[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
   REVIEWING THE IMPACT OF THE OFFICE OF FEDERAL CONTRACT COMPLIANCE 
                               PROGRAMS' 
                   REGULATORY AND ENFORCEMENT ACTIONS 

=======================================================================

                                HEARING

                               before the

                        SUBCOMMITTEE ON HEALTH,
                     EMPLOYMENT, LABOR AND PENSIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, APRIL 18, 2012

                               __________

                           Serial No. 112-59

                               __________

  Printed for the use of the Committee on Education and the Workforce


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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Robert E. Andrews, New Jersey
Todd Russell Platts, Pennsylvania    Robert C. ``Bobby'' Scott, 
Joe Wilson, South Carolina               Virginia
Virginia Foxx, North Carolina        Lynn C. Woolsey, California
Bob Goodlatte, Virginia              Ruben Hinojosa, Texas
Duncan Hunter, California            Carolyn McCarthy, New York
David P. Roe, Tennessee              John F. Tierney, Massachusetts
Glenn Thompson, Pennsylvania         Dennis J. Kucinich, Ohio
Tim Walberg, Michigan                Rush D. Holt, New Jersey
Scott DesJarlais, Tennessee          Susan A. Davis, California
Richard L. Hanna, New York           Raul M. Grijalva, Arizona
Todd Rokita, Indiana                 Timothy H. Bishop, New York
Larry Bucshon, Indiana               David Loebsack, Iowa
Trey Gowdy, South Carolina           Mazie K. Hirono, Hawaii
Lou Barletta, Pennsylvania           Jason Altmire, Pennsylvania
Kristi L. Noem, South Dakota         Marcia L. Fudge, Ohio
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director

         SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS

                   DAVID P. ROE, Tennessee, Chairman

Joe Wilson, South Carolina           Robert E. Andrews, New Jersey
Glenn Thompson, Pennsylvania           Ranking Member
Tim Walberg, Michigan                Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee          David Loebsack, Iowa
Richard L. Hanna, New York           Dale E. Kildee, Michigan
Todd Rokita, Indiana                 Ruben Hinojosa, Texas
Larry Bucshon, Indiana               Carolyn McCarthy, New York
Lou Barletta, Pennsylvania           John F. Tierney, Massachusetts
Kristi L. Noem, South Dakota         Rush D. Holt, New Jersey
Martha Roby, Alabama                 Robert C. ``Bobby'' Scott, 
Joseph J. Heck, Nevada                   Virginia
Dennis A. Ross, Florida              Jason Altmire, Pennsylvania



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on April 18, 2012...................................     1

Statement of Members:
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio..........................................     4
        Prepared statement of....................................     6
    Roe, David P., Chairman, Subcommittee on Health, Employment, 
      Labor and Pensions.........................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Bottenfield, Dana C., PHR, CCP, CBP, director of HRIS, 
      employment and immigration, St. Jude Children's Research 
      Hospital...................................................    20
        Prepared statement of....................................    22
    Graves, Fatima Goss, vice president for education and 
      employment, National Women's Law Center....................    27
        Prepared statement of....................................    29
    Horvitz, Alissa A., Esq., shareholder, Littler Mendelson, 
      P.C........................................................    37
        Prepared statement of....................................    39
    Norris, Jeffrey A., president, Equal Employment Advisory 
      Council....................................................     8
        Prepared statement of....................................    10

Additional Submissions:
    Ms. Bottenfield, response to questions submitted for the 
      record.....................................................    86
    Ms. Horvitz, response to questions submitted for the record..    89
    Mr. Kucinich:
        Letter from American Airlines to the U.S. Department of 
          Labor (DOL)............................................    48
        Letter, dated Feb. 21, 2012, from Amerigroup Corp. to DOL    50
        Letter, dated Feb. 2, 2012, from Bayer Corp. to DOL......    52
        Letter, dated Feb. 7, 2012, from Highmark Inc. to DOL....    54
    Mr. Miller, statement of Patricia A. Shiu, Director, Office 
      of Federal Contract Compliance Programs, U.S. Department of 
      Labor......................................................    78
    Mr. Norris:
        Letter, dated April 26, 2012, to Chairman Roe............    85
        Response to questions submitted for the record...........    97
    Chairman Roe:
        Letter, dated April 17, 2012, from Associated Builders 
          and Contractors (ABC)..................................    66
        Letter, dated April 18, 2012, from the U.S. Chamber of 
          Commerce...............................................    70
        Letter, dated April 17, 2012, from the HR Policy 
          Association............................................    74
        Letter, dated April 17, 2012, from the Society for Human 
          Resource Management (SHRM) and the College and 
          University Professional Association for Human Resources 
          (CUPA-HR)..............................................    75
        Letter, dated April 19, 2012, from the Food Marketing 
          Institute (FMI)........................................    77
        Questions submitted for the record to:
            Ms. Bottenfield......................................    86
            Ms. Horvitz..........................................    88
            Mr. Norris...........................................    96


                 REVIEWING THE IMPACT OF THE OFFICE OF
                 FEDERAL CONTRACT COMPLIANCE PROGRAMS'
                   REGULATORY AND ENFORCEMENT ACTIONS

                              ----------                              


                       Wednesday, April 18, 2012

                     U.S. House of Representatives

         Subcommittee on Health, Employment, Labor and Pensions

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 10:03 a.m., in 
room 2175, Rayburn House Office Building, Hon. David P. Roe 
[chairman of the subcommittee] presiding.
    Present: Representatives Roe, Rokita, Kucinich, Kildee, 
Tierney, Holt, Scott, and Altmire.
    Staff present: Jennifer Allen, Press Secretary; Katherine 
Bathgate, Deputy Press Secretary; Casey Buboltz, Coalitions and 
Member Services Coordinator; Molly Conway, Professional Staff 
Member; Ed Gilroy, Director of Workforce Policy; Benjamin Hoog, 
Legislative Assistant; Barrett Karr, Staff Director; Ryan 
Kearney, Legislative Assistant; Donald McIntosh, Professional 
Staff Member; Brian Newell, Deputy Communications Director; 
Krisann Pearce, General Counsel; Molly McLaughlin Salmi, Deputy 
Director of Workforce Policy; Linda Stevens, Chief Clerk/
Assistant to the General Counsel; Alissa Strawcutter, Deputy 
Clerk; Joseph Wheeler, Professional Staff Member; Kate Ahlgren, 
Minority Investigative Counsel; Aaron Albright, Minority 
Communications Director for Labor; Tylease Alli, Minority 
Clerk; Daniel Brown, Minority Policy Associate; Brian Levin, 
Minority New Media Press Assistant; Richard Miller, Minority 
Senior Labor Policy Advisor; Megan O'Reilly, Minority General 
Counsel; Laura Schifter, Minority Senior Education and 
Disability Advisor; Michele Varnhagen, Minority Chief Policy 
Advisor/Labor Policy Director; and Michael Zola, Minority 
Senior Counsel.
    Chairman Roe. A quorum being present, the Subcommittee on 
Health, Employment, Labor, and Pensions will come to order. 
Good morning, everyone.
    I would like to thank our witnesses for being with us 
today. We have a distinguished panel and we look forward to 
their insightful testimony.
    Roughly one out of every five workers is currently employed 
by a federal contractor, providing services ranging from 
construction and I.T. management to the acquisition of office 
supplies. Drawing from the experience and expertise of the 
private sector workforce helps ensure federal projects are 
carried out more efficiently and at the most competitive price 
for taxpayers.
    Like all employers, federal contractors have a 
responsibility to ensure equal employment opportunities for 
workers and job applicants. Discrimination of any kind is 
abhorrent.
    An individual's race, gender, religion, disability, or 
military service should never preempt a qualified worker from 
employment. In fact, federal policies prohibit employment 
discrimination and require employers to take affirmative action 
to recruit, hire, and advance qualified individuals in targeted 
populations.
    The Office of Federal Contract Compliance Programs is 
responsible for ensuring government contractors meet these 
responsibilities. Employers are required to maintain a written 
plan detailing efforts to identify and remove employment 
barriers. For women and minorities, employers must also 
complete an extensive analysis of the workplace that includes a 
description of all job classifications, the number of women and 
minorities placed in these job classifications, and the steps 
an employer will take to remedy situations when they are not 
appropriately represented.
    These requirements extend to subcontractors and cover every 
employee in an employer's workforce, regardless of whether 
their job is related to the government contract. Recognizing 
the scope and complexity of these requirements, it is critical 
our regulatory and enforcement actions promote the rights of 
workers without adversely affecting an employer's ability to 
run his or her business.
    While extensive, current policies have been largely 
successful in this endeavor. Individuals are protected and 
employers are aware of their legal responsibilities.
    However, the administration is advancing numerous 
regulations that significantly alter longstanding 
nondiscrimination practices and create new waves of uncertainty 
for workers and business owners. For example, OFCCP now wants 
federal contractors to document each step of the hiring process 
for veterans and individuals with disabilities, as well as 
submit a written statement of reasons documenting why an 
individual was not extended an offer of employment. This 
unprecedented regulatory scheme would bury employers in 
paperwork, diverting resources away from job creation to manage 
administrative burdens.
    Additionally, OFCCP is in the process of implementing for 
the first time an arbitrary hiring quota for individuals with 
disabilities. Supporters have characterized this--as merely a 
hiring goal, but when a goal is enforced by a federal agency 
make no mistake: it carries the weight of a mandate. This 
proposed regulation would also force job applicants to disclose 
whether they are disabled despite existing protections 
prohibiting an employer from soliciting such personal 
information.
    Finally, the agency is expanding its jurisdiction to those 
who provide health care services to military personnel and 
veterans through the federal health care program, TRICARE. The 
Department of Defense said it would be impossible to offer 
health care to military families if onerous federal contracting 
rules were applied to TRICARE providers.
    Despite this warning and congressional action, the OFCCP 
continues to move forward with its bureaucratic overreach. The 
agency has also extended its authority to provide dental, 
vision, hearing, and prescription drug services to seniors 
under Medicare.
    The challenges facing our nation's employers and workers in 
the wake of the recession are numerous and one of the greatest 
hazards to our economic recovery is heavy-handed regulation. 
U.S. Chamber of Commerce reported this week that 52 percent of 
small business owners believe regulations pose the greatest 
threat to their success.
    This timely survey underscores the toughest challenges 
facing the American workforce: a persistently weak economy and 
lack of jobs. African Americans, individuals with disabilities, 
and women are all experiencing higher levels of unemployment 
today than they were 3 years ago, and while the job prospects 
for veterans have modestly improved, roughly one in 10 veterans 
are still searching for work. The nation's unemployment--
unemployed don't need more regulations; they need more jobs.
    Now more than ever we need to support smart policies that 
protect workers and promote private sector job growth. And 
during this time of record deficits and debt we need employers 
with skilled workers competing for government contracts so we 
can best provide values to taxpayers. The question before us 
today is whether the regulatory and enforcement policies of 
today's OFCCP are moving our nation in the right direction.
    I look forward to our discussion and will now recognize my 
distinguished colleagues, Mr. Kucinich, the senior Democratic 
member of our subcommittee, for his opening remarks.
    [The statement of Chairman Roe follows:]

        Prepared Statement of Hon. David P. Roe, M.D., Chairman,
         Subcommittee on Health, Employment, Labor and Pensions

    Good morning, everyone. I would like to thank our witnesses for 
being with us today. We have a distinguished panel and we look forward 
to their insightful testimony.
    Roughly one out of every five workers is currently employed by a 
federal contractor, providing services ranging from construction and IT 
management to the acquisition of office supplies. Drawing from the 
experience and expertise of the private-sector workforce helps ensure 
federal projects are carried out more efficiently and at the most 
competitive price for taxpayers. Like all employers, federal 
contractors have a responsibility to ensure equal employment 
opportunities for workers and job applicants.
    Discrimination of any kind is abhorrent. An individual's race, 
gender, religion, disability, or military service should never preempt 
a qualified worker from employment. In fact, federal policies prohibit 
employment discrimination and require employers to take affirmative 
action to recruit, hire, and advance qualified individuals in targeted 
populations.
    The Office of Federal Contract Compliance Programs is responsible 
for ensuring government contractors meet these responsibilities. 
Employers are required to maintain a written plan detailing efforts to 
identify and remove employment barriers. For women and minorities, 
employers must also complete an extensive analysis of the workplace 
that includes a description of all job classifications, the number of 
women and minorities placed in these job classifications, and the steps 
an employer will take to remedy situations when they are not 
appropriately represented.
    These requirements extend to subcontractors and cover every 
employee in an employer's workforce, regardless of whether their job is 
related to the government contract. Recognizing the scope and 
complexity of these requirements, its critical regulatory and 
enforcement actions promote the rights of workers without adversely 
affecting an employer's ability to run his or her business. While 
extensive, current policies have been largely successful in this 
endeavor. Individuals are protected and employers are aware of their 
legal responsibilities.
    However, the Obama administration is advancing numerous regulations 
that significantly alter long-standing nondiscrimination practices and 
create new waves of uncertainty for workers and business owners. For 
example, OFCCP now wants federal contractors to document each step of 
the hiring process for veterans and individuals with disabilities, as 
well as submit a written ``statement of reasons'' documenting why an 
individual was not extended an offer of employment. This unprecedented 
regulatory scheme would bury employers in paperwork, diverting 
resources away from job creation to manage administrative burdens.
    Additionally, OFCCP is in the process of implementing for the first 
time an arbitrary hiring quota for individuals with disabilities. 
Supporters have characterized this as merely a hiring ``goal,'' but 
when a goal is enforced by a federal agency, make no mistake, it 
carries the weight of a mandate. This proposed regulation would also 
force job applicants to disclose whether they are disabled, despite 
existing protections prohibiting an employer from soliciting such 
personal information.
    Finally, the agency is expanding its jurisdiction to those who 
provide health care services to military personnel and veterans through 
the federal health care program, TRICARE. The Department of Defense 
said it would it would be impossible to offer affordable health care to 
military families if onerous federal contracting rules were applied to 
TRICARE providers. Despite this warning and congressional action, OFCCP 
continues to move forward with its bureaucratic overreach. The agency 
has also extended its authority to providers of dental, vision, 
hearing, and prescription drug services to seniors under Medicare.
    The challenges facing our nation's employers and workers in the 
wake of the recession are numerous, and one of the greatest hazards to 
our economic recovery is heavy-handed regulation. The U.S. Chamber of 
Commerce reported this week that 52 percent of small business owners 
believe regulations pose the greatest threat to their success.
    This timely survey underscores the toughest challenge facing the 
American workforce: A persistently weak economy and lack of jobs. 
African-Americans, individuals with disabilities, and women are all 
experiencing higher levels of unemployment today than they were three 
years ago. And while the job prospects for veterans have modestly 
improved, roughly one in 10 veterans are still searching for work. The 
nation's unemployed don't need more regulation; they need more jobs.
    Now more than ever we need to support smart policies that protect 
workers and promote private-sector job growth. And during this time of 
record deficits and debt, we need employers with skilled workers 
competing for government contracts so we can provide the best value to 
taxpayers. The question before us today is whether the regulatory and 
enforcement policies of today's OFCCP are moving our nation in the 
right direction.
    I look forward to our discussion, and will now recognize my 
distinguished colleague Rob Andrews, the senior Democratic member of 
the subcommittee, for his opening remarks.
                                 ______
                                 
    Mr. Kucinich. Thank you very much, Chairman Roe. It is a 
privilege to be with you this morning, my friend, and I look 
forward to this hearing. I am grateful for the chance to sit 
next to you here. And I want to thank you for calling the 
hearing and thank the witnesses for being here so that we can 
examine the Office of Federal Contract Compliance Programs.
    The federal government spends about $537 billion a year on 
contractors. With that kind of money at stake taxpayers have a 
right to expect that those contractors will perform to high 
standards. One of those standards is a simple one: Obey the 
law. Respect the civil rights of American workers.
    That is where the Office of Federal Contract Compliance 
Programs comes in. The agency's mission is to ensure that 
contractors receiving federal tax dollars comply with 
employment nondiscrimination and equal opportunity 
requirements.
    Taxpayer dollars should never be used to violate civil 
rights or to perpetuate discrimination. OFCCP monitors 
contractors for systemic civil rights violations, including 
everything from equal pay for women to failures to hire or 
promote veterans or individuals with disabilities.
    Today that work is more important than ever. Each year more 
than 2 million Americans are affected by workplace 
discrimination.
    The Equal Employment Opportunity Commission reports that 
private sector bias charges are at an all-time high. These 
unlawful employment practices cost our country $64 billion 
annually. Nearly 50 years after passage of Title VII of the 
Civil Rights Act it is unacceptable that workplace 
discrimination continues to be so prevalent.
    Yesterday we marked a milestone that illustrates how much 
work we and the OFCCP have to do. Yesterday was Equal Pay Day. 
Equal Pay Day marked the day on which women's compensation 
finally caught up with their male counterparts from last year. 
To earn what men earned in 2011 women must work all of 2011 and 
then keep on working right up until April 17th of this year.
    Now, that really bears some thought here because we are not 
really talking about people who are differently able; we are 
talking about people who are different genders and are being 
denied an opportunity for fair pay. The U.S. Census pointed out 
women working full time continue to earn just 77 cents for 
every dollar a man earns. This pay gap cost women $10,784 in 
lost wages last year. Lower lifetime earnings mean women have 
smaller pensions and an average annual Social Security benefit 
that is 25 percent less than their male counterparts.
    And it is not just women who suffer from pay 
discrimination. Paying people less than what they are owed is a 
drag on the entire economy. Closing the wage gap will help 
families stay in their homes, decrease reliance on government 
programs, and allow working women the opportunity to spend more 
of their hard-earned money in their communities.
    The OFCCP is the only agency--the only agency that 
systematically reviews federal contractors' employment 
practices for pay discrimination. The agency makes sure that 
when taxpayer dollars are spent women receive equal pay for 
equal work.
    The OFCCP's mission extends well beyond women's pay. The 
agency is also hard at work protecting our returning veterans, 
protecting individuals with disabilities, as well as racial and 
ethnic minorities, all of whom have been particularly hard hit 
by the great recession.
    Fortunately, this agency has not been content to maintain 
the status quo. In a recently released regulation the OFCCP 
recognized that our nation's veterans face unique challenges in 
transitioning to civilian employment. It is working to improve 
monitoring and enforcement in this area.
    Our veterans have every right to expect that they will 
receive fair consideration for employment on projects supported 
by federal tax dollars. OFCCP's job is to make sure these men 
and women get a fair shake when they return to the civilian 
workforce.
    The agency has also proposed a regulation updating the 
obligations of federal contractors with respect to individuals 
with disabilities. According to the Bureau of Labor Statistics, 
individuals with disabilities face nearly double the 
unemployment rate of individuals without disabilities. It is 
astounding, especially at a time when technological advances 
make it possible for individuals with disabilities to succeed 
in many more jobs than would otherwise be the case.
    The fight against discrimination is smart economics. 
Taxpayer dollars are limited. Taxpayers should expect that 
their dollars are spent wisely, employing, promoting, and 
compensating workers based on their merit, not on gender, race, 
disability, or veteran status.
    This is morally right and a good thing for business. 
Nondiscrimination ensures higher quality work.
    The OFCCP has gargantuan job monitoring responsibilities, 
monitoring the hundreds of billions of taxpayer dollars spent 
on contractors every year. While the agency develops ways to 
make its enforcement efforts more thorough, more agile, and 
more effective, let's not lose sight of the edict it is 
attempting to enforce.
    It is a simple edict. It is grounded in common sense. If 
you want to do business with the federal government you will 
treat our citizens fairly.
    I look forward, Mr. Chairman, to hearing from our 
distinguished panel and thank you, again, for holding this 
hearing.
    [The statement of Mr. Kucinich follows:]

  Prepared Statement of Hon. Dennis J. Kucinich, a Representative in 
                    Congress From the State of Ohio

    Good morning, Mr. Chairman.
    I want to thank you for calling this hearing to examine the Office 
of Federal Contract Compliance Programs (OFCCP).
    The federal government spends $537 billion a year on contractors. 
With that kind of money at stake, taxpayers have every right to expect 
that those contractors will perform to the highest standards.
    One of those standards is a simple one. Obey the law. Respect the 
civil rights of American workers.
    That's where OFCCP comes in. The agency's mission is to ensure that 
contractors receiving federal taxpayer dollars comply with employment 
nondiscrimination and equal opportunity requirements. Taxpayer dollars 
should never be used to violate civil rights or to perpetuate 
discrimination.
    OFCCP monitors contractors for systemic civil rights violations, 
including everything from equal pay for women, to failures to hire or 
promote veterans or individuals with disabilities.
    Today that work is more important than ever.
    Each year, more than 2 million Americans are affected by workplace 
discrimination. The Equal Employment Opportunity Commission reports 
that private sector bias charges are at an all-time high. These 
unlawful employment practices cost our country $64 billion annually. 
Nearly 50 years after the passage of Title VII of the Civil Rights Act, 
it is unacceptable that workplace discrimination continues to be so 
prevalent.
    Yesterday we marked a milestone that illustrates how much work we--
and OFCCP--have to do. Yesterday, April 17, was Equal Pay Day. Equal 
Pay Day marked the day on which women's compensation finally caught up 
with their male counterparts from last year. To earn what men earned in 
2011, women must work all of 2011, and then keep on working, right up 
until April 17 of this year.
    That's because, as the U.S. Census Bureau has pointed out, women 
working full-time continue to earn just 77 cents for every dollar a man 
earns.
    This pay gap costs women $10,784 in lost wages each year. Lower 
lifetime earnings mean women have smaller pensions and an average 
annual Social Security benefit that is 25 percent less than their male 
counterparts.
    And it's not just women who suffer from pay discrimination. Paying 
people less than what they are owed is a drag on the entire economy.
    Closing the wage gap will help families stay in their homes, 
decrease reliance on government programs, and allow working women the 
opportunity to spend more of their hard-earned money in their 
communities.
    OFCCP is the only agency that systemically reviews federal 
contractors' employment practices for pay discrimination. The agency 
makes sure that, when taxpayer dollars are spent, women receive equal 
pay for equal work.
    OFCCP's mission extends well beyond women's pay. The agency is also 
hard at work protecting our returning veterans, individuals with 
disabilities, as well as racial and ethnic minorities--all of whom have 
been hit particularly hard by the Great Recession.
    Fortunately, this agency has not been content to maintain the 
status quo.
    In a recently proposed regulation, OFCCP recognized that our 
nation's veterans face unique challenges in transitioning to civilian 
employment. It is working to improve monitoring and enforcement in this 
area.
    Our veterans have every right to expect that they will receive fair 
consideration for employment on projects supported by federal tax 
dollars. OFCCP's job is to make sure these men and women get a fair 
shake when they join the civilian workforce.
    The agency has also proposed a regulation updating the obligations 
of federal contractors with respect to individuals with disabilities.
    According to the Bureau of Labor Statistics, individuals with 
disabilities face nearly double the unemployment rate of individuals 
without disabilities.
    That is astounding, especially at a time when technological 
advances make it possible for individuals with disabilities to succeed 
in many more jobs than would otherwise be the case.
    The fight against discrimination is smart economics. Taxpayer 
dollars are limited. Taxpayers should expect that their dollars are 
spent wisely; employing, promoting and compensating workers based on 
their merit, not on their gender, race, disability or veteran status. 
That is both morally right and good for business. Nondiscrimination 
ensures higher quality work.
    OFCCP has a gargantuan job monitoring the hundreds of billions of 
taxpayer dollars spent on contractors every year. While the agency 
develops ways to make its enforcement efforts more thorough, more 
agile, and more effective, let's not lose sight of the edict it is 
attempting to enforce.
    It's a simple edict. It's one grounded in common sense. If you want 
to do business with the government of the United States, you will treat 
our citizens fairly.
    I look forward to hearing from our distinguished panel of witnesses 
and yield back. Thank you.
                                 ______
                                 
    Chairman Roe. Thank you.
    I thank the distinguished ranking member.
    And pursuant to rule--committee rule 7(c), all members will 
be permitted to submit written statements to be included in the 
permanent hearing record. And without objection the hearing 
record will remain open for 14 days to allow such statements 
and other extraneous material referenced during the hearing to 
be submitted for the official hearing record.
    Now it is my pleasure to introduce our distinguished panel. 
First, Mr. Jeffrey Norris is the president of the Equal 
Employment Advisory Council in Washington, D.C.
    And thank you for being here.
    Secondly, Ms. Dana Bottenfield is the director of human 
resources information system at St. Jude's Children's Research 
Hospital in Memphis, Tennessee.
    And before we go on I want to thank you all for what you do 
at St. Jude's Children's Hospital. We have a branch of St. 
Jude's Children's Hospital in my community in Johnson City, as 
you know, Tennessee. Not long after St. Jude's Children's 
Hospital opened, which was 1962, through the sight and the 
thought and benevolence of Danny Thomas, with 125 employees, 
that hospital--I was a medical student there in 1969 and I 
recall many cases I saw then, and I remember just reminiscing 
back a little bit that during that time that an acute 
lymphocytic leukemia, which will--there are people out there 
today whose children have that--had a 4 percent survival rate.
    Today it is 80 percent survival rate thanks to the 
incredible people who got up every single day of their lives 
knowing that 96 percent of children would not survive and went 
to work. And these are the people cleaning the floors, the 
people cooking the food, the entire staff. And what a 
remarkable place it is.
    And just one more personal response to that: I practiced in 
Johnson City for 31 years and one of my partners' children was 
there and had a less than 3 percent survival rate. He was 3 
years old; he is now a senior in high school and doing well.
    So thank you for what you all do every day to help children 
not only in Memphis, Tennessee and in the South, but around the 
world.
    Mr. Kucinich. Mr. Chairman, I would like to associate 
myself, if I may, with your remarks and thank you for your own 
humanitarian instincts, which led you to make those 
observations.
    Chairman Roe. Thank you.
    Next is Ms. Fatima Graves is the vice president for 
education and employment at the National Women's Law Center in 
Washington, D.C.
    Welcome.
    And Ms. Alissa Horvitz is a shareholder with the law firm 
Littler Mendelson in Washington, D.C.
    And before we start we have got to give you the rules of 
the game here. Before I recognize you to provide your testimony 
let me briefly explain our lighting system.
    You have 5 minutes to present your testimony. When you 
begin the light in front of you will turn green; with 1 minute 
left the light will turn yellow; and when your time is expired 
the light will turn red, at which point I will ask you to wrap 
up your remarks as best you are able. We are not going to cut 
you off in the middle of a sentence, but try to wrap it up.
    And as everyone has testified, members will then have 5 
minutes to ask the questions of the panel.
    And now we will start by recognizing Mr. Norris. We will 
start with your testimony.

           STATEMENT OF JEFFREY A. NORRIS, PRESIDENT,
               EQUAL EMPLOYMENT ADVISORY COUNCIL

    Mr. Norris. Thank you very much, Mr. Chairman. I appreciate 
the opportunity to speak with you and the other subcommittee 
members this morning about the significant changes being 
proposed to the regulations by the OFCCP.
    I appear here today as president of the Equal Employment 
Advisory Council, an association of 300 major federal 
contractors. As has already been noted, OFCCP enforces the 
nondiscrimination and affirmative action obligations of federal 
contractors.
    In this context affirmative action refers to the additional 
proactive steps federal contractors must take to ensure that 
applicants and employees are afforded equal opportunities in 
all aspects of their employment. OFCCP monitors contractors' 
obligations by conducting approximately 4,000 agency-initiated 
compliance evaluations each year--excuse me.
    If finalized, OFCCP's proposals will impose extensive new 
affirmative action obligations on federal contractors and will 
expand exponentially the scope and detail of workforce data 
that contractors must submit to OFCCP for review. OFCCP's five 
proposals fall into three broad categories: those pertaining to 
individuals with disabilities and veterans, those pertaining to 
how OFCCP will conduct compliance evaluations, and those 
pertaining to compensation analyses.
    The veterans and disability proposals would transform what 
are today qualitative programs based upon situation-specific, 
good faith efforts and equal opportunity into quantitative 
programs based on federally mandated numeric targets, 
preferential treatment, and extraordinarily burdensome 
paperwork requirements. Among other things, these proposals 
would for the first time require contractors to establish 
numeric placement rate goals for veterans and individuals with 
disabilities in the absence of any reliable information 
regarding their true availability in the labor market.
    They would promote outdated recruitment efforts, relying 
upon onerous state job posting requirements and contractor 
linkage agreements with OFCCP-prescribed referral agencies, 
ignoring completely the advantages of national Internet-based 
recruitment technologies and programs. And they would convert 
what today are recommended affirmative action measures in the 
current regulations into prescriptive mandates with extensive 
new record-keeping requirements, including requirements to 
extend multiple invitations to self-identify to individuals 
with disability and veterans and an obligation to build special 
employment files on individuals who do so.
    With respect to compliance evaluations, OFCCP has proposed 
expanding dramatically the information contractors must submit 
to the agency at the beginning of an audit, including 
competitively sensitive, employee-specific compensation data. 
Abandoning a tiered or phased approach to compliance 
evaluations in which the agency initially seeks high-level 
workforce data to conduct preliminary analyses, OFCCP now seeks 
to gather at the outset of each compliance evaluation, before 
there has been an indication of any compliance issue, all 
employment information that might become relevant in case a 
potential compliance issue should resolve during the--as the 
review unfolds.
    And third, with respect to compensation, there are two 
proposals that relate to compensation analyses. The first 
eliminates previously published guidance through agency 
investigators on the legal and statistical standards to be used 
when evaluating compensation practices--guidance that 
contractors found extremely valuable to do their own self-
audits.
    The second proposal calls for the development of new 
compensation data collection tool that will require federal 
contractors to collect and report extensive information about 
their compensation and benefits practices. OFCCP has not yet 
demonstrated a need for another burdensome compensation 
reporting instrument and the proposal duplicates an effort 
already underway by the Equal Employment Opportunity 
Commission.
    As described in my written statement, OFCCP has 
consistently underestimated the actual burdens and costs its 
regulatory initiatives will impose. As just one example, our 
members advise that the compliance cost of the proposed 
disability regulations alone will be $2 billion in the initial 
year and $1.5 billion in succeeding years; that is more than 30 
times OFCCP's estimate of $80.1 million.
    In fact, each one of the agency's five proposals carries 
with it significant burdens and costs for federal contractors. 
In combination, those burdens and costs and economic impact are 
staggering.
    Just last month, Cass Sunstein, administrator of OMB's 
Office of Information and Regulatory Affairs, advised the heads 
of all executive departments and agencies to, quote--``take 
active steps to take effect--account of the cumulative effects 
of new and existing rules and to identify opportunities to 
harmonize and streamline multiple rules.'' We believe that is 
appropriate advice for OFCCP as it proceeds with its five 
pending rulemakings.
    Thank you very much.
    [The statement of Mr. Norris follows:]

          Prepared Statement of Jeffrey A. Norris, President,
                   Equal Employment Advisory Council

