[Federal Register Volume 88, Number 149 (Friday, August 4, 2023)]
[Rules and Regulations]
[Pages 51717-51737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-16098]


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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

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

RIN 1250-AA14


Pre-enforcement Notice and Conciliation Procedures

AGENCY: Office of Federal Contract Compliance Programs, Labor.

ACTION: Final rule.

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SUMMARY: The U.S. Department of Labor publishes this final rule to 
modify procedures and standards the Office of Federal Contract 
Compliance Programs (``OFCCP'' or ``the agency'') uses when issuing 
pre-enforcement notices and securing compliance through conciliation. 
This final rule strengthens OFCCP's enforcement by rescinding the 
evidentiary standards and definitions codified in 2020 (``the 2020 
rule''), which hindered the agency's ability to pursue meritorious 
cases. OFCCP is instituting a streamlined, effective, and flexible pre-
enforcement and conciliation process that promotes greater consistency 
with Title VII of the Civil Rights Act of 1964 (``Title VII'').

DATES: These regulations are effective September 5, 2023.

FOR FURTHER INFORMATION CONTACT: Tina Williams, Director, Division of 
Policy and Program Development, Office of Federal Contract Compliance 
Programs, 200 Constitution Avenue NW, Room C-3325, Washington, DC 
20210. Telephone: (202) 693-0103 or toll free at 1-800-397-6251. If you 
are deaf, hard of hearing, or have a speech disability, please dial 7-
1-1 to access telecommunications relay services.

SUPPLEMENTARY INFORMATION: 

I. Legal Authority

    OFCCP administers and enforces Executive Order 11246, as amended 
(``E.O. 11246''); Section 503 of the Rehabilitation Act of 1973, as 
amended, 29 U.S.C. 793 (``Section 503''); and the Vietnam Era Veterans' 
Readjustment Assistance Act of 1974, as amended, 38 U.S.C. 4212 
(``VEVRAA''), as well as their implementing regulations. Issued in 
1965, and amended several times in the intervening years, E.O. 11246 
has two principal purposes. First, it prohibits covered Federal 
contractors and subcontractors \1\ from discriminating against 
employees and applicants because of race, color, religion, sex, sexual 
orientation, gender identity, national origin, or because they inquire 
about, discuss, or disclose their compensation or that of others, 
subject to certain limitations.\2\ Second, it requires covered 
contractors to take affirmative action to ensure equal employment 
opportunity.
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    \1\ Hereinafter, the terms ``contractor'' or ``Federal 
contractor'' are used to refer collectively to Federal contractors 
and subcontractors that fall under OFCCP's authority, unless 
otherwise expressly stated. This approach is consistent with OFCCP's 
regulations, which define ``contract'' to include subcontracts and 
``contractor'' to include subcontractors.
    \2\ The nondiscrimination protections and standards under E.O. 
11246 are interpreted consistently with those under Title VII of the 
Civil Rights Act of 1964 (``Title VII''). See OFCCP v. Greenwood 
Mills, Inc., Nos. 00-044, 01-089, 2002 WL 31932547, at *4 (ARB Final 
Decision & Order Dec. 20, 2002) (``The legal standards developed 
under Title VII of the Civil Rights Act of 1964 apply to cases 
brought under [E.O. 11246].'').
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    The requirements in E.O. 11246 generally apply to any business or 
organization that (1) holds a single Federal contract, subcontract, or 
federally assisted construction contract in excess of $10,000; (2) has 
Federal contracts or subcontracts that, when combined, total in excess 
of $10,000 in any 12-month period; or (3) holds Government bills of 
lading, serves as a depository of Federal funds, or is an issuing and 
paying agency for U.S. savings bonds and notes in any amount. Supply 
and service contractors with 50 or more employees and a single Federal 
contract or subcontract of $50,000 or more also must develop and 
maintain an affirmative action program that complies with 41 CFR part 
60-2. Construction contractors have different affirmative action 
requirements under E.O. 11246, codified at 41 CFR part 60-4.
    Enacted in 1973 and amended since, the purpose of Section 503 is 
twofold. First, Section 503 prohibits employment discrimination on the 
basis of disability by Federal contractors. Second, it requires each 
covered Federal contractor to take affirmative action to employ and 
advance in employment qualified individuals with disabilities. The 
requirements in Section 503 generally apply to any business or 
organization that holds a single Federal contract or subcontract in 
excess of $15,000.\3\ Pursuant to Section 503, contractors with 50 or 
more employees and a single Federal contract or subcontract of $50,000 
or more also must develop and maintain an affirmative action program 
that complies with 41 CFR part 60-741, subpart C.
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    \3\ Effective October 1, 2010, the coverage threshold under 
Section 503 increased from $10,000 to $15,000, in accordance with 
the inflationary adjustment requirements in 41 U.S.C. 1908. See 
Federal Acquisition Regulation; Inflation Adjustment of Acquisition-
Related Thresholds, 75 FR 53129 (Aug. 30, 2010).
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    Enacted in 1974 and amended in the intervening years, VEVRAA 
prohibits Federal contractors from discriminating against employees and 
applicants because of their status as protected veterans (defined by 
the statute to include disabled veterans, recently separated veterans, 
Armed Forces Service Medal Veterans, and active duty wartime or 
campaign badge veterans). It also requires each covered contractor to 
take affirmative action to employ and advance in employment these 
veterans. The requirements in VEVRAA generally apply to any business or 
organization that holds a single Federal contract or subcontract in 
excess of $150,000.\4\ Pursuant to VEVRAA, contractors with 50 or more 
employees and a single Federal contract or subcontract of $150,000 or 
more also must develop and maintain an affirmative action program that 
complies with 41 CFR part 60-300, subpart C.
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    \4\ Effective October 1, 2015, the coverage threshold under 
VEVRAA increased from $100,000 to $150,000, in accordance with the 
inflationary adjustment requirements in 41 U.S.C. 1908. See Federal 
Acquisition Regulation; Inflation Adjustment of Acquisition-Related 
Thresholds, 80 FR 38293 (July 2, 2015).
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    Pursuant to these authorities, receiving a Federal contract comes 
with a number of responsibilities. Contractors are required to comply 
with all provisions of these authorities as well as the rules, 
regulations, and relevant orders of the Secretary of Labor. Where OFCCP 
finds noncompliance under any of the three authorities or their 
implementing regulations, it utilizes established procedures to either 
facilitate resolution or proceed to administrative enforcement as 
necessary to secure compliance. A contractor found in violation that 
fails to correct violations of OFCCP's regulations may, after the 
opportunity for a hearing, have its contracts canceled, terminated, or 
suspended and/or may be subject to debarment.

