On April 18, 2012, the subcommittee on Health, Employment, Labor and Pensions of the Committee on Education and the Workforce held a hearing on the potential impact of the Office of Federal Contract Compliance Programs' regulatory and enforcement actions. The areas covered included the proposed Section 503 (disability), Section 4212 (protected veterans) and Compensation data elements of the proposed revised scheduling letter and proposed Compensation rule among other things. Proponents of the regulatory efforts pointed to the unemployment rates for individuals with disabilities and protected veterans and the pay gap between men and women as the reasons for their support of the OFCCP initiatives. Opponents of the proposals, in their current form, supported the general, overall objectives of improving employment outcomes for individuals with disabilities and protected veterans but raised concerns about the cost and effectiveness of the proposals in achieving their objectives.
In this article, I want to raise just a few of the enforcement questions that may arise when these regulations are finally implemented. These are some of the questions that would occur to me if I were responsible for implementation of these new rules. They are also questions that a Federal Contractor faced with new compliance obligations would benefit from knowing.
Section 503 - The proposed sample language of the invitation to self-identify omits individuals who are "regarded as" disabled when reciting the Section 503 definitions of disability. This is presumably because being "regarded as" a person with a disability only occurs when the employer or prospective employer takes certain actions based on the belief that you have an impairment so it is not a status that a person would be expected to "self-identify" when initially seeking employment.
However, the rule provides a number of specific affirmative action obligations to known individuals with disabilities which continue throughout the employee's tenure. The rule is silent as to the coverage of individuals who eventually fall into the category of "regarded as" having a disability. Is the omission in the invitation to self-identify intended to suggest that the affirmative action provisions of the rule are not to be applied to individuals who only satisfy the "regarded as" prong of the definition of disability?
The definition of "regarded as" having a disability was changed in the 2008 amendments to the ADA to eliminate the requirement that the individual prove that the condition he or she is thought to have actually substantially limits a major life activity.
(A) An individual meets the requirement of "being regarded as having such an impairment" if the individual establishes that he or she has been subjected to an action prohibited under this chapter because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity.
(B) Paragraph (1)(C) shall not apply to impairments that are transitory and minor. A transitory impairment is an impairment with an actual or expected duration of 6 months or less.
For example, a person can satisfy the "regarded as" prong of the definition if the employer refuses to give the employee an important, potentially career enhancing assignment because it mistakenly believes that the employee has chronic hypertension. This employee satisfies the definition because chronic hypertension is not transitory and minor and the employer negatively affected the employee's terms and conditions of employment because of the perception based on the misperception.
In addition, Congress included language in the 2008 amendments to the ADA to specifically state that individuals regarded as having a disability are not entitled to reasonable accommodation. It did not exclude them for any other purposes. Presumably, if they were to be excluded for other purposes, Congress knew how to achieve that goal.
Given this, the simple exclusion of "regarded as" from the recommended self-identification language of the proposed regulation and silence with respect to coverage in the balance of the rule seems insufficient to exclude individuals who satisfy the "regarded as" provision from the other affirmative action benefits in the rule. Could a Federal Contractor, as part of the remedy for a person who files a discrimination complaint on a "regarded as" basis, be required to be accorded all of the affirmative action benefits proposed in the regulations for individuals meeting Section 503 definition of disability, such as documentation of the reasons for all future non-selections? Since the definition of disability under Section 503 is tied to the definition of disability under the ADA as amended and that definition is set by Congress, this question takes on real significance. Individuals who satisfy the "regarded as" prong of the definition are individuals with disabilities under both Title I of the ADA and Section 503.
With the exception of the new limitations on reasonable accommodations, there appears to be no authority for restricting any other rights and privileges qualified individuals with disabilities under the "regarded as" prong may have compared with individuals covered under the other two prongs of "actual" disability and "record of" a disability.
Given that the definition of disability was established and then amended by Congress, it does not appear that OFCCP would have the regulatory authority to eliminate the possibility offered in my example, that falling under the "regarded as" prong entitles the individual to all of the affirmative action benefits conferred by the proposed rule. A person who has been discriminated against under the "regarded as" prong is thus presumably entitled to any affirmative action provisions that favor individuals with disabilities and these additional benefits should be sought as part of the remedy in any "regarded as" case. It would be interesting to hear the agency's position on this interpretation, but, as noted earlier, the proposed rule is essentially silent on the "regarded as" prong.