    Chairman Roe, Ranking Member Andrews, and Members of the 
Subcommittee, thank you for inviting me to testify today about the 
major changes that the U.S. Department of Labor's Office of Federal 
Contract Compliance Programs (OFCCP) has proposed making to the way it 
enforces the employment nondiscrimination and affirmative action 
obligations of federal contractors. I appear here today as President of 
the Equal Employment Advisory Council (EEAC), a nonprofit association 
of nearly 300 major federal contractors that, since its creation in 
1976, has dedicated itself exclusively to the development and 
advancement of practical and effective programs to eliminate employment 
discrimination.
    EEAC member companies are--and always have been--fully supportive 
of OFCCP's mission to eliminate discrimination in the workplace and 
establish policies that serve to promote equal employment opportunities 
for all employees--including women, minorities, individuals with 
disabilities, and veterans. To that end, EEAC has filed written 
comments with OFCCP on virtually every regulatory and sub regulatory 
initiative the agency has undertaken over the past 36 years, including 
those that are the focus of today's hearing.
    Simply stated, the pending regulatory proposals are unprecedented 
in terms of their scope, detail, and potential cost impact. If 
finalized in their current form they would fundamentally transform, in 
a negative way, the traditional working relationship of mutual trust 
and respect between OFCCP and federal contractors. They are also very 
technical and complex. Given this complexity, I will devote a few 
moments at the outset of my remarks to provide some background and 
context for today's discussion.
Background: EEOC versus OFCCP
    There are two federal agencies primarily responsible for 
prohibiting employment discrimination in the private sector--the Equal 
Employment Opportunity Commission (EEOC), and the Department of Labor's 
Office of Federal Contract Compliance Programs (OFCCP).
    Both agencies enforce federal laws that prohibit employment 
discrimination on the basis of race, color, religion, sex, national 
origin, and disability. The EEOC--but not the OFCCP--also enforces laws 
that prohibit discrimination on the basis of age and genetic 
composition. The OFCCP--but not the EEOC--also enforces laws that 
prohibit discrimination against veterans. EEOC's jurisdiction 
encompasses any private employer with 15 or more employees. OFCCP's 
jurisdiction extends only to employers that are federal contractors and 
subcontractors, entities which collectively employ roughly one-quarter 
of the private sector U.S. workforce.
    While both agencies are responsible for enforcing nondiscrimination 
requirements, OFCCP--and only OFCCP--is also responsible for enforcing 
the obligations imposed on federal contractors to engage in affirmative 
action. This often misunderstood term simply means in practice that in 
addition to refraining from discrimination, federal contractors also 
have an obligation to undertake affirmative, proactive steps to ensure 
that applicants and employees are afforded equal opportunities in all 
aspects of their employment.
    The dual mandate imposed on federal contractors (nondiscrimination 
and affirmative action) has given rise to very different enforcement 
procedures for the EEOC and OFCCP. Under the EEOC's procedures 
discrimination claims generally are raised through the filing of 
administrative charges by aggrieved individuals or by someone on their 
behalf. The nature and scope of EEOC's investigation is defined largely 
by the claims made in these individual charges.
    The vast majority of OFCCP enforcement actions, in contrast, take 
the form of agency-initiated ``compliance evaluations'' conducted at 
selected federal contractor establishments. In the recent past OFCCP 
has conducted approximately 4,000 compliance evaluations each year. 
Unlike EEOC charge investigations that generally focus on the specific 
allegations raised in a charge, OFCCP compliance evaluations are open-
ended and can encompass virtually any aspect of the contractor's 
employment practices or policies that OFCCP chooses to evaluate.
    If finalized as currently proposed, OFCCP's recent regulatory 
initiatives will have two major consequences: (1) impose extensive new 
and highly burdensome obligations on federal contractors to satisfy 
their affirmative action obligations, and (2) expand exponentially the 
scope and detail of workforce data that contractors would be required 
to collect, maintain and make available to OFCCP during routine 
compliance evaluations.
    The crucial question of course is whether these regulatory 
initiatives are the most effective way to accomplish OFCCP's and 
federal contractors' shared goal of matching qualified applicants with 
available jobs. In our view, the answer is no.
OFCCP's Traditional Regulatory Approach
    During its 47-year history, OFCCP has adopted a set of regulations 
and sub-regulatory guidance that both define the standards by which 
contractor compliance is measured, and establish procedures and 
protocols for conducting agency compliance evaluations. With respect to 
identifying unlawful discrimination, OFCCP generally applies the same 
legal standards followed by the EEOC. With respect to defining and 
evaluating federal contractor affirmative action commitments, OFCCP has 
tended to focus on four primary areas:
    (1) Development of written affirmative action programs (AAPs) for 
women and minorities, individuals with disabilities, and protected 
veterans;
    (2) Development of targeted outreach programs seeking diverse 
qualified applicant pools for all openings;
    (3) Statistical monitoring of selection rates (hires, promotions, 
transfers, terminations, educational opportunities, etc.) to ensure 
there are no institutional or attitudinal barriers to equal opportunity 
for any particular group; and
    (4) Monitoring of compensation patterns to ensure nondiscrimination 
in pay for all employees.
    Each one of these four affirmative action categories has been the 
subject of one or more OFCCP-initiated Administrative Procedure Act 
rulemakings. EEAC and other contractor associations have used these 
rulemakings to provide input into the practical implications of the 
agency's proposals, including the need for OFCCP to understand that 
federal contractors are not monolithic; their businesses are not all 
structured in the same way; nor do they select, develop or compensate 
employees in a one-size-fits-all fashion.
    Until recently, this process has yielded, if not complete agreement 
on all issues, at least a respectful mutual understanding of the 
important role OFCCP and federal contractors each play in promoting 
equal employment opportunity. Contractors have looked to OFCCP to 
define and enforce the compliance standards in a clear, consistent and 
transparent manner, and OFCCP has looked to contractors to undertake 
good faith efforts to apply those standards in the context of their 
unique business environments.
    The regulatory proposals issued by OFCCP over the past 16 months, 
if finalized in their current form, threaten to unravel this respectful 
mutual understanding to the detriment of the very individuals OFCCP and 
federal contractors are committed to protect. As discussed below, the 
proposals would convert current regulatory guidance and recommendations 
into highly prescriptive mandates, rejecting ``good faith efforts'' as 
a measure of compliance in favor of extensive recordkeeping and 
accomplishment of artificially created numerical benchmarks.
    Perhaps most troubling, the proposals appear to reflect an unspoken 
but yet unmistakable underlying OFCCP assumption that virtually all 
employers subject to the agency's oversight are engaging in unlawful 
discrimination, and as such must be compelled to adhere to the 
processes prescribed by OFCCP; must document each and every outreach 
effort and employment decision; and must make all of this information 
available to OFCCP during compliance evaluations so that the agency can 
assure itself that contractors are, in fact, keeping their commitments. 
Simply stated, the respectful mutual understanding developed between 
OFCCP and federal contractors over the years is today very much in 
jeopardy.
OFCCP Has Underestimated the Potential Economic Impact of Its Pending 
        Regulatory Proposals
    During calendar year 2011, OFCCP proposed five major changes to its 
enforcement regulations:
     January 3: Rescind existing guidance on procedures and 
standards for investigating systemic compensation discrimination
     April 26: Require establishment of numerical targets for 
veterans' employment and impose sweeping new obligations related to 
documenting the identification, recruitment and treatment of veterans
     August 10: Impose broad new compensation reporting 
requirements on contractors
     September 11: Seek permission from OMB to vastly expand 
the scope and amount of data requested of contractors at the outset of 
compliance evaluations
     December 9: Impose 7% hiring goal for individuals with 
disabilities and impose sweeping new obligations related to documenting 
the identification, recruitment and treatment of individuals with 
disabilities
    In addition to these proposals OFCCP has indicated that major 
changes to its construction industry regulations and sex discrimination 
guidelines will be proposed in the near future.
    For each proposal OFCCP conducted a cost and burden analysis under 
the Paperwork Reduction Act. In the course of preparing comment letters 
on the proposals, EEAC solicited feedback from its member companies 
regarding OFCCP's cost and burden estimates. Without exception, EEAC 
members concluded that OFCCP's figures vastly understated the actual 
burdens and costs of implementing the proposals in their workplaces.
    The specific deficiencies in OFCCP's economic impact analyses are 
discussed in detail in each EEAC comment letter. They include 
inaccurate counts of the number of covered contractor establishments; 
complete omission of certain critical compliance requirements; 
inaccurate assessments of the ease with which certain workforce data 
can be extracted from contractor computer systems; and wholly 
unrealistic estimates of the time required for contractors to 
accomplish prescribed new responsibilities.
    The most in-depth analysis of the accuracy of OFCCP's economic 
impact estimates was conducted with respect to the proposed revisions 
to the disability regulations. Shortly after the proposal was 
published, EEAC, the U.S. Chamber of Commerce and the Center for 
Corporate Equality developed a survey instrument to collect from their 
federal contractor members fact-based estimates of the proposal's 
anticipated burdens and utility. A total of 108 major federal 
contractors submitted complete or substantially complete responses to 
the survey. Collectively, these respondents employ more than 4.54 
million employees in the United States, or roughly 17% of the entire 
federal contractor workforce, as estimated by OFCCP. During 2011 these 
companies filled more that 1.1 million job openings, for which they 
received more than 37 million applications.
    OFCCP estimated the cost of implementing its disability proposal to 
be $80.1 million. The survey results estimated that the actual 
implementation costs will be at least $2 billion in the initial year 
(more than 30 times the agency estimate) and at least $1.5 billion 
annually thereafter. Additional survey results are noted in the more 
detailed analysis that follows. The consistent pattern of substantial 
discrepancies between OFCCP's burden and cost estimates and those of 
major federal contractors raises serious concerns over whether OFCCP 
has performed an adequate assessment of the likely impact of its 
proposals as required by Executive Orders 12866 and 13536 and the 
Paperwork Reduction Act of 1995.
    I now offer comments on each of OFCCP's five pending regulatory 
proposals.
Revision of Regulations Pertaining to Individuals with Disabilities and 
        Covered Veterans
    Two of the five pending regulatory proposals pertain to federal 
contractor nondiscrimination and affirmative action obligations on 
behalf of veterans covered by the Vietnam Era Veterans' Readjustment 
Assistance Act (``VEVRAA''), and individuals with disabilities 
protected under Section 503 of the Rehabilitation Act (``Section 
503''). The current VEVRAA and Section 503 regulations are very 
similar, although not identical. Because OFCCP has always enforced them 
in parallel fashion, I discuss them together.
    In sum, the pending proposals would transform a qualitative program 
based on situation-specific good faith efforts, equal opportunity, and 
respect for privacy of a person's disability into a quantitative 
program based on federally mandated numeric targets, preferential 
treatment, ineffective and extraordinarily burdensome paperwork 
requirements, and invasive inquiries into the disability status of tens 
of millions of U.S. workers and job seekers each year.
Establishment of Numeric Hiring Goals
    OFCCP has long required federal contractors to establish numeric 
placement rate goals for minorities and women in situations where their 
current employment levels are below what reasonably would be expected 
given their representation (i.e., ``availability'') in the labor 
market. The goals are calculated using the U.S. Census Bureau's Special 
EEO File which provides detailed minority and gender labor force 
participation rates broken out by job category, specific occupation and 
location.
    OFCCP has never before required numeric hiring goals for veterans 
and individuals with disabilities. Both proposals would require their 
establishment for the first time. The problem with such a requirement, 
however, is that there are no reliable ``availability'' data for 
veterans and individuals with disabilities comparable to that provided 
through Census data for women and minorities. The proposals address 
this inconvenience in two different, and equally ineffective, ways.
    The veterans' proposal contemplates that contractors will calculate 
their own ``availability'' estimates utilizing two data points provided 
by OFCCP and three data points unique to each contractor. These five 
data points are then ``weighted'' by the contractor according to their 
relative significance to arrive at a single veteran availability 
estimate upon which the goals would be based. In contrast, the Section 
503 proposal does not require contractors to calculate their own 
availability estimates for individuals with disabilities, but rather 
mandates use of a standard 7% utilization goal for each job group in 
the contractor's affirmative action plan. The primary data source for 
the 7% disability goal is the Census Bureau's American Community Survey 
(ACS), an instrument that does not collect disability information in a 
manner consistent with Section 503 or the Americans with Disabilities 
Act.
    The most fundamental flaw in both proposals is that there is not an 
exact match between the individuals upon which the benchmarks are based 
and individuals with disabilities protected by Section 503 or veterans 
covered under VEVRAA. Without an apples-to-apples comparison as exists 
with respect to women and minorities, the estimated veterans and 
disability benchmarks are useless standards by which to evaluate the 
success of a contractor's outreach efforts. Moreover, numeric hiring 
goals not based upon true availability encourage one of two 
unacceptable outcomes--contractors simply ``checking the box'' that the 
goals had been accomplished or, more significantly, engaging in 
unlawful preferences simply to meet the goal and avoid OFCCP scrutiny.
    OFCCP estimates that calculating goals for veterans will take each 
establishment 1 hour per year, while EEAC's estimate is 4 hours per 
year. The net difference between OFCCP's economic impact estimate for 
all goal-related aspects of its veterans' proposal and EEAC's estimate 
is approximately $95 million per year.
Recruitment Requirements--Mandatory State Job Postings and Linkage 
        Agreements
    OFCCP traditionally has left it up to contractors to identify the 
most productive recruitment sources and determine the most effective 
way to utilize them. While contractors are still free to do so, the 
disability and veterans' proposals mandate that federal contractors 
must also list their open positions with certain state and local 
employment agencies, and establish and monitor ``linkage agreements'' 
with referral agencies specified by OFCCP. In addition to being 
administratively burdensome, the mandated local recruitment efforts 
ignore the national scope of most contractors' recruitment initiatives 
and the sophisticated Internet-based technology used in today's 
employment searches.
Mandatory State Job Listings
    Contractors for many years have been required by VEVRAA to list 
most of their open positions at an appropriate local employment service 
office. This ``mandatory listing'' requirement has posed enormous 
compliance challenges for federal contractors, for OFCCP, and for the 
hundreds of state agencies that often lack the financial, technical and 
personnel resources to handle the volume of job postings filed. The 
advent of Internet recruiting has only exacerbated the challenge.
    The mandatory job listing requirement has been handled in several 
different ways. At one time contractors could satisfy their obligation 
by simply listing their openings on the America's Job Bank (AJB), a 
nationwide job board maintained by the U.S. Department of Labor. When 
AJB was eliminated in 2007, OFCCP required contractors to list their 
openings directly with the state or local employment agencies, but 
permitted them to do so in a manner (FAX, e-mail, or other electronic 
postings) acceptable to the contractor. More recently, OFCCP has 
flipped this option and now requires that job openings be posted in the 
``manner and format'' required by the local agency. With no consistency 
in the filing requirements imposed by the local agencies, this 
obligation presents enormous burdens and costs for contractors engaged 
in nationwide recruiting.
    There never has been a similar posting obligation for individuals 
with disabilities. The new disability proposal, however, would require 
that contractors for the first time post their open positions at the 
``One-Stop Career Center'' nearest to the contractor's facility. 
Unfortunately, there is no guarantee that the nearest ``One-Stop Career 
Center'' will also be the state employment service office that the 
contractor is using to satisfy its veterans' mandatory job listing 
requirement. EEAC has recommended to OFCCP that any posting with the 
state employment service satisfy both the veterans' and disability 
posting requirements.
    OFCCP's economic impact analysis assumes that contractor 
establishments will have only two open positions per year that require 
posting. The 108 EEAC survey respondents alone had 1.1 million such 
openings in 2011.
    Over the years, EEAC members have found the mandatory listing 
requirement to be burdensome, costly and only marginally productive in 
matching veterans with job openings. Since the requirement is 
statutorily based, the compliance challenges it has created for federal 
contractors, OFCCP and the state agencies can only be alleviated 
through a Congressional response. In our view, the current mandatory 
listing requirement should be eliminated and replaced with a national 
job board patterned after America's Job Bank that could serve as a 
centralized job posting system which would serve as the federal 
government's clearinghouse of job opportunities for which employers are 
specifically recruiting individuals with disabilities and protected 
veterans.
Linkage Agreements
    In addition to the mandatory postings, the disability and veterans' 
proposals also both require contractors to execute formal ``linkage 
agreements'' with OFCCP-specified referral agencies. Each set of 
regulations requires a minimum of three linkage agreements per 
establishment. One of the specified linkage agreements would qualify 
under both proposals thus resulting in a minimum total of five written 
linkage agreements per establishment. In addition, the effectiveness of 
each linkage agreement would need to be evaluated annually. With 
approximately 285,000 contractor establishments in the U.S., a total of 
1,425,000 written linkage agreements would need to be negotiated and/or 
reviewed each year.
    Mandating linkage agreements with government-specified agencies 
ignores the fact that most contractors already have well-established 
relationships with various employment services and placement 
organizations, and have become adept at utilizing Internet-based 
recruiting techniques. Unlike the centralized job posting system 
recommended above, the proposed linkage agreements will not facilitate 
matching veterans and individuals with disabilities with available 
jobs.
    The linkage agreements will instead constrain the already limited 
resources of both contractors and employment services agencies. Indeed, 
in comments filed with OFCCP on the proposed disability regulation, the 
National Association of State Workforce Agencies (NASWA)--an advocacy 
organization for state workforce programs and policies--warned that 
``[t]he volume of paperwork and administrative bulk of creating, 
approving, signing and maintaining such linkage agreements would be 
overwhelming. Without any administrative funding provided, this becomes 
an unfunded mandate to an already severely constrained system trying to 
provide universal services to a growing labor force.''
     Time required to initiate each linkage agreement: OFCCP 
estimate = 5.5 hours; EEAC survey estimate (35% of respondents) = 10 
hours
     Time to annually update each linkage agreement: OFCCP 
estimate = 15 minutes; EEAC survey estimate (54% of respondents) = 3 or 
more hours
Invitations to Self-Identify
    Federal contractors are already required under current regulations 
to solicit veteran and disability-related information from job 
applicants after an offer of employment has been extended, but before 
the individual begins working. Both sets of regulations would expand 
contractors' self-identification obligations. Individuals with 
disabilities would be afforded three opportunities to self-identify: 
(1) whenever they apply for or are considered for employment, (2) after 
being extended a job offer but before they begin working, and (3) 
annually as part of a required anonymous survey conducted by their 
employer. Veterans would be extended two invitations to self-identify: 
(1) a pre-offer invitation to self-identify as a ``protected veteran,'' 
and (2) a post-offer, pre-employment invitation to self-identify with 
respect to each applicable category of protected veteran.
    OFCCP's approach to the identification and treatment of individuals 
with disabilities (including disabled veterans) as reflected in the new 
proposals is very different than the approach advocated by the EEOC 
since enactment of the Americans with Disabilities Act (ADA). The EEOC 
prohibits employers from making preemployment disability inquiries 
except when required to undertake affirmative action by federal, state 
or local law, or when using the information to benefit individuals with 
disabilities (such as running sheltered workshops). The EEOC also has 
been very reticent to sanction post-employment invitations to self-
identify as mandated in the proposals.
    It has always been unclear whether simply being subject to Section 
503 is sufficient to justify extending pre-offer invitations to self 
identify. OFCCP apparently assumes that it is. The EEOC recently issued 
updated guidance on the ADA that simply reaffirms its traditional 
policies and fails to answer the question directly. Nevertheless, 
OFCCP's self-identification proposals, along with the requirement that 
contractors maintain special employment files on applicants and 
employees with disabilities (discussed below), stand in stark contrast 
to the EEOC's approach under the ADA that an individual's disability 
status generally is relevant only in the context of considering the 
need for reasonable accommodations.
    Contractors thus have concerns about OFCCP's self-identification 
proposals from the standpoint of (1) invasion of employee privacy, (2) 
potential exposure to ADA claims, and (3) cost.
     Time required to develop capability to extend pre-offer 
disability invitations: OFCCP estimate = 5 minutes per establishment; 
EEAC survey estimate = on average more than 560 hours per contractor
     Time required to develop capability to extend post-offer/
pre-employment disability invitations: OFCCP estimate = no additional 
economic impact; EEAC survey estimate = on average more than 458 hours 
per contractor
     Time required to develop capability to extend annual 
anonymous survey of employee disability status: OFCCP estimate = 5 
minutes per establishment; EEAC survey estimate = on average more than 
722 hours per contractor
Ineffective and Burdensome Paperwork Requirements
    The proposed disability and veterans' regulations would impose a 
wide array of paperwork requirements and costly administrative burdens 
on contractors while contributing little if anything to matching 
veterans and disabled individuals with job openings.
Annual Review of Personnel Processes
    The existing disability and veterans' regulations require the 
``periodic'' review of personnel processes to ensure that individuals 
with disabilities and veterans are considered for open positions and 
training opportunities. The appendix to the current regulations 
contains suggested methods for carrying out such reviews.
    The new proposals turn these suggested methods into mandates by 
requiring contractors to:
     Identify each known applicant and employee who is disabled 
or is a protected veteran;
     Keep a record of every vacancy and training opportunity 
for which protected veterans or disabled applicants and employees are 
considered;
     Prepare a statement for each instance in which protected 
veterans or disabled applicants and employees are rejected for a 
vacancy, promotion, or training opportunity, outlining the reason for 
the rejection and any accommodations considered;
     Describe the nature and type of accommodations accorded to 
disabled individuals (including disabled veterans) who were selected 
for hire, promotion, or training programs; and
     Make these statements available to the applicant or 
employee upon request.
    The net effect of these requirements will be to require contractors 
to create a unique compliance file on each and every protected veteran 
and disabled applicant and employee, documenting each and every 
employment and training opportunity the individual has ever had with 
the company, along with the reasons in each instance where the person 
was not successful.
     Time required to construct and maintain files: OFCCP 
estimate = 30 minutes per establishment; EEAC survey estimate (57% of 
respondents) = 3 hours or more per individual
     Time required to justify and document each non-selection 
decision: OFCCP estimate = 30 minutes per establishment; EEAC survey 
estimate (45% of respondents) = 3 hours or more per individual
     In cases where changes to existing systems, forms or 
procedures would be necessary to comply with this requirement, more 
than half of EEAC survey respondents reported that the cost would 
exceed $100,000
Review of Physical and Mental Job Qualifications
    The current disability and veteran regulations require the 
``periodic'' review of all physical and mental job qualifications to 
ensure that where such qualifications tend to screen out disabled 
veterans or persons with disabilities, they are job-related and 
consistent with business necessity. The proposed regulations would 
mandate that these reviews be performed for all jobs on an annual 
basis, irrespective of whether there has been a vacancy or the job has 
changed over the prior year. In addition, such reviews must be 
documented in such a way that would ``list the physical and mental job 
qualifications for the job openings during a given AAP year * * * and 
provide an explanation as to why each requirement is related to the job 
to which it corresponds.''
     Time to conduct annual review: OFCCP estimate = 2.5 hours 
per establishment; EEAC estimate = 2,500 hours per contractor
New Data Collection and Analysis Requirements
    The new disability and veterans' proposals require contractors to 
collect and tabulate ten (disability) or eleven (veterans) new data 
points annually, to be used in the assessment of the contractor's 
disability and veterans affirmative action efforts. These data points 
pertain to such minute details as:
     The number of referrals of protected veterans and 
individuals with disabilities--separately calculated for referrals from 
employment service offices, ``linkage'' agencies, and other sources;
     The number of applicants who are known to be or who self-
identified as being a protected veteran or individual with a 
disability;
     Total number of job openings, total number of jobs filled, 
and the ratio of jobs filled to openings;
     Total number of applicants for all jobs, the ratio of 
protected applicants to all applicants (``applicant ratio''), and the 
number of protected applicants hired; and
     The total number of applicants hired and the ratio of 
protected applicants hired to all hires (``hiring ratio'').
    The cost to federal contractors to comply with this one requirement 
is staggering:
     Time to design and implement the systems, forms and 
procedures to comply with this mandate: OFCCP estimate = one hour per 
establishment per year; EEAC survey estimate = on average more than 
3,755 hours per contractor
     Time to perform and document the annual evaluation of the 
effectiveness of each outreach and recruitment effort: OFCCP estimate = 
10 minutes per establishment; EEAC survey estimate = on average more 
than 1,946 hours per contractor
New Required Training
    The disability and veterans' proposals both impose new mandatory 
training obligations on federal contractors. First, the contractor's 
disability and veterans affirmative action policies must be discussed 
``thoroughly in any employee orientation and management training 
programs.'' Second, training must be provided annually for all 
personnel involved in ``recruitment, screening, selection, promotion, 
disciplinary, and related processes.'' The proposals detail the 
specific topics that must be covered in the training as well as the 
contemporaneous records that must be maintained regarding which 
personnel received the training, when they received it, and who 
facilitated it.
    Among the records that must be retained are the written and 
electronic materials used for the training, which must cover, at 
minimum, the following topics: (1) the benefits of employing protected 
veterans and individuals with disabilities; (2) appropriate sensitivity 
toward veterans and individuals with disabilities; (3) the legal 
responsibilities of the contractor and its agents regarding protected 
veterans and individuals with disabilities; and (4) the obligation to 
provide reasonable accommodation.
    OFCCP believes the burden and costs for this training to be 
minimal--20 minutes to develop and 5 minutes to present the orientation 
sessions per establishment each year, and 40 minutes to develop and 20 
minutes to deliver the personnel selection training per establishment 
each year. These estimates are totally unrealistic in part because they 
totally ignore the costs involved in removing employees from their jobs 
to attend and receive the training. The EEAC survey estimates the 
actual costs of the orientation training to be $310.3 million and the 
actual costs of the personnel selection training to be $254.5 million--
a combined training cost of approximately $564.8 million.
Proposed Expansion of Contractor Desk Audit Submission Requirements
    As noted earlier, OFCCP carries out its enforcement 
responsibilities primarily through conducting agency-initiated 
compliance evaluations at selected contractor establishments. Unlike 
the scope of EEOC investigations which are defined primarily by the 
allegations contained in the discrimination charge, OFCCP compliance 
evaluations are largely open-ended and thus potentially can embrace any 
and all of a contractor's employment policies, practices and decisions.
    Contractor establishments are notified of their selection for 
review through OFCCP issuance of an OMB-approved Scheduling Letter and 
attached Itemized Listing. The Itemized Listing enumerates information 
OFCCP may request at the outset of the compliance evaluation such as 
copies of Affirmative Action Plans (AAPs); recent EEO-1 Reports; 
summaries of applicants, hires, promotions and terminations; aggregate 
compensation information; and copies of collective-bargaining 
agreements.
    The requested information must be submitted by the contractor to 
OFCCP within 30 days of receipt of the Scheduling Letter, and OFCCP 
uses the information to conduct its preliminary analysis--referred to 
as the ``desk audit.'' If OFCCP's desk audit review reveals potential 
compliance questions, additional information may be requested through 
focused follow-up data requests or through compliance officers visiting 
the contractor's premises to conduct an ``onsite investigation.''
    Until recently, OFCCP's practice was to evaluate the desk audit 
submission to ensure that the AAPs and other written information 
conformed to all technical requirements of the regulations, and to 
conduct preliminary statistical analyses of the employment transactions 
(hires, promotions and terminations) and compensation. In cases where 
the submission conformed to the regulations and there were no 
statistical ``indicators'' of potential discrimination against any 
group, the audit was closed. Conversely, where there were indicators of 
noncompliance or statistical adverse impact, a further investigation 
would be conducted focused on the problematic areas.
    This ``tiered'' or ``phased'' approach to compliance evaluations 
offered several advantages to both OFCCP and to contractors. 
Contractors knew from the Itemized Listing what information they needed 
to maintain on an ongoing basis for submission to OFCCP, and by 
authorizing OFCCP to evaluate only that information during the desk 
audit phase, OMB discouraged OFCCP from venturing off into unfocused 
``fishing expeditions'' during their compliance evaluations. This 
approach also enabled OFCCP to focus its resources on issues having 
significant potential for noncompliance.
    The key to maintaining this effective balance is the OMB-approved 
Itemized Listing. Each time the Itemized Listing comes up for periodic 
OMB renewal under the Paperwork Reduction Act there is a struggle 
between OFCCP and federal contractors. OFCCP invariably seeks OMB 
authorization to collect more comprehensive and detailed information 
for desk audit review, and federal contractors invariably seek OMB 
protection from being required to disclose highly sensitive and 
confidential information to OFCCP at the outset of a compliance 
evaluation before there is any indication of a compliance-related need 
for it.
    The Scheduling Letter and Itemized Listing currently are before OMB 
for reauthorization, and the struggle continues--but this time the 
stakes are much higher given the breadth of OFCCP's request for 
information and the agency's abandonment of a tiered approach to 
compliance evaluations. There are several new items of information that 
OFCCP wants to add to the Itemized Listing, but two of them are 
particularly problematic for federal contractors--employment 
transactions data and compensation data.
Employment Transactions Data
    Currently federal contractors are required to submit to OFCCP 
summary information on applicants, hires, promotions and terminations 
(1) by gender and minority/nonminority status, (2) for each AAP job 
group or each job title. This is the source information that OFCCP 
traditionally has used to determine whether there are any preliminary 
``indicators'' of statistically significant adverse impact in 
selections.
    OFCCP is now seeking authorization from OMB to collect such 
information (1) by gender and individual race/ethnicity categories, (2) 
for each AAP job group and job title. In addition, OFCCP wants 
contractors to identify by race and gender the ``actual pool of 
candidates'' who applied or were considered for promotion, or who were 
considered for termination. This request is objectionable for two 
reasons--the data in the preferred format are too granular to be useful 
for many statistical selection analyses, and most contractors do not 
utilize ``pools'' for all of their promotions and terminations.
Compensation Data
    Over the years the compensation data requested on the Itemized 
Listing has served as the greatest source of friction between OFCCP and 
federal contractors. OFCCP has contended that it needs employee-
specific compensation data to conduct meaningful compensation analyses; 
contractors have responded that employee-specific compensation data at 
the higher levels of an organization are among the most sensitive and 
competitively confidential information they maintain. The result thus 
far has been a compromise brokered by OMB--OFCCP has been authorized to 
collect aggregate level (i.e., not-employee specific) compensation data 
for purposes of desk audit analysis, and then may issue requests for 
detailed employee-specific information when a need for it has been 
established. This compromise has generally worked well, although the 
standards utilized by OFCCP to demonstrate ``need'' for the follow-up 
information have eroded significantly in recent years.
    As with the transactions data, OFCCP is now petitioning OMB for 
permission to request in the Itemized Listing far more detailed 
compensation information. The new request modifies (1) the date the 
compensation ``snapshot'' is taken [February 1 each year], (2) the 
range of employees for whom compensation information must be provided 
[including contract, per diem, day labor, and temporary employees], and 
(3) the scope and detail of the compensation data requested [in 
addition to base salaries and wage rates--such items as bonuses, 
incentives, commissions, merit increases, locality pay, and overtime].
    In addition to being extremely burdensome (discussed below) and 
technically objectionable, OFCCP's transaction and compensation data 
requests are also operationally objectionable because they reflect the 
agency's abandonment of tiered compliance evaluations in favor of 
thorough ``wall-to-wall'' compliance evaluations in each and every 
compliance review. OFCCP apparently assumes that most (or all) federal 
contractors are out of compliance with their nondiscrimination and 
affirmative action obligations and it is therefore necessary to gather 
at the outset of each compliance evaluation--before there is any 
indication of a compliance issue--all employment information that might 
be potentially relevant in case a potential violation should develop as 
the review unfolds. We believe such an assumption is unwarranted, and 
OFCCP's request to OMB, if approved, will result in contractors 
maintaining, evaluating and disclosing to OFCCP large amounts of 
sensitive and confidential business information that will turn out to 
be unnecessary for a determination of compliance.
OFCCP Burden Estimates
    Notwithstanding seeking permission to require audited contractors 
to provide OFCCP with more data, more records, more manual tabulations, 
and more information at the outset of the review, OFCCP estimates that 
its proposed changes will actually reduce the overall burden on each 
audited federal contractor by approximately 1.34 hours per audit. In 
addition to defying logic, over two-thirds of the comments submitted to 
OFCCP in response to its proposed changes questioned the agency's 
burden estimates as being unrealistically low. EEAC members report that 
if OMB grants OFCCP's request, their current burden hours will increase 
three-and in some instances four-fold. OFCCP's burden estimates are 
simply not credible.
Compensation Analysis
    In addition to the proposed Scheduling Letter changes, two other 
OFCCP proposals will impact the way federal contractors and OFCCP 
evaluate compensation. The first is OFCCP's proposal, announced in 
early 2011, to rescind its 2006 Systemic Compensation Discrimination 
Guidelines and replace them with new--as yet unpublished--guidance. The 
second is OFCCP's intention to develop a new compensation data 
collection tool that will require federal contractors to periodically 
report to the agency extensive information about their compensation 
systems, practices and patterns.
Rescission of Systemic Compensation Discrimination Guidelines
    Prior to 2006, OFCCP did not have a consistent approach to how it 
audited contractor compensation practices. There was no consistency 
with respect to such fundamental questions as: (1) how employees should 
be grouped together for purposes of analysis, (2) what pay variables 
should be included in the analysis, (3) what statistical methodologies 
were appropriate for conducting the analysis, (4) how to interpret the 
statistical results, or (5) whether discrimination allegations could be 
predicated upon statistics alone or needed to be supplemented with 
anecdotal evidence of discrimination. In those days the results in any 
particular audit would depend upon which field offices--or which 
auditors--were conducting the analysis.
    This changed in 2006 when these and other questions were addressed 
in OFCCP's systemic compensation discrimination guidelines. While 
admittedly not perfect in all respects, the guidelines nevertheless 
were predicated upon sound legal and statistical principles accepted by 
the federal courts in compensation discrimination cases. They thus 
constituted a valuable blueprint for both OFCCP and federal contractors 
to follow in conducting compensation analyses. The predictability 
generated by the guidelines encouraged federal contractors to conduct 
voluntary self-critical analyses of their compensation systems.
    The compensation guidelines serve as a good illustration of the 
beneficial consequences that can flow from clearly articulated, 
consistently applied OFCCP policies. Unfortunately, OFCCP concluded 
that the guidelines were too rigid and constraining and that it needed 
greater flexibility to utilize a ``variety of investigative and 
analytical tools.'' OFCCP has indicated that it will not officially 
rescind the 2006 guidelines until new guidance is developed to replace 
it. Thus far there is no indication of what form that guidance will 
take other than a commitment that it will be based upon principles 
contained in Title VII of the Civil Rights Act of 1964.
    The key point to be learned by the rescission of the compensation 
guidelines is that preserving investigative flexibility for OFCCP 
invariably carries with it investigative uncertainty for contractors. 
In most instances OFCCP's mission will be better served through a clear 
articulation of policy and standards that both OFCCP and contractors 
can rely upon--as was the case with the 2006 systemic compensation 
discrimination guidelines.
Compensation Data Collection Tool
    On August 10, 2011, OFCCP requested public comment on a proposed 
new collection tool that would require federal contractors to collect, 
calculate, and disclose to OFCCP millions of confidential data points 
on their pay and benefits policies and decisions. OFCCP posed 15 
specific questions regarding the scope, content, and format of the data 
collection tool--not one of which posed the fundamental question of 
whether there is actually a need for such a potentially burdensome and 
intrusive requirement.
    EEAC, in conjunction with several other business organizations, 
have asked OFCCP not to proceed with developing the compensation data 
collection tool. The agency already has extensive compensation 
information available to it in the files of recently-completed 
compliance evaluations, and will have significantly more information 
from this source should OMB grant the agency's request to expand the 
Scheduling Letter and Itemized Listing.
    In addition, the EEOC currently is sponsoring a project being 
conducted by the National Academy of Sciences (``NAS'') to ``review 
methods for measuring and collecting pay information'' from U.S. 
employers for purposes of administering Title VII. Given the Obama 
Administration's emphasis on having agencies coordinate their 
enforcement efforts--and given the EEOC's and OFCCP's commitment to the 
National Equal Pay Enforcement Task Force to do so--OFCCP should not 
proceed with the development of a compensation data collection tool 
independently of the NAS study.
Conclusion
    Over the past sixteen months, OFCCP has published five major 
regulatory proposals. In three instances (disability regulations, 
veterans' regulations, and revisions to the compliance evaluation 
Scheduling Letter Itemized Listing), OFCCP is proposing to expand 
exponentially the recordkeeping, data collection and analysis, and 
reporting requirements already imposed on federal contractors by the 
agency's existing regulations. In one instance (rescission of the 2006 
compensation guidelines), OFCCP is proposing to withdraw and replace 
well-founded legal guidance that served as a useful catalyst for 
voluntary compliance. And in one instance (compensation data collection 
tool), OFCCP is proposing development of a massive reporting 
requirement without having established a need for it and apparently 
without coordination with a parallel study being conducted by the EEOC.
    By itself, each proposal carries with it significant burdens and 
costs for federal contractors. In combination, the burdens and costs 
are enormous, and the economic analyses conducted by OFCCP suggest a 
serious underestimation of what those burdens and costs actually will 
be.
    Last month, Cass Sunstein, Administrator of OMB's Office of 
Information and Regulatory Affairs, reminded the heads of all executive 
departments and agencies to be aware of the ``cumulative effects of 
regulations.'' He noted that President Obama's Executive Order 13563 
urges agencies to promote ``coordination, simplification, and 
harmonization,'' and directs them to ``propose or adopt a regulation 
only upon a reasoned determination that its benefits justify its 
costs.'' He further observed that consistent with the Executive Order, 
agencies should:
    ``[t]ake active steps to take account of the cumulative effects of 
new and existing rules and to identify opportunities to harmonize and 
streamline multiple rules. The goals of this effort should be to 
simplify requirements on the public and private sectors; to ensure 
against unjustified, redundant, or excessive requirements; and 
ultimately to increase the net benefits of regulations.''
    None of the five proposals discussed in this testimony has been 
finalized. It is still possible, therefore, to identify and modify 
their most problematic aspects. As it has throughout its 36-year 
history, EEAC is ready and willing to engage in a serious and reasoned 
dialogue with OFCCP to identify and address those aspects of the 
proposals that we see as roadblocks to our shared goal of matching 
qualified applicants--including women, minorities, veterans and 
individuals with disabilities--with available job openings. It is in 
that spirit that we make the following six recommendations:
    1. The outdated, onerous, and only marginally effective mandatory 
job listing requirements for veterans should be replaced with a 
national job board patterned after the former America's Job Bank. Such 
a step would facilitate national recruitment efforts, capitalize on 
current Internet-based recruiting techniques, and eliminate the need 
for negotiating and annually updating approximately 1.4 million costly 
and locally-oriented linkage agreements.
    2. OFCCP and EEOC should reconcile their seemingly divergent 
approaches to identifying and employing individuals with disabilities. 
OFCCP's insistence upon multiple and ongoing self-identification 
invitations, in combination with the obligation to build special files 
on applicants and employees with disabilities, raises the uncomfortable 
possibility that contractor compliance with OFCCP's regulations can be 
accomplished only at the risk of violating the Americans with 
Disabilities Act.
    3. OFCCP should not require the establishment of numerical hiring 
goals for veterans and individuals with disabilities in the absence of 
reliable labor market availability data.
    4. The numerous recommended affirmative action measures for 
veterans and individuals with disabilities in the current regulations 
should remain ``recommendations'' and not be converted into 
prescriptive, mandatory requirements complete with exhaustive 
documentation and recordkeeping obligations. Such internally-focused 
``process'' requirements do little to promote actual job creation or 
placement.
    5. Federal contactors should be provided with clear and 
consistently-applied guidance regarding OFCCP's compliance standards. 
Such guidance promotes voluntary compliance.
    6. The ``phased'' approach to compliance evaluations should be 
retained. Contractors should not be required to submit volumes of 
detailed and highly sensitive employment information to OFCCP at the 
outset of an audit before there is any indication of a compliance-
related need for it.
    Thank you again for the opportunity to testify before the 
Subcommittee today. I will be pleased to answer any questions you may 
have.
                                 ______
                                 
    Chairman Roe. Thank you.
    Ms. Bottenfield?