II. Summary of Relevant Background

    This final rule, like the 2020 rule it modifies, focuses almost 
entirely on OFCCP's pre-enforcement resolution procedures. This 
includes the processes by which the agency notifies Federal contractors 
of the agency's findings during the compliance evaluations it conducts, 
and how the agency seeks to conciliate matters in which it finds a

[[Page 51718]]

violation of its regulations prior to referring a matter to the Office 
of the Solicitor for possible enforcement. To provide background and 
context for this final rule, we first summarize how OFCCP had 
traditionally accomplished this prior to the 2020 rule, the changes 
that the 2020 rule made to this approach, and how the agency proposed 
to modify this approach in the 2022 Notice of Proposed Rulemaking 
(NPRM).

A. OFCCP's Use of Pre-Enforcement Notices Prior to the 2020 Rule

    For decades prior to the promulgation of the 2020 rule, the 
regulations most relevant to OFCCP's pre-enforcement resolution 
procedures remained unchanged.\5\ OFCCP's general regulations on 
compliance evaluations provided that, when OFCCP finds deficiencies in 
contractors' compliance with its regulatory obligations, it will make 
``reasonable efforts . . . to secure compliance through conciliation 
and persuasion. . . .'' \6\ If the compliance evaluation found a 
material violation of the legal authorities administered by the agency, 
the contractor was willing to correct the violations, and OFCCP 
determined that settlement was appropriate, the parties would enter 
into a written conciliation agreement.\7\ If the agency had reasonable 
cause to believe that the contractor violated OFCCP's authorities and 
the contractor would not correct the violation, the agency could issue 
a notice requiring the contractor to show cause (``Show Cause 
Notice''), within 30 days, why enforcement proceedings or other 
appropriate actions should not be instituted.\8\ For decades, OFCCP 
evaluated and conciliated with contractors under this regulatory 
framework.
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    \5\ These regulations were not substantively revised by the 2020 
rule, and this final rule makes only minor clarifying revisions to 
one of the provisions, as discussed in more detail below.
    \6\ 41 CFR 60-1.20(b); 60-300.60(b); 60-741.60(b).
    \7\ 41 CFR 60-1.33; 60-300.62; 60-741.62 (2019). While the 2020 
rule added additional provisions to these sections of the 
regulations, the language on conciliation agreements remained 
substantively the same.
    \8\ 41 CFR 60-1.28; 60-300.64; 60-741.64 (2019); Compliance 
Responsibility for Equal Employment Opportunity, 43 FR 49240, 49247 
(Oct. 20, 1978); Revision of Chapter, 33 FR 7804, 7810 (May 28, 
1968). These regulations were not modified by the 2020 rule.
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    In addition to these regulatory provisions, OFCCP, as a matter of 
agency policy, long provided contractors with additional notice of its 
findings and an opportunity to respond during the course of its 
compliance evaluations and prior to any referral for enforcement.\9\ 
Specifically, whenever discrimination or other violations were found 
during the course of a compliance review, prior to the issuance of a 
Show Cause Notice, OFCCP would issue to the contractor a Notice of 
Violation.\10\ The Notice of Violation would notify the contractor that 
the agency found violations of the legal authorities it administers, 
and would specify the corrective actions the contractor would have to 
take in order to resolve the violations.\11\ OFCCP required that the 
Notice of Violation indicate the reasons for each finding and, if 
appropriate, note the contractor's failure to adequately justify its 
actions.\12\ Contractors were provided an opportunity to respond to the 
Notice of Violation and to attempt to conciliate the violations prior 
to issuance of a Show Cause Notice.\13\
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    \9\ See generally Federal Contract Compliance Manual (FCCM), 
Chapter 8, Resolution of Noncompliance, available at https://www.dol.gov/agencies/ofccp/manual/fccm/chapter-8-resolution-noncompliance (last accessed Dec. 1, 2022).
    \10\ Id. at Chapter 8F, Notice of Violation, available at 
https://www.dol.gov/agencies/ofccp/manual/fccm/chapter-8-resolution-noncompliance/8f-notice-violation (last accessed Dec. 1, 2022).
    \11\ Id.
    \12\ Id.
    \13\ Id.
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    Additionally, prior to the issuance of a Notice of Violation, OFCCP 
would in certain circumstances issue a Predetermination Notice. The 
2020 rule traced the agency's use of the Predetermination Notice back 
to 1988.\14\ Since that time, the agency has used the Predetermination 
Notice in a variety of circumstances. In those situations in which it 
was used, the purpose of this pre-enforcement notice has been to convey 
to the contractor an analysis of concerns OFCCP identified during its 
review indicating potential discrimination, whether referred to as 
``preliminary findings'' or ``preliminary indicators.'' Historically, 
issuance of a Predetermination Notice was not required. In 2018, 
however, OFCCP issued a Directive on the use of Predetermination 
Notices, requiring that OFCCP issue them ``for preliminary individual 
and systemic discrimination findings identified during the course of 
compliance evaluations,'' and providing contractors with an opportunity 
to respond prior to OFCCP deciding to issue a Notice of Violation.\15\ 
This Directive remains in effect.
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    \14\ ``Nondiscrimination Obligations of Federal Contractors and 
Subcontractors: Procedures to Resolve Potential Employment 
Discrimination,'' 85 FR 71553, 71561 (Nov. 10, 2020).
    \15\ Directive 2018-01, Use of Predetermination Notices, (Feb. 
27, 2018), available at https://www.dol.gov/agencies/ofccp/directives/2018-01 (last accessed Dec. 1, 2022).
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B. The 2020 Rule

