AFFIRMATIVE ACTION AND FEDERAL CONTRACT COMPLIANCE
LOOKING AHEAD TO 2025
MORE OF 2024 IN REVIEW
2024 PREDICTIONS RECAP
Post- Chevron Challenges Expected In the wake of a Supreme Court decision reducing the power of federal regulators and placing more authority in the hands of judges, we expect to see courts strike down more agency rules. How will this impact federal contractors? OFCCP has pushed broad interpretations of its regulations to govern federal contractors, including an expansive and ever-changing approach to compensation and significant revisions to the audit scheduling letter. And some observers even go so far as to wonder whether the Executive Order that created the entire affirmative action system for federal contractors is an overbroad regulatory reach.
New FOIA Requests The OFCCP once again received several Freedom of Information Act (FOIA) requests to disclose certain reports from federal contractors that include sensitive employee demographic data — specifically the release of 2021 EEO-1 consolidated report information. Employers that oppose having 2021 EEO-1 Type 2 Reports disclosed were given an opportunity to submit a written objection. Pay Transparency Measures Proposed Back in January, the Biden administration announced new pay transparency measures intending to reduce wage gaps based on gender and race. Like many of the state laws aimed at closing the wage gap, President Biden’s multi-pronged approach includes salary history bans, reinforcement of equal pay obligations, and a proposal that would require federal contractors and subcontractors to disclose expected salary ranges in job postings. We expect the final rule to be issued any day now.
Feds Announce New Race/ Ethnicity Categories
We accurately predicted that the federal government would change how it categorizes people by race and ethnicity. In March, the White House announced that the federal government was making key revisions – for the first time in over 25 years – to the questions agencies use to collect such information. Although the changes took effect immediately, agencies still have time to roll out their new data collection approaches, so employers should look for directions from the applicable agencies.
Trump Administration Will Shift Focus
As President-elect Trump prepares to return to the White House, we can take several cues from his first term to predict how his administration will approach federal contract compliance: • More Enforcement: Trump’s OFCCP will increase its enforcement efforts since the agency had more financial recoveries during his first term than during the prior nine years combined. • Rescind Contractor Minimum Wage: The new administration will rescind a Biden-era order that significantly raised the minimum wage for workers on covered federal contracts. Notably, in November, a federal appeals court held that President Biden didn’t have the authority to set a federal contractor minimum wage, and we expect the court battle to continue as the incoming administration determines next steps. • End Certain Diversity Training: OFCCP will return to Trump-era restrictions on diversity training for federal contractors – including reissuing the Executive Order prohibiting “divisive” training, which President Biden revoked. • Ensure Religious Exemptions: The administration will ensure religious organizations have clear and appropriate exemptions. • More Transparency: We also expect to see a return to enforcement policies and procedures that often provided more transparency to the contractor community. • No Pay Data Reporting: Finally, as we mentioned in our Pay Equity section, we think the EEOC will abandon its attempts to resurrect its EEO-1 pay data reporting requirement.
Delayed OFCCP Regulations on Modernization
With the uptick in remote work in recent years, the OFCCP has recognized that AAP structures based on establishment or physical location are becoming unworkable for many contractors. But we missed the mark on thinking the agency would release regulations in 2024 aimed at refining the structure of affirmative action programs to accommodate changes in the way companies work. Instead, the agency has said it should issue a modernization rule by May 2025.
HOW’D WE DO ON OUR PREDICTIONS? We got the predictions SOMEWHAT RIGHT
Cheryl L. Behymer
Sheila M. Abron
Columbia Senior Counsel and Co-Chair, AAFCC Practice Group cbehymer@fisherphillips.com
Columbia Partner and Co-Chair, AAFCC Practice Group sabron@fisherphillips.com
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