  STATEMENT OF DANA BOTTENFIELD, DIRECTOR OF HUMAN RESOURCES 
   INFORMATION SYSTEMS, ST. JUDE CHILDREN'S RESEARCH HOSPITAL

    Ms. Bottenfield. Chairman Roe, Senior Ranking Member Mr. 
Kucinich, and other members, I am very honored to speak with 
you today as a representative at St. Jude Children's Research 
Hospital and share with you my experiences of the affirmative 
action planning process. I am the director of H.R. information 
systems, employment, and immigration at St. Jude.
    The mission of St. Jude is to eliminate catastrophic 
diseases in children through research and treatment. We are a 
nonprofit run primarily on donor dollars. We have over 3,700 
employees who hail from more than 80 countries and every 
continent but Antarctica.
    Annually, we receive over 30,000 applications every year 
and hire more than 600 individuals. As a government contractor 
and a standalone organization we are required to complete a 
single affirmative action plan every year.
    Our efforts to comply with the regulations of the OFCCP are 
multifaceted. Some duties are just embedded in the day-to-day 
activities of our team, which make them difficult to extract or 
quantify.
    The appropriate infrastructure to support our efforts is 
absolutely required. This includes software, hardware, and 
storage systems, including onsite physical files, offsite 
storage, and electronic storage. In addition, in my opinion, an 
affirmative action vendor and legal attorney are absolutely 
necessary.
    All of these require time and effort. However, the efforts 
I discuss today will be mostly focused on what I consider to be 
the tip of the iceberg, not on creating and maintaining the 
infrastructure to support these efforts.
    Every year St. Jude expends resources to collect, audit, 
and process data collected in our systems to send to our vendor 
to create our plan. Once the plan is finalized we must review, 
understand, and implement meaningful actions around the 
results.
    We need to stay current of new and pending regulations and 
devise strategies to comply with these. And we need to ensure 
the continued training of new and existing staff around these 
regulations. Last but not least, we must endeavor to improve 
data collection processes as opportunities for improvement 
always exist.
    To illuminate our efforts I want to focus on our current 
affirmative action plan. This document is over 450 pages long. 
In addition, our background--our affirmative action vendor 
provides the statistical analysis that the OFCCP would run if 
were audited. This is an additional 250 pages long. This 
information has to be read and absorbed and actions taken.
    In our current plan we have 21 placement goals, 15 
potential areas for adverse impact, and more compensation 
issues than I can count. For our plan year our estimated time 
for these activities around these issues is 500 person hours 
and--at the cost of $58,000.
    If our organization is audited our efforts and costs will 
increase. Our last audit was in 2009 and it lasted 8 months. A 
conservative estimate put the time and cost to meet the request 
of the auditor and to defend ourselves against charges of 
discrimination at a person hour--400 person hours and $37,000. 
Contractors can be audited every 2 years.
    St. Jude takes very seriously our responsibility of 
guarding against discrimination. When any allegations occur we 
are committed to dealing with these in a fair, swift, and 
consistent manner. However, current regulatory framework poses 
challenges for us to meet the goals and standards set by the 
OFCCP and the increasing scrutiny of minutia in the audit.
    If St. Jude is not employing enough minorities or women in 
a particular job category then we may--it may appear we are 
discriminating. If we devise strategies to eliminate this 
discrepancy and we are too successful in our efforts, meaning 
we have actually now hired too many men or too many women or 
minorities, then it may appear that we are engaged in reverse 
discrimination and actually have adverse impact on another 
group.
    Standards require that we have the perfect mix of gender 
and racial groups for every job category. It is an impossible 
standard to meet, not to mention that the data elements used to 
conduct the analysis are crude and incomplete.
    If you only look at race and gender as predictors of 
hiring, promotions, termination, and pay, then you are actually 
ensuring that these are the factors that will explain the 
statistical variance. In reality, there are a plethora of 
factors that influence these decisions, most of which are not 
easy to capture in a database or to quantify for over 30,000 
applicants and 3,700 employees each year.
    Every year our burdens increase. An example would be the 7 
percent target representation of persons with disabilities for 
each job category with an estimated effort of 30 minutes. Based 
on my experience, this effort is grossly underestimated.
    There are good things that come from the affirmative action 
process. Employer outreach to underemployed groups, attention 
to eliminating barriers to employment for women, minorities, 
veterans, and disabled individuals, and encouraging employers 
to assess their efforts regularly are desirable and of real 
benefit. The real question, though, is whether the OFCCP's 
methods and new regulations actually promote these good things 
in an efficient and effective way or simply create excessive 
burdens and fodder for litigation.
    In conclusions, the effort, resources, and cost to comply 
with the OFCCP creates significant burdens and barriers far in 
excess of what is necessary to accomplish effective affirmative 
action. Our team is not focused on providing a fair and diverse 
workplace, but instead of surviving our next audit.
    Thank you, Mr. Chairman.
    [The statement of Ms. Bottenfield follows:]

 Prepared Statement of Dana C. Bottenfield, PHR, CCP, CBP, Director of 
HRIS, Employment and Immigration, St. Jude Children's Research Hospital

    Chairman Roe and other members of the Committee, I am honored for 
the opportunity to speak to you as a representative of St. Jude 
Children's Research Hospital and share with you my experience with the 
Affirmative Action Planning process.
Background
    St. Jude Children's Research Hospital (St. Jude) was founded in 
1962 by the late entertainer Danny Thomas, who believed that no child 
should die in the dawn of life. Since inception, St. Jude has been not 
only a hospital, but also an academic research center. In fact, St. 
Jude has changed the way the world treats childhood cancer and other 
life-threatening diseases. Supported largely by donations, St. Jude is 
a non-profit institution where no family pays for medical care, and for 
every child treated here, thousands more have been saved worldwide 
through St. Jude discoveries. Our 3,700 employees hail from more than 
80 countries and every continent except Antarctica. St. Jude receives 
more than 30,000 applications annually and hires about 600 employees 
each year. We are a government contractor and stand-alone organization; 
consequently, we only create a single affirmative action plan. More 
complex organizations, including hospitals with multiple locations and 
services (e.g., hospitals, hospice care, nursing homes, outpatient 
surgery) may be required to complete multiple plans.
    I have 17 years of experience in Human Resources, with all but two 
of these years at St. Jude. I have worked in Compensation, Human 
Resources Information Systems (HRIS), Immigration, Benefits and 
Employment. I have 15 years of experience in HRIS and seven years of 
experience in employment. My current title is Director of HRIS, 
Employment and Immigration. In my 15 years at St. Jude, we have been 
audited by the Office of Federal Contract Compliance Programs (OFCCP) 
three times, with the most recent audit starting and concluding in 
2009. During these 15 years, my exposure to Affirmative Action Planning 
(AAP) has increased to the point that I am now responsible for aspects 
of our plan including, general compliance and communication, and I also 
serve as the main contact for any audits.
    In the paragraphs that follow, you will see what the AAP process 
looks like when put into practice in the real-world setting of a 
pediatric research hospital. To say the process takes an insignificant 
number of hours and dollars would grossly underestimate the time, 
effort, resources and costs required to collect, store and process 
data, create the actual AAP, construct and implement a meaningful 
action plan based on the AAP results, conduct outreach efforts, 
coordinate with linkage sources, stay current as to new and pending 
regulations, comply with new regulations and ensure ongoing staff 
training. If I had to estimate the actual hours spent by St Jude's team 
in preparing St. Jude's AAP, it would vary from a minimum of 300 to 600 
person hours over the course of a year. For the current AAP year, based 
upon our current initiatives, I expect for St. Jude employees to spend 
500 hours on affirmative action duties that are in addition to their 
day-to-day affirmative action duties. The estimated cost of these 
expenditures, including consulting and the hours of additional effort 
is approximately $58,000. If our institution is audited, then another 
200 to 400 hours can be added to this effort. Our last audit was in 
2009. St. Jude employees spent, conservatively estimated, 400 hours 
working on this audit with an estimated cost of $37,000, including 
legal fees, consulting fees and cost of employee efforts. However, this 
does not fully capture the costs or effort. The necessary 
infrastructure must exist and continue to be maintained. Software 
systems must be selected, installed, tested, set-up, upgraded and 
maintained along with the necessary hardware. Document storage systems, 
including onsite files, offsite files and electronic storage must be 
also be created and maintained. And day-to-day compliance is built into 
the jobs and responsibilities that our HR teams carry out daily. There 
are real hours and dollars included in the cost of building and 
maintaining this infrastructure and to get to the point where you have 
a viable program. The time, effort and costs are not included because 
it is not simple to determine; however, it would easily double or 
triple the time, effort and costs I have already quoted. In short, 
creating an AAP is not merely running a few reports and submitting the 
results to the OFCCP. It's an intensive process that St. Jude must take 
seriously or else face penalties.
    I sincerely hope that you as members of the U.S. Congress will 
agree that as important a mechanism as the Affirmative Action Plan is, 
there is indeed an opportunity to improve the process so that it is 
more streamlined and productive and becomes the meaningful and 
efficient process it was intended to be.
Creating the Affirmative Action Plan
    The first requirement in creating an AAP is to have the systems and 
staff in place to collect and produce the required applicant and 
employee data. At St. Jude, we have a team of professionals dedicated 
to HRIS (8.3 full-time equivalents). This team is responsible for 
selection, installation, testing, troubleshooting, reporting and daily 
maintenance of HR systems in conjunction with applicable technical 
professionals in our Information Sciences Department and our vendors. 
We have two systems that hold data required for our AAP--an applicant 
tracking system (ATS) and an HR/Payroll system (HRMS). The ATS handles 
the collection and storage of applicants, applications, resumes, other 
documents and demographic elements about applicants for all open 
positions. Any candidates selected for a position are then fed to our 
HRMS through an interface, and the employment history of the employee 
is tracked in this system. These systems require regular interaction 
and maintenance in order to code, collect, endure date integrity and 
store the applicable data and documents.
    To pull the data required for the AAP, the appropriate table and 
coding structure must exist in the applicable software systems, and 
then the reports must be developed to extract the data for the required 
timeframes. I was personally involved in the creation of all the 
current reports used by St. Jude, which easily took 400 person hours. 
The reports in the ATS were developed using report writing software by 
the HRIS team at St. Jude in conjunction with our ATS vendor. The 
reports in our HRMS were developed by a programmer at St. Jude due to 
the complexity of pulling historical information from the applicable 
data files in this system and the computer programming knowledge 
needed. Over time, these reports continue to be refined and tweaked 
annually. Depending upon the change, this effort can take from a matter 
of minutes to about 10 hours. An example of a recent ``tweak'' is 
adding the address of the applicant at the time the application was 
submitted. This has allowed us to better understand where, from a 
geographic perspective, we get our applicants, which then corresponds 
to a more accurate estimate for factor weights used to create our 
availability statistics. This relatively small tweak took more than 5 
hours to complete. The time and effort to set up computer systems, 
create useful reports and continue to update systems and reporting as 
needed will vary widely dependent upon the resources available at an 
institution and the computer systems being used.
    In total, our team generates and audits 10 reports each year that 
contain the raw data used to create our AAP. Because of the volume of 
data, it is inevitable that coding errors and other discrepancies will 
exist. Attempts are made to find and correct any deficiencies in the 
data. Because we use two systems, certain data from these systems must 
be compared and validated against each other. For example, every 
selected candidate in our ATS must match a corresponding record for a 
hire, rehire, promotion, demotion or transfer record in our HRMS. Each 
year there are a handful that do not match. A common reason for this 
discrepancy is the person's name has changed from the time she or he 
applied for the position and the date of hire. However, failure to 
correct this prior to sending our data to our affirmative action vendor 
will create an error when creating our plan. Consequently, we try to 
find and correct this on the front end. These sorts of data errors are 
unavoidable, whether due to human error or a process or computer system 
issue.
    We start our initial report/auditing process in late September each 
year. This is to start identifying any potential errors or issues that 
will need to be addressed and corrected. Our plan year runs from 
October 1 to September 30. By the end of October all data regarding 
filled positions, hires, promotions, separations and applicable pay 
increases for the AAP plan year are complete and closed in both of our 
computer systems, and the reports have been validated and are ready to 
be sent to our affirmative action vendor. Annually, the auditing, 
production and validation of our reports for our AAP take about 25 to 
40 hours.
    Our next step is to forward our raw data to our affirmative action 
vendors. St. Jude has elected to enlist an outside vendor because the 
skills, knowledge and expertise necessary to compile and run the 
applicable statistical analyses are not something we have on our 
current team. Without our outside vendor I can say with certainty the 
task of completing an AAP each year would be beyond the ability of the 
St. Jude team. Literally we could not do it ourselves.
    Once our affirmative action vendor receives our data, the vendor 
runs a series of validation processes. They compare our current year 
data to previous year data and then ask us to validate any changes or 
discrepancies. Both are inevitable and must be researched, potentially 
corrected or explained. Over the years, as we learn of potential 
weaknesses in our data collection and/or processes, we make adjustments 
to correct for future years. This process of back-and-forth between St. 
Jude and our affirmative action vendor lasts two to three months each 
year with an effort of 10 to 20 hours per month by St. Jude employees.
    Once all additional data issues are resolved, our affirmative 
action vendor begins to compile the basic numbers and statistics for 
the AAP. St. Jude then moves its focus to update other areas of the AAP 
that must be reviewed each year. This includes the narrative, feeder 
groups and factor weights. All of these are forwarded to our 
affirmative action vendor for inclusion into the final AAP. This takes 
about 5 to 10 hours to update each year and has remained constant over 
the last three years. These duties are handled by the manager of 
employment or me.
    St. Jude's most recent AAP, for the dates of October 1, 2010, to 
September 30, 2011, was more than 450 pages. We also have our 
affirmative action vendor run the various statistical analyses that 
would be generated by the OFCCP if we were audited. This report for the 
most recent plan year is more than 250 pages. These final reports were 
sent to us in February. Multiple employees spend significant time 
reviewing the results and compiling questions and concerns. Typically, 
about a month after we have received the AAP, we have a one to two hour 
conference call with our affirmative action vendor to review our 
concerns and for our affirmative action vendor to point out issues and 
areas for improvement based upon the audit experiences of their other 
clients. The time and effort to review and absorb the affirmative 
action plans and statistical analysis varies upon the number of initial 
issues found. For our most recent AAP, I have easily spent 30 hours 
reviewing our plan and conducting trend analyses. Other St. Jude 
employees also have spent a great deal of time on this process, and I 
am not able to assess their efforts at this time.
Continual Improvement
    After the conference call has concluded, the St. Jude team has a 
final AAP, and we have identified areas of concern that warrant further 
analysis. In our current plan, we have 21 placement goals, more than 15 
potential issues around adverse impact and numerous potential 
compensation issues. Placement goals are always reviewed with our 
entire recruitment team. The placement goals are reviewed over time 
along with sourcing data to determine if we are headed in the right 
direction with our efforts or if we need to devise new strategies.
    Any statistical indication of potential adverse impact with 
selection, promotion and termination decisions are reviewed by the 
employment team. Any statistical indication of potential compensation 
issues are reviewed by the compensation team. Each group will devise 
strategies, research the issues, and conduct additional analysis. All 
of this effort and time varies widely each year dependent upon what 
findings we have in our plan.
    In addition, every year we focus on any new and proposed 
regulations that may become effective in the future and potential areas 
of weakness in which our processes and systems can be improved or may 
need to be modified. Each step can be expensive and time-consuming even 
for small improvements. For example, in the past two years, we have 
created new recruitment and retention initiatives relating to U.S. 
veterans returning from the Iraq and Afghanistan wars. We also had a 
team research and implement a solution that allows for applicants with 
disabilities to have new alternative methods (other than using our 
Career Center website) to apply for open positions. Unfortunately, 
sometimes the investment does not produce results desired, and we bear 
the cost of wasted time and expense. For example, we also have 
attempted to improve our system for collecting data elements relating 
to the selection process in order to be able to respond fully to OFCCP 
data requests and to analyze the data. Our current ATS is not designed 
to provide the data elements we need. Consequently, we paid for and 
implemented customizations to our ATS about 18 months ago, which we 
thought would solve this problem. Unfortunately we were off target and 
are still struggling to find a way to address those issues. The result 
is that we must now reconsider the steps and expend additional time and 
expense to make an incremental modification in order to be able to 
respond to OFCCP data requests. All of these efforts require resources, 
effort and dollars and vary widely from year to year.
    Carrying out the processes and producing the affirmative action 
plan required by OFCCP regulations is an extremely involved undertaking 
and can be overwhelming. This is my third year of having full 
responsibility for the AAP. The first year, given the volume of work 
required to meet regulatory requirements, all I could manage to do was 
just to absorb some of the data. The second year, the information and 
how to address the issues started to solidify. In my third year, I 
finally gained enough understanding of the data elements and statistics 
to truly begin to manage many aspects of the AAP processes and to be 
more active and able to interact effectively with our vendor.
Training
    Every year, we expect our teams to participate in training relating 
to OFCCP regulations. Our compensation and employment teams participate 
in local conferences, seminars, webinars, list serves and other 
activities to ensure that we are up-to-date in our current knowledge. 
Many of our current compensation professionals and recruiters were not 
at St. Jude for our last audit in 2009. Consequently, we are in the 
process of scheduling our affirmative action vendor to conduct two to 
three days of training for our team onsite. This will cost $4,000/day 
plus travel expenses. The need to train new employees on the entire 
process and keep other employees current in their knowledge is a 
constant requirement. This will be in addition to an onsite session 
with our vendor to revise our data collection, analysis and reporting 
around factor weights, feeder groups and availability percents.
Audits
    All of these efforts I have described are solely in preparation for 
an audit and passing the audit. Over the course of my employment at St. 
Jude, we have been audited three times. The last two audits happened in 
quick succession, in 2007 and 2009. The audit in 2009 started and 
concluded in that year and lasted about eight months. The length is 
similar to previous audits. The time and effort expended in 2009 was 
significant. Each month, our auditor had a number of questions and 
concerns, which had to be researched and addressed. Before sending any 
response, St. Jude discussed the questions and our response with our 
affirmative action vendor and our legal counsel. This back-and-forth 
process consumed about 20 to 40 hours of effort each month, depending 
on the number of individuals required to research and compose the 
response.
    In June, we were notified that an onsite visit was required. We 
were told that there were three job titles that had potential 
discrimination with respect to compensation and that this was the 
reason for our audit being elevated from what is referred to as a 
``desk audit'' to a full audit with an onsite visit. Four St. Jude 
employees spent weeks pulling applications, personnel files, resumes 
and curriculum vitas to compile additional data that we felt would 
explain the difference in the pay in these three job titles. Examples 
of the type of information we collected and entered into a spreadsheet 
for each employee in these job titles were years of directly related 
job experience obtained before hire, level of degree, number of 
degrees, area of specialty, years in job title (not necessarily the 
same as tenure) and past performance reviews. This information was sent 
to our affirmative action vendor who reran the applicable statistical 
analyses. In all instances the statistical indication of potential 
discrimination was eliminated by these relevant factors. Two other team 
members focused their time on creating a presentation for the auditors 
to explain the nature of work done at St. Jude and how we were 
different than the typical sort of institution being audited by the 
OFCCP.
General Concerns and Conclusion
    St. Jude takes seriously our responsibility of guarding against 
discrimination and when such allegations occur, we are committed to 
dealing with these in a fair, swift and consistent manner. But the 
current regulatory framework poses challenges for us to meet the goals 
and standards set by the OFCCP. If St. Jude is not employing enough 
minorities and women in a job category, it may appear that we are 
discriminating; if we devise a strategy to eliminate this discrepancy, 
but we are too successful in our efforts--essentially meaning now we 
have hired too many women and minorities--then we may appear to be 
engaged in reverse discrimination. The standards require that we have 
the perfect mix of gender and racial groups for every job category. It 
is an impossible standard to meet, not to mention that the data 
elements used to conduct the analysis are crude and incomplete. If you 
only look at race and gender as predictors of hiring, promotions, 
terminations and pay, then you are actually ensuring that these are the 
factors that create a statistical variance. The focus of audits, in my 
professional opinion, become on smaller and smaller bits of data.
    The OFCCP's focus on statistical analysis and forcing federal 
contractors to collect more and more detailed data encourages 
contractors to focus on data collection data storage, paperwork and 
legal defense, not on the outreach and employee development that are 
the essence of affirmative action. The statistical numbers generated in 
an AAP do not paint a full and accurate picture. The factors that go 
into making hiring, pay, promotion and termination decisions are 
numerous and cannot always be quantified, much less collected in a 
database. Two individuals may have bachelor's degrees--one from a 
prestigious educational institution and the other from an institution 
where the only requirement for entrance is to pay the fee and has 
minimal standards for the individuals teaching the courses. I can 
potentially capture in a database that both applicants have a degree, 
but how do I quantify the value or worth of the educational experience 
represented by each degree? The educational institutions are very 
different form one another. Yet the OFCCP's analysis treats them 
equally valuable and may accuse us of discrimination for hiring a 
graduate of one educational institution over another. The entire list 
of intangible factors that matter for my institution are many; 
including number of publications, quality of publications, number of 
citations, impact on field of study, number of grants, phone 
interviews, face-to-face interviews, references, quality of references, 
awards, etc. It is not possible to pull all of this into our analysis 
for more than 30,000 applicants every year and more than 3,700 
employees, as much of this information doesn't even exist in a 
database. The burden of collecting, maintaining and analyzing this 
information in the manner that is expected in an OFCCP audit is immense 
and essentially requires the expense of outside experts. The 
appropriate focus, and the only one that actually produces the type of 
results that are supposed to be the OFCCP's goal, is on good faith 
efforts to improve diversity in the applicant and promotion pools, and 
creating fair selection processes
    And every year the burdens continue to increase as new regulatory 
requirements must be met. The new proposed regulation relating to 
affirmative action for persons with disabilities is likely to increase 
burdens significantly. The proposed target for disability hiring for 
each job group is 7%. This will require a whole host of additional 
responsibilities for employers. The OFCCP has estimated that an 
employer can accomplish all of these new obligations in only 30 minutes 
each year, but this is grossly underestimated in my opinion.
    There are good things that come from the affirmative action 
process. Employer outreach to under-employed groups, attention to 
eliminating barriers to the employment of women, minorities, veterans 
and disabled individuals and encouraging employers to assess their 
efforts regularly are desirable and can be of real benefit. The real 
question, though, is whether the OFCCP's methods and new regulations 
actually promote those good things in an efficient and effective way or 
simply create excessive burdens and fodder for litigation. As an 
individual who has worked on OFCCP compliance diligently for a number 
of years, the process is all ``stick'' and no ``carrot.'' It does not 
feel as though St. Jude is rewarded for its good behavior or for making 
the good faith efforts to combat problems that are larger than the 
institution.
    In conclusion, the efforts, resources and costs to collect the 
data, create an AAP, do something with the information from the AAP, 
stay current of new and pending regulations, ensure education for our 
team and meet other compliance obligations and OFCCP requests create 
significant burdens and barriers to efficiency and impose a level of 
expense of time and money that is far in excess of what is necessary to 
accomplish effective affirmative action. In other words, our team is 
not focused on providing a fair and diverse workplace, but instead 
surviving our next audit. Thank you.
                                 ______
                                 
    Chairman Roe. Thank you for your testimony.
    Ms. Graves?

 STATEMENT OF FATIMA GOSS GRAVES, VICE PRESIDENT FOR EDUCATION 
          AND EMPLOYMENT, NATIONAL WOMEN'S LAW CENTER

    Ms. Graves. Mr. Chairman, Ranking Member Kucinich, and 
members of this subcommittee, thank you for this opportunity to 
testify today on behalf of the National Women's Law Center. I 
am pleased to speak today about the Office of Federal Contract 
Compliance Programs because it is an office of great importance 
to workers and to women in particular.
    OFCCP's authority is not limited to merely responding to 
complaints. It proactively addresses discrimination by bringing 
systemic investigations, conducting compliance reviews, and 
providing real guidance to contractors on affirmatively 
promoting equal opportunity in the workplace.
    The key role that OFCCP has played in improving economic 
security for workers and their families cannot be overstated, 
so though my testimony today is focused primarily on OFCCP's 
important work on sex discrimination and employment, OFCCP's 
historic and current role in addressing discrimination based on 
race, national origin, religion, veteran status, and disability 
has improved opportunities for a wide range of workers and it 
would be impossible in a short statement to detail it all.
    Through the years OFCCP has integrated workforces and taken 
on large systemic problems. And as this nation recovers from 
the deep recession that began in 2007 and women finally begin 
to gain jobs that were lost even in the economic recovery, 
OFCCP's current role could not be more important.
    In fact, as was already noted, yesterday was Equal Pay Day, 
the day in which women's wages finally catch up to the wages of 
men from the prior year. According to the most recent data 
available from the U.S. Census Bureau, the typical woman 
working full time made only 77 percent of male full-time 
workers' earnings. The wage gap is even larger for many women 
of color, with African American women making only 62 cents and 
Hispanic women only 54 cents for every dollar earned by white, 
non-Hispanic men.
    OFCCP has a tremendous responsibility and opportunity to 
help address these and other barriers to workplace equality for 
women, and its regulatory agenda, along with the reinvigorated 
enforcement of Executive Order 11246, demonstrates that it 
understands the urgency of equal employment opportunities for 
women and their families.
    To begin with, OFCCP has prioritized pay discrimination 
enforcement, and I saw in a document released just yesterday by 
the Equal Pay Enforcement Task Force that 20 percent of its 
financial settlements are now in the area of pay 
discrimination. This emphasis is especially important given the 
difficulties workers face even in identifying pay 
discrimination.
    A recent settlement with AstraZeneca, a company with $2 
billion in federal contracts, illustrates this point. After 
OFCCP found gender-based pay disparities it agreed to pay 
$250,000 to 124 current and former female employees who were 
paid an average of $1,700 less than their male counterparts. 
That is $1,700 lost for those women and their families.
    Second, OFCCP has identified key areas for regulatory 
improvement in the area of pay discrimination, proposing 
measures that would allow its enforcement capabilities to be 
enhanced and allowing it to conduct more accurate and strategic 
reviews of contractor compensation practices. For example, it 
has proposed the rescission of two guidance documents that 
undermined OFCCP's ability to address pay discrimination. In 
addition, last fall OFCCP took the initial steps towards 
implementing an instrument specific to compensation data.
    Since 2006, private employers have not been required to 
systematically report gender-or race-identified wage data to 
the federal government. OFCCP sought the input of stakeholders 
on approaches for collecting this wage data and on ways to 
limit the burden of data collection for employers.
    And although women are typically paid less than men in the 
same occupation, unequal access to high-paying jobs exacerbates 
the persistent pay disparities between male and female workers, 
which leads me to my third point. The recent settlement with 
Tyson Fresh Meats for over $2 million in back pay wages, 
interest, and benefits to more than 1,600 women who, despite 
being qualified applicants, were rejected for positions at 
Tyson's plants is therefore worth highlighting.
    In addition to its work on issues for women, OFCCP has 
importantly exercised the full range of its authority, focusing 
not just on Executive Order 11246 but also its authority under 
Section 503 of the Rehabilitation Act and VEVRAA. If anything, 
updates to these laws are long overdue and are really crucial 
in light of the extraordinary rates of unemployment experienced 
by both veterans and individuals with disabilities.
    I will just end by saying that there is no doubt that 
enforcement priorities and policy proposals put forth by OFCCP 
stand to improve worker protections, and in these times there 
is no worker and really no family who can afford to have their 
employment opportunities limited or their wages arbitrarily 
lowered by discrimination. OFCCP's role is really essential.
    Thank you.
    [The statement of Ms. Graves follows:]

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    Chairman Roe. Thank you.
    Ms. Horvitz?

           STATEMENT OF ALISSA HORVITZ, SHAREHOLDER,
                    LITTLER MENDELSON, P.C.

    Ms. Horvitz. Mr. Chairman, Ranking Member Kucinich, and 
members of the subcommittee, thank you for the opportunity to 
speak with you today regarding the Department of Labor's Office 
of Federal Contract Compliance Programs. The OFCCP is the 
Department of Labor agency charged with ensuring that companies 
receiving federal dollars in the form of contracts--not grants 
or federal financial assistance--are practicing the two-fold 
obligation: to engage in affirmative action by using good faith 
efforts to increase the representation of qualified females, 
minorities, individuals with disabilities, and veterans, in 
candidate or applicant pools when opportunities become 
available; and two, to ensure that when the company's decision-
makers have an opportunity to make a decision to hire, to 
promote, to terminate, to set compensation, that they are doing 
so fairly and in accordance with the principles of equal 
employment opportunity.
    OFCCP's mission is an important one and one that I would 
not want to see eliminated.
    I know that being a federal government contractor has 
repeatedly been heralded as a privilege and not a right. 
However, I also understand that many in the business 
community--and especially the small business community--are 
incredibly frustrated because being a government contractor 
under the current OFCCP administration has become so 
overwhelmingly burdensome under the existing regulatory 
framework, and it is anticipated to become significantly and 
substantially more burdensome if OFCCP's proposed regulations 
are adopted without change.
    Several of my clients have terminated their relationship 
with the federal government when their contracts ended and 
others are making the decision not to get into the relationship 
with the government because of the immense startup costs, 
burdens, hurdles, and compliance barriers that OFCCP has placed 
in their path. I am thoroughly convinced that more companies 
would be willing to contract with the government if at lower 
contract dollar values they could be exempted from some of 
these onerous provisions. It would drive up competition and it 
would drive down taxpayer costs.
    In my opinion, the dollar threshold to impose affirmative 
action plan obligations on supply and service contractors 
should be raised from the current threshold of a mere $50,000 
to a tiered approach based on contract values starting at 
$250,000. And the implementation time before OFCCP can select 
the company for an audit should be extended from its current 
120 days to 12 months, if not longer. I am advocating for audit 
exemptions for companies that don't have contracts worth $1 
million in the first year working with the government.
    In addition, despite the administration's repeated 
statement that it was going to be more transparent, the current 
OFCCP administration has been decidedly nontransparent in very 
critical respects. For example, in December 2010 OFCCP issued 
Directive 293, which purported to set forth the circumstances 
under which OFCCP would assert jurisdiction over various health 
care providers and pharmaceutical suppliers. As of April 16, 
2012, when these remarks were written, that directive was 
nowhere to be found on OFCCP's Web site.
    It also issued a directive in June of 2010 which sets forth 
how the compliance officers are supposed to be evaluating pay 
during routine compliance review, but that directive is not 
available to contractors. How are companies who want to do the 
right thing and be in compliance proactively supposed to do 
that when OFCCP does not publish the directives it later 
enforces and without advising government contractors how to 
self-evaluate their own data?
    In my experience, when some companies have gone to OFCCP's 
district offices to attend compliance assistance seminars and 
meetings and have asked, how is OFCCP evaluating compensation, 
its district offices have not provided any answers. It seems 
fundamentally contrary to notions of due process that companies 
should be accused of violating OFCCP's regulations when the 
agency doing the enforcing has failed to identify the 
benchmarks and standards that companies should follow.
    In my experience, OFCCP's conduct during compliance reviews 
is one of the principal reasons why more companies do not want 
to contract with the government. There is no current compliance 
manual that defines how audits ought to be conducted, which has 
led to OFCCP's compliance officers conducting these audits very 
differently across its six regions. The most onerous aspect of 
OFCCP's reviews is the scrutiny it gives to non-hired 
applicants.
    I have found that OFCCP will develop its own database, make 
its own judgment about whether an applicant was qualified or 
not, and then refuse to discuss its database. There is no room 
for negotiation with the agency in these situations.
    In short, OFCCP's approach to compensation is not 
transparent, not consistent, not well-defined, and arbitrary. 
The notion that OFCCP can develop a Web-based, uploadable tool 
in a one-size-fits-all approach to compensation, in my opinion.
    In conclusion, much has changed at OFCCP in the last 
several years. I appreciate the agency's commitment to 
achieving its mission. However, I have seen that the contractor 
community is increasingly frustrated by the negative tenor of 
these audits, the perception that compliance officers approach 
audits with an eye towards finding violations, and citing 
employers for noncompliance, and the increased willingness to 
take contractors into enforcement if they are unwilling to 
agree to the very harsh negotiation tactic that OFCCP employs 
at the conclusion of these reviews.
    We hope that there is a great willingness to be more 
objective, less biased, and more conciliatory, especially when 
dealing with employers that truly are trying to do the right 
thing and be in compliance with the laws and regulations that 
OFCCP enforces. I contend that an open and clear communication 
of contractors' compliance obligations is a better use of 
OFCCP's resources and will go further in achieving the agency's 
mission.
    Thank you very much.
    [The statement of Ms. Horvitz follows:]

      Prepared Statement of Alissa A. Horvitz, Esq., Shareholder,
                        Littler Mendelson, P.C.