    In November 2020, OFCCP published a final rule amending its 
regulations regarding the agency's pre-enforcement resolution 
procedures.\16\ The 2020 rule changed the obligations placed on the 
agency in several respects. First, the 2020 rule codified \17\ that 
OFCCP would issue a Predetermination Notice and Notice of Violation in 
any compliance evaluation \18\ in which the agency found potential 
discrimination or other material violations of its legal 
authorities.\19\ Accordingly, in combination with the Show Cause Notice 
already required by the regulations, the 2020 rule required OFCCP to 
provide the contractor with three separate pre-enforcement notices 
during the course of its compliance evaluation, and an opportunity for 
contractors to respond to each,\20\ prior to a decision to refer a case 
to the Office of the Solicitor for possible enforcement.
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    \16\ 85 FR 71553.
    \17\ As noted above, Directive 2018-01 required that OFCCP issue 
Predetermination Notices for preliminary individual and systemic 
discrimination findings identified during the course of compliance 
evaluations. The 2020 rule codified this practice. See 85 FR 71561.
    \18\ The regulation stated that OFCCP ``may'' issue these 
notices, see 41 CFR 60-1.33(a) and (b) (2021), but this language was 
to account for OFCCP's inherent enforcement discretion not to pursue 
enforcement in certain cases if it so chose. See generally Heckler 
v. Chaney, 470 U.S. 821 (1985). For any matters that OFCCP wished to 
pursue with potential discrimination or other material violations, 
the 2020 rule required the issuance of the Predetermination Notice 
and Notice of Violation.
    \19\ 85 FR 71553. The final rule, which took effect on December 
10, 2020, was published after OFCCP considered comments it received 
on a notice of proposed rulemaking, Nondiscrimination Obligations of 
Federal Contractors and Subcontractors: Procedures To Resolve 
Potential Employment Discrimination, 84 FR 71875 (Dec. 30, 2019).
    \20\ See 41 CFR 60-1.33; 41 CFR 60-300.62; 41 CFR 60-741.62 
(providing the contractor an opportunity to respond to the 
Predetermination Notice, Notice of Violation, and Show Cause 
Notice).
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    In addition, the 2020 rule established specific evidentiary 
requirements that OFCCP would need to meet in order to issue pre-
enforcement notices. These requirements applied equally to the 
Predetermination Notice and the Notice of Violation. First, the rule 
required OFCCP to identify and disclose to contractors in the 
Predetermination Notice and Notice of Violation the theory of 
discrimination--disparate treatment and/or disparate impact--under 
which it was proceeding. Second, depending on the theory of 
discrimination, the 2020 rule required OFCCP to meet specific 
evidentiary thresholds in order to issue any pre-enforcement notice. 
For matters

[[Page 51719]]

proceeding under a disparate treatment theory, the 2020 rule required 
OFCCP to set forth: (1) sufficient ``quantitative evidence''; (2) 
sufficient ``qualitative evidence'' that, in combination with other 
evidence, supported a finding that the contractor's discriminatory 
intent caused disparate treatment; and (3) a demonstration that any 
observed disparities were also ``practically significant.'' \21\ For 
matters proceeding under a disparate impact theory, the 2020 rule 
required the same findings of sufficient ``quantitative evidence'' and 
``practical significance'' prior to issuing a pre-enforcement notice, 
as well as a requirement that OFCCP identify the specific policy or 
practice of the contractor causing the adverse impact. For purposes of 
further describing the evidentiary obligations OFCCP must meet to issue 
these pre-enforcement notices, the 2020 rule also included lengthy 
definitions of ``quantitative evidence'' and ``qualitative evidence'' 
detailing specific types and amounts of evidence that would satisfy the 
definition.
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    \21\ The 2020 rule included some narrow exceptions where OFCCP 
would not be required to satisfy all three of these prongs in order 
to issue a Predetermination Notice, such as when qualitative 
evidence alone could satisfy a disparate treatment finding, or if 
the quantitative evidence was ``so extraordinarily compelling that 
by itself it is sufficient'' to support a disparate treatment 
finding. 41 CFR 60-1.33(a)(2). As discussed in the NPRM and herein, 
however, Title VII does not require meeting such rigid requirements 
in order to satisfy a prima facie case; rather, case law provides 
that the standards of proof in such cases are flexible and fact-
specific.
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    Additionally, the 2020 rule required OFCCP to disclose the 
quantitative and qualitative evidence it had accumulated in 
``sufficient detail'' to allow contractors to investigate and respond. 
It also required OFCCP to disclose ``the model and variables used in 
any statistical analysis and an explanation for why any variable 
proposed by the contractor was excluded from that analysis.'' Once 
OFCCP issued the Predetermination Notice, the 2020 rule provided 
contractors with 30 days to respond. As an alternative, the 2020 rule 
also codified a provision stating that contractors could waive the 
procedures for issuing a Predetermination Notice and/or Notice of 
Violation and enter directly into a conciliation agreement if they so 
chose. Finally, the 2020 rule included severability clauses that 
applied only to these new pre-enforcement obligations.
    The stated rationale for these revisions in the 2020 rule was ``to 
increase clarity and transparency for Federal contractors, establish 
clear parameters for OFCCP resolution procedures, and enhance the 
efficient enforcement of equal employment opportunity laws.'' \22\ The 
2020 rule preamble further asserted that the rule would ``provide[ ] 
contractors with more certainty as to OFCCP's operative standards for 
compliance evaluations, and provide[ ] guardrails on the agency's 
issuance of pre-enforcement notices.'' \23\ As a result, OFCCP 
concluded that the 2020 rule would ``help [the agency] to increase the 
number of contractors that the agency evaluates and focus on resolving 
stronger cases through the strategic allocation of limited agency 
resources.'' \24\ The 2020 rule further clarified that the Department 
was issuing the rule ``as an exercise of its enforcement discretion,'' 
and that the approach codified in the rule was ``neither compelled nor 
prohibited by Title VII and OFCCP case law.'' \25\
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    \22\ 85 FR 71553.
    \23\ Id.
    \24\ Id.
    \25\ Id. As noted above, the nondiscrimination protections and 
standards under E.O. 11246 are interpreted consistently with those 
under Title VII.
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C. The 2022 NPRM