Section 503 - The proposed 7% goal and possible 2% sub-goal for individuals with disabilities and individuals with severe disabilities, respectively, is admittedly not reflective of the qualified, available populations of individuals with disabilities with the requisite skills in the reasonable recruiting area and includes a percentage that is said to account for "discouraged workers." What will Federal Contractors be required to show in order to demonstrate whether a job group meets the 7% or 2%? In other words, in actual enforcement, will OFCCP only count individuals who voluntarily self-identify when determining the incumbent disabled population in a job group? This is important because the requirement to set a hiring goal is only triggered when job group utilization falls below the 7% goal or 2% sub-goal level. Will the agency assume because the survey of incumbents for disability status is anonymous, that all individuals with disabilities will fill out the survey? Does this assumption lead it to only count the population that does complete the anonymous survey as the entire incumbent disabled population in the job group?
Or, since the ADA has long acknowledged the reluctance of some individuals to self-identify and hence the traditional limitations on pre-employment inquiries, will contractors be permitted to put forward methodologies to account for individuals who either choose not to self-identify or for people who are not used to thinking of themselves as disabled but would likely satisfy the new expanded definitions of disability? Can Federal Contractors, for instance, use health statistics possibly combined with age, race and gender data (since the incident rate for some disabling conditions varies by age, race and gender) to estimate the percentage of their job groups that have disabilities?
For example, the Centers for Disease Control website notes that 8.3% of the U.S. population is affected by diabetes, i.e., diabetic or pre-diabetic and that 12% of adults 20 and over have been told they have heart disease. Will employers be allowed to use these kinds of figures in estimating the percentage of their incumbent populations that have disabilities because of impairments to major bodily functions caused by these conditions?
The fact that the goals being established by the proposed regulations are based on broad assumptions rather than specific availability figures for qualified disabled persons with the requisite skills could lead to the conclusion that Federal Contractors should be allowed similar latitude in determining their incumbency figures. It would be extremely helpful if Federal Contractors knew, in advance, how the agency intends to calculate the disability incumbency rates.
Under both Section 503 and Section 4212, significantly more obligations are triggered when a person self-identifies as a member of either of these classes than is triggered when a person self-identifies race or gender. The invitation to self-identify for race and gender does not carry with it the obligation to advise you of all openings that you may qualify for or to create written documentation of the reasons for non-selection nor does it make these reasons available to the employee. These and other privileges will be accorded to individuals with disabilities and certain classes of veterans under the proposals.
Will it be a discrimination violation for a Federal Contractor to request documentation of the claimed status before incurring these additional obligations with respect to the employee or will asking for documentation from these two groups, but not for race and gender self-identification, be considered disparate treatment? On its face, such selective requirements for documentation would appear vulnerable to a claim of disparate treatment.
Will the agency ask for proof of the self-identified status in determining whether the Contractor is compliant in setting its benchmarks, in determining underutilization and in according the various affirmative action privileges contemplated by the rule? How will the Contractor be able to get this proof in making these decisions if seeking it from the applicant or employee exposes it to a possible disparate treatment claim? OFCCP should advise Contractors up front if it intends to base its calculations of who is a veteran or person with a disability for affirmative action purposes on a particular type of proof such as a DD 214 or a medical record or if it is going to rely solely on the results of the voluntary self-identification process. It should also clarify whether it is a violation for a Federal Contractor to request proof of status for either individuals with disabilities, veterans or both.
Both the Section 503 and Section 4212 proposals require the 5 year retention of applicant, hiring and job fill ratios. How is this data to be used in enforcement? The agency should at a minimum explain why it needs the data, what it intends to do with the data, and how the data will advance the employment prospects of these two populations. Will OFCCP consider the Federal Contractor compliant if it makes and retains the ratios but does not retain the support data upon which the ratios are based? If the support data must also be retained, this should be specifically noted in the rule and included in the paperwork burden calculations. It is not clear what purpose will be served if the ratios cannot be substantiated with actual data.
The proposed revisions to Section 4212 require that the Contractor establish a benchmark for hiring veterans and then set goals based on the benchmark. Under Title VII, voluntary veteran's preferences can be found to have a disparate impact on women, whereas such preferences, authorized by statute, are permitted. Statutes that merely encourage but do not require such preferences would not be sufficient to excuse the disparate impact. Since the Section 4212 regulations are encouraging Federal Contractors to be more proactive in hiring veterans, it is important for the regulatory agencies to provide clear guidance concerning the intersection of Section 4212 and Title VII. This guidance should provide examples of the kinds of initiatives that would be lawful under both Section 4212 and Title VII and examples of the kinds of initiatives that are likely to get an employer in trouble under Title VII because of the disparate impact on women and possibly other protected groups.