    Mr. Chairman and Members of the Subcommittee: Thank you for the 
opportunity to speak with you today regarding the Department of Labor's 
Office of Federal Contract Compliance Programs (OFCCP).
    I am a shareholder in the Washington D.C. office of Littler 
Mendelson, P.C. and one of the two co-chairs of our OFCCP Practice 
Group. My practice is devoted to working with companies that choose to 
do business with the federal government and to helping them to comply 
with the equal opportunity laws that OFCCP enforces.
    My testimony today is based on my own personal views and does not 
reflect the views of Littler, its attorneys, or of any other 
organization or client.
    The OFCCP is the Department of Labor agency charged with ensuring 
that companies receiving federal dollars in the form of contracts--not 
grants or federal financial assistance--are practicing their two-fold 
obligation:
    (1) to engage in affirmative action by using good faith efforts to 
increase the representation of qualified females, minorities, 
individuals with disabilities and veterans in candidate or applicant 
pools when opportunities become available; and
    (2) to ensure that when the company's decision makers have an 
opportunity to make a decision--to hire, to promote, to terminate, to 
set compensation--that they are doing so fairly and in accordance with 
the principles of equal employment opportunity.
    OFCCP's mission is an important one, and one that I would not want 
to see eliminated. It performs this mission by engaging in compliance 
assistance and by conducting random audits known as compliance reviews. 
OFCCP conducts roughly 4,000 compliance reviews per year.
The Dollar Threshold Should Be Raised
    Different compliance obligations are triggered depending on the 
value of the federal contract, but in my opinion, the dollar threshold 
to impose these obligations is far too low for the burden placed on 
companies.
    When the aggregated value of all the company's federal contracts in 
a 12-month period exceeds a mere $10,000, onerous record keeping and 
subcontractor flow down obligations are triggered.
    At a mere $50,000 from one single contract (not an aggregate), the 
company must prepare two written affirmative action plans--one for 
women and minorities, which plan includes extensive annual data 
analyses, and a second plan for individuals with disabilities. Because 
$50,000 is the dollar threshold that triggers written affirmative 
action plans, contracts above this dollar threshold are subject to 
audit.
    With a single contract worth $100,000, the obligation to prepare an 
affirmative action plan for veterans is triggered, and contractors must 
also undertake the separate obligation to ensure that throughout the 
organization, including establishments and facilities at which no 
government contract work is performed, every job vacancy is listed with 
requisite state and local job banks, unless the job is a temporary job 
lasting 3 days or less, unless it is a senior management or high-level 
executive position, or it will be filled with an internal candidate. It 
does not matter whether the state and local workforce agencies are 
amply funded, or not, or are able to refer the employer any qualified 
candidates, or not.
    I know that being a federal government contractor has repeatedly 
been heralded as a privilege and not a right. However, I also 
understand that many in the business community (and especially the 
small business community) are incredibly frustrated because being a 
government contractor under the current OFCCP administration has become 
so overwhelmingly burdensome under the existing regulatory framework, 
and is anticipated to become significantly and substantially more 
burdensome if OFCCP's proposed regulations are adopted without change. 
Several of my clients have terminated their relationship with the 
federal government when their contracts ended and others are making the 
decision not to get into the relationship with the government because 
of the immense start-up costs, burdens, hurdles and compliance barriers 
that OFCCP has placed in their path. I am thoroughly convinced that 
more companies would be willing to contract with the government if, at 
lower contract dollar values, they could be exempted from these onerous 
provisions. It would drive up competition and drive down taxpayer 
costs. In my opinion, the dollar threshold to impose affirmative action 
plan obligations should be raised from the current threshold of $50,000 
to a tiered approach based on contract value starting at $250,000, and 
the implementation time before OFCCP can select the company for an 
audit should be extended from its current 120 days to 12 months, if not 
longer.
    I do not believe that raising the dollar threshold, which triggers 
the heavy administrative burdens, will cause otherwise law-abiding 
companies, already subject to other federal and state nondiscrimination 
laws, to begin engaging in intentional discrimination if their 
contracts are below that value.
    I am advocating for audit exemptions for companies that do not have 
contracts worth at least $1,000,000 in the first year working with the 
government. If the contract is worth $500,000, the company could be 
audited after two years. If the contract is worth $250,000, it could be 
audited after completing its third year. Congress needs to give smaller 
and medium businesses that are new to these obligations adequate time 
to evaluate the profit margin from these contracts and to take steps to 
comply with OFCCP's obligations.
    In addition, despite the Administration's repeated statements that 
it was going to be more transparent, the current OFCCP administration 
has been decidedly non-transparent in critical aspects. For example, on 
December 16, 2010, OFCCP issued Directive 293, which purported to set 
forth the circumstances under which OFCCP would assert jurisdiction 
over various health care providers and pharmaceutical suppliers. As of 
April 16, 2012, when these remarks were written, that directive still 
was nowhere to be found on OFCCP's website. OFCCP's recent enforcement 
settlement with Federal Express was posted on OFCCP's media page the 
same day as the settlement was announced, but significant and 
desperately-needed guidance to the health care industry is available 
only if you obtain a copy of the directive through other means.
    OFCCP also issued Directive 289 on June 4, 2010, which sets forth 
how compliance officers are supposed to be evaluating pay during 
routine compliance reviews, but this directive is not available to 
contractors, either. Contractors are expected to evaluate employees' 
pay annually to ensure that there are no gender, race, or ethnicity-
based disparities, but OFCCP has not published any information or 
guidance that sets forth how it is going to evaluate compensation 
during audits, and yet from June 2010 through at least the beginning of 
this year, OFCCP was using this new protocol in audits.
    How are companies who want to do the right thing and be in 
compliance, proactively, supposed to do that when OFCCP does not 
publish the directives it later enforces and without advising 
government contractors how to self-evaluate their own data? In my 
experience, when some companies have gone to OFCCP's district offices 
to attend compliance assistance seminars and meetings, and have asked 
how OFCCP is evaluating compensation, OFCCP's district offices have not 
provided an answer. It seems fundamentally contrary to notions of due 
process that companies could be accused of violating OFCCP's 
regulations when the Agency doing the enforcing has failed to identify 
the benchmarks and standards that companies should follow.
Compliance Burdens
    Once the value of all the company's contracts over the course of 12 
months exceeds $10,000, there are two compliance burdens that begin:
    (1) the obligation to notify all subcontractors and vendors that 
they, too, may have affirmative action obligations if the work they 
perform is necessary to the performance of a government contract (41 
CFR Section 60-1.4(a)(7)); and
    (2) the extraordinary record keeping obligations set forth in 
section 60-1.12.
    For example, if one small research lab in a large hospital enters 
into a research contract with an agency of the federal government, then 
the entire hospital is required to ensure that for each and every 
position it seeks to fill--both internally and externally--it must 
implement a way to track every single expression of interest in 
employment that it receives.
     If a recruiter does not look at the expression of 
interest, the company must develop a way to default that application to 
``not considered.''
     If the recruiter looks at the resume or electronic 
application, the recruiter must evaluate the candidate's credentials to 
determine if the candidate is qualified or not.
     If the candidate is not qualified, the company must still 
maintain a record of that application for two years from the making of 
the record or the hiring decision, whichever is later.
     If the company is a small business, and the value of its 
contract is more than $10,000 but less than $150,000, it is obligated 
to keep those records for only one year.
     For each qualified candidate, the company must be able to 
identify every stage of the hiring process that the candidate made it 
through, and for every qualified candidate who is not hired, the burden 
is on the employer to have documentation that explains why the 
qualified candidate was not hired.
     For each qualified candidate, the employer must solicit 
the applicant's race and gender. If, over time, a sufficient percentage 
of candidates voluntarily elects not to disclose that information, 
OFCCP might substitute labor market availability for actual data in an 
effort to find that the contractor is engaging in discrimination 
against females or a racial subgroup.
     The contractor must develop a mechanism to solicit race 
and gender, then ensure that the actual decision makers do not have 
access to that information, but cross reference the hidden information 
back to the candidate's application every year for purposes of 
evaluating whether managers--who did not have access to race and gender 
information--nonetheless rejected a disproportionate percentage of 
applicants based on race or gender, even though they did not have 
access to that information unless and until the candidate was 
interviewed.
     If the contractor does have records of who applied, OFCCP 
might go to the state workforce agency and locate expressions of 
interest that the agency collected and deem them to be potential 
victims of hiring discrimination, even though there is no proof that 
the employer actually considered those individuals for employment.
    At the $50,000 level, and as part of the written affirmative action 
plan for women and minorities, employers are expected to perform three 
sets of data analyses:
    (1) a comparison of employment against availability,
    (2) analyses of hiring rates, promotion rates and termination rates 
to ensure that those rates do not differ significantly for men compared 
to women, or any one racial sub group against all other racial 
subgroups, and
    (3) a compensation analysis.
    Under the goal-setting compliance obligation, for any grouping of 
titles in the workforce (which grouping the employer has discretion in 
developing), if the contractor's employment of females and minorities 
is less than reasonably expected, the employer is obligated to set a 
hiring goal. There are no fines or penalties for not meeting the goal, 
but there is an obligation on the part of the employer to identify the 
goal in its written affirmative action plan under the ``Identification 
of Problem Areas'' section of the plan, and there is an obligation for 
the employer to develop an ``action oriented program'' for each group 
with a goal, designed to improve the representation of qualified 
females or minorities when opportunities arise in the future. If the 
employer hires externally for such vacant positions, initiatives might 
include the use of new recruiting sources, outreach to organizations 
that help to place qualified females and minorities, and the like. If 
the employer tends to promote from within, then ensuring that women and 
minorities are trained and mentored could be examples of action-
oriented programs for those job groups.
    Still at the $50,000 level, government contractors also have 
obligations under the regulations that implement Section 503 of the 
Rehabilitation Act of 1973, which deals with individuals with 
disabilities. Employers are required to include the EO Clause in each 
of their covered contracts or subcontracts. Employers must make 
available the entire written affirmative action program to any employee 
or applicant for employment upon request.
    Employers must also include the following sections and legal 
commitments in a written affirmative action program under Section 503:
    1. Prepare an equal opportunity policy statement that indicates the 
Chief Executive Officer's commitment and that it is updated annually.
    2. Review personnel processes to ensure they provide for careful 
and systematic consideration of the job qualifications of applicants 
and employees with disabilities.
    3. Establish a schedule for the periodic review of all physical and 
mental job qualification standards to ensure that qualification 
standards are job related and do not screen out otherwise qualified 
disabled applicants and employees.
    4. Make reasonable accommodation to the physical and mental 
limitations of otherwise qualified individuals with disabilities unless 
the contractor can demonstrate that the accommodation would impose an 
undue hardship on the operation of its business.
    5. Develop and implement procedures to ensure that its employees 
are not harassed because of any disability.
    6. Undertake appropriate outreach and positive recruitment 
activities to recruit qualified individuals with disabilities.
    7. Ensure adequate internal support from supervisory and management 
personnel to encourage them to take the actions necessary to meet the 
contractor's affirmative action obligations, and disseminate its policy 
internally.
    8. Design and implement an audit and reporting system that measures 
the effectiveness of the contractor's affirmative action program.
    9. Designate an official to be assigned responsibility for 
implementing the contractor's affirmative action program.
    10. Train all personnel involved in the recruitment, screening, 
selection, promotion, evaluation, and discipline systems to ensure that 
the contractor's commitments are implemented.
    At $100,000, the Veterans obligations begin. They largely overlap 
with the Section 503 regulations, but the additional obligation to list 
every nonexecutive, non-temporary, and non-internal position with the 
employment service delivery systems is a tremendous burden for small 
businesses who, after subtracting expenses from revenue, often cannot 
afford a third-party vendor costing tens of thousands of dollars 
annually, who can scrape the employer's website for new vacancies and 
ensure that they are posted properly. It is also an unreasonable burden 
for employers seeking highly skilled professionals, to be forced to use 
these one-stop employment service delivery systems because the 
candidates being referred are not likely to be qualified. A university 
looking for a Ph.D. assistant professor candidate in physics still has 
to list that assistant professor job with the unemployment office or it 
is a violation of the Veterans' regulations that OFCCP enforces. A 
hospital looking for a Neurosurgeon has to list that vacancy with the 
one-stop employment service delivery system.
    In sum, these burdens are currently imposed on all companies doing 
business with the government at very low thresholds. Profits from low-
dollar contracts do not begin to cover the costs of ensuring that each 
one of these obligations is met within 120 days of signing the 
contract, or the in case of the mandatory job listings, on the date 
that the contract is signed.
Compliance Reviews
    In my experience OFCCP's conduct during compliance reviews is one 
of the principal reasons why more companies do not want to contract 
with the government. There is no current compliance manual that defines 
how audits ought to be conducted, which has led to OFCCP's compliance 
officers conducting these audits very differently across OFCCP's six 
regions. For almost two years now, OFCCP has made representations to 
the contractor community that it is revising and republishing the 
manual.
    The most onerous aspect of OFCCP's compliance reviews is the 
scrutiny it gives to non-hired applicants.
    Using twelve (12) months of data from the employer's HRIS or 
payroll system, the employer is expected to know for each vacancy it 
filled, who was the qualified applicant pool. The employer is required 
to evaluate hiring rates of women against men, and every racial group 
against all other racial groups that comprise 2% of the labor force or 
2% of the employer's workforce. If any of these applicant and hire 
equations reveals statistically significant differences in hiring 
rates, the OFCCP compliance officers are trained to follow up with the 
employer and obtain a substantial amount of underlying data, including 
all resumes, applications, interview notes, and the like to evaluate 
whether the employer's decisions were based on legitimate, 
nondiscriminatory reasons. The burden is on the employer to have all 
this documentation going back two years (unless it is a small business 
with fewer than 150 employees) because if it does not, OFCCP will 
presume that the information would have been unfavorable to the 
employer. It will launch burdensome information requests for every 
application that the employer included on its applicant flow log, and 
it will come onsite to the employer's premises to interview HR 
managers, recruiters, hiring managers, and hired employees. In my 
experience, in its search for anecdotal evidence, it will also 
interview rejected applicants.
    Many employers have had to invest in expensive electronic applicant 
tracking systems in order to maintain this information. To make it 
easier for recruiters to fill positions and record the reasons why an 
applicant might not be the most qualified person for the job, many of 
these applicant tracking systems use disposition codes--a code to 
indicate why the applicant was rejected.
    OFCCP affords employer applicant flow log disposition codes little 
to no deference in audits. If the employer's human resource managers 
coded applications as ``not qualified,'' ``unstable work history,'' 
``lacks relevant experience,'' OFCCP compliance officers will likely 
attempt to substitute their judgment for the employer's judgment and 
include those rejected candidates in OFCCP's remedies if the employer 
hired only one person whose resume or application appeared to include 
``unstable work history'' or lacking in relevant experience. Again, in 
my experience, a number of OFCCP compliance officers equate even the 
littlest inconsistency in an employer's hiring process with intentional 
discrimination.
    When the hiring rates for women are greater than the hiring rates 
for men, or the hiring rates for minorities are greater than the hiring 
rate for nonminorities, OFCCP will still pursue information requests if 
those hiring rates are statistically significantly different. It 
apparently does not matter whether the employer had a goal for women or 
minorities, and tried to increase the percentage of qualified females 
or minorities in the candidate pools. If the employer's hiring rates 
are not proportional based on the applicant population, OFCCP will 
follow up in audits. I have found that there is most definitely a 
perception among the equal employment opportunity and diversity 
professionals charged with compliance that there is a no-win situation 
with many of OFCCP's compliance officers. These auditors are apparently 
approaching audits as if the employer is presumed to have discriminated 
and presumed to have lost records.
    If the employer fails to maintain complete and accurate records 
that will explain the nonselection of all qualified candidates, OFCCP 
will seek back pay remedies on behalf of the non-hired applicants who 
appear on paper to be just as qualified as the hired employees. When 
OFCCP is pursuing an adverse impact in hiring case, the applicant flow 
data base is very important. It forms the basis for the OFCCP's 
argument as to who applied, who was qualified, who wasn't interviewed, 
who wasn't hired. In too many recent cases, I have found that OFCCP 
will develop its own database, make its own judgment about whether an 
applicant was qualified or not, and refuse to discuss the database. The 
applicant flow database--which forms the basis for the OFCCP's 
assertion of monetary relief--is ``off the table.'' There is no room 
for negotiation with the Agency in these situations. If the employer 
``accepts'' the database, it is responsible for locating all non-hired 
applicants and affording them monetary back pay relief. Every non-hired 
applicant has to get added to the employer's payroll for purposes of 
paying back pay and withholding taxes, and then once the checks are 
cut, the alleged victims of discrimination are removed from the payroll 
so that they are not inadvertently counted in future affirmative action 
plan reports.
    When an employer with incomplete records is accused of violating 
the Executive Order and OFCCP's regulations, and OFCCP seeks to 
negotiate a conciliation agreement, I have found the employer is facing 
an Agency that will not negotiate a reasonable settlement offer. In my 
experience, OFCCP begins settlement negotiations under the presumption 
that the non-hired candidates could never have found other, alternative 
employment, even at the minimum wage, until much later in the 
negotiating process. Opening offers seem artificially inflated. Indeed, 
OFCCP in the current administration frequently asks the employer to 
begin negotiations by coming up with the amount it is willing to pay; 
OFCCP does not open negotiations by valuing the non-hired applicants' 
alleged loss and adjusting for median tenure or wage mitigation.
    OFCCP audits can proceed quickly, some closing in less than 30 
days. The more common scenario, however, is that an OFCCP audit can 
last more than a year. Our law firm has at least four audits that are 
approximately five years old. OFCCP currently is seeking regulatory 
authority to expand the temporal scope of a compliance review. Right 
now, OFCCP can review two years' of data looking back from the date 
that the employer receives its audit letter. OFCCP is proposing to 
increase the scope of the audit so that the audits can stay open 
indefinitely. I understand that many in the contractor community have 
strongly opposed that provision in the proposed veterans and 503 
regulations, and Congress ought to step in and ensure that audits 
cannot cover a data period more than the current two-year period going 
back from the date the audit letter is received.
Compensation
    The other issue that has frustrated government contractors in my 
experience is OFCCP's position on compensation. Although OFCCP has no 
standards or guidance to employers about how it will evaluate 
compensation in audits, OFCCP compliance officers have been focusing on 
every job title where there is a 2% or $2000 difference and requiring 
the contractor to justify the difference. If the employer wants to 
justify the difference based on prior relevant experience, it needs to 
produce a resume or application supporting that difference. If the 
employer wants to justify the difference based on performance, it needs 
to have performance evaluations.
    Because of how OFCCP enforces its unpublished, stealth directive on 
compensation, labor market demands and economic factors are not taken 
into consideration by compliance officers pursuing information 
requests.
    Most employers present their compensation data in an audit by job 
title because in most workplaces, individuals who are placed into the 
same title often (but not always) are doing similar work. At the first 
phase of the audit, when an employer is required to provide summary 
compensation, the OFCCP compliance officer looks to see if there are 
any job titles with 2% or $2000 differences. If just one title has this 
2% or $2000 difference, OFCCP has sent out a form letter seeking 
additional information from the government contractor for every job 
title in the establishment being audited. It does not matter whether 
the job has one single incumbent, or all incumbents in the job title 
are all the same race or the same gender. OFCCP demands that the 
employer produce the additional information on everyone, and if the 
employer does not have the information stored in an easily retrievable 
human resource information system or payroll system, the OFCCP will 
come on site, demand the production of employee personnel files, and it 
will build this data base itself.
    This focus on whether there are current differences in average pay, 
however, has no basis in Title VII compensation law. Under Title VII, 
as amended by the Lilly Ledbetter Fair Pay Act of 2009, a plaintiff in 
litigation must be able to point to a decision that the employer made 
that was discriminatory. OFCCP, despite its stated intention to follow 
Title VII principles when it investigates compensation, is not doing 
that. OFCCP is focused on whether there are disparities or differences 
in current pay. If there are differences in pay, then I have found that 
OFCCP immediately shifts the burden of producing a nondiscriminatory 
reason back onto the employer--for every job in the workplace with a 2% 
or $2000 difference. Employers with tens of thousands of employees in 
one AAP are spending months trying to justify current compensation, 
pulling thousands of paper and electronic files, looking at resumes and 
applications, refreshing their recollections as to why pay was 
initially set as it was decades ago. Employers that have acquired new 
companies with very different salary structures are not given 
recognition for how long legacy differences in pay are allowed to 
exist.
    What OFCCP compliance officers ought to be focusing on are employer 
decisions made during the audit time frame, typically a 12-month period 
preceding the audit letter's receipt. When the government contractor 
had an opportunity to hire someone, or promote someone, or make salary 
increases, did it do so fairly and in accordance with equal employment 
principles?
    In addition, during an onsite visit, OFCCP interviews managers 
responsible for setting compensation and employees to build a record of 
everything that the employees do that are the same. OFCCP compliance 
officers typically do not focus on parts of the job that are different, 
and the employer may not have an attorney or management representative 
in employee interviews to ensure that the compliance officer's 
questions are fair, objective and balanced. In short, OFCCP's approach 
to compensation is not transparent, not consistent, not well-defined, 
and arbitrary in audits. The notion that OFCCP can develop some type of 
web-based, data uploadable tool in a one-size-fits-all approach is the 
wrong approach, in my opinion. It is not going to enable OFCCP to hone 
in on compensation decisions that were made unlawfully based on race, 
ethnicity, or gender, and it is going to place unreasonable 
documentation and record keeping burdens on already-thinned human 
resource and equal opportunity staff, who are trying to comply with 
these laws and regulations.
Reinstate the Ombudsman
    During prior OFCCP administrations, there was an Ombudsman--someone 
at OFCCP whose job it was to field concerns about inconsistent 
positions among the OFCCP's compliance officers and district officers 
and enable these types of concerns to be dealt with efficiently. In my 
view, it would be a positive development if the Ombudsman position 
could be reinstated.
Separate Facility Exemptions
    Finally, I question why it takes approximately two years for OFCCP 
to evaluate an employer petition for a separate facility exemption. In 
2002, OFCCP developed a process for companies (particularly retail 
companies) to apply for an exemption for those facilities not connected 
with a government contract. The idea behind the exemption was that if a 
clothing retailer, which had hundreds if not thousands, of stores in 
malls and shopping centers all across the nation, was also selling 
clothes to the military, for example, but only out of its corporate 
office or its distribution center, OFCCP could be petitioned to require 
the corporate office and the distribution center to have to comply with 
all these rules and regulations, but OFCCP would grant the employer an 
exemption for all the small retail stores in the malls and shopping 
centers. It seemed to be a fair and reasonable approach to all these 
compliance burdens. I do not know how many pending separate facility 
exemption petitions are currently pending at OFCCP, but I do not 
understand why it should take upwards of 19 months, which is very 
burdensome for employers waiting for a response.
Functional Affirmative Action Plans (FAAPs)
    OFCCP's regulations explain that an employer is expected to have a 
separate affirmative action plan for each facility with 50 or more 
employees. In some larger workplaces, the notion of having an AAP tied 
to a physical building is artificial. Workforces are spread out among 
several different physical buildings, but they report to the same 
executive. Splitting up the workforce into separate physical 
establishments makes it harder for that executive to appreciate whether 
his or her workforce has any employment goals for women and minorities, 
or whether when that executive's managers and directors made hiring, 
promotion, and termination decisions, those decisions were made fairly.
    Rather, I believe it makes more sense for the employer to be able 
to prepare an affirmative action plan based on a functional 
organizational unit, like a division or department. OFCCP developed a 
process known as the Functional Affirmative Action Plan (FAAP) 
directive that allows an employer to petition OFCCP for permission to 
prepare its plans on a functional basis. In 2011, however, OFCCP 
revised the 2002 FAAP directive and required that all employers that 
previously had been granted permission to prepare plans on a functional 
basis had to re-apply for permission to prepare plans that way. A term 
or condition of the 2011 re-approval process is that the contractor 
agrees when audited to provide all applicant flow, hires, promotions, 
terminations, and compensation data in Microsoft Excel or Access, not 
pdf. There is no such obligation under other current regulations.
    In addition, if the contractor wants to renew the FAAP agreement, 
at least two FAAP facilities will have to undergo a compliance 
evaluation during the three-year term of the FAAP approval. Thus, under 
OFCCP's new FAAP approval process, companies that wish to continue 
preparing AAPs on a functional basis are guaranteed to undergo at least 
two audits. If the company has only four functional agreements, it is 
100% guaranteed to have 50% of its plans audited every three years, if 
it wants to continue doing business with the federal government and 
prepare its plans in a manner that makes more sense. The new directive 
comes across as harsh and punitive. It is clearly a game-changer for 
many companies that thought preparing plans on a functional basis was a 
better way to track and report employment data.
    In conclusion, much has changed at OFCCP in the last several years. 
I appreciate the Agency's commitment to achieving its mission. However, 
I have seen that the contractor community is increasingly frustrated by 
the negative tenor of compliance reviews, the perception that 
compliance officers approach audits with an eye towards finding a 
violation and citing the employer for noncompliance, and the increased 
willingness to take contractors into enforcement if they are unwilling 
to agree to the often harsh negotiation tactics that OFCCP may employ 
at the conclusion of these reviews. We hope there is a greater 
willingness to be more objective, less biased, and more conciliatory, 
especially when dealing with employers that truly are trying to do the 
right thing and be in compliance with the laws and regulations that 
OFCCP enforces. I contend that an open and clear communication of 
contractors' compliance obligations is a better use of OFCCP's 
resources and will go further in achieving the Agency's mission.
                                 ______
                                 