    On March 22, 2022, OFCCP published a NPRM that proposed to rescind 
most, though not all, provisions in the 2020 rule.\26\ OFCCP proposed 
to retain the requirement that it would issue Predetermination Notices 
and Notices of Violation to contractors in matters in which OFCCP found 
preliminary indicators of discrimination. OFCCP also proposed to retain 
the regulatory language regarding early resolution, which provides that 
contractors may waive the pre-enforcement notice procedures if they 
enter directly into a conciliation agreement.
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    \26\ See Pre-Enforcement Notice and Conciliation Procedures, 87 
FR 16138 (Mar. 22, 2022).
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    OFCCP proposed to remove or modify the other provisions in the 2020 
rule. OFCCP proposed to eliminate the specific evidentiary requirements 
of 41 CFR 60-1.33(a) and (b) that the agency needed to meet to issue a 
Predetermination Notice or Notice of Violation. This included the 
requirement to identify the theory of discrimination at the pre-
enforcement notice stage, the requirement to provide specific and 
different forms of ``quantitative'' and ``qualitative'' evidence as 
defined by the 2020 rule, the definitions of ``quantitative'' and 
``qualitative'' evidence, and the requirement to demonstrate that any 
disparities identified were also ``practically significant.''
    The NPRM provided multiple reasons for these proposed 
modifications.\27\ First and foremost, the NPRM explained that many of 
the key stated objectives of the 2020 rule--to promote more effective 
enforcement, increase the number of contractors that the agency 
evaluates, and promote greater certainty and clarity regarding the 
agency's resolution procedures--had not been met. Rather than creating 
clear standards and more effective enforcement, the NPRM noted that the 
2020 rule instead resulted in time-consuming disputes with contractors 
over the application of the new requirements. The NPRM also described 
how the 2020 rule placed certain obligations on OFCCP that went beyond, 
or were even in some cases inconsistent with, Title VII principles and 
case law. For instance, the 2020 rule required OFCCP to demonstrate 
practical significance, a concept that is not found in the Title VII 
statute and that multiple circuit courts have held is not necessary in 
order to satisfy a prima facie case of employment discrimination. The 
2020 rule also included rigid evidentiary thresholds for issuing pre-
enforcement notices, such as requiring specific types and amounts of 
``quantitative evidence'' and ``qualitative evidence'' as defined by 
the rule with only narrow exceptions, which the NPRM explained were 
inconsistent with the general principle that the Title VII evidentiary 
standard is a flexible one dependent on the unique facts at issue in 
each case. The NPRM further emphasized that, beyond the rigid 
evidentiary requirements themselves, the 2020 rule's requirement that 
OFCCP meet them prior to issuing pre-enforcement notices, while the 
investigation is still underway, had also proven problematic. Not only 
did this require OFCCP to meet a heightened evidentiary threshold 
before issuing even a preliminary notice of findings to contractors, 
but the same standard applied to both the Predetermination Notice and 
the Notice of Violation, rendering the two notices--which were 
originally intended to serve separate purposes--duplicative. 
Accordingly, the NPRM proposed to restore the function of the 
Predetermination Notice to convey preliminary findings of potential 
discrimination, providing contractors early notice when OFCCP had found 
potential issues and fostering more efficient exchanges of information 
that may focus the scope of review.
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    \27\ The reasons summarized here are some of the key points 
raised in the NPRM but is not an exhaustive list. For further detail 
and explanation, we refer readers to the NPRM itself, as well as the 
response to public comments in Section IV, infra.

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[[Page 51720]]

    OFCCP also proposed to modify the period of time for contractors to 
respond to pre-enforcement notices from 30 to 15 days, noting that the 
latter was the timeframe for response that the agency had set forth in 
its 2018 Directive on Predetermination Notices and that it would 
continue its practice of providing extensions to contractors for good 
cause when needed.\28\ Additionally, OFCCP proposed to modify the 
severability clause included in the 2020 rule, expanding it so that it 
applied to all parts of OFCCP's regulations, not just the specific 
section pertaining to OFCCP's resolution procedures.
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    \28\ See Directive 2018-01, Use of Predetermination Notices, 
(Feb. 27, 2018), available at https://www.dol.gov/agencies/ofccp/directives/2018-01 (last accessed Dec. 1, 2022).
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    Finally, OFCCP proposed two additional clarifications to the 
regulations related to, but not addressed by, the 2020 rule. First, 
OFCCP proposed language clarifying the ``reasonable efforts'' standard, 
which applies to the actions the agency must take ``to secure 
compliance through conciliation and persuasion.'' The NPRM proposed 
language clarifying that the standard should be interpreted 
consistently with Title VII and its requirement that the Equal 
Employment Opportunity Commission (EEOC) ``endeavor to eliminate any 
such alleged employment practice by informal methods of conference, 
conciliation, and persuasion'' prior to bringing an enforcement action, 
to ensure that OFCCP has the same flexibility in the administration of 
its laws as that recognized under Title VII by Congress and by the U.S. 
Supreme Court. Second, the NPRM clarified that, if OFCCP identified 
additional violations after issuing a Predetermination Notice, it could 
include those violations in a subsequent Notice of Violation or Show 
Cause Notice without amending and reissuing the Predetermination 
Notice. The NPRM explicitly stated that OFCCP would continue to provide 
contractors with an opportunity to respond to and conciliate any such 
violations prior to referring a case for enforcement.

D. Public Comments

    OFCCP received 11 public comments in response to the NPRM. The 
commenters included individuals, employer associations, law firms, a 
women's rights legal advocacy organization, a labor rights 
organization, and a civil and human rights advocacy organization. Some 
commenters, such as the women's rights legal advocacy organization, 
labor rights organization, and civil and human rights advocacy 
organization, generally supported the proposed rule, asserting that the 
2020 rule imposed unnecessary, burdensome, and confusing enforcement 
standards that did not align with the requirements of Title VII and 
conflated the first two stages of OFCCP's pre-enforcement process, 
thereby causing delay and wasting resources. These commenters believed 
that modifying the 2020 rule would restore consistency between OFCCP 
practice and Title VII and would reestablish the distinct roles of the 
Predetermination Notice and the Notice of Violation. Other commenters, 
such as employer associations and law firms, generally opposed the 
proposal, expressing concerns that the modification would remove 
transparency from the enforcement process, did not align with Title 
VII, and would afford contractors less due process. These commenters 
also asserted that OFCCP has not demonstrated a need for the rulemaking 
and believed that 15 calendar days was an inadequate amount of time to 
provide a response to a Predetermination Notice. In addition, one 
commenter raised concerns that the proposed use of the term ``indicator 
of discrimination'' signaled that OFCCP intended to issue 
Predetermination Notices based solely on the results of the agency's 
initial analyses. These comments are explained in more detail and 
addressed by the agency in Section IV, below.

