OFCCP will provide the contractor 
an opportunity to conciliate additional violations identified in the 
Show Cause Notice.
    (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 conciliation agreement shall be required. The 
agreement shall provide for such remedial action as may be necessary to 
correct the violations and/or deficiencies identified, including, where 
appropriate (but not limited to), remedies such as back pay, salary 
adjustments, 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,

[[Page 16155]]

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) Show cause notices. When the Director has reasonable cause to 
believe that a contractor has violated the equal opportunity clause the 
Director may issue a notice requiring the contractor to show cause, 
within 30 days, why monitoring, enforcement proceedings, or other 
appropriate action to ensure compliance should not be instituted. OFCCP 
may issue a Show Cause Notice without first issuing a Predetermination 
Notice or Notice of Violation when the contractor has failed to provide 
access to its premises for an on-site review or refused to provide 
access to witnesses, records, or other information. The Show Cause 
Notice will include each violation that OFCCP has identified at the 
time of issuance. Where OFCCP identifies additional violations after 
issuing a Show Cause Notice, OFCCP will modify or amend the Show Cause 
Notice.
    (f) Expedited conciliation option. OFCCP may agree to waive the 
procedures set forth in paragraphs (a) and/or (b) of this section to 
enter directly into a conciliation agreement with a contractor. OFCCP 
may offer the contractor this expedited conciliation option, but may 
not require or insist that the contractor avail itself of the expedited 
conciliation option.


Sec.  60-741.64   [Removed and Reserved]

0
29. Remove and reserve Sec.  60-741.64.
0
30. Add Sec.  60-741.84 to read as follows:


Sec.  60-741.84   Severability.

    Should a court of competent jurisdiction hold any provision(s) of 
this part to be invalid, such action will not affect any other 
provision of this part.

[FR Doc. 2022-05696 Filed 3-21-22; 8:45 am]
BILLING CODE 4510-CM-P