    Chairman Roe. Thank all the witnesses.
    Mr. Kucinich?
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    As I am listening to the testimony one of the things that 
strikes me is that we have got men and women out in the field 
right now with their lives on the line--veterans that will be 
returning home. They put their lives on the line, they want--
and there is a very high rate of unemployment among returning 
veterans--but can't find jobs.
    The best shot they have is when you have requirements that 
if somebody has a federal contract, if anyone wants to go to 
work with them that the veteran is going to have some 
protection in making sure that the law is going to be enforced 
with respect--with respect to returning veterans, and if the 
regulations that are being proposed right now are not put in 
force we are looking at veterans having really less 
opportunities. I want to point out that in April 2011 the OFCCP 
issued a proposal to strengthen the nondiscrimination and 
affirmative action protections for veterans, and it proposed 
its regulations in response to the employment obstacles that 
veterans are facing when they return from Iraq and Afghanistan.
    We have a national unemployment rate of about 8.2 or 8.3 
percent; the unemployment rate for veterans serving on active 
duty at any time after September 2001 was 12.1 percent in 2011, 
and 26 percent of recently returning veterans reported having a 
service-connected disability in August 2011.
    Excuse me, but federal contractors wouldn't even have the 
ability to participate in these programs if you didn't have 
veterans who are protecting the rights of all of us. And it 
doesn't seem like it would be asking much when these men and 
women come home to just say, ``Well, you have got to jump 
through a few extra hoops to make sure that somebody is giving 
a fair them opportunity.'' Now, this is one of the reasons why 
the Paralyzed Veterans of America are supporting not just 
annual hiring bench, but that you have them supporting the 
proposal of the OFCCP.
    But you have opponents like the Chamber of Commerce. I 
mean, what a bunch of phonies at the Chamber of Commerce. You 
know, they are the first to wave the flag when our men and 
women are over there, but when they come back they are the ones 
that are fighting the efforts to try to make sure that 
reporting requirements are there to insist that these men and 
women get hired. So please----
    Now, Mr. Norris--how much time we got left--in your 
testimony you say that this proposed legislation would be 
detrimental to business. However, you have companies, including 
Bayer, Highmark, Amerigroup, American Airlines, and Walgreens--
they have recognized the benefits of hiring individuals with 
disabilities and they have written in support of this 
regulation.
    And, Mr. Chairman, without objection I would like to submit 
these letters for the record from these corporations.
    [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
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    Chairman Roe. Without objection, so ordered.
    Mr. Kucinich. I appreciate that, Mr. Chairman.
    And, you know, some, in fact, have set hiring goals for 
people with disabilities that exceed the 7 percent established 
in the regulations. Now, where you point to concerns these 
companies see benefits. In one letter of support Bayer says, 
quote--``Although it will be an adjustment for Bayer and other 
companies to be more proactive around collecting data that can 
track the incidence of disability within our workforce and 
within our applicant pool, the reality is that this data will 
help us set goals and monitor performance internally in a more 
systemic way than we are currently able to do.'' So businesses 
are saying this benefits.
    Now, Ms. Graves, can you implement this--can implementing 
this regulation help address the employment gap for people with 
disabilities?
    Ms. Graves. I think there is no doubt that it would make a 
real difference. As you point out, the employment gap is almost 
two times for--between people with disabilities and without 
disabilities.
    And what history has shown is that this won't happen on its 
own, that contractors and other employers, that some will not 
engage in the steps that are required to improve access to 
high-quality jobs for people with disabilities that are so 
needed. And so much has changed since Section 503 was passed in 
the 1970s that it is really time that Congress' mission really 
be fulfilled on this point.
    Mr. Kucinich. Thank you very much, Mr. Chairman. Yield 
back.
    Chairman Roe. I thank the gentleman for yielding.
    Mr. Rokita?
    Mr. Rokita. Thank you, Mr. Chairman.
    I would like to also thank the witnesses for their 
participation today. My first question deals with the recently 
issued proposal to require contractors to ask job applicants to 
self-identify as an individual with a disability.
    And I missed--admittedly missed some of your testimony, Mr. 
Norris, and if you talked about this I apologize, and I will go 
to you with this question first. Do you believe this proposal 
is consistent with the requirements of the ADA or not, and 
where do you see litigation, if any, going?
    Mr. Norris. This proposal is very inconsistent with the 
underlying philosophy of the Americans with Disabilities Act, 
which is to minimize one's disability, to keep it a private 
matter except in instances where it is necessary to be 
discussed in the context of a--of affording a reasonable 
accommodation. What this proposal will do will be to feature 
one's disability, will be to ask people to identify their 
disabilities and their veteran status not once, not twice, but 
sometimes three times on an annual basis for purposes of 
establishing numerical targets that are not based upon labor 
market data.
    So this proposal is inconsistent in the sense that it is 
featuring someone's disability and it raises the uncomfortable 
prospect that companies will be able to satisfy OFCCP's 
regulations only at the expense of violating the Americans with 
Disabilities Act.
    Mr. Rokita. Yes, it seems to me, and coming from a guy who 
used to run a couple of agencies back in the state of Indiana, 
it is a classic example of the right hand not knowing or not--
more offensively, not caring what the other hand is doing, and 
asking business, the engine of our economy, to try to interpret 
all that.
    Mr. Norris. That is exactly right.
    Mr. Rokita. Very unfair.
    Ms. Bottenfield, thank you for your testimony, as well. I 
was amazed to hear some of your figures--450 pages for your 
manual and another 250 pages for what?
    Ms. Bottenfield. For the analysis that the OFCCP would run 
if we were audited, so we do that proactively every year.
    Mr. Rokita. And then without the audit you are running 
about $60,000 a year in costs?
    Ms. Bottenfield. It will vary depending each year, but that 
is what we plan to spend this year.
    Mr. Rokita. And then your last audit, which was part of the 
roving audit scheme that is going on, you didn't--it wasn't a 
complaint-based audit that caused this, right?
    Ms. Bottenfield. No.
    Mr. Rokita. Right. That was $40,000, and you had--that took 
8 months?
    Ms. Bottenfield. Yes.
    Mr. Rokita. Now, they sat in your office for 8 months, or 
how did all this work?
    Ms. Bottenfield. Lot of phone calls, e-mailing back and 
forth for a number of months, so we would get requests for data 
or requests to justify something we had been doing, so a lot of 
back and forth----
    Mr. Rokita. Was the data readily available or did it cause 
you to have to redo I.T. programs, or go off on searches, or 
how easy was that to compile, in all honesty?
    Ms. Bottenfield. Well, when they decided to come on-site, 
and we had three job titles where they said we had 
discrimination with respect to pay, we had to pull a number of 
personnel files to collect data that wasn't originally in the 
analysis that we felt were the drivers and the explanation for 
that pay. So, for example, that would be years of experience 
prior to coming to St. Jude, so we would have to get that from 
the application; the degree that the candidate or the employee 
had, and is it meeting the job requirement or in excess of that 
job requirement.
    Mr. Rokita. And all this was part of the 400 man hours----
    Ms. Bottenfield. Yes.
    Mr. Rokita [continuing]. Person hours, excuse me.
    We are all aware from your testimony and just general 
knowledge about the mission of St. Jude's. Given that St. Jude 
is a non-for-profit and funding is largely from donations--
majority is still from donations, is that right?
    Ms. Bottenfield. Yes.
    Mr. Rokita. Okay. Do you believe these OFCCP compliance 
resources spent largely on paperwork and recordkeeping could be 
used elsewhere within the hospital--400 person hours?
    Ms. Bottenfield. As a nonprofit, any dollar not spent on 
administration is always going to be made available for 
research or patient care. But I could also argue that we could 
spend these dollars more effectively to truly reach the goals 
of affirmative action. Instead of focusing on pieces of paper 
and documenting that our team could do real community outreach, 
as other business partners in the city of Memphis have done, 
to, for example, reach out to our city schools and get children 
interested in science, technology, engineering, and math, so 
that they are eligible to get the college educations that are 
going to make them----
    Mr. Rokita. What an excellent, positive idea. If you do 
that or if you were to do that would you get any credit, so to 
speak, or any kind of recognition in your audit from OFCCP?
    Ms. Bottenfield. I have got to have the documentation of 
that----
    Mr. Rokita. Mr. Norris, do you--oh, so--but they would give 
you----
    Ms. Bottenfield. They would give me some credit, but then 
it is going to go back to that they are going to come back and 
say, ``Well, it looks like you have got discrimination issues 
with respect to this compensation. That is all really great but 
deal with this bit of minutia,'' and that is what we would have 
to defend. There are so many potential areas that you have to 
defend, you might have these great efforts, and they are great, 
and they say, ``We applaud you but now we are focused on this 
small bit of information and we want you to defend that.''
    Mr. Rokita. Understood. Thanks. I am out of time.
    Yield----
    Chairman Roe. Gentleman's time is expired.
    Mr. Kildee?
    Mr. Kildee. Thank you, Mr. Chairman.
    Mr. Norris, you spoke of the costs which OFCCP imposes on 
business. Fire prevention costs money but prevents negative 
consequences. How do we determine whether the costs of 
enforcing OFCCCP are reasonable or unreasonable?
    OFCCP may cost business, but women waiting until April 17th 
to catch up with men in their compensation certainly cost women 
money. How do we justify that? Everything costs some money.
    But we do know that women--and this is--the data has been 
sifted through many, many times--really have to wait till April 
17 to catch up with men, and they are being cost money. How do 
you justify that and how do you get your figures for the cost 
to business?
    Mr. Norris. Well, there is no question that there is costs 
attendant to compliance with these regulations. The question is 
whether or not the resources that are required to comply with 
the regulations are being used in the most effective manner.
    And I will use your example of pay as a good example. One 
of the most beneficial things that OFCCP did back in 2006 was 
to eliminate prior confusion as to how companies should monitor 
their compensation practices for pay equity, and they came up 
with some legal and statistical standards that their auditors 
would use in their compliance evaluations. With that clear 
guidance companies were able to take that guidance and apply it 
to their own practices to ensure that their pay systems were 
equitable and that women, minorities, everybody was being paid 
equitably.
    That is an effective use of resources. Requiring some of 
the burdensome paperwork requirements of this new regulation is 
not an effective use of resources.
    Mr. Kildee. Why do you say it is not an effective--what 
waste is taking place there?
    Mr. Norris. Well, for the very reason that Ms. Bottenfield 
just said, that their resources that could be used for 
outreach, that could be used to try and match veterans, 
individuals with disabilities with jobs, instead are being 
directed internally to comply with all of the paperwork 
requirements so that in the event that there is a compliance 
evaluation the company can document that they went through each 
and every step that OFCCP prescribes must be done. Companies 
should be left to develop their own resources in light of their 
own business needs and be evaluated on the bottom line, not on 
the very prescriptive steps to get there.
    Mr. Kildee. But knowledge is power, and you have to have 
knowledge of what--how a business is operating, and it is 
extremely important to try to get information to empower the 
agency to carry out the effect of the laws and regulations 
which the federal government puts in place. You know, my dad 
worked at the auto plant in Flint, Michigan from 1916 to 1960, 
and unless federal government had moved in there the number of 
people who were physically injured would have escalated.
    So there has to be some cost to protect people, whether it 
be their wages, their health. Has to be some cost, and 
knowledge is helpful in determining how we can protect those 
people.
    Mr. Norris. Well, and I think knowledge is a two-way 
street. I think it is helpful for OFCCP to clearly articulate 
what its requirements are going to be for contractors, and 
contractors then have to take that information and translate it 
into programs that are in compliance.
    Mr. Kildee. I thank you, Mr. Norris.
    Thank you. I yield back. I yield back, Mr. Chairman.
    Chairman Roe. Mr. Tierney?
    Mr. Tierney. Thank you, Mr. Chairman.
    So, Ms. Horvitz, when you say your clients choose to do 
business with the federal government who do they choose not to 
do business with in making that choice?
    Ms. Horvitz. I guess I am unclear about your question. Who 
do they not choose to do business----
    Mr. Tierney. I mean, so who do they pass up in order to do 
business with the federal government if they choose to do 
business with the federal government?
    Ms. Horvitz. They are going to do business with other 
private companies that don't impose these onerous obligations.
    Mr. Tierney. Okay. And nobody is stopping them from doing 
that, right?
    Ms. Horvitz. No. No one is stopping them, but the problem 
really is that many companies get pulled into this arena 
without their knowledge of it. You could have a company----
    Mr. Tierney. Seriously?
    Ms. Horvitz. Absolutely. You could have a company that has 
a major customer. They are supplying $50,000 of their product 
to another company. It is a great customer relationship.
    And that other company could decide that it wants to get 
into the business of doing business with the federal 
government. That other company is a direct federal contractor, 
and now my client who was simply producing widgets for a 
customer all of a sudden is a federal government subcontractor, 
and all of OFCCP's obligations have been pulled down at the 
subcontractor level and it never signed onto that. OFCCP has 
jurisdiction when what my client is producing is necessary to 
the performance of that prime contract.
    Mr. Tierney. Because now they are providing matters--or 
materials to a company that is doing direct contracting with 
the government and because----
    Ms. Horvitz. And they did so for a specific cost, and now 
all of a sudden the costs of preparing the affirmative action 
plan, and engaging the vendors, and hiring the statisticians, 
and doing all the outreach, and complying with the mandatory 
listings is all put on them. It is a very expensive 
proposition----
    Mr. Tierney. Which they will reflect in their cost, I 
assume, right, when----
    Ms. Horvitz. Excuse me?
    Mr. Tierney. Which they will reflect in the amount that 
they charge?
    Ms. Horvitz. To the American taxpayer, that is right, 
because the company doing business with the government is going 
to have to pay more because the subcontractor is going to have 
to spend more costs.
    Mr. Tierney. Do you think it is important to have a law 
that requires that people not be able to discriminate on race?
    Ms. Horvitz. Absolutely.
    Mr. Tierney. On color?
    Ms. Horvitz. Absolutely.
    Mr. Tierney. On religion?
    Ms. Horvitz. Yes.
    Mr. Tierney. On national origin?
    Ms. Horvitz. Yes.
    Mr. Tierney. On gender?
    Ms. Horvitz. Yes.
    Mr. Tierney. On disability?
    Ms. Horvitz. Yes.
    Mr. Tierney. On veteran status?
    Ms. Horvitz. Yes. I am for the mission of OFCCP and I would 
not want to see it eliminated.
    Mr. Tierney. So basically your argument is on matter of 
degree.
    Ms. Horvitz. It is a matter of what has happened in this 
administration to businesses.
    Mr. Tierney. Well, what has primarily happened is they have 
proposed some matters and they put out an advanced notice of 
rulemaking, right?
    Ms. Horvitz. Well, yes, in part, and our----
    Mr. Tierney. Well, that is primarily what the beef is here, 
right? There has been advanced notice of proposed rulemaking on 
a couple of issues--on compensation and on disability. And on 
those matters when they put out advanced notice of rulemaking 
you get to give your complaints to them.
    Ms. Horvitz. Correct.
    Mr. Tierney. Which you have done, I presume?
    Ms. Horvitz. Yes.
    Mr. Tierney. As forcefully as you have done it here today?
    Ms. Horvitz. Hopefully.
    Mr. Tierney. And you are awaiting some decision?
    Ms. Horvitz. Yes.
    Mr. Tierney. Then I think we are a little early for this 
hearing, Mr. Chairman.
    So what is the beef? You have a process. You have been 
given an opportunity to make your cases. I have had no 
indication from you that they are ignoring you and that they 
won't consider them.
    That is what we have the advanced notice of rulemaking for; 
that is what we have the rulemaking process for. We all agree 
with you. We don't want discrimination against any of these 
matters, particularly women, who I think Ms. Graves made a 
particular case of. They have been discriminated in pay 
compensation.
    Lilly Ledbetter apparently is forgotten by some of our 
colleagues here. That was not too long ago that we had to take 
action on that matter.
    Nobody wants to see people with disabilities discriminated 
against. We have an affirmative obligation to the agency that 
is responsible for making sure that that doesn't happen. They 
are doing the best that they can to make sure that they do that 
fairly. They have asked for your advice and counsel.
    In fact, they put out that notice because they wanted you 
to give them ideas of how it would affect your business, how it 
might be done better, how it might be less intrusive, and how 
you could both agree with the goal of making sure there is no 
discrimination in the way that is most efficient for you. And 
you have submitted your suggestions for that.
    Ms. Horvitz. I have. I really hope they take our 
suggestions into account if they finalize the rule.
    Mr. Tierney. Well, let's wait and see.
    But, Mr. Chairman, until they do that maybe we could have 
fewer preemptive hearings and let the agency do its job and the 
companies make their case, and then if something goes awry we 
can come in and take the committee's time. I yield back. Thank 
you.
    Chairman Roe. Mr. Scott?
    Mr. Scott. Thank you, Mr. Chairman.
    Ms. Graves, can you explain how you can guarantee 
nondiscrimination in employment if you don't have regulations?
    Ms. Graves. I think you have hit the nail on the head. It 
is one thing to have a ban on discrimination or a promise for 
equal opportunity, but you need enforcement.
    And I just want to give one example where it really matters 
around pay discrimination. You know, there is a huge veil of 
secrecy around pay discrimination, and many employers have 
either firm policies or unwritten policies that you can't even 
talk about your own wages.
    So you mentioned--Congressman Tierney mentioned Lilly 
Ledbetter. She worked for almost 20 years without knowing that 
she was experiencing pay discrimination.
    So without the OFCCP's ability to do a systemic evaluation 
of pay practices wage disparities and wage discrimination could 
go on for many, many years without individuals in the workplace 
being able to do anything about it.
    Mr. Scott. And what about if discrimination is going on in 
employment--say racial discrimination--how would anybody know 
it if you don't keep the records that are being requested?
    Ms. Graves. That is precisely right. I mean, the complaints 
that have been heard today have essentially been about the 
requirement for record-keeping and the requirement to do 
outreach. And if a company is taking really great steps to do 
the sort of outreach and they are ensuring that they aren't 
discriminating, you know, I am not sure what OFCCP is supposed 
to do to evaluate the sort of disparities if they don't have 
records, and I am not sure how a company is supposed to take 
the sort of equal opportunity steps if it doesn't do outreach.
    Mr. Scott. Well, the numbers alone are not sufficient to 
prove discrimination. Is that right?
    Ms. Graves. That is right.
    Mr. Scott. And so if there is discrimination going on and 
you have got obviously disparate numbers, how would you show--
Well,if they are not discriminating and have disparate numbers 
they would have to show that they at least tried--good faith 
effort. Is that right?
    Ms. Graves. You know, there is no hard quota or anything 
like that, to be sure, but I mean, I just want to say, in terms 
of the record-keeping that is required, it gives a company the 
opportunity to show, ``This is what we have been doing. These 
are the steps that we have taken and here is our response to 
your concerns.''
    So, you know, an audit may take an additional piece of 
time, but if an employer is undertaking the type of self-
evaluation that it is required to take in some areas and it is 
tracking its steps it will be able to demonstrate, ``Well, you 
know what, you know, here is why there are significant 
disparities and here is what we do.'' And OFCCP could give some 
additional advice there about some additional things they could 
do to increase their talent pool.
    Mr. Scott. You have indicated that a lot of times people 
don't know they are being discriminated against. If we had to 
wait for people to bring individual cases of discrimination 
what would be wrong with that?
    Ms. Graves. We would never get at the problem. I mean, 
that, you know--the EOC's charges have increased, particularly 
during this economic downturn, but I will tell you that that is 
just a drop in the bucket in terms of the type of 
discrimination that is out there because when you are having to 
wait for an individual to undertake the burden of filing a 
discrimination charge, risking retaliation, standing alone in 
that type of instance, that takes a particular type of person. 
Most discrimination is going to go unchecked and unaddressed 
without the sort of systemic enforcement that OFCCP can do.
    Mr. Scott. And if we don't do this in government contracts 
what chance would there be that the culture would change?
    Ms. Graves. It just wouldn't happen. And I think in 
government contracts in particular, the privilege of being a 
government contractor, the role of the government contractor 
really needs to reflect the society's nondiscriminational 
norms, and it is a process and OFCCP's proposals, I believe, 
are a way to move forward with that process.
    Mr. Scott. Thank you, Mr. Chairman.
    Chairman Roe. Thank the gentleman for yielding.
    Dr. Holt?
    Mr. Holt. Thank you. Thank you, Mr. Chairman.
    I thank the witnesses.
    Ms. Horvitz, do you agree that there are instances of those 
things that you want to prevent--instances of employment 
discrimination based on sex, based on disability, based on 
returning veteran status, and so forth?
    Ms. Horvitz. I suppose there probably are some instances 
out there.
    Mr. Holt. Okay.
    Mr. Norris, you said at one point--kind of my paraphrase--
what you are really asking is to let companies do their work, 
or leave them to their own devices to solve these problems. How 
would you rephrase what I just----
    Mr. Norris. That is partially correct.
    Mr. Holt. Okay.
    Mr. Norris. What I am saying is the enforcement agency has 
responsibilities to enforce the laws that it administers. It 
has to provide standards by which it is going to do that--
legally, statistically defensible standards. And once those 
standards are issued then contractors have an obligation to try 
to exercise good faith efforts to try and accomplish those 
obligations.
    We are not saying that there should not be any oversight of 
a company's affirmative action and nondiscrimination 
requirements. What we are saying is that those are actually 
shared goals that federal contractors and OFCCP have and the 
contractor community and the OFCCP should be working together 
to devise methods by which they can accomplish that objective 
of matching people with jobs.
    Mr. Holt. So, Ms. Bottenfield, I think I heard you say--not 
a--I won't go back to read the record--have the record read--
but it was essentially, if we do a good job in outreach, if you 
have some sort of outreach program for science--STEM education, 
or whatever, OFCCP would then say, ``But what about this 
instance of discrimination?''
    Ms. Bottenfield. Yes.
    Mr. Holt. I have----
    Ms. Bottenfield. Yes. That is the analysis that is 
considered--it is called adverse----
    Mr. Holt. Now, I am sure St. Jude's Hospital is very well 
intentioned, but don't you think there are institutions where 
there are, indeed, instances of discrimination?
    Ms. Bottenfield. I am sure there are.
    Mr. Holt. Well, you know, I am trying to get a sense of 
just how widespread this is. I mean, we hear, for example, that 
women are earning 77 cents on the dollar compared to men. We 
have some state breakdowns of median earnings for full-time, 
year-round workers by sex and state, and, you know, it is--I 
see the lowest here appears to be Wyoming at 63.8 percent; the 
highest is the District of Columbia at 91.4 percent.
    It would be really good if we had good--really good data 
about how much discrimination there is.
    Ms. Goss Graves, is there anything different about the 
District of Columbia, why that number might be higher?
    Ms. Graves. You know, it is hard to say. Part of it could 
be the role of the federal government as an employer in the----
    Mr. Holt. Yes. Let me offer that as a suggestion. The 
contractors here and the employers here in--are more the 
federal government than they are in North Dakota, Wyoming, the 
other states, where women evidently are not doing quite so 
well.
    So, you know, I understand my colleague, Mr. Tierney's, 
frustration with holding this hearing prematurely. I would 
argue a little differently, that I think it is not that the 
hearing is premature, but the witnesses' testimony is directed 
toward the wrong thing.
    It shouldn't be, how can we get the government out of our 
hair? But it should be directed toward, what do we need to 
understand? How will we get the data that we need? What record-
keeping must be done so that we have the data so that we can 
deal with what are very real problems and actually solve those 
problems?
    There is very real discrimination out there, and relying on 
the good faith of good employers evidently, looking over 
decades of data, is not good enough. It requires record-
keeping. Otherwise we won't know what is going on. We won't 
know how bad the problem is or how we are going to solve it.
    That is the role that we have given to the OFCCP and I hope 
that that will be the focus of this and any future hearings. 
Thank you.
    Chairman Roe. I thank the gentleman for yielding.
    I will now ask some questions and submit for the record--
and I don't for 1 minute think the Obama White House is doing 
this on purpose, it is just what it is. But the 2011 annual 
report of White House staff, female employees earned a median 
salary of $60,000, which is about 18 percent less than the 
median salary for male employees.
    Now, I don't think they intentionally did that but that is 
a fact, and so I would like to submit that to the record and 
also submit to the record for the pay discrimination, and 
obviously discrimination of any kind is wrong. I want to bring 
up something from my 30-something years as an employer and just 
ask your advice about this. We had a decision on the Florida 
hospital case where the OFCCP's issuance of the Directive 293 
and the National Defense Authorization Act that was passed this 
year contained a provision clarifying that health care 
providers operating as a part of TRICARE network may not be 
considered a federal contractor or subcontractor, and they did 
that.
    So that means if I take--in my medical practice, if I take 
a TRICARE patient maybe I now have to comply with all these 
directives that OFCCP did. Here is the problem I have: I am an 
OB/GYN doctor. I have never had anybody in my office as an 
employee in 35 years but a female. We have half of our medical 
practice now are female; my office manager has always been a 
female. Am I, in that office, doing reverse discrimination?
    And because of this, now, if I am--if this applies to me 
the simplest thing for me to do as a practitioner is to get out 
of TRICARE, quit seeing people who have served this nation, as 
I have--I am the--I think I am the only Vietnam veteran sitting 
here--and what should I do?
    And the second question I have--and I would like Ms. 
Horvitz, let me give you a chance to answer that. Am I involved 
in reverse discrimination?
    Ms. Horvitz. No, Mr. Chairman. I don't think you are 
involved in reverse discrimination when you have hired 
qualified physicians who happen to be female if they are the 
most qualified people who applied for that opportunity.
    The problem that contractors have, however, is that when 
they offer opportunities they are going to place an 
advertisement. Chances are you are going to field a pool of 
candidates and the most important thing that you have to keep 
in mind is you have to hire the most qualified person for the 
job.
    But a federal government contractor has to do something 
different. We are supposed to collect information on race and 
gender and then hide it from the decision-makers, go ahead and 
make our decision, and then marry all the data to make sure 
that the information we collected but didn't use as part of our 
decision-making reveals at the end of the day that we didn't 
discriminate in employment. That is a very difficult burden to 
impose on even small businesses--small medical practices who 
may be part of larger institutions.
    Chairman Roe. And, Ms. Bottenfield, one of the concerns I 
have also is that the 450 pages and however much money you--and 
then 250 pages of your auditor, and then--and what was the 
result of your 2009 audit? What happened after all that year, 
almost, that went by?
    Ms. Bottenfield. We had a full-day on-site visit from our 
auditors. It was expected that that would continue forth over a 
number of weeks but when we presented our data and actually did 
a tour of our facilities and explained how St. Jude was really 
different than the sorts of organizations they typically audit, 
which are logistics firms and construction firms in the Memphis 
City area, they ultimately took our data and said, ``Thank you, 
goodbye.''
    Chairman Roe. Well, thank goodness, because all of that 
effort you put in did not go to taking care of childhood 
cancers and research and the people down there that have done 
it. It took away from that, and that bothers me.
    The other thing that bothered me was I think you put in 
your testimony you were paying $4,000-plus per day for 
training, plus expenses for people to come in, because you do 
have turnover in your----
    Ms. Bottenfield. Yes.
    Chairman Roe [continuing]. In your shop. Is that correct?
    Ms. Bottenfield. Yes. We feel it is imperative that they 
are trained and understand the regulations they need to comply 
with.
    Chairman Roe. There needs to be. And just one other entry 
into the record, and I am sure Mr. Kucinich did not realize 
this about the Chamber, but in March of 2011 the Chamber 
launched a program called Hiring our Heroes, which is a 
nationwide effort to hire veterans like myself and military 
spouses for employment, and they had 100--in the last 12 months 
140 hiring fairs in 47 states and the District and have placed 
over 10,000 veterans in jobs. So that was a good thing.
    I think what we are trying to do is no one here is saying, 
``Do you want discrimination?'' That is like saying, ``Do you 
still beat your wife?'' Nobody wants that. And that is a loaded 
question.
    What you want is you want a situation where employers can 
meet these criteria and not be buried in paperwork or not, like 
me, just get out of TRICARE--create a situation where you just 
fold your hands up and say, ``We are done.'' Is that 
reasonable, what I have just said?
    Mr. Norris?
    Mr. Norris. Yes it is. It is absolutely reasonable.
    Ms. Graves. And, Chairman Roe, may I respond to the TRICARE 
question, too?
    Chairman Roe. Yes. Ms. Graves?
    Ms. Graves. I just wanted to point out in the example you 
gave that the OFCCP affirmative action obligations and many of 
the record-keeping pieces that we have discussed here today 
don't apply to all contractors, it is contractors with 
employee--50 or more employees and contracts of $50,000 or 
more----
    Chairman Roe. I have 50 employees in my office; I have 350. 
And also, I don't know whether we have that--I know we do that 
in Medicare and they are trying--this OFCCP is trying to get 
into Medicare Part D, Medicare Part C, and so it is a slippery 
slope for me to be on to know if I am compliant.
    Ms. Graves. And if I could just raise one more point, it is 
my understanding that the Florida hospital litigation is on--is 
continuing as there will be an assessment about what this new 
law means.
    Chairman Roe. Thank you.
    I see no other witnesses--I mean no other congressmen here, 
so I will ask Mr. Kucinich if he has any closing--and I want to 
thank the panel, too--and if you have any closing remarks?
    Mr. Kucinich. I do, Mr. Chairman, and I want to thank you 
very much for calling this hearing. I note your remarks about 
the Chamber of Commerce. That is good. They are encouraging 
veterans to be hired, and all they have to do is go a step 
further and say, let's make sure that it is done in a way the 
veterans' rights are never going to be compromised, that there 
are a lot of veterans out there that need jobs. Let's follow 
equal employment opportunity laws, and in addition to that to 
look at the proposals that are under review by this 
subcommittee today.
    One of the things that, as I am hearing this discussion, 
that concerns me is there seems to be an undercurrent on the 
part of some of the people who are testifying that promotes 
this type of thinking: How can we get the federal government 
out of federal contracting requirements? You can't. It is a 
privilege, as Ms. Graves said, to have a federal contract.
    No business is owed a federal contract. We are not talking 
about private businesses dealing with each other here; we are 
talking about private businesses dealing with the federal 
government. Federal government has every right to put these 
requirements on here for the protection of minorities, women, 
veterans, protecting against any gender-based discrimination.
    So thank you, Ms. Graves, for pointing out that it is a 
privilege to have a federal contract, and I think that if we 
are going to--those businesses who are having difficulty 
dealing with the federal government should keep in mind that it 
is a privilege to have a federal contract.
    Thank you, Mr. Chairman.
    Chairman Roe. I thank Mr. Kucinich.
    And I want to thank the panel. I read all of your testimony 
end to end--a little tedious for some of it for a doctor to be 
reading it, but I did read it all. It was very informative, and 
what I believe, obviously, the goal should be is to reduce and 
eliminate discrimination as--if it is possible in this country 
to do that without the onerous obligations of the federal 
government to stymie business. I think that is what--it is a 
delicate balance, and it is hard to do.
    And I look at my 30-plus years in my business that I have 
run and trying to jump through all these hoops. One of the 
things that you may not be doing, as Ms. Horvitz pointed out is 
that you may be a subcontractor and may not be involved at all 
but be involved by not--through no action of your own. I think 
we need to clarify those things for subcontractors so that they 
are not there.
    And certainly when you look at a--and I cannot say enough 
good things about St. Jude's Hospital because you have changed 
so many lives of people that I have seen--babies I have 
delivered that have these terrible childhood cancers, and 
anything that gets in the way of your mission should be--and 
fortunately, the OFCCP saw that when they go down there, that 
is 3,700 employees, that you are making a good faith effort in 
providing a nondiscriminatory environment and the highest 
quality of care in the world for our citizens and for people 
around the world.
    So I think that is what we are trying to do here and that 
is what the mission of this would be. I thank you all for being 
here and I thank both sides for this, and I think we will 
continue this discussion.
    Meeting adjourned.
    [Additional submissions of Chairman Roe follow:]

                                                    April 17, 2012.
Hon. Phil Roe, Chairman; Hon. Robert Andrews, Ranking Member,
Subcommittee on Health, Employment, Labor and Pensions, Committee on 
        Education and the Workforce, 2181 Rayburn House Office 
        Building, U.S. House of Representatives, Washington, DC 20515
    Dear Chairman Roe and Ranking Member Andrews: On behalf of 
Associated Builders and Contractors (ABC), a national association with 
74 chapters representing 22,000 merit shop construction and 
construction-related firms, I am writing in regard to the subcommittee 
hearing, ``Reviewing the Impact of the Office of Federal Contract 
Compliance Programs' (OFCCP) Regulatory and Enforcement Actions.''
    ABC supports OFCCP's mission to address employment discrimination 
against individuals with disabilities. However, ABC has serious 
concerns regarding a recent proposed rulemaking designed to update 
existing requirements for federal contractors and subcontractors under 
Section 503 of the Rehabilitation Act of 1973. OFCCP itself has 
referred to the proposal as a ``sea change.''
    The December 2011 notice of proposed rulemaking (NPRM), drafted 
under questionable statutory authority, mandates arbitrary quotas 
(referred to by the agency as ``goals'') for the hiring of disabled 
workers by all contractors with a government contract or subcontract of 
$50,000 or more and 50 or more employees. To date, OFCCP has failed to 
compile any meaningful evidence to indicate federal contractors are 
currently failing to meet their affirmative action and 
nondiscrimination obligations toward the disabled community. In 
addition, OFCCP minimized, and in some instances ignored, the 
regulatory burdens the NRPM would impose on contractors, particularly 
small businesses--more than 20,000 of which currently contract with the 
federal government.
    ABC is deeply concerned about each of the failures identified 
above.However, our greatest concern is that OFCCP failed to analyze or 
justify the draconian impact of its proposal on the construction 
industry, and has not acknowledged or explained the inconsistencies 
between the NPRM and OFCCP's longstanding differentiation of the 
construction industry from other industries with regard to affirmative 
action requirements. Our industry has long been exempted from being 
forced to engage in job group utilization analyses, data collection and 
reporting--all of which will be required if the proposal is finalized.
    ABC has requested OFCCP withdraw its proposal immediately so the 
agency can address the many concerns outlined in this letter (and 
described in greater detail in our formal comments, which are 
attached). It is our hope that this hearing will also highlight these 
concerns.
    We commend the subcommittee for its attention to this issue, and 
look forward to its continued oversight of this important rulemaking.
                                             Geoffrey Burr,
                                   Vice President, Federal Affairs.
                       via electronic submission
                                                 February 21, 2012.
Patricia A. Shiu, Director,
Office of Federal Contract Compliance Programs, U.S. Department of 
        Labor, 200 Constitution Avenue, NW, Room C-3325 Washington, DC 
        20210.
Debra A. Carr, Director,
Division of Policy, Planning and Program Development, Office of Federal 
        Contract Compliance Programs, U.S. Department of Labor, 200 
        Constitution Avenue, NW, Room C-3325 Washington, DC 20210.
Re: Affirmative Action and Nondiscrimination Obligations of Contractors 
    and Subcontractors Regarding Individuals with Disabilities (RIN 
    1250--AA02)

    Dear Directors Shiu and Carr: Associated Builders and Contractors, 
Inc. (ABC) submits the following comments in response to the above-
referenced notice of proposed rulemaking (NPRM), published in the 
Federal Register by the U.S. Department of Labor's Office of Federal 
Contract Compliance Programs (OFCCP, or Department) on Dec. 9, 2011, at 
76 Fed. Reg. 77056.
About Associated Builders and Contractors, Inc.
    ABC is a national construction industry trade association 
representing 22,000 contractors, subcontractors, materials suppliers 
and construction-related firms within a network of 74 chapters 
throughout the United States. ABC member contractors employ workers 
whose training and experience span all of the more than 20 skilled 
trades that comprise the construction industry. Moreover, the vast 
majority of our contractor members are classified as small businesses. 
ABC's membership is bound by a shared commitment to the merit shop 
philosophy. This philosophy is based on the principles of 
nondiscrimination due to labor affiliation and the awarding of 
construction contracts through open, competitive bidding based on 
safety, quality and value. This process assures taxpayers and consumers 
will receive the most for their construction dollar.
    ABC is submitting these comments to make the Department aware of 
the adverse impact the NPRM will have on the construction industry and 
to request immediate withdrawal or modification of the proposal to 
maintain consistency with the Department's historic recognition of the 
unique employment features of the construction industry. Also, ABC 
seconds the comments of other organizations that represent government 
contractors generally, and small business contractors in particular, 
whose burdens the Department has failed to acknowledge or properly 
analyze.
ABC's Comments in Response to OFCCP's NPRM
    ABC strongly supports OFCCP's longstanding regulatory goal of 
affirmative action and nondiscrimination regarding individuals with 
disabilities under Section 503 of the Rehabilitation Act. Of equal 
importance, however, is the longstanding recognition by the Department 
that the construction industry is different in many ways from other 
industries that contract with the government. ABC is concerned the NPRM 
fails to recognize the uniquely burdensome impact of the proposed data 
collection and reporting requirements on the construction industry and 
fails to acknowledge or explain the inconsistency between the proposed 
rule and OFCCP's longstanding differentiation of the construction 
industry from other industries with regard to affirmative action 
requirements.
    As stated in OFCCP's own guide with regard to Executive Order 
11246, ``in order to take into account the fluid and temporary nature 
of the construction workforce, OFCCP does not require construction 
contractors to develop written affirmative action programs.'' \1\ In 
particular, unlike the requirements of job group utilization analyses 
the Department has required of other industries under Executive Order 
11246 for minorities and women, OFCCP has long recognized the 
collection and reporting of utilization data in such detail would be a 
wasteful and futile exercise for construction contractors, whose 
workforces ebb and flow much more frequently than other types of 
government contractors. Therefore, in lieu of extensive data analysis 
and reporting, OFCCP for decades has maintained a special set of 
regulations for the construction industry enumerating more practical 
good faith steps that covered construction contractors must take in 
order to increase their employment of minorities and women in the 
skilled trades.\2\
    Unlike Executive Order 11246, construction contractors have not 
been specifically exempted from the provisions of Section 503 of the 
Rehabilitation Act of 1973, as implemented in 41 C.F.R. Part 60-741. 
Until now, this did not place an onerous burden on construction 
contractors because the provisions of Section 503 and OFCCP's 
implementing regulations did not mirror the job group utilization 
analyses and related data collection efforts required under Executive 
Order 11246 for non-construction contractors. Instead, prior to the 
NPRM, OFCCP regulations under Section 503 focused exclusively on good 
faith affirmative action efforts similar in scope to those already 
applicable to the construction industry under Executive Order 11246. 
Thus, no requirement exists under the current Section 503 regulations 
for any contractor to undertake burdensome job group utilization 
analyses of disabled workers, to document or report the reasonable 
accommodations offered to such workers, or to meet any arbitrarily 
selected target goal for the number of disabled workers hired into the 
workplace.
    All of that is about to change under the Department's NPRM. 
Notwithstanding the absence of any statutory authority under Section 
503 itself, OFCCP is proposing to mandate arbitrary target quotas for 
the hiring of disabled workers by all contractors with a government 
contract or subcontract of $50,000 or more and 50 or more employees--a 
threshold that will impact more than 20,000 small businesses in all 
industries that currently contract with the federal government. In the 
Department's own words, this is a ``sea change'' in the Department's 
affirmative action regulations.\3\
    Not only has OFCCP failed to identify any statutory authorization 
for its radical new approach, but the Department has failed to compile 
any statistical or other evidence that federal contractors are failing 
to meet their affirmative action obligations towards the disabled 
community.\4\ Instead, the preamble to the NPRM relies exclusively on 
statistics purporting to show higher unemployment of workers with 
disabilities in the workforce as a whole, without any assessment of the 
employment rate of disabled vs. nondisabled workers employed by 
government contractors.\5\ In short, OFCCP has collected no data on 
which to support the premise that government contractors' affirmative 
action efforts are failing to meet their objectives. Under such 
circumstances, no justification exists for the Department's drastic 
changes to the affirmative action requirements of federal contractors 
generally.
    Even worse, OFCCP has ignored or unfairly minimized the regulatory 
burdens that the NRPM will impose on government contractors, 
particularly small business contractors. The Department has thereby 
acted in a manner inconsistent with the congressional mandate that 
federal agencies should encourage and give preference to small and 
disadvantaged businesses in procurement of government contracts, as set 
forth in the Small Business Act.\6\
    ABC is deeply concerned about each of the failures identified above 
as they appear in the NPRM. But ABC's greatest concern is that OFCCP 
has apparently failed to notice, and has certainly failed to analyze or 
justify, the draconian impact of its proposal on the construction 
industry. In particular, as further discussed below, the NPRM gives no 
attention at all to the historical reasons why the construction 
industry has been exempted from being forced to engage in the sort of 
wasteful and fruitless job group utilization analysis and other data 
collection and reporting that will now be required if the proposal is 
finalized.
            1. The NPRM Ignores the Unique Aspects of Construction 
                    Industry Employment, Contradicting Decades of 
                    Regulation by OFCCP
    As noted above, OFCCP has for many decades recognized the unique 
employment challenges facing construction contractors, resulting in a 
separate set of regulations governing construction contractors' 
affirmative action requirements.\7\ While these unique regulations have 
traditionally applied only in the context of minorities and women, as 
opposed to disabled workers, the reasons underlying the longstanding 
differentiation between construction contractors and other industries 
apply with even greater force to the proposal. Specifically, the fluid 
and temporary nature of employment in the construction industry renders 
most forms of job category utilization analysis futile and wasteful. 
Given that OFCCP has repeatedly recognized this fact with regard to the 
employment of minorities and women, it makes no sense for the 
Department to suddenly require construction contractors to engage in 
the much more difficult analysis of the utilization of disabled 
workers. It is obvious the analysis called for in the NPRM will be much 
more difficult for employment of disabled workers than minorities and 
women because of the need to make numerous difficult judgments 
regarding reasonable accommodations, undue hardships and direct threats 
to safety, none of which are necessary in analyzing the employment of 
minorities and women. The Department gives no attention to these 
proposed new burdens on the construction industry in the proposal.
    The Department should also be aware that the construction industry 
is one of the most physically demanding and hazardous industries, which 
renders many of the assumptions underlying the NPRM irrelevant and 
incorrect. For example, in support of the need for strengthening the 
affirmative action rules, the Department cites the fact that employment 
rate disparities continue to persist in the entire workforce ``despite 
years of technological advancements that have made it possible to apply 
for and perform many jobs from remote locations, and to read, write, 
and communicate in an abundance of ways.'' \8\ Yet the overwhelming 
majority of construction work cannot be performed anywhere except the 
jobsite, so the ability to perform other types of jobs from remote 
locations is of little or no value to the construction industry. Even 
the ability to read, write and communicate through technological 
advances, while somewhat more helpful to construction workers, is often 
not the primary consideration in determining whether a disabled 
individual is able to perform the essential elements of a construction 
job requiring physical and hazardous labor, with or without reasonable 
accommodation.
    The point is not that construction contractors should be entitled 
to shirk their duty to take affirmative steps to recruit and 
accommodate disabled workers when such accommodations do not create 
undue hardships or direct threats to health and safety on construction 
sites. Rather, the point is that a ``one size fits all industries'' 
rule, such as the one being proposed by the Department, is arbitrary 
and capricious because it fails to take into account the very real 
differences between industries and the unique challenges confronting 
construction contractors in particular. Again, there has been no 
showing by the Department that construction contractors have 
significantly failed to meet the affirmative action requirements of 
Section 503 on government projects that would call for imposition of 
the additional burdens by the NPRM.
    Chief among the additional burdens, as noted above, is the 
requirement that all government contractors above a minimal size 
(contracts of $50,000 or more and 50 or more employees) must perform a 
job group utilization analysis for disabled workers comparable to, and 
even more extensive than, the analysis required for non-construction 
industries regarding minorities and women. What is most striking about 
the NPRM in this regard is the assumption that all industries already 
routinely engage in such analysis.\9,10\ In other words, the drafters 
of the proposal appear to have forgotten that construction contractors 
have never been required to perform such analyses as to minorities and 
women under Executive Order 11246, so the newly proposed analysis will 
be a drastic and burdensome change.
    The 7 percent target goal arbitrarily adopted for all industries by 
the Department is flawed on many levels; but limiting our focus to 
construction, OFCCP erroneously assumes contractors will use their 
``existing job groups'' for analysis, a shortcut not available to 
construction contractors who have not previously been required to 
conduct such analyses under Executive Order 11246. Even worse is the 2 
percent sub-goal that the Department is considering. OFCCP offers no 
consideration as to how construction contractors can safely target 
workers, except in rare circumstances, who suffer from total deafness, 
blindness, paralysis, epilepsy and severe intellectual disability, to 
name only a few of the severe disabilities referenced in the NPRM. 
Again, a one-size-fits-all approach makes no sense for the construction 
industry and must be withdrawn as arbitrary and capricious.
            2. OFCCP's Initial Analysis Under the Regulatory 
                    Flexibility Act (RFA) is Deeply Flawed
    The RFA requires all agencies conducting rulemakings to ``prepare 
and make available for public comment an initial regulatory flexibility 
analysis,'' which ``shall describe the impact of the proposed rule on 
small entities.'' \11\ As part of its analysis, the agency is required 
to consider other significant alternatives to the rule that could 
affect the impact on small entities, and explain any rejection of such 
alternatives in its final regulatory flexibility analysis.\12\ The sole 
relevant exception to this requirement arises if ``the head of the 
agency certifies that the rule will not, if promulgated, have a 
significant economic impact on a substantial number of small 
entities.'' \13\
    The agency must provide a factual basis for its certification, the 
determination of which is subject to judicial review for correctness 
under a non-deferential standard.\14\
    Reports from ABC members and our knowledge of the construction 
industry lead ABC to respectfully submit that OFCCP has significantly 
understated the costs of compliance with its proposal. The time for 
compliance with the paperwork burdens (repeatedly cited by the 
Department as taking anywhere from five minutes to 30 minutes) has been 
understated by several decimal points. In other words, ABC is reliably 
informed by its members that the time spent on training managers; 
interacting with applicants about the self-identification process; 
analyzing, documenting, and reporting on the number of disabled 
individuals recruited, hired and laid off; and the time spent 
analyzing, documenting, and reporting the reasonable accommodations, 
undue hardships and direct threats to safety are more likely to take 
hundreds, if not thousands, of hours. Most small contractors will be 
unable to perform the analysis required at all, and will no doubt 
instead be compelled to turn to outside consultants at significant 
additional costs in order to comply. OFCCP's erroneous cost estimates 
must be entirely reconsidered and the NPRM withdrawn for further study 
in order to determine the unique impact it will have on the 
construction industry and on small federal contractors generally.
    For each of the reasons set forth above and in the comments of 
other organizations representing construction contractors and small 
businesses generally, the NPRM should be withdrawn, or significantly 
modified and republished for public comment.
    Thank you for the opportunity to submit comments on this matter.
                                endnotes
    \1\ OFCCP, Technical Assistance Guide for Federal Construction 
Contractors, May 2009.
    \2\ See 41 C.F.R. 60-4.
    \3\ Bureau of National Affairs (BNA), OFCCP Proposal Includes 
`Utilization' Goal for Contractors Employing Disabled Workers, Dec. 8, 
2011.
    \4\ 76 Fed. Reg. at 77074: ``DOL is not aware of any existing data 
that show the number or percentage of federal contractor employees with 
disabilities. * * *''
    \5\ 76 Fed. Reg. at 77069.
    \6\ 15 U.S.C. 637(d).
    \7\ 41 C.F.R. Part 60-4.
    \8\ 76 Fed. Reg. at 77056.
    \9\ 76 Fed. Reg. at 77067: ``Although measurements specific to 
disability are new requirements of this proposed regulation, the non-
disability-specific data, such as the total number of applicants, the 
total number of job openings, and the number of jobs filled is 
information that contractors are already required to maintain pursuant 
to Executive Order 11246. * * *''
    \10\ See also 76 Fed. Reg. at 77075: ``OFCCP expects that 
contractors will conduct this assessment in conjunction with the 
correlating assessments required under [Executive Order] 11246. * * *''
    \11\ 5 U.S.C. Sec.  603(a).
    \12\ Id. at Sec.  604. A ``significant regulatory alternative'' is 
defined as one that: 1) reduces the burden on small entities; 2) is 
feasible; and 3) meets the agency's underlying objectives. See A Guide 
for Government Agencies, How to Comply with the Regulatory Flexibility 
Act, SBA Office of Advocacy, June 2010, p. 73-75 (available at http://
www.sba.gov/advo/laws/rfaguide.pdf).
    \13\ Id. at Sec.  605(b).
    \14\ North Carolina Fisheries Association v. Daley, 27 F. Supp. 2d 
650 (E.D. Va. 1988); Aeronautical Repair Station Assn, Inc. v. FAA, 449 
F. 3d 161, 175-177 (D.C. Cir. 2007), reversing agency certification of 
lack of impact on small entities.
                                 ______
                                 