III. Summary of the Final Rule

    After consideration of all significant issues raised in the public 
comments, this final rule adopts most of the revisions outlined in the 
NPRM, with some minor adjustments. As set forth in more detail below, 
the changes adopted in this final rule stem from OFCCP's experience 
implementing the 2020 rule as well as its reconsidered policy judgment 
as to how OFCCP can strengthen enforcement of its requirements and 
promote consistency with Title VII principles. In sum, this final rule 
largely returns to the processes and standards under which OFCCP and 
contractors operated for many years prior to the effective date of the 
2020 rule, while also providing additional certainty and notice to 
contractors.
    As proposed in the NPRM, this final rule does retain some 
provisions from the 2020 rule that will provide additional certainty 
and efficiency for contractors during the course of compliance 
evaluations. First, the final rule retains the requirement that OFCCP 
will issue a Predetermination Notice and Notice of Violation to 
contractors in all matters in which the agency has made preliminary 
findings of potential discrimination and findings of discrimination, 
respectively. Second, the final rule retains the early resolution 
provisions allowing OFCCP and the contractor to resolve identified 
issues without the need for OFCCP to issue a Predetermination Notice 
and Notice of Violation if the contractor so chooses.
    The final rule does include a few additional changes from what was 
proposed. First, the final rule replaces the term ``indicators of 
discrimination'' with ``preliminary findings of potential 
discrimination'' to describe what is necessary in order to issue a 
Predetermination Notice. Further detail regarding this change is set 
forth in Section IV, infra. Second, consistent with OFCCP's 
longstanding practice and the 2020 rule, the final rule includes a 
clarification that the agency may issue a Show Cause Notice without 
first issuing a Predetermination Notice or Notice of Violation when the 
contractor has failed to provide access to its premises for an on-site 
review, or refuses to provide access to witnesses, records, or other 
information. Finally, the proposed language in the regulation on 
Predetermination Notices stated that if there was insufficient rebuttal 
evidence to the Predetermination Notice, the agency would ``proceed 
with its review.'' The final rule makes two minor clarifications. It 
first adds language to clarify that OFCCP's determination on whether 
there was sufficient rebuttal evidence would be determined by the 
contractor's response and any additional investigation undertaken by 
the agency, to clarify that the agency may conduct an additional 
investigation after issuing the Predetermination Notice and as a result 
of the contractor's response to the Predetermination Notice. It also 
amends this provision to clarify that it will proceed ``to issue a 
Notice of Violation,'' which is the intended, more specific meaning.
    The final rule otherwise adopts the NPRM as proposed. A more 
detailed discussion of the public comments that OFCCP received follows 
in the next section.

IV. Response to Public Comments

A. Public Comments on Modifications to the E.O. 11246 Regulations

1. Evidentiary Standards
a. Qualitative and Quantitative Evidence
    As described above, the NPRM proposed to amend Sec.  60-1.3 by 
removing the 2020 rule's definitions for ``qualitative evidence'' and

[[Page 51721]]

``quantitative evidence.'' OFCCP also proposed rescinding the 
requirement for the agency to provide both ``qualitative'' and 
``quantitative'' evidence under a specific theory of proof before 
issuing a Predetermination Notice or Notice of Violation.
    OFCCP received eight comments on this topic from employer 
associations, law firms, and labor rights and advocacy organizations. A 
women's rights legal advocacy organization agreed with removing the 
definitions. It stated that the definitions were confusing and further 
disagreed with the 2020 rule's requirement that OFCCP provide both 
quantitative and qualitative evidence before issuing Predetermination 
Notices or Notices of Violation. It asserted that removing this 
requirement will ensure that OFCCP can conduct investigations 
efficiently, ``without being forced to develop its full slate of 
evidence at a preliminary stage.'' A labor rights organization and a 
civil and human rights advocacy organization made similar comments, 
describing how the definitions and requirements for showing qualitative 
and quantitative evidence departed from Title VII principles and 
hindered OFCCP's ability to issue pre-enforcement notices based on the 
specific facts and circumstances uncovered through the compliance 
evaluation. One law firm stated that it understood why OFCCP would want 
to remove the qualitative and quantitative evidence definitions, as 
OFCCP should be able to evolve with Title VII's interpretation.\29\ 
Some employer associations and law firms opposed removing the 
definitions and evidentiary requirements, asserting that the 2020 
rule's definitions were broad enough to allow OFCCP to effectively 
pursue cases and stating that OFCCP was not required to provide 
examples of every type of quantitative or qualitative evidence included 
in the definitions.
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    \29\ This firm disagreed with removing other aspects of the 
evidentiary requirements, which OFCCP addresses below.
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    OFCCP considered these comments and maintains that, on balance, the 
inclusion of the definitions created more problems than benefits. First 
and foremost, as set forth in the NPRM and expanded upon here, OFCCP 
found that these definitions created confusion and increased disputes 
regarding the evidence required to issue pre-enforcement notices. 
Specifically, since the 2020 rule went into effect, some contractors 
have asserted that OFCCP must present evidence in its preliminary pre-
enforcement notices of the highly specific examples included in the 
definitions in order for the agency to satisfy the requirements of the 
2020 rule. In one instance, rather than providing a substantive 
response to the agency's preliminary determination notice, the 
contractor cited the 2020 rule, claiming that OFCCP failed to identify 
sufficient qualitative evidence of intentional discrimination. The 
contractor disputed the type of qualitative evidence OFCCP was 
permitted to use under the 2020 rule, asserting that information OFCCP 
obtained from interviews was not evidence, but instead speculative 
statements insufficient to infer discriminatory intent. These disputes 
are directly at odds with the 2020 rule's stated intention of 
increasing clarity and enhancing the efficient enforcement of equal 
employment opportunity laws.
    In addition to these inefficiencies, OFCCP, upon further 
reconsideration, found that the codification of evidentiary definitions 
was confusing, overly particularized, and inconsistent with the general 
principle that the Title VII evidentiary standard is a flexible one 
dependent on the unique facts at issue. As otherwise discussed in the 
NPRM, the definitions in the 2020 rule included many examples of 
evidence demonstrating overt bias, including ``biased statements, 
remarks, attitudes, or acts based upon membership in a protected class, 
particularly when made by a decision maker involved in the action under 
investigation.'' \30\ This type of highly specific evidence of 
discrimination is rare and not required by Title VII standards in order 
for a plaintiff to prevail.\31\ Yet, the inclusion of this language 
engendered contractor disputes over whether the evidence OFCCP 
presented met this definition. In addition, the definition did not 
encompass the full range of relevant evidence and ran counter to the 
flexibility needed to demonstrate discrimination based on the facts of 
each case. Further, although the ``qualitative evidence'' definition 
also applied to disparate impact matters, the definition was overly 
focused on evidence of discriminatory intent in disparate treatment 
cases. Although the definition included one example related to 
disparate impact cases--evidence related to ``the business necessity 
(or lack thereof) of a challenged policy or practice'' \32\--that 
example was problematic because it was: (1) a category of evidence that 
is the employer's burden to demonstrate, after the agency establishes a 
prima facie case; \33\ and (2) not the only sort of ``qualitative'' 
evidence that plaintiffs typically introduce or rely upon in the course 
of a disparate impact case.\34\ Another problem with the definition is 
that it included ``whether the contractor has otherwise complied with 
its non-discrimination obligations'' as a type of permissible 
qualitative evidence. Upon reconsideration, OFCCP determined that this 
provision could easily be misinterpreted to mean that when a contractor 
complies with some of its nondiscrimination obligations, it somehow 
lessens the weight of evidence of noncompliance with other 
nondiscrimination obligations.
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    \30\ 85 FR 71553, 71570-71574.
    \31\ See Thomas v. Eastman Kodak Co., 183 F. 3d 38, 58 n.12 (1st 
Cir. 1999) (citing Hodgens v. Gen. Dynamics Corp., 144 F.3d 151, 171 
n. 13 (1st Cir. 1998)) (noting that direct evidence, while probative 
of discrimination, is ``rarely found in today's sophisticated 
employment world'').
    \32\ 85 FR 71557.
    \33\ 42 U.S.C. 2000e-2(k)(1)(A)(i); see also Ricci v. DeStefano, 
557 U.S. 557, 578 (2009) (``An employer may defend against liability 
[for disparate impact discrimination] by demonstrating that the 
practice is `job related for the position in question and consistent 
with business necessity.'' (quoting 42 U.S.C. 2000e-2(k)(1)(A)(i))); 
Wards Cove Packing Co., 490 U.S. at 659 (``[T]he employer carries 
the burden of producing evidence of a business justification for his 
employment practice.'').
    \34\ By way of example, because a plaintiff in disparate impact 
cases must, where possible, identify the particular employment 
practice that is causing the adverse impact, see 42 U.S.C. 2000e-
2(k)(1)(B)(i), it is commonplace for a plaintiff to introduce 
testimony or interview statements from expert witnesses or company 
officials regarding its selection or compensation system that would 
provide necessary context and help to identify the particular 
employment practice at issue. Similarly, evidence regarding less 
discriminatory alternative employment practices is a common feature 
in disparate impact cases. 42 U.S.C. 2000e-2(k)(1)(A)(ii).
---------------------------------------------------------------------------