OFCCP is now seeking a substantial amount of compensation data in every compliance review. What exactly does the agency intend to do with this data? Specifically, what are the elements of a systemic discrimination compensation case? What must a Contractor do to ensure that its pay systems are compliant? How can you tell a compliant system from a non-compliant pay system? What are the self-audit procedures that OFCCP would expect a compliant Contractor to undertake? Specific common issues include how does OFCCP evaluate the impact of starting salaries on present salary? Do variances in starting salaries that persist provide legitimate non-discriminatory reasons for present disparities or is the salary gap expected to close at some point and how can that point be determined? Are Contractors expected to perform regression analyses in order to satisfy the self-monitoring requirement? Are policies requiring non-disclosure of salary information inherently suspect? Would such policies ever be subjected to a disparate impact challenge on the theory that salary secrecy is more disadvantageous to women than to men because of the traditional disparity in pay for women? Would OFCCP ever consider bringing such an argument?
Traditionally, OFCCP compensation indicators that appear systemic tend to resolve as cohorts, small groups or individuals whose salaries appear out of line and for which insufficient alternative explanations are provided. Systemic discrimination in pay likely exists but so far the agency has not been able to explain what it looks like with sufficient clarity to aid Federal Contractors in voluntarily complying with requirements for non-discriminatory pay system. The agency has yet to clearly articulate the answers to the questions posed above. Voluntary compliance on the part of Contractors would be greatly improved if the answers to the above inquiries were provided by the agency.
The corrective measure for insufficient "good faith effort" used to be a requirement that the employer enter into "linkage agreements" with certain specified service organizations. Suppose a Federal Contractor has engaged in linkages with a variety of organizations over time and none have been productive in providing applicants for particular job groups in some of its locations. Can the Federal Contractor avoid a technical violation by providing evidence as to why it was reasonable to stop seeking new linkage partners or that no new linkage partners exist because it has exhausted the available resources? What is the enforcement mechanism if the Federal Contractor stops pursuing new linkage agreements in those areas? What is the enforcement mechanism if OFCCP cannot identify any new linkage partners in those areas? What is the enforcement mechanism for any Federal Contractor who fails to have a linkage agreement at some, but not all, of its facilities?
These are some of the enforcement issues that occurred to me as I was listening to the April 18th hearing. When enforcement becomes a reality, many more questions will surface routinely as the agency tries to grasp what it, in fact, is asking Federal Contractors to do.
One thing that will definitely happen is that technical violations will go up, the cost of compliance will go up and the time it takes to complete the review will go up. What is significantly less likely is that these additional costs will have any meaningful impact on employing and advancing in employment individuals with disabilities and protected veterans and in closing the "gender gap" in pay. Passing these regulations will not be a victory, it will simply be the beginning of a costly experiment and one with a very tenuous hypothesis.
These problems of employment and pay equality are not simple. For example, there is a whole dimension of the risk of lost benefits that employment poses to individuals who rely on Social Security and other social safety nets that keeps many qualified individuals with disabilities from even putting themselves in the applicant pools. These workers are indeed discouraged but not by the actions of Federal Contractors. The disconnect or difficulties in translation between the kinds of jobs veterans hold in the military and the kinds of jobs Federal Contractors need to fill is not because of animus against veterans. The systemic pay gap may not reflect simply the pay actions of the current employer but the cumulative pay decisions at various employers throughout the employee's work history as well as decisions that the employee made that were impacted by societal gender expectations that impacted the starting pay set by the current employer. Addressing these issues is not simply a matter of forcing Federal Contractors to engage in certain behaviors.
Working with Federal Contractors can lead to successful outcomes. The Tyson case which was cited by the rules proponents as an example of OFCCP success in addressing gender discrimination did not get resolved by persisting in an adversarial stance with Tyson. Actually, the perception that negotiations with the Region would be adversarial delayed the resolution of these cases and led to the filing of administrative complaints. It was only once we all sat down at a table and talked about the issues in a less adversarial and more conciliatory manner and acknowledged the meaningful efforts that Tyson had made to correct problems that it had largely inherited through acquisitions that we were able to make meaningful progress in reaching a consent decree.
The enforcement effort should not be an "us versus them" issue. OFCCP does not have a monopoly on concern for improving the employment outcomes for individuals with disabilities and protected veterans, nor does it have a monopoly on desiring fair pay systems. For any of the solutions to work, the Federal Government, Federal Contractors, Worker's Rights Organizations and affected workers are going to have to find ways that work for all three parties to achieve meaningful improvements in employment outcomes. This is very difficult work and needs to be ongoing. It is easy to give up on the "One America" theme and move to the "99% versus 1% " theme, especially when you wield enforcement power, but easy is not going to solve the problem. All interested parties need to hang in there until solutions that are going to stick are found. I hope that whatever the outcome of this regulatory exercise, that some core group from each of these segments will keep working to make meaningful improvements that matter to real people and not just sound bites for their respective constituencies.