                                                    April 18, 2012.
Hon. David P. Roe, Chairman,
Subcommittee on Health, Employment, Labor, and Pensions, Committee on 
        Education and the Workforce, U.S. House of Representatives 
        Washington, DC 20515.
    Dear Chairman Roe: We are writing on behalf of the U.S. Chamber of 
Commerce (Chamber), the world's largest business federation 
representing the interests of more than three million businesses and 
organizations of every size, sector, and region, in advance of the 
Subcommittee's hearing scheduled for April 18, 2012, entitled Reviewing 
the Impact of the Office of Federal Contract Compliance Programs' 
Regulatory and Enforcement Actions. The purpose of this letter is to 
provide you with a summary of our members concerns regarding the 
agency's regulatory and enforcement agenda.
    At the outset, we wish to thank you for holding a hearing on this 
important subject. The laws and Executive Orders that the Office of 
Federal Contract Compliance Programs (OFCCP) implements and enforces 
are very important. They and the regulations implementing them are also 
very detailed and technical, requiring an investment of significant 
time and resources to fully understand. We wish to express our 
appreciation for the Subcommittee making OFCCP oversight a priority. We 
look forward to working with you and other members of the Subcommittee 
on these issues in the coming months.
    In this letter, we present the concerns of our members first with 
OFCCP enforcement. We then turn to a summary of our concerns with the 
OFCCP's very active regulatory and sub-regulatory agenda. We wish to 
emphasize that it is not our intent in this letter to debate the merits 
of any Executive Order or law that the OFCCP is charged with 
implementing and enforcing. Instead, these comments focus on the manner 
in which the OFCCP is carrying out its responsibilities under these 
laws and Executive Orders.
OFCCP Enforcement
    No discussion of OFCCP enforcement can begin without first 
understanding the tremendous leverage that OFCCP has over federal 
contractors stemming from the OFCCP's authority to cancel or terminate 
a particular government contract and the OFCCP's authority to debar a 
contractor from future opportunities.\1\ The threat of such a penalty 
is so severe that it creates a powerful incentive for contractors to 
settle any dispute with OFCCP no matter how frivolous an allegation may 
be or how egregiously agency staff has acted. While sophisticated 
contractors may push back against OFCCP allegations, few are willing to 
go through all of the Administrative reviews and seek protection of 
their rights in court because even a small risk of debarment is 
unacceptable no matter how good the contractor's case.
    Given the tremendous leverage that debarment and these other severe 
sanctions give the OFCCP, it is all the more important that enforcement 
be reasonable and undertaken only after careful and thoughtful analysis 
has been conducted. Unfortunately, it appears that all too often the 
OFCCP is failing to acquit itself in such a manner.
    It should also be emphasized that enforcement tactics can be 
difficult to summarize in a letter such as this. Many concerns seem 
outrageous on their face. Others might not seem egregious standing 
alone, but repeated time and again or combined with other abuses, 
become more serious. The following summarizes a handful of examples of 
enforcement abuses that we have heard from our members over the last 
year:
     OFCCP staff telling a contractor that it was welcome to 
bring a matter before an administrative law judge, ``but the judge 
works for us.''
     Agency staff using strong arm tactics in employee 
interviews to get the answers they want to hear.
     Employers passing an audit and then investigators 
returning and re-opening the investigation until they can find a 
violation.
     OFCCP might have an issue with a handful of job groups or 
titles, but will demand information on all job groups or titles.
     OFCCP is not interested in discussing narrowing the scope 
of its information requests. Rather than data on problem areas, OFCCP 
wants data on everyone.
     Agency staff telling employers ``we can ask for anything 
we want.''
     Sitting on data for years without closing cases.
     Using substandard interpreters while interviewing 
employees who do not speak English.
     OFCCP looks at large data sets and cherry picks to allege 
violations, such as using arbitrary timelines or combinations of 
protected classes.
     Blind adherence to statistics, such as assuming any 
numerical disparity more than two standard deviations must be 
attributable to discrimination and ignoring the fact that any large 
data set will produce some number of statistical disparities.
     Not understanding other laws or regulations that constrain 
employers may be responsible for disparities, such as the relation of 
payments to physicians to schedules set by the Center for Medicare and 
Medicaid Services.
    These examples are just a few reported to us by our membership 
recently. Some of these examples come from contractors who by any 
measure would be considered among the most progressive and compliant 
employers in the nation. As you may understand, most contractors and 
subcontractors are not willing to discuss these concerns publicly for 
fear of retaliation. Consequently, we urge you to continue the 
Committee's oversight of OFCCP enforcement with this in mind, perhaps 
by utilizing the General Accounting Office, or another route that 
provides strong confidentiality for contractors and subcontractors who 
may be interviewed.
OFCCP Regulatory and Sub-Regulatory Agenda
    The OFCCP has an incredibly aggressive regulatory and sub-
regulatory agenda. While a comprehensive review of these matters is 
beyond the scope of these comments, the following identifies several of 
the OFCCP's most controversial policy initiatives, a summary, and, 
where available, links for further information.
OFCCP Jurisdiction
    OFCCP has continued to push its interpretation of its jurisdiction 
to the limits of credibility, earning it a sharp rebuke from Congress. 
Nevertheless, rather than recognize its overreach, the agency has 
pledged to fight for greater jurisdiction.
    The OFCCP has jurisdiction over virtually all federal contractors 
and subcontractors. However, the issue of whether an employer is a 
contractor or subcontractor is not as straightforward as it otherwise 
might seem. While OFCCP has always maintained a broad view of its 
jurisdiction, we have seen the agency take an even broader view in 
recent years with perhaps the highest profile example being treatment 
of certain hospitals.
    For example, OFCCP Directive No. 262 limited jurisdiction over 
hospitals that had contracted with an insurer who, it turn, contracted 
with the federal government under the Federal Employees Health Benefits 
Plan (FEHBP).\2\ Now, the OFCCP has rescinded Directive 262 \3\ and is 
litigating a high profile case to try to establish jurisdiction over a 
hospital as a FEHBP subcontractor.\4\ Compounding challenges for the 
hospital is the fact that its contracts with the insurer were 
established before the insurer ever contracted with the federal 
government.\5\
    In a similarly high profile case, OFCCP has sought jurisdiction 
over hospitals that have contracted with insurers under TRICARE.\6\ 
This case is particularly egregious because the Department of Defense 
specifically stated that the payments to hospitals were federal 
financial assistance (and thus not a subcontract). Nevertheless, OFCCP 
argued that its determination was controlling, not that of the 
Department of Defense.\7\
    Responding to this case, Congress stepped in and adopted language 
as part of the National Defense Authorization Act stating that such 
arrangements to provide care under TRICARE do not confer jurisdiction 
as covered subcontractors.\8\ Rather than accept this rebuke, OFCCP 
condemned the legislation, which was signed into law by the president, 
and vowed that ``this isn't over yet.'' \9\ It is disturbing that even 
in light of a Congressional rebuke the OFCCP would continue to assert 
such broad jurisdiction.
Compensation, Data Collection, and Analysis
    Through three separate but related initiatives, the OFCCP has 
proposed doing away with what little transparency exists in how the 
agency will assess whether systemic compensation has occurred. It is 
also embarking on an effort to collect massive amounts of individually 
identifiable pay and benefits data without adequate privacy protections 
and without even a scintilla of evidence of wrongdoing.
    The OFCCP has at least three separate initiatives that raise 
significant concerns among contractors related to the agency's approach 
toward data collection and analysis, specifically compensation data.
            1. Rescinding Guidelines for Determining Systemic 
                    Compensation Discrimination.\10\
    On January 3, 2011, the OFCCP published a notice proposing to 
rescind guidance issued during the last administration related to 
systemic compensation discrimination. The existing guidance makes it 
clear that the OFCCP will not use the debunked pay-banding method (or 
the so-called DuBray method) of determining whether discrimination may 
have occurred, but will instead use more robust and accurate 
methodologies such as multivariable regression. It also issued 
voluntary guidelines for self-evaluation.
    OFCCP now plans to abandon these guidelines without replacing them, 
which could mean that the OFCCP will return to using debunked 
statistical analysis as it pursues compensation discrimination claims. 
The Chamber filed comments on this proposal on March 4, 2011:

     http://www.uschamber.com/issues/comments/2011/comments-ofccp-
                    rescissioncompensation-guidance

            2. New Compensation Data Collection Tool.\11\
    On August 10, 2011, the OFCCP published an advanced notice of 
proposed rulemaking to develop a replacement for the EO survey to 
implement Executive Order 11246. This is highly controversial since the 
EO survey required extensive time for contractors to complete and 
produced no useful data for enforcement, as verified by a third party 
review of the program. The ANPRM solicits comments from the public on 
15 separate questions. Perhaps most alarming, the agency in one of 
their questions has raised the possibility that businesses bidding on 
future Federal contracts will need to submit compensation data as part 
of the Request for Proposal process. OFCCP has also stated their 
intentions to use this type of compensation data for research, such as 
analyzing industry trends. On October 11, 2011, the Chamber submitted 
comments seeking withdrawal of the regulation.
    Chamber comments filed Oct. 11, 2011:

      http://www.uschamber.com/issues/comments/2011/comments-non-
   discriminationcompensation-compensation-data-collection-tool-adva

            3. Modification of the ``scheduling letter and itemized 
                    listing.'' \12\
    On May 12, 2011, the OFCCP published a notice, which seeks to make 
significant changes to the ``scheduling letter'' and ``itemized 
listing'' that it uses at an initial stages of a compliance evaluation. 
On July 11, 2011, the Chamber submitted comments sharply critical of 
some of the proposed changes, in particular, the creation of a new 
government database of private compensation information, the burdens 
that would be imposed by the new recordkeeping and reporting 
obligations, and the invasion of privacy and threat to proprietary and 
confidential information. On September 28, 2011, the OFCCP sent a final 
version of the letter and itemized listing to OMB. The Chamber 
submitted comments on October 28, 2011.
    Chamber comments filed July 11, 2012:

    http://www.uschamber.com/issues/comments/2011/comments-proposed-
         extensionapproval-information-collection-requirements

    Chamber comments filed Oct. 28, 2011:

    http://www.uschamber.com/issues/comments/2011/comments-proposed-
  extensionapproval-information-collection-requirements%E2%80%94non-co

New Tremendously Burdensome Affirmative Action Regulations
    The proposed revisions to affirmative action regulations that OFCCP 
has made are heavy on paperwork and recordkeeping requirements and have 
grossly underestimated the costs of compliance. In addition, there are 
many new proposals that seem impracticable at best. It is within the 
OFCCP's power to strengthen these regulations through an approach that 
would increase employment for protected veterans and individuals with 
disabilities by consensus without imposing such dramatic costs for 
programs of questionable utility.
    Among the two most burdensome initiatives proposed by the OFCCP so 
far are revisions of affirmative action and non-discrimination 
regulations that apply with respect to protected veterans and 
individuals with disabilities. We wish to emphasize that these 
requirements were enacted pursuant to laws that the Chamber supports. 
Our criticism of revisions to the regulations should not be interpreted 
as criticisms of these laws. While we appreciate that the OFCCP may 
believe that the existing regulations may not have operated 
effectively, the approach taken by the OFCCP in its proposals would be 
tremendously burdensome. We strongly believe that a consensus approach 
could be found to both sets of regulations and we renew our call for 
OFCCP to engage stakeholders to sit down and work through the many 
difficult issues to arrive at a shared goal.
            1. Federal Contractor Affirmative Action Obligations under 
                    the Vietnam Era Veterans Readjustment and 
                    Assistance Act
    On April 26, 2011, OFCCP issued a proposed rule that seeks to 
strengthen affirmative action requirements by requiring federal 
contractors to conduct more substantive analyses of recruitment and 
placement actions under the Vietnam Era Veterans Readjustment 
Assistance Act (VEVRAA, as amended) and the use of numerical targets to 
measure effectiveness. The proposal also imposes vast new recordkeeping 
and other burdens on contractors and subcontractors. The Chamber filed 
comments, in conjunction with other employer associations, on July 11, 
2011, emphasizing the significant new burdens that would be imposed on 
contractors should the rule be implemented, and offered alternative and 
less burdensome mechanisms to achieve the shared goal of increasing 
employment opportunities for our nation's veterans.
    The coalition comments may be accessed here:

 http://www.uschamber.com/issues/comments/2011/coalition-full-comments-
         affirmative-actionand-nondiscrimination-obligations-co

            2. Federal Contractor Affirmative Action Obligations under 
                    the Rehabilitation Act
    On December 9, 2011, OFCCP published a notice of proposed 
rulemaking significantly altering the regulations implementing Section 
503 of the Rehabilitation Act. If implemented, the proposal would 
establish a utilization goal for hiring individuals with disabilities 
for every job group. The proposal also would require contractors to ask 
every applicant for employment to self-identify as an individual with a 
disability upon application as well as later in the hiring process. It 
would also require contractors to survey their entire workforce each 
year to ascertain disability status. The proposal further would 
establish numerous new paperwork burdens, such as tracking every 
reasonable accommodation request, no matter how informal. The Chamber, 
in conjunction with other associations, conducted a survey of about 100 
federal contractors and estimated that the costs of the regulation are, 
at a minimum, $2 billion per year. The Chamber submitted comments on 
February 21, 2012.
    The comments may be accessed here:

     http://www.uschamber.com/sites/default/files/comments/120221--
                            503Comments.pdf

Conclusion
    We wish to thank you for taking the time to hold this important 
hearing on OFCCP oversight. These comments only begin to summarize the 
very great concern that we have with the OFCCP's enforcement and policy 
agenda. We look forward to working with you as you continue to examine 
these important issues. Please do not hesitate to contact us if we may 
be of assistance in this matter.
            Sincerely,
                 Michael J. Eastman, Senior Vice President,
  Executive Director, Labor, Immigration & Employee Benefits Labor 
                                                        Law Policy.
                                endnotes
    \1\ See, e.g., Exec. Order No. 11246, Sec. 209(a)(6).
    \2\ Mar 17, 2003.
    \3\ OFCCP Directive No. 293 (Dec. 16, 2010).
    \4\ OFCCP v. UPMC Braddock, ARB Case No. 08-048 (May 29, 2009).
    \5\ Ralph Lindeman, Hospitals Wage Legal Battle with OFCCP: 
Hospitals Claim High-Stakes Controversy, DAILY LABOR REPORT (BNA)(Feb. 
17, 2011).
    \6\ OFCCP v. Florida Hospital of Orlando, ALJ Case No. 2009-OFC-
00002 (Oct. 18, 2010).
    \7\ See Ralph Lindeman, Hospitals Wage Legal Battle with OFCCP: 
Hospitals Claim High-Stakes Controversy, DAILY LABOR REPORT (BNA)(Feb. 
17, 2011).
    \8\ Pub.L. 112-81, Sec. 715.
    \9\ Jay-Anne B. Casuga, Shiu Says OFCCP Will Assess Its Policies In 
Light of Subcontractor Provision in NDAA, DAILY LABOR REPORT (BNA)(Dec. 
21, 2011).
    \10\ Interpretive Standards for Systemic Compensation 
Discrimination and Voluntary Guidelines for Self-Evaluation of 
Compensation Practices Under Executive Order 11246; Notice of Proposed 
Rescission, 76 Fed. Reg. 62 (Jan. 3, 2011).
    \11\ Non-Discrimination in Compensation; Compensation Data 
Collection Tool, Advanced Notice of Proposed Rulemaking, 76 Fed. Reg. 
49,398 (Aug. 10, 2011).
    \12\ Agency Information Collection Activities; Submission for OMB 
Review; Comment Request; Office of Federal Contract Compliance Programs 
Recordkeeping and Reporting Requirements--Supply and Service, Notice, 
76 Fed. Reg. 60,083 (Sept. 28, 2011).
                                 ______
                                 
                                                    April 17, 2012.
Hon. David P. Roe, Chairman,
Subcommittee on Health, Employment, Labor, and Pensions, Committee on 
        Education and the Workforce, U.S. House of Representatives 
        Washington, DC 20515.
    Dear Chairman Roe: HR Policy Association is writing to commend you 
for holding the hearing, ``Reviewing the Impact of the Office of 
Federal Contract Compliance Programs' Regulatory and Enforcement 
Actions,'' to examine the Department of Labor's (DOL's or Department's) 
Office of Federal Contracts Compliance Programs (OFCCP). Though the 
OFCCP is not widely known, its operations have wide-reaching effects as 
their policies have been estimated to cover 25 percent of the 
workforce.
    While HR Policy is concerned in general with reports from our 
members about the OFCCP's aggressive enforcement of its rules, our 
members are most concerned specifically with OFCCP's December 9, 2011 
Notice of Proposed Rulemaking (NPRM) revising the regulations 
implementing the non-discrimination and affirmative action regulations 
of section 503 of the Rehabilitation Act of 1973. We strongly believe 
that this proposal, on its own, merits a close examination by your 
Subcommittee with an additional hearing.
    As you know, our association has a long-standing commitment to the 
development of a workable and effective federal policy regarding the 
employment of individuals with disabilities. Because of that 
commitment, the last time Congress addressed federal workplace 
disability policy, we were actively engaged in the enactment of the 
Americans with Disabilities Act Amendments Act of 2008 (ADAAA). The 
final bill was largely a result of negotiations between the business 
community and the disability and civil rights groups, in which HR 
Policy played a critical role. We believe this process formed a 
valuable template for formulating federal workplace disability policy--
an approach that is being abandoned with the NPRM.
    The Section 503 NPRM would, for the first time, set a goal that 
seven percent of every job group in a contractors' workforce be filled 
with individuals with disabilities. The proposed rules would apply to a 
contractor's entire workforce regardless of the percentage of the 
company that is devoted to the federal contract. The difficulty in 
achieving this goal is underscored by the fact that the federal 
government as well as most agencies (including the Department of Labor) 
fall short of the proposed goal on a workforce-wide basis, not to 
mention in each job group. In addition, the Department is, like most 
federal agencies, unable to meet the federal government's goal of 
filling two percent of its workforce with individuals with ``targeted'' 
disabilities.
    Given the OFCCP's own description of the aggressive enforcement it 
would apply to the new rules, most federal contractors, to avoid the 
threat of debarment, would have to treat the goals as, in effect, a 
quota system, even though the federal courts have ruled that quotas are 
illegal. The NPRM also fails to explain how employers can achieve these 
goals if they are not hiring new employees. Would current employees 
have to be displaced in order to hire individuals with disabilities?
    Further, the proposal requires employers to ask each job applicant 
if he or she has a disability, even though employers are prohibited 
under federal law. In addition to violating a specific prohibition in 
the Americans with Disabilities Act, this requirement raises 
substantial privacy issues and contravenes sound human resource 
practices by shifting the focus of a job applicant's abilities that 
would match the employer's needs to a focus on the disabilities of 
employees and applicants.
    Finally, the NPRM deliberately kept the cost estimates below the 
$100 million threshold to avoid triggering additional procedural 
hurdles for regulations that are considered ``economically 
significant.'' The estimate was kept lower by ignoring major new 
requirements that would be imposed on contractors. Factoring these in, 
we estimate that compliance will cost $1.8 billion annually.
    Given that OFCCP has put this proposal on a fast track to be 
finalized this year, we believe it is critical that your Subcommittee 
review this proposal carefully. Thus, HR Policy urges you to consider 
holding a hearing specifically to examine this NPRM. Thank you for your 
consideration and we respectfully request that this letter be included 
in the record of the hearing.
            Sincerely,
            Daniel V. Yager, President and General Counsel,
                                             HR Policy Association.
                                 ______
                                 
                                                    April 17, 2012.
Hon. Phil Roe, M.D., Chairman,
Subcommittee on Health, Employment, Labor and Pensions, U.S. House of 
        Representatives, Washington, DC 20515.
    Dear Chairman Roe: Thank you for holding the April 18, 2012 hearing 
reviewing the impact of recent regulatory and enforcement actions taken 
by the U.S. Department of Labor's Office of Federal Contract Compliance 
Programs (OFCCP). On behalf of the Society for Human Resource 
Management (SHRM) and the College and University Professional 
Association for Human Resources (CUPA-HR), we write to express concern 
with OFCCP's recent flurry of activity.
    As you know, OFCCP is responsible for enforcing affirmative action 
and equal employment opportunity laws for employers that do business 
with the Federal government. Both SHRM and CUPA-HR are supportive of 
the affirmative action goals articulated by the executive orders and 
laws administered by OFCCP and the underlying goals of recent OFCCP 
rulemakings.
    However, we are very concerned that the recent regulatory and 
enforcement initiatives will not achieve our shared objective of 
increased employment opportunities for protected classes as the agency 
has not provided accurate and reliable methods for compiling the data 
necessary to implement its proposed requirements. At the same time, the 
recent regulatory actions impose requirements for federal contractors 
that conflict with other statutes, intrude on employee privacy, and set 
unrealistic objectives and impose unnecessary and burdensome paperwork 
requirements.
    In the past 18 months, OFCCP has issued the following regulations:
     January 3, 2011--notice of proposed rescission of its 
systemic compensation discrimination standards and self-audit 
guidelines for evaluating pay practices for federal contractors and 
subcontractors under Executive Order 11246 (See CUPA-SHRM comments: 
http://www.shrm.org / Advocacy / PublicPolicyStatusReports / Courts-
Regulations / Documents / 3 % 204 % 2011 % 20OFCCP % 20comments % 20on 
% 20rescission % 20of % 20comp % 20guidance % 20stds % 20 % 
20FINAL.pdf)
     April 26, 2011--notice of proposed rulemaking under the 
Veterans' Readjustment Assistance Act overhauling the federal 
contractor affirmative action program requirements for covered veterans 
(See CUPA-SHRM comments: http://www.shrm.org / Advocacy / 
PublicPolicyStatusReports / Courts-Regulations / Documents / 7 % 2011 % 
2011 % 20Protected % 20Veterans % 20Comments % 20FINAL.pdf)
     August 10, 2011--advanced notice of proposed rulemaking 
soliciting comments on development of a compensation data collection 
tool (See CUPA-SHRM comments: http://www.shrm.org / Advocacy / 
PublicPolicyStatusReports / Courts-Regulations / Documents / 
20111011155702497.pdf)
     September 29, 2011--formal request to the Office of 
Management and Budget to review and approve a significant revision of 
the information they routinely request on Scheduling Letters and 
Itemized Listings from federal contractors (See CUPA-SHRM comments: 
http://www.shrm.org / Advocacy / PublicPolicyStatusReports / Courts-
Regulations / Documents / Oct % 2028 % 20CUPA-HR % 20and % 20SHRM % 
20Scheduling % 20Letter % 20comment.pdf)
     December 9, 2011--notice of proposed rulemaking amending 
the regulations implementing Section 503 of the Rehabilitation Act of 
1973 revising nondiscrimination and affirmative action employment 
requirements for individual with disabilities for all federal 
contractors (See CUPA-SHRM comments: http://www.shrm.org / Advocacy / 
PublicPolicyStatusReports / Courts-Regulations / Documents / SHRM % 
20comments % 20to % 20OFCCP % 20on % 20Changes % 20to % 20Affirmative % 
20Action % 20Requirements % 20forIndividuals % 20with % 20Disabilities 
% 20- % 202.21.2012.pdf)
    We have filed detailed comments on all of these regulatory actions 
reflecting our concerns (links listed above). These comments are 
attached and we respectfully request they be included in the official 
hearing record. In addition to the above actions, we understand OFCCP 
is currently developing five regulatory proposals that may lead to even 
greater administrative burdens on employers.
    Mr. Chairman, thank you for your consideration of our concerns with 
OFCCP's significant changes to its regulatory and enforcement policies. 
We look forward to working with you on these issues.
            Sincerely,
     Michael P. Aitken, Vice President, Government Affairs,
                             Society for Human Resource Management;
          Joshua Ulman, Chief Government Relations Officer,
         College and University Professional Association for Human 
                                                         Resources.
                                 ______
                                 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 
                                 ______

    [Additional submission of Mr. Miller follows:]

  Prepared Statement of Patricia A. Shiu, Director, Office of Federal 
         Contract Compliance Programs, U.S. Department of Labor