    Some commenters, including law firms and employer associations, 
also asserted that the requirement to show quantitative and qualitative 
evidence helped contractors better understand the preliminary 
indicators and helped them provide a meaningful response to the 
Predetermination Notice. One employer association expressed the 
importance of the 2020 rule's requirement that OFCCP identify its 
theory of proof (i.e., disparate treatment or disparate impact) and the 
benefit of the clear parameters the 2020 rule provided for each theory. 
In response to these comments, OFCCP notes that the agency will 
continue to provide a Predetermination Notice describing its 
preliminary findings of potential discrimination and any other 
potential violations. This information enables the parties to clarify 
the issues, respond to each other's positions, and work toward an 
efficient resolution. For proof at trial, the agency will marshal all 
relevant evidence to prove that discrimination has occurred, which will 
typically include interviews with a more expansive number of employees

[[Page 51722]]

and other witnesses and documents, data, and other information obtained 
through the investigative and discovery process. However, the agency 
need not provide the specific theory of proof or satisfy rigid 
evidentiary standards to provide preliminary notice of findings of 
discrimination.\35\ Furthermore, Title VII case law demonstrates that 
there are multiple ways to establish a prima facie case of 
discrimination as long as the plaintiff ultimately satisfies its burden 
of proof. As the U.S. Supreme Court and lower courts have long 
recognized, Title VII requires a case-by-case evaluation of the facts 
and circumstances.\36\ Additionally, prior to discovery in litigation, 
OFCCP may not have access to the full evidentiary record necessary to 
evaluate the precise theories of proof and would need to conduct 
depositions of witnesses and obtain relevant data and information for 
each stage of the employment process at issue before making this 
determination. Despite this, the 2020 rule required OFCCP to satisfy 
bright line statistical thresholds and proffer specific types of 
evidence to issue even preliminary notices of findings to contractors. 
Additionally, OFCCP agrees with the law firm comment that the removal 
of the qualitative and quantitative evidence definitions will enable 
the agency's enforcement to evolve with developments in the 
interpretation of Title VII.
---------------------------------------------------------------------------

    \35\ Longstanding case law provides that OFCCP need not make an 
election between alternative theories of proof during litigation, 
let alone in the preliminary notice stage of a compliance review. 
OFCCP v. Honeywell, 77-OFC-3, 1993 WL 1506966, at *11 (Sec'y of 
Labor June 2, 1993) (``no procedural election between alternative 
legal theories is required of a claimant at either pre-trial, or 
appellate stages'') (citing Wright v. Nat'l Archives & Records 
Serv., 609 F.2d 702, 711 (4th Cir. 1979)); see also Teamsters v. 
United States, 431 U.S. 324, 336 n.15 (1977).
    \36\ See Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 995 
n.3 (1988) (noting that the Supreme Court has ``not suggested that 
any particular number of `standard deviations' can determine whether 
a plaintiff has made out a prima facie case in the complex area of 
employment discrimination''); Gay v. Waiters' & Dairy Lunchmen's 
Union, Local No. 30, 694 F.2d 531, 551 (9th Cir. 1982) (``It would 
be improper to posit a quantitative threshold above which 
statistical evidence of disparate racial impact is sufficient as a 
matter of law to infer discriminatory intent, and below which it is 
insufficient as a matter of law.''); see also Alvarez v. Royal 
Atlantic Developers, Inc., 610 F.3d 1253, 1264 (11th Cir. 2010) 
(also noting, in an individual case without statistical evidence, 
that ``[t]he methods of presenting a prima facie case are flexible 
and depend on the particular situation.'').
---------------------------------------------------------------------------

    Based upon further consideration of its position, the effect of the 
final rule, and the comments received, OFCCP has determined the 2020 
rule's rigid requirements were unnecessary, fostered confusion, and 
limited OFCCP's ability to pursue potentially meritorious cases. As 
noted above, the 2020 rule's evidentiary standards placed certain 
obligations on OFCCP that went beyond, or were even in some cases 
inconsistent with, Title VII principles and case law. Accordingly, 
OFCCP is removing the definitions for qualitative evidence and 
quantitative evidence and is rescinding the requirement for OFCCP to 
provide both quantitative and qualitative evidence under a specific 
theory of discrimination in order to issue a Predetermination Notice or 
Notice of Violation.
    The NPRM also proposed removing the 2020 rule requirement that 
OFCCP disclose the quantitative and qualitative evidence the agency 
relied upon in the Predetermination Notice ``in sufficient detail to 
allow contractors to investigate allegations and meaningfully 
respond.'' \37\ The requirement for OFCCP to provide ``sufficient 
detail'' for a contractor to ``meaningfully respond'' is inherently 
subjective. Some contractors argued that the anecdotal evidence that 
OFCCP shared to support its issuance of pre-enforcement notices failed 
to meet the qualitative evidence definition included in the 2020 rule. 
Contractors have also argued that the qualitative evidence that OFCCP 
provided was insufficient because the agency failed to disclose the 
identity of the interviewees who provided relevant statements at the 
Predetermination Notice stage.
---------------------------------------------------------------------------

    \37\ 87 FR 16138, 16143.
---------------------------------------------------------------------------

    Additionally, commenters, including a women's rights legal advocacy 
organization, a labor rights organization, and a civil and human rights 
advocacy organization, shared OFCCP's concern articulated in the 
proposed rule that the requirement to disclose anecdotal evidence at 
this preliminary stage may have a chilling effect on the willingness of 
victims and witnesses to participate in OFCCP's investigation due to 
concerns that an employer may uncover their identities, which could 
lead to retaliation. One commenter disagreed, citing OFCCP's ability to 
protect a witness' identity while still providing the required 
evidence. However, as described above, some contractors have 
nevertheless asserted that, under the 2020 rule, OFCCP must reveal the 
identity of relevant witnesses at the preliminary stage in order to 
meet the 2020 rule's requirements. OFCCP believes this interpretation 
of the regulation is incorrect, as the government informer's privilege 
generally protects the agency's right to withhold the identity of 
confidential witnesses.
    Nevertheless, it remains that the 2020 rule's required disclosure 
of anecdotal evidence has led to extensive disputes about what 
information is sufficient under the rule, and OFCCP's authority to 
protect witness' confidentiality at the preliminary stages of 
investigations. These disputes over inherently subjective thresholds 
regarding what information needed to be proffered in preliminary 
notices of findings have limited OFCCP's ability to pursue cases that 
would be actionable under Title VII standards. Accordingly, in the 
final rule, OFCCP is rescinding the requirement to disclose the 
quantitative and qualitative evidence relied upon in the 
Predetermination Notice.\38\ To promote consistency and notice to 
contractors, the final rule does require the use of the 
Predetermination Notice where the agency has made preliminary findings 
of potential discrimination. Further, the final rule specifies that in 
the Predetermination Notice, OFCCP will continue to describe the 
preliminary findings of potential discrimination and any other 
potential violations to enable the contractor to understand OFCCP's 
position and provide a substantive response.
---------------------------------------------------------------------------

    \38\ OFCCP retains discretion to disclose some or all of the 
quantitative and qualitative evidence supporting the 
Predetermination Notice, where appropriate.
---------------------------------------------------------------------------

b. Statistical Model and Variables
    While most comments opposing the rule focused on evidentiary 
standards as a whole, one law firm specifically requested that OFCCP 
retain the 2020 rule's requirement that, upon the contractor's request, 
OFCCP must provide the model and variables used in any statistical 
analysis and an explanation for why any variable proposed by the 
contractor was excluded from that analysis. The law firm asserted that 
sharing this information promoted transparency and helped contractors 
understand OFCCP's analysis and allowed the contractor to more easily 
make a business decision to resolve the matter.
    In response, OFCCP declines to retain this requirement because 
imposing a regulation requiring the production of the model and 
variables used in any statistical analysis the agency performs and an 
explanation for why any variable proposed by the contractor was 
excluded from that analysis creates inefficiencies. The agency already 
has guidance that promotes sufficient transparency through the sharing 
of information by OFCCP, including information on the agency's 
econometric methods and the provision

[[Page 51723]]

of replication data.\39\ OFCCP will continue to explain its statistical 
analysis in sufficient detail for the contractor to replicate the 
analysis and assess the merits of the agency's findings. OFCCP will 
also continue to explain its rationale for excluding otherwise 
reasonable variables from its analysis.
---------------------------------------------------------------------------

    \39\ See Directive 2018-05, Analysis of Contractor Compensation 
Practices During a Compliance Evaluation, issued Aug. 24, 2018, 
available at https://www.dol.gov/agencies/ofccp/directives/2018-05 
(last accessed Dec. 5, 2022).
---------------------------------------------------------------------------