    Chairman Roe, Ranking Member Andrews, and Members of the 
Subcommittee, thank you for holding this important hearing. As the 
Director of the Office of Federal Contract Compliance Programs 
(``OFCCP'') at the Department of Labor (``Department''), I am pleased 
to provide this Statement for the Record on the impact of OFCCP's 
regulatory and enforcement actions. OFCCP is a worker protection 
agency, responsible for enforcing the civil rights of nearly one-
quarter of American workers. The mission of OFCCP's more than 700 
dedicated staff is to protect workers, promote diversity, and enforce 
the nation's equal employment opportunity laws in federal contractors' 
and subcontractors' workforces. OFCCP has jurisdiction over 170,000-
plus establishments that profit from over $700 billion in government 
contracts annually. These companies are held to the fair and reasonable 
standard that discrimination must never be a factor in their hiring, 
promotion, termination, compensation, and other employment decisions. 
With jurisdiction over so many employees and companies, the work OFCCP 
does to level the playing field has a ripple effect across the entire 
labor market.
    The thoughtful testimony given by the witnesses and insightful 
questions posed by the Members of the Subcommittee at its hearing on 
April 18, 2012, revealed the positive effect that OFCCP's work has on 
the lives of thousands of women, minorities, individuals with 
disabilities, and protected veterans. Much of what was said is also 
reflected in the thousands of comments we received on OFCCP's recent 
regulatory proposals. OFCCP remains committed to reviewing and 
considering any and all feedback that will help achieve the shared goal 
that was repeated by several participants in the hearing: to combat 
discrimination and ensure equal employment opportunity in a manner that 
is efficient, effective, measurable, consistent with the law, and fair.
Background on OFCCP
    OFCCP has long been a pillar of the federal government's civil 
rights enforcement and enforces, for the benefit of job seekers and 
wage earners, the contractual promise of equal employment opportunity 
(both nondiscrimination and affirmative action) required of those who 
do business with the federal government. OFCCP administers and enforces 
three legal authorities that require equal employment opportunity: 1) 
Executive Order 11246, as amended (``the Order'' or ``EO 11246''); 2) 
Section 503 of the Rehabilitation Act of 1973, as amended, 29 USC Sec. 
793 (``Section 503''); and 3) the Vietnam Veterans' Readjustment 
Assistance Act of 1974, as amended, 38 U.S.C. 4212 (``VEVRAA'').
    The Executive Order prohibits federal contractors and federally-
assisted construction contractors and subcontractors (hereafter, 
``contractors'') who have contracts of at least $10,000 with the 
federal government from discriminating in employment on the basis of 
race, color, religion, sex, or national origin. Among other things, 
this includes discrimination in rates of pay or other forms of 
compensation. For contractors with 50 or more employees and a contract 
of at least $50,000, the Executive Order also requires contractors to 
take affirmative action to ensure that equal opportunity is provided in 
all aspects of their employment.
    Section 503 protects the employment rights of individuals with 
disabilities. It covers persons with a wide range of mental and 
physical impairments that substantially limit or restrict a major life 
activity such as hearing, seeing, speaking, walking, breathing, 
performing manual tasks, caring for oneself, learning, or working. Like 
the Executive Order, Section 503 requires federal contractors with 
Government contracts of at least $50,000 and 50 employees to take 
affirmative action to employ and advance in employment these 
individuals.
    VEVRAA sets forth the requirements for nondiscrimination against 
veterans by federal contractors. Section 4212(a) (1) prohibits federal 
contractors from discriminating against specified categories of 
veterans and requires contractors to take affirmative action to employ, 
and advance in employment, those veterans. Federal contractors with a 
contract of at least $100,000 and 50 or more employees are required to 
take affirmative action to employ and advance in employment protected 
veterans.
    Taken together, these laws ban discrimination and require federal 
contractors to take affirmative action to ensure that all individuals 
have an equal opportunity for employment, without regard to race, 
color, religion, sex, national origin, disability or status as a 
protected veteran. Under all three laws, contractors must develop 
written programs detailing the actions that they are taking for this 
purpose and make the plans available when requested in a compliance 
evaluation or complaint investigation.
    Over the past few years, OFCCP has focused on three priorities:
     strengthening enforcement activities,
     broadening outreach to agency stakeholders, and
     implementing an ambitious agenda of regulatory reform.
Enforcement
    OFCCP is one of three federal agencies protecting the civil rights 
of employees, the other two being the Equal Employment Opportunity 
Commission and the Civil Rights Division of the U.S. Department of 
Justice. But OFCCP is unique in that it conducts in-depth compliance 
evaluations of about 4,000 contractor establishments each year, 
according to a neutral selection and scheduling system. These are 
scheduled reviews, not triggered by specific complaints. While OFCCP 
does investigate complaints, the majority of its work consists of 
compliance evaluations, during which compliance officers check to make 
sure that contractors are meeting their legal obligations to provide 
equal opportunity for all of their workers.
    OFCCP's compliance reviews are particularly important because too 
often, workers are unaware of the discrimination they face. Job seekers 
who don't get an offer, employees who are being paid less than 
colleagues doing similar work, workers who are downsized in a bad 
economy--they may not know if the underlying cause is discrimination, 
because they do not have the necessary information. But federal 
contractors have specific obligations when it comes to record-keeping 
and data collection, including maintaining information about listed job 
openings; worker recruitment methods; selections of interviewees for 
openings; and decisions about hiring, terminations, placement, pay, and 
promotions. Contractors are required to share those records with OFCCP 
during audits, and OFCCP is able to analyze that data and determine if 
there are indicators of discrimination. If so, OFCCP does a more in-
depth investigation to see if the contractor treats protected groups 
differently or follows practices that create an unjustified adverse 
impact on job seekers or workers.
    Under this Administration, OFCCP has undertaken a concerted effort 
to shift toward more thorough, careful and consistent compliance 
reviews, toward higher quality--not just quantity--of evaluations. In 
2010, OFCCP provided the first national training for its compliance 
officers in more than a decade. Also in 2010, it updated its 
enforcement and evaluation protocols to improve the way compliance 
evaluations are conducted--with more thorough desk audits, more 
frequent on-site investigations, more flexibility in defining classes 
of victims, and more reviews focused on specific types of 
discrimination. Now, OFCCP investigates all types of discrimination--
not just hiring, but also compensation, placement, promotion, 
termination, harassment, retaliation, and other conditions of 
employment; every protected group, including women, minorities, people 
with disabilities, and protected veterans; and every industry and job 
group. Notably, these changes have been accomplished while maintaining 
the overall level of compliance evaluations conducted at approximately 
4,000 per year.
    One important example of these changes is that OFCCP now reviews 
compliance with Sections 503 and VEVRAA in every evaluation in which a 
contractor meets minimum coverage requirements. Previously, the agency 
audited for Section 503 and VEVRAA compliance in only in a few focused 
reviews each year, which meant that very few violations of those laws 
were ever uncovered. Now that OFCCP routinely reviews Section 503 and 
VEVRAA compliance, the proportions of evaluations in which violations 
are found have significantly increased: for Section 503, the proportion 
rose from three percent in FY 2005 to 21 percent in FY 2011; for 
VEVRAA, from five percent in FY 2005 to 25 percent in FY 2011. The vast 
majority of these are violations such as failure to have an Affirmative 
Action Program, failure to post job listings as required, failure to do 
outreach, and recordkeeping violations.
    The increased thoroughness of OFCCP's compliance reviews is 
revealed by several other performance statistics as well:
     The proportion of compliance evaluations in which some 
kind of violation--including discrimination as well as violations such 
as failure to have an Affirmative Action Program (AAP), failure to list 
job openings as required, failure to do outreach, and recordkeeping 
violations--rose dramatically, from 13 percent in FY 2007 to 38 percent 
in FY 2011.
     In FY 2011, the number of cases closed with financial 
remedies was at its highest point since at least FY 2005.
     The amount of back pay and interest collected in FY 2011--
$12.3 million--was at its highest point since at least FY 2005.
     The average back pay and interest per eligible worker in 
FY 2011--$842--was at its highest point since at least FY 2005.
    One statistic that has remained constant is that the vast majority 
of reviews in which violations were found--99 percent--are resolved by 
conciliation agreement or consent decree. Extremely few cases go to 
litigation, and voluntary compliance is always OFCCP's goal. That said, 
OFCCP will litigate if necessary, and, for the worst offenders, will 
seek debarment of federal contracts.
Focus On Compensation Discrimination
    Despite passage of the Equal Pay Act of 1963, which requires that 
men and women in the same workplace be given equal pay for equal work, 
and of the Civil Rights Act of 1964, which prohibits compensation 
discrimination more generally, the ``gender gap'' in pay persists. On 
average, women, who work full-time, still earn only about 77 cents for 
every dollar a man earns. The gap is even larger for African American 
women, who earn about 64 cents, and Hispanic women who earn about 56 
cents for each dollar that white males earn. Over a woman's lifetime, 
this wage gap adds up and grows over time. By age 65, the cumulative 
gap in earnings can be hundreds of thousands of dollars.
    Decades of research shows that the ``gender gap'' in pay remains 
even after factors like the kind of work people perform and 
qualifications, such as education and experience, are taken into 
account. Many studies address how much these factors explain why women 
earn less than men. They consistently conclude that a pay gap still 
remains and that discrimination is the best explanation for the 
difference. Research also shows that progress towards closing the pay 
gap has stalled. In other words, pay discrimination is a real and 
persistent problem that continues to shortchange American women and 
their families.
    As a member of the President's Equal Pay Task Force, OFCCP has made 
combating pay discrimination a major priority. On the enforcement side, 
about 20 percent of OFCCP's financial settlements addressed 
compensation issues in FY 2011--a significant increase over prior 
years. In fact, the 28 conciliation agreements with financial remedies 
in compensation cases in FY 2011 were greater than the number of such 
conciliation agreements in FYs 2006 through 2009 combined.
    OFCCP's equal compensation enforcement efforts have made real 
differences in the lives of many workers. For example, in June of 2011, 
OFCCP settled a lawsuit against AstraZeneca, alleging that the 
pharmaceutical company discriminated in compensation at its 
Philadelphia Business Center in Wayne, Pennsylvania. OFCCP determined 
that 124 female sales specialists were paid, on average, $1,700 less 
than their male counterparts. Under the terms of the settlement 
agreement, the company agreed to pay $250,000 to the women who were 
discriminated against, to adjust salaries accordingly going forward, 
and to work with OFCCP to re-examine its pay practices at facilities 
across the country. AstraZeneca also agreed to develop and annually 
update its affirmative action plan and keep all supporting 
documentation as required by law.
Outreach to Stakeholders
    Through its outreach efforts, OFCCP seeks to ensure input from 
stakeholders as it develops policies that are both practical and 
effective. Outreach is also undertaken to make sure that workers 
understand OFCCP is available as their resource. At both the national 
and local levels, OFCCP proactively reaches out to community-based 
groups, veterans' service organizations, labor unions, employer 
associations, civil rights leaders, contractors, subcontractors, and 
the workers directly affected by its protections. OFCCP's leadership 
has made it a priority to meet with groups that are directly affected 
by its program, and has had numerous and productive conversations with 
some of the organizations that testified at the hearing.
    In FY 2011, OFCCP hosted more than 1,800 outreach events where more 
than 61,000 stakeholders were engaged. Of these events, nearly 1,000 
compliance assistance events provided contractors with the tools to 
understand and comply with the laws it enforces. More than a third of 
those compliance assistance events were directed specifically at small 
businesses and first-time federal contractors.
Regulatory Proposals
    Over the last three years, OFCCP has recovered nearly $35 million 
in back wages and interest on behalf of over 70,000 workers affected by 
discrimination. It has audited more than 12,000 businesses which employ 
almost 7 million workers. While these are major accomplishments, 
workplace discrimination against women, minorities, people with 
disabilities, and protected veterans is still a major problem. To 
increase the effectiveness of its efforts and those of contractors to 
eliminate such discrimination, OFCCP has recently issued several 
regulatory proposals, which were discussed at the Subcommittee's 
hearing.
Notice of Proposed Rulemaking to Strengthen Affirmative Action 
        Obligations With Respect to Employment Opportunities for People 
        with Disabilities under Section 503
    On December 9, 2011, OFCCP published a Notice of Proposed 
Rulemaking (NPRM) to strengthen affirmative action obligations with 
respect to employment opportunities for people with disabilities under 
Section 503. The NPRM details specific actions contractors must take in 
the areas of recruitment, training, record-keeping and policy 
dissemination--similar to those that have long been required to promote 
workplace equality for women and minorities. The proposed rule would 
establish, for the first time, a single, national utilization goal for 
individuals with disabilities: contractors would be required to set an 
aspirational goal of having 7 percent of their employees be workers 
with disabilities in each job group of the contractors' workforce. This 
aspirational goal is not a quota and failure to meet it would not be 
evidence of discrimination; rather, it will help contractors evaluate 
the effectiveness of their recruitment efforts towards workers with 
disabilities. The proposed rule also would improve collection of data 
on the employment of people with disabilities by requiring contractors 
to invite applicants to voluntarily self-identify as an ``individual 
with a disability'' at the pre-offer stage of the hiring process, to 
invite post-offer voluntary self-identification, and to survey all 
employees annually to invite their self-identification in an anonymous 
manner. Under the proposal, contractors would also, for the first time, 
develop and implement written procedures for processing requests for 
reasonable accommodation.
    At the Subcommittee's hearing on April 18, 2012, a concern was 
raised that the voluntary self-identification requirements in the 
Section 503 NPRM could be in conflict with the Americans with 
Disabilities Act. I would like to take a moment to address that 
concern. As the Preamble to OFCCP's proposed rule explains:
    The requirement to give applicants and employees the opportunity to 
self-identify is consistent with the ADA's restrictions on pre-
employment disability-related inquiries. Although the ADA generally 
prohibits inquiries about disability prior to an offer of employment, 
it does not prohibit the collection of this information by a contractor 
in furtherance of its section 503 affirmative action obligation to 
employ and advance in employment qualified individuals with 
disabilities. (Emphasis supplied.)
    In fact, in its regulations and guidance implementing the ADA, the 
EEOC specifically states that ``inviting individuals to identify 
themselves as individuals with disabilities * * * to satisfy the 
affirmative action requirements of section 503 of the Rehabilitation 
Act is not restricted'' by the ADA as long as individuals are given 
clear notice that their response to the invitation is voluntary, that 
refusal to provide a response will not subject the individual to any 
adverse treatment, and that the information will be kept confidential 
and used only for affirmative action purposes.\1\ In developing its 
proposed rule on Section 503, OFCCP worked in close partnership with 
officials at the EEOC to ensure that any regulatory changes are 
completely consistent with both the letter and the spirit of the ADA.
---------------------------------------------------------------------------
    \1\ Appendix to 29 CFR 1630.14(a); Enforcement Guidance on 
Disability-Related Inquiries and Medical Examinations of Employees 
Under the Americans With Disabilities Act, U.S. EQUAL EMP'T OPPORTUNITY 
COMM'N, Question 23 (July 7, 2000), http://eeoc.gov/policy/docs/
guidance-inquiries.html#10.
---------------------------------------------------------------------------
Notice of Proposed Rulemaking on Contractors' Obligations With Respect 
        to Employment Opportunities for Protected Veterans under VEVRAA
    OFCCP's VEVRAA regulations have remained unchanged, in large 
measure, since the implementing rules were first published in 1976. 
Meanwhile, increasing numbers of veterans are returning from tours of 
duty in Iraq, Afghanistan, and other places around the world, and many 
are faced with substantial obstacles in finding employment upon leaving 
the service. In fact, veterans who served on active duty since 
September 2001 face a higher rate of unemployment than nonveterans. On 
April 26, 2011, OFCCP proposed changes to the VEVRAA regulations that 
would improve the job opportunities for this group and ensure that the 
men and women who served our country are afforded their full rights and 
protections under VEVRAA.
    Specifically, the VEVRAA proposal would require contractors to 
record and maintain quantitative data on their recruitment and hiring 
of veterans and establish annual hiring benchmarks based on relevant 
information. Contractors would also have to evaluate the effectiveness 
of their efforts to ensure that protected veterans have access to 
employment opportunities.
Policies Regarding Compensation Discrimination
    With regard to compensation discrimination, OFCCP has several 
policy initiatives underway.
    First, on January 3, 2011, OFCCP proposed to rescind two policy 
documents that were adopted in 2006--``Interpretive Standards for 
Systemic Compensation Discrimination'' and ``Voluntary Guidelines for 
Self-Evaluation of Compensation Practices for Compliance With 
Nondiscrimination Requirements of Executive Order 11246''--because the 
Standards ``have limited [its] ability to effectively investigate, 
analyze and identify compensation discrimination'' and the Voluntary 
Guidelines ``have not been an effective enforcement strategy'' (76 Fed. 
Reg. 62 (January 3, 2011)).
    Second, on August 10, 2011, OFCCP published an Advanced Notice of 
Proposed Rulemaking (ANPRM) seeking comments on the possibility of 
systematically collecting compensation data with respect to gender, 
race and national origin from federal contractors and subcontractors, 
to strengthen its ability to identify and remedy compensation 
discrimination. The ANPRM posed 15 questions for public response on the 
types of data that should be requested, the scope of information OFCCP 
should seek, how the data should be collected, how the data should be 
used, what the tool should look like, which contractors should be 
required to submit compensation data, and whether the tool might create 
potential burdens for small businesses. By publishing this ANPRM, OFCCP 
proactively sought feedback on what a compensation data tool might look 
like.
Potential Impact on Contractors
    Finally, I would like to address some of the issues raised during 
the recent hearing. In particular, there was concern expressed that in 
recent years government contractors' obligations have become overly 
burdensome and would increase if the proposed regulations are 
finalized.
    I would like to assure the Members of the Subcommittee that in 
moving forward with all of OFCCP's regulatory initiatives and in 
developing a data compensation tool, OFCCP is diligently analyzing the 
impact that our proposals may have on contractors and the business 
community as a whole. By reviewing and considering any and all public 
comments on these proposals, OFCCP is ensuring that federal contractors 
and their representatives, as well as workers and their 
representatives, play a central role in its efforts.
    Many, if not all, of the concerns raised regarding OFCCP's 
regulatory proposals are being examined by OFCCP and were addressed in 
comments the agency received. For instance, some concerns were raised 
at the Subcommittee's hearing that the compensation data device was 
burdensome and costly. Yet there have been no decisions, and no device 
has been deployed--or even formally proposed. OFCCP is reviewing, 
considering and analyzing the more than 7,800 comments submitted from a 
broad range of stakeholders in response to the ANPRM. The issues and 
concerns raised during the hearing were reflected in these comments, 
and OFCCP will take them into account in developing any proposal for a 
compensation data tool.
    In addition, the guidance, training, webinars, and other forms of 
technical assistance that OFCCP provides informs contractors both about 
their obligations under the law and about the agency's regulatory and 
other policy proposals. OFCCP is committed to sharing information about 
our regulatory proposals to the extent it can do so within the law and 
to considering constructive feedback about the impact of such proposals 
on stakeholders, and will stay true to this commitment as its 
regulatory reform efforts go forward.
    The overall burden imposed by OFCCP compliance reviews is 
relatively small. As noted above, OFCCP conducts an average of 
approximately 4,000 compliance reviews a year--out of more than 170,000 
contractor establishments. Accordingly, each establishment has less 
than a 2.4 percent chance of being reviewed each year.
    Moreover, the total number of OFCCP's compliance evaluations has 
remained quite steady over the last six years. In FY 2011, OFCCP 
conducted 4,014 compliance evaluations. This total is very close to 
4,122, the average number of evaluations conducted per year in FY 2005 
through FY 2011, and, in fact, is the median number conducted for those 
years (the number conducted having been fewer in FYs 2005, 2006, and 
2009, and greater in FYs 2007, 2008, and 2010).
    The perspective provided at the hearing by the witness from St. 
Jude's Children's Research Hospital about her experience as an employee 
of a federal contractor who dealt with an OFCCP compliance evaluation 
was extremely informative. St. Jude's clearly takes its obligations as 
a federal contractor very seriously. In OFCCP's 2009 compliance review, 
St. Jude's successfully documented its compliance: after an exchange of 
data and a single day of on-site interviews, OFCCP compliance officers 
concluded the audit fully satisfied and with no finding of 
discrimination. The witness testified that approximately 400 employee 
hours were spent to respond to this audit. However, St. Jude's Hospital 
has 3,700 employees, and thus 400 employee hours is the equivalent of 
only 20 percent of one full-time employee's time per year.
    With regard to record-keeping obligations, the witness testified 
that about eight full time employees work on St. Jude's employee 
databases, which are used in OFCCP-related record-keeping. However not 
only is that is only 0.2 percent of St. Jude's staff, but most of that 
employee time would have to be expended on similar tasks even absent 
OFCCP, to manage employee records electronically for payroll, tax and 
accounting functions and compliance with other employment laws.
    The witness estimated the cost of preparing an Affirmative Action 
Program at $58,000, but that amount is approximately 0.01 percent of 
the total revenue of $589,885,089 that St. Jude's reported on its FY 
2010 tax return and a small proportion of the approximately $82 million 
that St. Jude's currently receives in federal contracts.
    Finally, the witness testified that St. Jude's took additional 
steps, such as running various statistical analyses on the data, which 
are not required by OFCCP. For the largest contractors, it costs 
approximately $8,000 per year to develop (in the first year) or to 
review and update (in subsequent years) an Affirmative Action Program. 
The additional measures that St. Jude's took while preparing its plan 
may well explain why the stated cost ($58,000) varies from the national 
estimate. More importantly, St. Jude's willingness to go beyond OFCCP's 
requirements illustrates how well-run organizations are aware of the 
value of keeping adequate records on personnel activity, compensation, 
diversity and affirmative action compliance.
    Some concern has been expressed that OFCCP has abandoned its tiered 
approach to compliance evaluations. That is not true, however. Pursuant 
to its settled practice, OFCCP continues to conduct desk audits on all 
scheduled compliance evaluations and generally conducts onsite visits 
only when the desk audits reveal some evidence of potential 
discrimination or concerns about data integrity.
    In some cases, OFCCP requests additional information during the 
desk audit phase of a compliance evaluation. This has been a long-
standing practice of OFCCP and has been upheld by the courts, which 
have found that contractors must provide the information requested 
because, as one United States District Court stated: ``submission to 
such lawful investigations is the price of working as a federal 
contractor.'' \2\ OFCCP has always verified and followed up on concerns 
presented in a contractor's Affirmative Action Plan or otherwise 
revealed in a desk audit, and will continue to do so.
---------------------------------------------------------------------------
    \2\ United Space Alliance, LLC v. Solis, Civil Action No. 11-746, 
2011 WL 5520428 (D.D.C. Nov. 14, 2011).
---------------------------------------------------------------------------
    Moreover, recordkeeping is essential to a contractor's success in 
increasing employment opportunities for minorities, women, protected 
veterans, and people with disabilities. The law requires employers to 
maintain and analyze their records not merely in anticipation of an 
OFCCP review, but also as a tool for self-evaluation, and to help 
employers proactively address challenges and opportunities when it 
comes to ensuring diversity in their workforce.
    It is a simple rule of business that what gets measured gets done. 
Any successful company relies on data every day to track its 
performance and identify where it can do better. OFCCP's recordkeeping 
requirements ensure that contractors have the data they need to measure 
their own performance in providing equal employment opportunity and to 
identify areas where they can do better. Businesses must be able to 
track their progress in hiring our nation's veterans or closing the pay 
gap for women just as they track sales, inventory, profits or any other 
critical measure of success.
    While there are limited costs associated with complying with 
OFCCP's regulations, being a federal contractor remains a privilege. 
Federal contractors receive millions--in some cases billions--of 
dollars in federal contracts. As these contractors continue to benefit 
from taxpayer dollars, so do we strive to ensure that they respect the 
civil rights and advance the opportunities of the taxpayers who are 
their employees.
Confidentiality
    Concerns were also expressed about the confidentiality of employee-
specific compensation data under the proposed regulations. OFCCP has 
always taken steps to protect the confidentiality of contractor data, 
and will continue to do so. Specifically, OFCCP treats compensation and 
other personnel information provided by the contractor during a 
systemic compensation investigation as confidential to the maximum 
extent the information is exempt from public disclosure under the 
Freedom of Information Act.
Transparency
    Some witnesses expressed concern that OFCCP has not been 
sufficiently transparent in the standards it uses to evaluate 
contractors' compliance. OFCCP is committed to transparency, and 
OFCCP's website reveals the extent to which the agency provides 
detailed information about its standards and procedures. An important 
element of these efforts is the Federal Contractor Compliance Manual 
that OFCCP staff use in compliance evaluations, which is publicly 
available at http://www.dol.gov/ofccp/regs/compliance/fccm/
fccmanul.htm. OFCCP is in the process of reviewing and updating the 
Compliance Manual; in the meantime, the current Manual remains in 
effect. Any interim changes to procedures in the Manual are made 
public, as appropriate, via Directives or other agency guidance.
    In addition, virtually all of OFCCP's directives are available to 
the public on the OFCCP website. OFCCP does maintain the 
confidentiality of a few directives that contain sensitive information 
involving its law enforcement protocols and internal policies. The use 
of such internal directives is not unique to OFCCP; nor is it a 
recently developed OFCCP practice.
    Finally, OFCCP spends thousands of hours each year providing free 
compliance assistance to any federal contractor or subcontractor that 
seeks clarity on the law. This service is free of charge (and without 
the possibility of any kind of adverse action toward contractors) and 
is offered via Webinars and trainings and forums at regional and field 
offices across the country, as well as in individual consultations.
    In sum, OFCCP is committed to providing transparency regarding any 
changes to existing guidance once that process is complete. And both 
before and after such changes may be made, the OFCCP staff stands able, 
willing and ready to provide any information, technical assistance or 
education that will enable contractors to understand their obligations 
under the law.
Conclusion
    Workers are our nation's greatest resource. The United States has 
the most talented, most innovative, and most hard-working people in the 
world, and they are the engine of our economic recovery. That is why 
the Department of Labor in general, and OFCCP in particular, are so 
singularly focused on making sure that American workers have the 
opportunities and working conditions that will allow them and their 
employers to flourish.
                                 ______
                                 
    [Additional submission of Mr. Norris follows:]
                                                    April 26, 2012.
Hon. Phil Roe, Chairman,
Subcommittee on Health, Employment, Labor and Pensions, Committee on 
        Education and the Workforce, U.S. House of Representatives, 
        2181 Rayburn House Office Building, Washington, DC 20515.
Re: OFCCP Oversight Hearing, April 18, 2012

    Dear Chairman Roe: At the April 18, 2012 Subcommittee hearing 
entitled, ``Reviewing the Impact of the Office of Federal Contract 
Compliance Programs' Regulatory and Enforcement Actions,'' you extended 
an invitation to the witnesses to supplement their testimony by 
inserting additional information into the hearing record.
    The testimony I provided on behalf of the Equal Employment Advisory 
Council (EEAC) questioned the accuracy of the economic impact analyses 
conducted by OFCCP in support of the five pending regulatory 
initiatives that were the focus of the hearing. I compared the economic 
impact estimates calculated by OFCCP with the considerably higher 
estimates provided by EEAC's member companies.
    The magnitude of the differences in these cost estimates could not 
be captured adequately in my oral or written testimony, but are 
compared in detail in the comment letters EEAC submitted to OFCCP on 
each of its pending regulatory proposals. Accordingly, I respectfully 
request that the following documents be included in the official 
hearing record:
     March 3, 2011 EEAC comment letter on OFCCP's proposal to 
rescind existing guidance on procedures and standards for investigating 
systemic compensation discrimination [76 Fed. Reg. 62 (January 3, 
2011)] http://www.eeac.org/public/11-046a.pdf
     July 11, 2012 EEAC comment letter on OFCCP's proposal to 
require numerical targets for veterans' employment and impose sweeping 
new obligations related to documenting the identification, recruitment 
and treatment of veterans [76 Fed. Reg. 23358 (April 26, 2011)] http://
www.eeac.org/public/11-133a.pdf
     October 11, 2011 EEAC comment letter on OFCCP's proposal 
to impose broad new compensation reporting requirements on contractors 
[76 Fed. Reg. 49398 (August 10, 2011)] http://www.eeac.org/public/11-
197a.pdf
     October 28, 2011 EEAC comment letter on OFCCP's proposal 
to seek permission from OMB to vastly expand the scope and amount of 
data requested of contractors at the outset of compliance evaluations 
[76 Fed. Reg. 60083 (September 28, 2011)] http://www.eeac.org/public/
11-206a.pdf
     February 21, 2012 EEAC comment letter on OFCCP's proposal 
to impose a 7% hiring goal for individuals with disabilities and impose 
sweeping new obligations related to documenting the identification, 
recruitment and treatment of individuals with disabilities [76 Fed. 
Reg. 77056 (December 9, 2011)]
    http://www.eeac.org/public/12-037a.pdf
    Thank you again for the invitation to testify at the April 18 
hearing, and please feel free to call upon us if we can be of 
additional assistance.
            Sincerely,
                              Jeffrey A. Norris, President,
                                 Equal Employment Advisory Council.
                                 ______
                                 
    [Questions submitted for the record and their responses 
follow:]

                                             U.S. Congress,
                                      Washington, DC, May 31, 2012.
Dana Bottenfield, Director of Human Resources Information Systems,
St. Jude Children's Research Hospital, 262 Danny Thomas Place, Memphis, 
        TN 38105.
    Dear Ms. Bottenfield: Thank you for testifying at the April 18, 
2012, Subcommittee on Health, Employment, Labor, and Pensions hearing 
entitled, ``Reviewing the Impact of the Office of Federal Contract 
Compliance Programs' Regulatory and Enforcement Actions.''
    Enclosed are additional questions submitted by subcommittee members 
following the hearing. Please provide written responses no later than 
June 14, 2012, for inclusion in the official hearing record. Responses 
should be sent to Benjamin Hoog of the committee staff, who may be 
contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the committee.
            Sincerely,
                                        Phil Roe, Chairman,
           Subcommittee on Health, Employment, Labor, and Pensions.
                   questions from representative roe
    1. Based on your experience complying with the Office of Federal 
Contract Compliance Programs' (OFCCP) regulatory requirements and 
audits, what suggestions do you have to improve the OFCCP compliance 
process?
    2. Based on your experience responding to OFCCP audits, do you have 
any concerns about the agency's pending proposal pertaining to 
individuals with disabilities, which would require contractors to set a 
``goal'' that 7 percent of all job groups be filled with individuals 
with disabilities, including a ``sub-goal'' of 2 percent for 
individuals with severe disabilities? In your experience, how has OFCCP 
enforced other such ``goals''?
    3. The Americans with Disabilities Act states that employers 
``shall not conduct a medical examination or make inquiries of a job 
applicant as to whether such applicant is an individual with a 
disability or as to the nature or severity of such disability'' prior 
to extending a job offer to an applicant. However, OFCCP's proposal 
pertaining to individuals with disabilities would require St. Jude and 
all federal contractors to make such inquiries. How would this 
requirement impact St. Jude's hiring process?
                                 ______
                                 

    Ms. Bottenfield's Response to Questions Submitted for the Record

    Below, please find responses from Dana Bottenfield, on behalf of 
St. Jude Children's Research Hospital, to additional questions from the 
House Committee on Education and Workforce's Subcommittee on Health 
Employment, Labor and Pensions. These questions are related to the 
subcommittee's April 18, 2012 hearing entitled, ``Reviewing the Impact 
of the Office of Federal Contract Compliance Programs' Regulatory and 
Enforcement Actions.''

    Q1: Based on your experience complying with the Office of Federal 
Contract Compliance Programs' (OFCCP's) regulatory requirements and 
audits, what suggestions do you have to improve the OFCCP compliance 
process?

    A: We have a number of suggestions to improve the OFCCP compliance 
process:
     The length of the OFCCP audit should be defined and 
adhered to. St. Jude is audited regularly by many agencies and 
accrediting organizations, including, but not limited to the Joint 
Commission, OSHA, CMS, FDA, PHS, CAP, USCIS and the State of Tennessee. 
OFCCP audits last months or years, while audits by the other agencies 
typically last days.
     The OFCCP should reinstate the practice that a full audit 
is not required unless a desk audit identifies serious issues.
     The OFCCP should focus on ``systemic'' rather 
``individual'' allegations of discrimination.
     The OFCCP should develop a realistic compensation standard 
to replace its current unrealistic standard. Currently, the OFCCP 
considers it an issue if there is a 2 percent average pay difference 
between men and women in a job title or 2 percent average pay 
difference between minorities and non-minorities in a job title. There 
are many drivers for pay, including differences in performance, special 
skills, years of experience prior to employment, level of education and 
myriad other pertinent factors. The tight standard does not recognize 
that pay can vary widely based upon these legitimate factors. The 
unfortunate result of the unrealistic compensation standard is 
meritless allegations of compensation issues that nevertheless must be 
defended.
     For organizations with a history of compliance, positive 
audit outcomes, and appropriate hiring efforts, the OFCCP should allow 
a longer period between audits than the 2 years currently permitted.
     The OFCCP should reconsider the pending regulations, 
including the time, effort and costs associated with these regulations 
and the feasibility of implementing and adhering to these standards for 
members of the Federal contractor community, especially the regulations 
that directly conflict with other existing statues.

    Q2: Based on your experience responding to the OFCCP audits, do you 
have any concern about the agency's pending proposal pertaining to the 
individuals with disabilities, which would require contractors to set a 
``goal'' that 7 percent of all job groups be filled with individuals 
with disabilities, including a ``sub-goal'' of 2 percent for 
individuals with severe disabilities? In your experience how has the 
OFCCP enforced other such ``goals''?

    A: Yes, we have concerns that the 7 percent and 2 percent goals are 
unrealistic. Placement goals traditionally have been based on readily 
available information, such as census data, and there are no other 
predefined, across-the-board placement goals for all job groups. This 
will be the first ``hard'' placement goal, rather than targets based 
upon availability analysis. A review of St. Jude's ``faculty member'' 
job category illustrates the difficulty of attaining these goals. All 
of the job titles in St. Jude's ``faculty member'' category require an 
MD, Ph.D. or other similar doctorate level degree. However, St. Jude 
has no idea if 7 percent of the U.S. population with a MD or Ph.D. has 
a disability or if 2 percent have a severe disability and whether it 
would be possible to reach those goals and satisfy all of our other 
hiring criteria. We are concerned about the repercussions if we are 
unable to identify and hire the required 7 percent and 2 percent. If 
the regulation is implemented, then all contractors must expect that 
this will be a focus for any audit and that hard placement goals must 
be met. Another major issue is the apparent conflict with the Americans 
with Disabilities Act (ADA), which places employers between the 
proverbial ``rock and hard place.'' Federal contractors will have to 
make very tough decisions that leave them vulnerable for the standards 
of one regulation or the other.

    Q3: The Americans with Disabilities Act states that employers 
``shall not conduct a medical examination or make inquiries of a job 
applicant as to whether such applicant is an individual with a 
disability or as to the nature or severity of such disability'' prior 
to extending a job offer to an applicant. However, OFCCP's proposal 
pertaining to individuals with disabilities would require St. Jude and 
all Federal Contractors to make such inquiries. How would this 
requirement impact St. Jude's hiring process?

    A: Employers would face serious challenges with complying with 
conflicting regulations. This will mean all contractors are susceptible 
to consequences with respect to one statute or the other.

    Should you have questions or need additional information, please do 
not hesitate to contact Rob Clark, Director of Government Affairs for 
St. Jude Children's Research Hospital, at [email protected].
                                 ______
                                 
                                             U.S. Congress,
                                      Washington, DC, May 31, 2012.
Alissa Horvitz, Shareholder,
Littler Mendelson, P.C., 1150 17th Street, NW, Suite 900, Washington, 
        DC 20036.
    Dear Ms. Horvitz: Thank you for testifying at the April 18, 2012, 
Subcommittee on Health, Employment, Labor, and Pensions hearing 
entitled, ``Reviewing the Impact of the Office of Federal Contract 
Compliance Programs' Regulatory and Enforcement Actions.''
    Enclosed are additional questions submitted by subcommittee members 
following the hearing. Please provide written responses no later than 
June 14, 2012, for inclusion in the official hearing record. Responses 
should be sent to Benjamin Hoog of the committee staff, who may be 
contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the committee.
            Sincerely,
                                        Phil Roe, Chairman,
           Subcommittee on Health, Employment, Labor, and Pensions.
                   questions from representative roe
    1. The conference report for the 2012 National Defense 
Authorization Act exempted TRICARE network providers from the Office of 
Federal Contract Compliance Programs' (OFCCP) jurisdiction. In light of 
this development, is it your understanding OFCCP has ceased pursuing 
health care providers that participate in a TRICARE network? Please 
explain.
    2. How does an entity that contracts with a direct federal 
contractor know whether it must comply with OFCCP's requirements? Is it 
possible for OFCCP's requirements to apply to an entity that was not 
aware of the requirements at the forming of a contract with a direct 
federal contractor?
    3. Please explain how a single transaction with the federal 
government can unknowingly subject an entity to coverage under OFCCP's 
requirements. As part of your response, please discuss whether it is 
likely that a single transaction with the federal government--a $50,000 
transaction, for example--would cover the costs of complying with 
OFCCP's requirements.
    4. Your written testimony noted that OFCCP is proposing to increase 
the scope of its audit process, so that audits can stay open 
indefinitely. First, how long can audits last currently? Second, what 
are the potential consequences for contractors of an indefinite 
temporal scope to OFCCP audits?
    5. In your opinion, is OFCCP focusing adequate resources on 
compliance assistance for contractors? What steps, if any, is OFCCP 
taking to clarify the rules of the road for contractors?
    6. In the context of investigating possible discrimination in 
compensation, your written testimony notes that during the audit 
process, OFCCP launches a full investigation of a contractor's 
compensation practices wherever there is a 2 percent or $2,000 
difference between certain workers in a particular job title. How has 
OFCCP justified these thresholds? Once OFCCP identifies a compensation 
disparity in a contractor's workforce, what burdens does the agency 
impose on the contractor to prove that there is no discrimination?
    7. Your written testimony highlighted the fact that solely focusing 
on differences in average pay between workers has no basis in 
compensation discrimination law under Title VII of the Civil Rights Act 
of 1964. For the purposes of pursuing a pay discrimination claim under 
Title VII, what is the appropriate analysis?
                                 ______
                                 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                 
                                ------                                


      Ms. Horvitz' Response to Questions Submitted for the Record

    1. The conference report for the 2012 National Defense 
Authorization Act exempted TRICARE network providers from the Office of 
Federal Contract Compliance Programs' (OFCCP) jurisdiction. In light of 
this development, is it your understanding OFCCP has ceased pursuing 
health care providers that participate in a TRICARE network? Please 
explain.

    No, it is not my understanding that OFCCP has ceased pursuing 
health care providers that participate in a TRICARE network. OFCCP held 
a web seminar on April 25, 2012 during which time it announced that it 
was putting those audits on hold during the pendency of the appeal 
involving Florida Hospital of Orlando. Indeed, its litigation position 
in the Florida Hospital case is that the National Defense Authorization 
Act eliminated only the ``provision of medical care'' as a basis for 
subcontractor status via TRICARE. OFCCP argues that Florida Hospital of 
Orlando is still a subcontractor based on its role in facilitating the 
creation of the TRICARE health network. This interpretation of the 
National Defense Authorization Act would have the effect of all but 
writing out the exemption in the National Defense Authorization 
Act.Also in the interim, while the appeal of the Florida Hospital of 
Orlando case is pending, OFCCP has sent letters to hospitals and other 
medical institutions, whose audits were on hold because of the Tricare 
jurisdictional issue, if OFCCP believes it has an alternate basis to 
assert jurisdiction, such as the existence of a direct federal 
contract. For those companies with an alternate basis for jurisdiction, 
OFCCP is expecting them to submit affirmative action plans as of the 
date when the company first received a scheduling letter before the 
audit hold went into effect. For some companies, in other words, OFCCP 
is now seeking in 2012 a 2009 affirmative action plan, based on 2008's 
data.

    2. How does an entity that contracts with a direct federal 
contractor know whether it must comply with OFCCP's requirements? Is it 
possible for OFCCP's requirements to apply to an entity that was not 
aware of the requirements at the forming of a contract with a federal 
contractor?

    It is possible for the agency's requirements to apply to a company 
that was not aware of the obligations at the forming of an arrangement 
with a federal contractor. There are several ways in which a company 
doing business with a contractor could learn that it is a covered 
contractor, including receiving a notice from the direct contractor 
asking for the subcontractor's certification with the laws and 
regulations that OFCCP enforces. Other prime or direct contractors 
include references to OFCCP's regulations or the applicable Federal 
Acquisition Regulation (FAR) provisions in their standard contract 
terms and conditions. It may be in the ``fine print,'' but the direct 
contractor has complied with its obligation to flow down the OFCCP's 
regulatory compliance obligations to each subsequent level, and it is 
up to the subcontractor, supplier, or vendor to determine whether it 
must comply.
    The problem is that not every vendor and supplier on a direct 
federal contract is a covered subcontractor. A covered subcontractor is 
an entity that either sells a good or renders a service that is 
``necessary to the performance'' of the direct government contract, or 
who performs any portion of the direct contractor's obligation under 
the contract. Most of the time, the direct contractor's procurement or 
contracting officers do not know whether the goods or services they are 
procuring are ``necessary'' to the performance of the direct federal 
contract. It is simpler to have the direct contractor's procurement 
officials insert the clause in every commercial contract and purchase 
order they let out along with the words ``as applicable.'' Then, it is 
up to the vendor or supplier to inquire as to whether the goods and 
services it is providing meet that ``necessary to the performance'' 
threshold.
    OFCCP's position in pending litigation, however, is that whether or 
not the incorporated equal opportunity clauses are actually flowed 
down, they operate as a matter of law, and their omission from a 
contract is not evidence that the company need not comply. OFCCP's 
regulations at 41 CFR Sections 60-1.4(e), 60-300.5(e), and 60-741.5(e) 
are parallel, and the Executive Order regulation at 1.4(e) states that 
``By operation of the [Executive] order, the equal opportunity clause 
shall be considered to be a part of every contract and subcontract 
required by the order and the regulations in this part to include such 
a clause whether or not it is physically incorporated in such contracts 
and whether or not the contract between the agency and the contractor 
is written.'' In other words, even if the contract does not have any 
OFCCP equal opportunity clause language in it, the company could still 
be a covered contractor or subcontractor.
    That is what happened to UPMC Braddock Hospital, which is 
litigating this and other issues before the United States District 
Court for the District of Columbia. UPMC Braddock Hospital was selected 
for an audit and contested jurisdiction. UPMC Braddock Hospital had 
signed participating provider agreements with UPMC's HMO. The HMO in 
turn had signed a direct federal contract with the Office of Personnel 
Management, which negotiated medical service contracts for the Federal 
Employee Health Benefit Program. OPM has its own regulation, duly 
promulgated based on notice and comment, which regulation specifically 
carves out the participating hospitals and medical providers from the 
definition of subcontractor. The contract that UPMC Braddock signed 
specifically excluded hospitals from subcontractor jurisdiction, but 
the DOL's Administrative Law Judge and the Administrative Review Board 
held that OPM's regulation was entitled to no deference. Only the 
Director of OFCCP or the Secretary of Labor can exempt an employer from 
OFCCP's regulations, and OPM had no authority to do so, according to 
the ALJ and ARB. Because the direct contract between the UPMC HMO and 
the Federal Employee Health Benefit Program was to provide medical 
services to federal employees, their dependents, and beneficiaries, and 
UPMC Braddock Hospital provided medical services in fulfillment of that 
direct contract, UPMC Braddock Hospital was held to be a covered 
subcontractor.
    Every time a company receives a document from a federal agency, it 
has no certainty at all whether OFCCP's obligations apply, or not. 
Suppose the procurement officer forgets to check the box that 
incorporates OFCCP's regulations. How does the company know whether the 
unchecked box was intentional or inadvertent? Can it rely on that, or 
does it have to assume that OFCCP's obligations apply as a matter of 
law? There is no definitive answer.
    Other agencies are very oblique in the agreements they sign, not 
making it clear whether the agency is expending grant funds (which do 
not give OFCCP audit jurisdiction) or is contracting with the company 
(which would give OFCCP jurisdiction). It's a no-man's land, in many 
respects. Other times, procurement officials have entered mis-
information into the federal procurement data system, characterizing 
arrangements as contracts when they were not. This has happened 
frequently with respect to medical and scientific research. Some 
agencies procure medical research through grants and contracts, but 
their procurement officials have not been accurate in the 
characterization of such arrangements in the Federal Procurement Data 
System. Several times, a recipient of grant funds is accused of having 
a federal contract, when it does not, and it has to engage a lawyer and 
expend additional funds to try to persuade OFCCP to ``administratively 
close'' the audit because OFCCP lacks jurisdiction, and the 
``agreement'' is really a grant, not a contract.
    Finally, as I mentioned during my oral testimony, a company 
(Company A) can have an existing relationship to supply a good or 
service to another company (Company B) at a fixed, agree-upon price. If 
company B decides to become a direct federal contractor, and accepts 
the obligations imposed on it by the OFCCP, it has an obligation to 
flow-down the compliance clauses to all of its vendors and suppliers, 
who are supplying goods or services necessary for the performance of 
its new government contract. If Company A is supplying a good necessary 
to the performance of the government contract, it is now covered by all 
of OFCCP's regulations. It is (unwillingly) a government subcontractor. 
If the value of the goods and services that Company A supplies to 
Company B (and that are necessary to the performance of the direct 
contract) exceed $50,000, the subcontractor must prepare written 
affirmative action plans for women and minorities, and for individuals 
with disabilities. The women and minorities' plan includes extensive 
data evaluation regarding the employment of females and minorities 
against census data, the setting of employment goals, and the 
evaluation of hiring rates, promotion rates, termination rates, and 
compensation equity for the entire company (not just the facility that 
is supplying the good or service to the prime contractor). If the value 
of the subcontract exceeds $100,000, then on the date that the direct 
contractor signed the contract, the subcontractor (unknowingly) had an 
obligation to begin listing all of its non-executive and non-temporary 
jobs with the unemployment office where the job is located, for all of 
its jobs, all over the country, even if only one of its facilities is 
supplying a direct federal subcontractor with $100,000 in supplies.

    3. Please explain how a single transaction with the federal 
government can unknowingly subject an entity to coverage under OFCCP's 
requirements? As part of your response, please discuss whether it is 
likely that a single transaction with the federal government--a $50,000 
transaction, for example--would cover the costs of complying with 
OFCCP's requirements?

    I think one of the most striking examples of how a transaction 
would unknowingly subject an institution to coverage is the example of 
a hospital that agreed to treat a federal prisoner with a severe heart 
condition. The hospital agreed to treat the prisoner (as if it could 
ethically say ``no''?) and, not surprisingly, the medical bills soon 
reached $50,000 (if not much higher). In order for the Federal Bureau 
of Prisons to pay for the medical care that the hospital rendered, it 
had to create a purchase order in its system (after the fact). The 
purchase order contained the standard EEO clauses in it. When the 
hospital was selected for an audit, it asked OFCCP for evidence of the 
contract, and OFCCP sent it the Federal Bureau of Prisons purchase 
order. That one hospital was part of a larger network of hospitals, and 
as a result of the one hospital's decision to treat the federal 
prisoner, OFCCP asserted that the whole hospital system is a covered 
contractor with an obligation to prepare AAPs and track applicants, and 
the like.
    To comply with OFCCP's regulations, particularly the excruciating 
record keeping associated with applicant tracking, most companies spend 
far more than $50,000 in the first year of the contract:
     Companies need to implement changes to any on-line hiring 
process to ensure they have a method to solicit the race and gender of 
qualified applicants, and to solicit the veteran and disability status 
of new hires;
     The company's website needs to be re-configured to 
accommodate applicants with disabilities;
     The company needs to change managers' and supervisors' 
hiring processes and train them in all aspects of the OFCCP's 
regulations;
     The company must prepare written affirmative action plans 
for each of its establishments with 50 or more employees if the value 
of the single contracts exceeds $50,000, which data queries often 
trigger expensive software development upgrades to payroll or HRIS 
systems because the systems were not developed with an eye towards 
preparing affirmative action plans.
     The company is expected to evaluate compensation for race, 
ethnicity, or gender-based disparities, and it is highly unwise to do 
that without the protection of attorney client privilege, which means 
there are legal fees associated with compliance.
     If the contract is for $100,000 or more, the obligation to 
list every job vacancy with the employment service delivery system in 
the jurisdiction where the job is located will apply, and that 
obligation is not limited to the building or facility where the 
government contract is being performed.
     The job listing obligation applies immediately upon 
signing a contract, unlike the written AAP obligation which contractors 
have 120 days to implement.
     And there are other obligations, including engaging in 
meaningful outreach for qualified veterans and individuals with 
disabilities, which also takes time and resources because since the 
federal government eliminated America's Job Bank, multi-establishment 
employers have no one-stop place to efficiently and cost-effectively 
comply with that job listing obligation. It also results in individuals 
with disabilities and veterans having to check multiple sources for 
these opportunities, instead of affording them one unified place to 
begin a job search.
    OFCCP's proposed new scheduling letter will seek even greater 
information from employers in audits, if adopted as proposed, and 
employers will have to re-configure payroll systems to adapt. ``For all 
employees, compensation includes base salary, wage rate, and hours 
worked.'' [Proposed New Question 12(a)]. The vast and overwhelming 
majority of companies are not tracking hours worked for exempt 
employees. I do not know how my clients are going to do this, at all.

    4. Your written testimony noted that OFCCP is proposing to increase 
the scope of its audit process, so that audits can stay open 
indefinitely. First, how long can audits last currently? Second, what 
are the potential consequences for contractors of an indefinite 
temporal scope to OFCCP audits?

    Although, most compliance reviews will end within one year, some 
can last a lot longer. I am personally aware of four audits that are 
all more than four years old. Our oldest began in July 2007.
    As long as I can remember, it has always been OFCCP's practice to 
ask for information going back from the date of the scheduling letter. 
At first, OFCCP receives the current affirmative action plan, which is 
based on the prior year's data. If OFCCP identifies potential 
discrimination in that first year's data, it typically asks for one 
more year going back, so it can evaluate a total of two years' worth of 
data. If the company was more than six months into its current plan 
year when it received the scheduling letter, OFCCP also obtained data 
for the first six months of the current year. At most, therefore, OFCCP 
would have 2.5 years of data to evaluate. It was efficient for 
contractors to be able to handle the audits because the data set that 
was being evaluated was limited and confined to a concrete period.
    Now, OFCCP is proposing to alter its veterans and disabilities 
regulations to remove any date limitations on the scope of those 
audits, and the Administrative Review Board held in OFCCP v. Frito-Lay 
that OFCCP can obtain information past the date of the scheduling 
letter in audits conducted pursuant to the Executive Order. OFCCP 
compliance officers can stop working on an Executive Order audit (women 
and minorities) for four years, pick it up again, and ask the company 
for all of its compliance data in the intervening four years, and 
contractors will have to gather it. In fact, that is essentially what 
happened in the Frito-Lay case. OFCCP did almost nothing in that 
compliance review, and then nearly two and a half years later sought to 
double the time frame under review based on nothing more than summary 
data showing a statistically significant difference in hiring rates 
between females and males in one job group. OFCCP did nothing for two 
years to understand what was driving the disparity. OFCCP needed more 
data for no other reason than OFCCP had not pursued the compliance 
review in a timely manner. The ARB's ``objective deficiency'' standard 
of one statistically significant disparity to justify extending the 
audit out indefinitely is divorced from what statistical significance 
means--that an outcome would only occur randomly by chance 5% or less 
of the time. In my opinion, most employers do not make decisions 
randomly. Without any factual investigation at all, OFCCP will never 
know if the nonrandom explanation was discrimination.
    Moreover, and more importantly, a 5% or 1 out of 20 result is 
statistically expected and not particularly unusual, at all. If 
approved, OFCCP's new scheduling letter will ask for hires and 
applicant information title by title, and any company with hiring 
activity in as few as 20 job titles in its AAP can expect that if its 
plan is ``typical'', one of those titles will show a statistically 
significant gender-based hiring disparity and another title will show a 
statistically significant race-based hiring disparity--that is, of 
course if hiring decisions were simply random.
    The ARB's assertion that one statistically significant disparity 
without any other evidence linking that disparity to discrimination is 
an ``objective deficiency'' that justifies an unlimited extension in 
the temporal scope of an audit represents either an intentionally broad 
directive that will justify the temporal extension of a very large 
percentage of OFCCP's compliance reviews or an embarrassingly gross 
misunderstanding of the concept of statistical significance.
    There are no limitations, at all, as to how long these audits can 
take. And now, with the ARB's decision in Frito-Lay, there likewise 
will be no limit to the period of time that gets reviewed by OFCCP in a 
compliance review when OFCCP fails to process and complete its 
compliance reviews in a timely manner.
    In my opinion, the EEO professionals who work on these audits want 
very much to be in compliance with OFCCP's regulations. Most companies 
genuinely want to know if they did something wrong, or are not doing 
everything they are supposed be doing. They want to do the right thing. 
Tell them what they did wrong so they won't keep doing it. They will 
agree to do it right going forward. If the OFCCP finds a violation, 
cite the employer, negotiate a fair resolution, and then OFCCP can 
monitor progress going forward. The audit is done. If OFCCP finds 
statistically significant differences in hiring rates in data it 
receives in 2012 for the calendar 2011, what is the point of letting 
the contractor continue to engage in the same discriminatory practice 
or policy in 2012, 2013, 2014, and into 2015? It makes more sense for 
the OFCCP to reach its conclusions early and compel the employer to 
stop doing the wrong thing sooner rather than later. Why is it in the 
interest of future victims of discrimination to allow the employer to 
continue doing the same thing that caused the problem in the first 
place? The longer OFCCP takes to conduct the audit, the more victims 
there will be in 2012, 2013, 2014, and 2015. The stark reality is that 
the longer the audit is open, the more back pay remedies OFCCP will 
seek on behalf of more victims. The bigger the dollars, the larger the 
media coverage is likely to be.

    5. In your opinion, is OFCCP focusing adequate resources on 
compliance assistance for contractors? What steps, if any, is OFCCP 
taking to clarify the rules of the road for contractors?

    In my opinion, OFCCP is not focusing adequate resources on 
compliance assistance for contractors. There are some OFCCP district 
offices where the district director and assistant district director are 
very well-trained, and thus the compliance officer ranks are well 
trained. I would recommend that my government contractor clients take 
advantage of the assistance OFCCP provides in such offices. Hartford 
and Buffalo come to mind in that respect. However, there are other 
offices where that is not the case, at all, and companies that have 
gone to these compliance assistance seminars are being given incorrect 
advice.
    For example, we have had clients attend compliance assistance 
training, and the compliance officer has told the company that every 
single person who sends the company a resume is an applicant, must be 
included on an applicant tracking log, and must be sent an invitation 
to self-identify. That is incorrect. The OFCCP's Internet Applicant 
definition has four parts to it, and only when all four parts are met 
does the company have an obligation to solicit race and gender of 
applicants. Companies receiving expressions of interest over the 
Internet, by fax, or by email, for example, have no obligation to 
solicit race and gender from individuals who are not Internet 
Applicants. This referenced company received those expressions of 
interest via email. If the company did not actually consider the 
candidate for an open position, and never even determined whether the 
candidate was qualified, there was no legal obligation to solicit race 
and gender. A company's obligation is to solicit race and gender of 
qualified candidates it actually considers for a vacant position. But 
in reliance on the OFCCP compliance officer's incorrect advice, that 
company included all the unsolicited resumes on its applicant log, and 
OFCCP used that information to assert that the company was 
discriminating against those non-hired applicants because of gender 
when the rate at which it hired women was significantly less than the 
rate it hired men. When the company tried to argue that it did not 
actually consider those individuals for an open position, OFCCP 
rejected the argument because the company had no evidence in support of 
its position. It had no evidence that it did not consider the 
individuals. How are companies expected to prove that they did not do 
something?
    Compliance assistance is hit or miss in the district offices. When 
OFCCP has rendered assistance by web seminar out of its national 
office, those compliance assistance broadcasts are well done. However, 
more compliance assistance could and should be provided.
    OFCCP also has the ability to issue Directives and Guidance to the 
contractor community, but on several occasions during the Shiu 
administration, these directives were never published or made available 
to the contractor community so that contractors could be informed about 
OFCCP's position. For several years, OFCCP has been telling the 
government contractor community that it will be publishing its revised 
Compliance Manual, but it has not completed that task, either.

    6. In the context of investigating possible discrimination in 
compensation, your written testimony notes that during the audit 
process, OFCCP launches a full investigation of a contractor's 
compensation practices wherever there is a 2 percent or $2,000 
difference between certain workers in a particular job title. How has 
OFCCP justified these thresholds? Once OFCCP identifies a compensation 
disparity in a contractor's workforce, what burdens does the agency 
impose on the contractor to prove that there is no discrimination?

    I don't think OFCCP has justified the 2% or $2000 threshold. It 
apparently designed the threshold to be so low that practically every 
contractor fails it, and then it has some basis to obtain line item, 
individual compensation data on everyone in the entire workforce, even 
for employees that are single incumbents in the job, and including job 
titles where everyone in the title is the same race or the same gender. 
OFCCP sends the contractor a letter stating that is has identified 
``unexplained differences in average compensation that require further 
evaluation of your company's compensation practices.'' For example, the 
18 variables that districts in the southeast region request are:

     Employee ID Number
     Job Title
     Pay Division/Group as identified in the Itemized 11 
response
     Job Group (AAP)
     Gender
     Race/Ethnicity
     Annual base salary or base hourly wage (excluding 
overtime, bonuses, incentives)
     Date of hire (provide the date, not the time in months or 
years)
     Date of entry into the job title (provide the date, not 
the time in months or years)
     Part-time/Full-time status (for part-timers, please 
include a separate column showing the average hours worked in a typical 
week)
     Other paid allowances, if any, such as commission pay, 
overtime pay, bonus pay or shift differential. Report each allowance in 
separate data columns;
     Department
     Work shift (if more than one and as applicable)
     Exempt vs. non-exempt status
     Grade level or salary band classification (if applicable)
     Employee location
     Similarly Situated Employee Groupings (SSEG's), if 
developed, and
     All other factors relevant to your company's compensation 
system.

    The form letter then says, ``If any of the items requested above 
are not applicable and/or not readily available, please notify us 
immediately. We will then determine if we are able to continue our 
evaluation with the readily available items and/or to determine if a 
need for an onsite visit to gather the items is appropriate.'' The 
subtext there is that if the contractor does not invest substantial 
time, money, and resources into creating its own database with these 
variables included, OFCCP would be willing to come on site, look at 
every personnel file, and make its own database. Either the employer 
can go through the arduous exercise of building such a database, or 
OFCCP would be happy to do it by coming onsite to inspect personnel 
records.
    Some district offices rationally ask for further information only 
on job titles with comparators. Other districts rigidly insist on 
having the contractor populate Excel workbooks for every job title in 
the workplace, including job titles with no comparators because the 
form letter says ``[f]or the next phase of our evaluation, we are 
requesting that you provide the following information, for all 
employees in your workforce, as of the same date and workforce used in 
the your data submission to Itemized 11 of the scheduling letter.''
    That rigid approach makes no sense in smaller workplaces where it 
is highly unlikely that a lot of jobs will have multiple incumbents of 
different races and genders. In a workplace with fewer than 300 
employees, you would not expect to have three HR Managers, three 
Marketing Managers, three CEOs. It is plausible for a small employer to 
have one person doing a job that is unique to him or her. So if it 
there is only one CEO, and no comparators, why does OFCCP need the 
CEO's Department Name, Exempt FLSA status, work location, date of hire, 
date in the job, bonus pay, and the like? Likewise, if the employer has 
only three Executive Assistants, and all are Black Females, why does 
the OFCCP need the variables for everyone in that job title? Why does 
OFCCP insist on having the contractor gather all the additional 
information on job titles with single race and gender incumbents? None 
of that information is likely to help OFCCP identify whether there is 
discrimination based on gender, race or ethnicity.
    OFCCP places extensive and extraordinary burdens on employers to 
prove that any observed difference in compensation triggered by the 2% 
or $2000 threshold is justified by a nondiscriminatory reason. Soon 
after the contractor submits its response to Itemized Listing 11, which 
includes only total compensation and total number of employees in the 
grouping (whether by title, by grade, by range, by family), as noted 
above in the response to number 8, OFCCP will send the company a letter 
stating that it has identified ``unexplained differences'' in 
compensation. OFCCP typically provides only 10 business days for the 
contractor to gather the variables, one of which is time in the 
position or time in the title. A substantial number of government 
contractors are not tracking that information in a way that enables 
them to write a query of a database and extract the information 
efficiently. They have to go into personnel files and look up each 
person individually. Even in situations where time with the company 
fully and satisfactorily explains the differences that OFCCP was 
observing initially, some district offices insist that the contractor 
extract all of the requested variables, not just the one that would 
explain the differences. In other cases, OFCCP's rigid variable list 
has nothing to do with the differences in pay. Two individuals could 
have started in the same job on the same day, and they are making $3000 
difference. One came to the job with three years of direct relevant 
experience working for a competitor, and the other came to the job 
right out of college with no direct relevant experience. There is no 
column that identifies whether the experience is relevant, and in those 
situations, where experience indeed explains the difference in 
compensation, the contractor is expected to produce an application or 
resume, clearly showing that there were differences in prior relevant 
experience justifying the difference in pay. If a contractor has 
evidence that subsequent performance has led to pay differences over 
time, it will need to demonstrate that fact with evidence of 
performance reviews. If performance review information is not in the 
same database as the payroll data, it needs to be ``married'' or 
``merged'' into the same database so that the employer can evaluate the 
mathematical effect of the performance information on pay.
    If the employer is unable to produce evidence in the form of 
applications, resumes or performance evaluations, the OFCCP is likely 
to come onsite to interview managers responsible for the setting of 
compensation, supervisors who may have knowledge about differences in 
skills, responsibilities, job performance, attendance, attitude, and 
other criteria relevant to pay, and the employees themselves in an 
effort to obtain evidence of the similarity of employee roles. In my 
opinion, many newer compliance officers who have been hired recently 
approach these onsites with a bias against the employer, looking to 
find evidence of discrimination. Questions are not neutral and designed 
to gather facts. Questions are designed to foster conclusions of 
similar work for different pay because that is the evidence OFCCP needs 
to allege discrimination. The employer or its representative is not 
permitted to sit in on these employee interviews, and the employer is 
not allowed to ask the employee what he or she told the auditor. During 
manager interviews, if the employer's representative tries to help the 
client recall information, the compliance officers will instruct the 
second compliance officer in the role of ``scribe'' or ``note-taker'' 
to write down that it was the lawyer who gave the answer, not the 
company. In these cases, it is not about the search for truth; it is 
about the search for evidence of discrimination.

    7. Your written testimony highlighted the fact that solely focusing 
on differences in average pay between workers has no basis in 
compensation discrimination law under Title VII of the Civil Rights Act 
of 1964. For the purposes of pursuing a pay discrimination claim under 
Title VII, what is the appropriate analysis?

    Pursuant to the Lilly Ledbetter Fair Pay Act of 2009, if someone 
wants to claim pay discrimination, (s)he must identify a specific 
discriminatory decision affecting her/his pay. Showing that you are 
paid less than a peer is not enough. In other words, under Title VII, 
which applies the standards adopted in Lilly Ledbetter Fair Pay Act of 
2009, an employee must point to a discriminatory decision affecting 
pay, not just differences in pay.
    Gender-based (but not race-based) pay difference are relevant under 
the Equal Pay Act if the employees are in substantially the same job at 
the same location and if the difference in pay is not based on factors 
other than sex. OFCCP generally does not pursue its cases under the 
limited and very narrow Equal Pay Act.
    Yet in a compliance review, OFCCP does not analyze pay decisions at 
all. Instead, OFCCP receives total compensation and total number of 
employees and calculates an average. It asks the employer to explain 
the difference with evidence, such as a resume or application to 
differentiate education, skill set, prior relevant experience, and the 
like. It may ask for performance evaluations, if the employer contends 
that performance influences pay. If the employer asks for a data 
variable that the employer does not maintain in its HRIS or payroll 
system, the OFCCP will insist on coming onsite to examine personnel 
files to obtain the data itself and create its own data base.
    Even if the employer is able to extract the demanded variables from 
an HRIS or payroll system, OFCCP may decide to conduct onsite 
interviews with individuals responsible for setting initial 
compensation and with employees in the same job to measure how similar 
or different the roles are.
    OFCCP knows that if it identifies a difference in pay between 
similarly titled individuals, and the amount of the compensation remedy 
is less than what it would cost the employer to retain counsel and 
oppose the violation, it is more cost effective for the government 
contractor to pay the employee the difference in wages than to litigate 
the matter through years of enforcement proceedings. Thus, even if the 
employer offers a legitimate, nondiscriminatory reason for the 
difference, and OFCCP has not identified any discriminatory decision, 
OFCCP issues the Notice of Violations and obtains back pay remedies. 
OFCCP alleges that the employer violated Executive Order 11246, and so 
long as the conciliation agreement contains a non-admissions clause, 
the employer capitulates without any proof or evidence at all that 
there was a discriminatory decision that led to the difference in pay. 
OFCCP is issuing a Notice of Violations in situations when it has not 
identified a discriminatory decision.
                                 ______
                                 
                                             U.S. Congress,
                                      Washington, DC, May 31, 2012.
Jeffrey A. Norris, President,
Equal Employment Advisory Council, 1501 M Street, NW, Suite 400, 
        Washington, DC 20005.
    Dear Mr. Norris: Thank you for testifying at the April 18, 2012, 
Subcommittee on Health, Employment, Labor, and Pensions hearing 
entitled, ``Reviewing the Impact of the Office of Federal Contract 
Compliance Programs' Regulatory and Enforcement Actions.''
    Enclosed are additional questions submitted by subcommittee members 
following the hearing. Please provide written responses no later than 
June 14, 2012, for inclusion in the official hearing record. Responses 
should be sent to Benjamin Hoog of the committee staff, who may be 
contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the committee.
            Sincerely,
                                        Phil Roe, Chairman,
           Subcommittee on Health, Employment, Labor, and Pensions.
                   questions from representative roe
    1. Your written testimony highlighted that the Office of Federal 
Contract Compliance Programs (OFCCP) underestimated the potential costs 
and burdens of each of its pending regulatory proposals. For example, 
you noted that the burdens associated with the agency's proposal 
pertaining to individuals with disabilities may have been 
underestimated by 30 fold. Please explain how, in your opinion, the 
agency underestimated the burdens of its regulatory proposals. Also, as 
part of your response, please include a discussion of the extent to 
which OFCCP consulted federal contractors in preparing the regulatory 
proposals and appurtenant burden estimates.
    2. Your written testimony stated that OFCCP's regulatory proposals 
would convert the agency's current regulatory scheme of ``guidance and 
recommendations'' into one of ``highly prescriptive mandates.'' These 
new mandates would, in large part, reject contractors' ``good faith'' 
efforts as a measure of compliance. Instead, OFCCP would become more 
focused on hyper-technical administrative requirements and whether 
contractors are meeting the agency's predetermined outcomes. Based on 
your experience, please explain whether OFCCP's mission is best served 
by such highly-prescriptive requirements and predetermined outcomes.
    3. Your written testimony noted that OFCCP is proposing to mandate 
a number of new requirements relating to contractors' obligations to 
post jobs with local workforce agencies. This includes forming 
``linkage agreements'' with workforce agencies hand-picked by OFCCP. 
Please explain the burdens associated with forcing contractors to 
undertake these requirements. Also, please explain whether you believe 
the potential benefits of requiring these efforts of contractors would 
outweigh the costs.
    4. Your written testimony noted that OFCCP intends to rescind its 
guidelines related to systemic compensation discrimination. In 
conjunction with this rescission, I understand OFCCP has also argued 
that to prove systemic pay discrimination, it may not need to consider 
anecdotal evidence of discrimination in the workplace or the 
nondiscriminatory variables that form contractors' pay decisions. 
Please explain whether you believe this is consistent with the Supreme 
Court's rulings on pattern or practice discrimination under Title VII 
of the Civil Rights Act of 1964.
                                 ______
                                 

       Mr. Norris' Response to Questions Submitted for the Record

    Dear Chairman Roe: On May 31, 2012 you requested that I provide 
written answers to four questions regarding the testimony I presented 
to the Subcommittee at the hearing referenced above. I am pleased to do 
so. Your questions and my responses are as follows:

    1. Your written testimony highlighted that the Office of Federal 
Contract Compliance Programs (OFCCP) underestimated the potential costs 
and burdens of each of its pending regulatory proposals. For example, 
you noted that the burdens associated with the agency's proposal 
pertaining to individuals with disabilities may have been 
underestimated by 30 fold. Please explain how, in your opinion, the 
agency underestimated the burdens of its regulatory proposals. Also, as 
part of your response, please include a discussion of the extent to 
which OFCCP consulted federal contractors in preparing the regulatory 
proposals and appurtenant burden estimates.

    The fundamental flaws in OFCCP's economic impact analyses for both 
its ``Section 503'' proposal pertaining to individuals with 
disabilities and its ``Section 4212'' proposal pertaining to covered 
veterans--flaws which we respectfully submit have resulted in a gross 
understatement of their true cost burden--were the subject of extensive 
discussion and analysis in our comment letters submitted to OFCCP in 
response to each proposal's formal Notice of Proposed Rulemaking 
published in the Federal Register. I have linked copies of both comment 
letters for your review. Please see pages 2-11 of the Section 503 
disability comment letter (http://www.eeac.org/public/12-037a.pdf) and 
pages 4-11 of the Section 4212 veterans' comment letter (http://
www.eeac.org/public/11-133a.pdf). By way of summary, however, the 
errors and omissions contained within OFCCP's economic impact analysis 
for each of its two proposals can be categorized as follows:
     OFCCP has underestimated by a minimum of 100,000, and 
perhaps as many as 200,000, the actual number of federal contractor 
establishments subject to the agency's Section 503 and Section 4212 
requirements;
     OFCCP has completely omitted from its economic impact 
analyses certain mandatory compliance requirements--such as mandatory 
training sessions and employee meetings--that federal contractors will 
be required to spend considerable time and resources to satisfy;
     OFCCP has grossly understated or ignored the actual amount 
of time federal contractor personnel will spend complying with many if 
not most of the agency's proposed requirements; and
     OFCCP has grossly understated or ignored other critical 
parameters--such as the number of jobs filled by the federal contractor 
community each year--in its economic impact analyses.
    With respect to OFCCP's efforts to consult with federal contractors 
in preparing its Section 503 and Section 4212 proposals, and 
specifically to develop accurate and realistic estimates of each 
proposal's respective burdens, we respectfully submit that no such 
meaningful consultation ever occurred. Aside from a handful of ``town 
hall listening sessions'' and ``online chats'' held by the agency 
during its development of these regulatory proposals, we are aware of 
no other efforts by the agency to engage the contractor community in a 
dialogue around how the proposed rules' underlying policy objectives 
might be most effectively and efficiently accomplished. Indeed, even 
with a history of more than 35 years of close collaboration between 
EEAC and OFCCP--regardless of the Administration in power--on matters 
of equal employment opportunity and affirmative action policy, EEAC was 
not consulted in any meaningful way on either of these two significant 
regulatory proposals.

    2. Your written testimony stated that OFCCP's regulatory proposals 
would convert the agency's current regulatory scheme of ``guidance and 
recommendations'' into one of ``highly prescriptive mandates.'' These 
new mandates would, in large part, reject contractors' ``good faith'' 
efforts as a measure of compliance. Instead, OFCCP would become more 
focused on hyper-technical administrative requirements and whether 
contractors are meeting the agency's predetermined outcomes. Based on 
your experience, please explain whether OFCCP's mission is best served 
by such highly-prescriptive requirements and predetermined outcomes.

    We believe a ``one-size-fits all'' approach to regulating the 
employment practices of federal contractors is doomed to fail given the 
wide variety of ways that companies structure their businesses and 
manage their workforces. OFCCP can most efficiently accomplish its 
mission of promoting affirmative action and equal employment 
opportunity in the workplace by clearly articulating in general terms 
its compliance standards and then monitoring how federal contractors 
adapt to those standards in ways appropriate to their unique business 
environments.
    OFCCP's past evaluation of corporate compensation practices is a 
case in point. In 2000, OFCCP implemented an Equal Opportunity Survey 
(``EO Survey'')--a reporting form that required federal contractors to 
report employment and compensation information in a standardized 
format. The prescribed format did not conform to how most companies ran 
their businesses. As a result, completing the report was burdensome and 
of no practical value to contractors and provided little usable 
enforcement information to OFCCP. The EO Survey was rescinded by OFCCP 
in 2006 because it ``failed to provide value to either OFCCP 
enforcement or contractor compliance.'' Unfortunately, the EO Survey 
seems to have acquired a new lease on life in OFCCP's August 10, 2011 
Advance Notice of Proposed Rulemaking to develop and implement a new 
compensation data collection tool. The proposed tool suffers from all 
of the same infirmities as the former EO Survey, with the addition of 
many more prescriptive elements.
    In contrast to the EO Survey and proposed new compensation data 
collection tool, OFCCP's 2006 Systemic Compensation Discrimination 
Guidelines (which OFCCP is now proposing to rescind) provide clear 
guidance to both OFCCP compliance officers and federal contractors 
regarding the statistical and legal standards to be used in evaluating 
the equity of corporate compensation systems. Rather than being 
prescriptive, the standards instead offer guidance for how contractors 
can appropriately evaluate the various components of their compensation 
systems. With the benefit of this guidance, many federal contractors 
voluntarily undertook compensation self-evaluations and implemented pay 
adjustments where warranted.
    Such voluntary action under the 2006 compensation guidelines has 
better served OFCCP's mission than did the failed EO Survey. 
Unfortunately, by proposing to rescind the compensation guidelines and 
resurrect the EO Survey in the form of a new compensation data 
collection tool, OFCCP currently is proceeding in exactly the wrong 
direction.

    3. Your written testimony noted that OFCCP is proposing to mandate 
a number of new requirements relating to contractors' obligations to 
post jobs with local workforce agencies. This includes forming 
``linkage agreements'' with workforce agencies hand-picked by OFCCP. 
Please explain the burdens associated with forcing contractors to 
undertake these requirements. Also, please explain whether you believe 
the potential benefits of requiring these efforts of contractors would 
outweigh the costs.

    The ``mandatory listing'' and ``linkage agreement'' requirements 
contained in the Section 503 disability and Section 4212 veteran 
proposals are other examples of OFCCP's ``one-size-fits-all'' approach 
to enforcement. They are discussed on pages 4-11 of the veteran comment 
letter and pages 2-11 of the disability comment letter. Both 
requirements prescribe ways federal contractors must recruit veterans 
and individuals with disabilities.
    The mandatory listing obligation requires contractors to post most 
of their employment openings with an ``appropriate'' local employment 
delivery system such as the state employment service or a local 
veterans' employment representative (for veterans) and the ``One-Stop 
Career Center'' nearest the contractor's facility (for individuals with 
disabilities). These are not necessarily the same offices in all cases. 
Quite apart from the sheer number of postings required, the most 
burdensome aspect of the mandatory job listing obligation is the fact 
that the listings must be made in the ``manner and format'' required by 
the particular receiving office. Accordingly, rather than developing 
and utilizing a standard job posting and transmittal process 
appropriate for all openings, each listing must be customized to the 
idiosyncrasies of the local offices where it is posted.
    The ``linkage agreements'' are referral contracts federal 
contractors must negotiate with veteran and disability referral 
agencies, many of which are specified by the federal government. 
Collectively, OFCCP's veterans and disability proposals mandate a 
minimum of five linkage agreements for each establishment. With 
approximately 285,000 covered contractor establishments in the U.S., a 
total of 1,425,000 written linkage agreements would be required each 
year.
    The notion that contractors will successfully generate greater 
numbers of disabled and veteran job applicants by signing more than one 
million written linkage agreements and posting their jobs with hundreds 
of state and local job services offices in the specific manner and 
format each office requires, ignores the modern-day methods and 
mechanisms employers use to recruit qualified applicants, as well as 
the methods and mechanisms used by veterans to find and express 
interest in those jobs. It also ignores the fact that many contractors 
already actively utilize numerous resources to recruit disabled persons 
and veterans, including some currently mandated by the agency's 
existing regulations.
    The recruitment efforts, as proposed by OFCCP, dictate a certain 
process that largely ignores today's technology and the far reach of 
the Internet. Today, a great deal of recruiting is conducted online, 
thus making a global community seem far more local. Imposing 
restrictions requiring ``local'' recruitment efforts has the effect of 
limiting the contractor community to efforts aimed at small pockets of 
the disabled and veteran communities. EEAC member companies prefer to 
continue to raise awareness of their commitment to the employment of 
individuals with disabilities and protected veterans by utilizing 
resources that allow individuals access to all of their opportunities, 
not only those in their immediate geographic locale.

    4. Your written testimony noted that OFCCP intends to rescind its 
guidelines related to systemic compensation discrimination. In 
conjunction with this rescission, I understand OFCCP has also argued 
that to prove systemic pay discrimination, it may not need to consider 
anecdotal evidence of discrimination in the workplace or the 
nondiscriminatory variables that form contractors' pay decisions. 
Please explain whether you believe this is consistent with the Supreme 
Court's rulings on pattern or practice discrimination under Title VII 
of the Civil Rights Act of 1964.

    OFCCP's current Systemic Compensation Discrimination Guidelines 
provide that ``[e]xcept in unusual cases, OFCCP will not issue a Notice 
of Violation (NOV) alleging systemic compensation discrimination 
without providing anecdotal evidence to support OFCCP's statistical 
analysis.'' This position is consistent with Supreme Court precedent as 
well as with EEOC's enforcement guidance on compensation 
discrimination, which provides that ``[a] cause finding of systemic 
discrimination rarely should be based on statistics alone.'' See EEOC 
Compliance Manual, Section 10, n. 30. OFCCP now finds that traditional 
position ``problematic'' in its proposal to rescind the current 
compensation guidelines because, in the agency's view, anecdotal 
evidence of pay discrimination ``may not exist'' in some cases. Yet in 
Int'l Brotherhood of Teamsters v. United States, the lone Supreme Court 
precedent that OFCCP relies upon in supporting a statistics-only 
approach to compensation discrimination, the government's statistical 
evidence of discrimination was bolstered by individual testimony 
describing 40 specific instances of discrimination. In the Court's 
view, it was this individual, anecdotal evidence that ``brought the 
cold numbers convincingly to life.'' It is this same precedent upon 
which the EEOC and the courts rely in ``rarely'' pursuing 
discrimination cases based upon statistics alone.
    While we, like the EEOC, acknowledge that in rare instances 
statistics alone can form the basis of a discrimination claim, those 
cases are typically reserved for instances where the disparities are so 
extreme on their face that additional statistical analyses offer little 
additional probative value. In Teamsters, for example, the Court was 
faced with evidence that despite the fact that African Americans 
represented approximately 50% of Atlanta's population and nearly 20% of 
Los Angeles' population, not one of the company's more than 400 line 
drivers in those locations were African American. The Court observed 
that the company's inability to defend itself came not from statistics, 
but from the ``inexorable zero.'' Further, as the Court stated in 
Hazelwood School District v. United States, 433 U.S. 299, 312-13 (1977) 
only after considering ``all of the surrounding facts and 
circumstances'' can a determination be made as to the usefulness of 
statistics and their ability to serve as the foundation of a ``pattern 
or practice'' of discrimination.
    It is troubling that OFCCP now elects to marginalize long-standing 
Title VII principles in this area. OFCCP should not be permitted to 
convert the rare exception into a general rule by using statistics to 
infer discrimination in the absence of any other supporting evidence, 
rather than using statistics to confirm the existence or bolster a 
theory of discrimination otherwise based upon a foundation of anecdotal 
evidence.
    Once again, thank you very much for the opportunity to testify on 
April 18, and to provide the supplemental information requested in 
these additional written responses. I hope the information is helpful 
to the Subcommittee in its important deliberations, and that you will 
feel free to call upon me in the future if I can be of additional 
assistance.
                                 ______
                                 
    [Whereupon, at 11:19 a.m., the subcommittee was adjourned.]

                                 
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