    However, OFCCP has determined that imposing a regulatory 
requirement to provide the model and variables used in any statistical 
analysis, particularly at preliminary stages of the review, limits the 
agency's effective enforcement of the law. First, the 2020 rule's 
requirement for OFCCP to share its ``model'' is vague and subject to 
dispute, as the types of analyses and statistical techniques can vary 
widely from case to case, and the agency needs to exercise discretion 
over the aspects of its modeling that would be appropriate to share 
based on the stage of the investigation, the nature of the concerns 
identified, and a consideration of aspects of the analysis, tools, and 
techniques subject to deliberative process privilege.
    The regulatory requirement to explain ``any'' variables suggested 
by the contractor raises similar concerns by limiting OFCCP's ability 
to exercise its enforcement discretion and promote efficiency in its 
investigation. Not all variables suggested by a contractor merit 
explanation and response. For example, variables that are highly 
correlated with other variables, those that do not impact selections or 
pay in the direction or magnitude claimed by the contractor, and those 
that are differentially distributed by gender or race but do not 
legitimately influence selection or pay may not warrant an explanation 
depending on the fact and circumstances of the matter. While OFCCP will 
address certain variables in appropriate circumstances, the categorical 
requirement that OFCCP address all proposed variables is inefficient.
    In sum, rather than expend resources responding to unproductive 
requests for further information, OFCCP has determined that to promote 
effective enforcement, the agency needs to have discretion to ascertain 
where providing further details about its modeling is likely to be 
productive. Removing the regulatory requirements that OFCCP produce its 
models and variables and address all variables suggested by a 
contractor will allow OFCCP to utilize its discretion to provide 
information on its modeling and variables to promote contractors' 
understanding of concerns OFCCP has identified and to facilitate a 
prompt and successful resolution of compliance evaluations.
c. Practical Significance
    In the NPRM, OFCCP proposed removing the regulatory requirement to 
demonstrate practical significance before issuing a Predetermination 
Notice.\40\ The agency received five comments on the proposal to remove 
this regulatory requirement from employer associations, a law firm, a 
women's rights legal advocacy organization, and a civil and human 
rights advocacy organization. Two commenters supported removing the 
requirement, stating that whether Title VII requires a showing of 
practical significance is unsettled as a matter of law. One employer 
association commented that practical significance is a necessary 
consideration in scientific research and therefore cannot be ignored by 
the agency. The same commenter also believed that the use of practical 
significance allowed OFCCP to prioritize compliance evaluations with 
the strongest evidence and strategically allocate resources. Another 
employer association argued that removing the requirement to 
demonstrate practical significance before issuing a Predetermination 
Notice was generally inconsistent with Title VII principles and would 
effectively set a dual standard upon which contractors would be 
evaluated. A law firm commented that removing this requirement would be 
counterproductive as doing so would cause delays and reduce 
settlements.
---------------------------------------------------------------------------

    \40\ Practical significance refers to whether an observed 
disparity in employment opportunities or outcomes reflects 
meaningful harm to the disfavored group, focusing on the contextual 
impact or importance of the disparity rather than its likelihood of 
occurring by chance.
---------------------------------------------------------------------------

    In response, OFCCP notes that it did not propose adopting a blanket 
policy to disregard practical significance. As part of its enforcement, 
dating back before the publication of the 2020 rule, OFCCP has utilized 
practical significance measures where appropriate in compliance 
evaluations, based on the specific facts of the case. There is no 
professional consensus among statisticians and labor economists 
regarding an appropriate or actionable practical significance threshold 
for all cases of employment discrimination.\41\ Further, the text of 
Title VII contains no reference to practical significance,\42\ and the 
case law is unsettled as to whether Title VII specifically requires a 
finding of practical significance, and, if so, what level of practical 
significance is sufficient and appropriate.\43\ Therefore, the final 
rule removes the regulatory requirement to demonstrate practical 
significance prior to issuing a Predetermination Notice or Notice of 
Violation. OFCCP will continue to utilize the concept of practical 
significance where appropriate, along with statistical significance, 
and all other evidence gathered in the review, as part of a holistic 
approach that applies the case law and statistical techniques as they 
evolve to the compliance evaluations it investigates, conciliates, and 
refers for enforcement.
---------------------------------------------------------------------------

    \41\ See Joseph L Gastwirth et al, On the Interplay Between 
Practical and Statistical Significance in Equal Employment Cases, 20 
Law, Probability and Risk, 69, 69-87 (2022), available at https://doi.org/10.1093/lpr/mgac002 (last accessed June 22, 2022).
    \42\ See Elliot Ko, Big Enough to Matter: Whether Statistical 
Significance or Practical Significance Should Be the Test for Title 
VII Disparate Impact Claims, 101 Minn. L.R. 869, 889 (2016) (``Title 
VII does not require plaintiffs to prove that an employment practice 
had a `large' impact on a protected class. Title VII just requires 
plaintiffs to prove that `a particular employment practice' had a 
disparate impact on a protected class. . . . Title VII only requires 
proof of a `disparate impact,' not proof of a `very' disparate 
impact that is large enough to warrant societal or moral 
condemnation.'').
    \43\ Several circuit courts have held that a finding of 
practical significance is not required in order to satisfy a prima 
facie case of discrimination. See, e.g., Jones v. City of Boston, 
752 F.3d 38 (1st Cir. 2014); Apsley v. Boeing Co., 691 F.3d 1184 
(10th Cir. 2012); Stagi v. Nat'l R.R. Passenger Corp., 2010 WL 
3273173 (3d Cir. Aug. 16, 2010). Other circuit courts have 
considered measures of practical significance to varying degrees. 
See, e.g., Brown v. Nucor Corp., 785 F.3d 895, 908, 935 (4th Cir. 
2015); Isabel v. City of Memphis, 404 F.3d 404, 412, 418 (6th Cir. 
2005); Ensley Branch of NAACP v. Seibels, 31 F.3d 1548, 1555 (11th 
Cir. 1994); Waisome v. Port Auth. of N.Y. & N.J., 948 F.2d 1370, 
1376 (2d Cir. 1991); Clady v. County of Los Angeles, 770 F.2d 1421, 
1428-29 (9th Cir. 1985); Fisher v. Procter & Gamble Mfg. Co., 613 
F.2d 527, 545 (5th Cir. 1980).
---------------------------------------------------------------------------

d. General Comments Regarding the Evidentiary Standards
    OFCCP also received general comments in favor of and against 
removing the evidentiary standards that the 2020 rule imposed on 
OFCCP's use of the Predetermination Notice and Notice of Violation. 
Commenters' concerns about removing the evidentiary standards for the 
Predetermination Notice generally aligned with their concerns regarding 
the Notice of Violation. Labor rights and advocacy organizations agreed 
with removing the evidentiary standards, asserting that these 
heightened evidentiary standards were not aligned with Title VII and 
impeded OFCCP's ability to enforce its legal authorities. Employer 
associations and law firms generally disagreed with removing the 
evidentiary standards. An employer association stated that the 2020 
rule's

[[Page 51724]]

evidentiary standards were beneficial because contractors could use the 
standards to replicate OFCCP's approach during their self-audits. OFCCP 
has concluded that the 2020 rule's rigid evidentiary standards are not 
necessary for contractors to conduct self-audits. The agency provides 
extensive guidance and resources to assist contractors in conducting 
meaningful self-audits of their employment systems, including two 
recent public directives,\44\ the FCCM, compliance assistance 
materials, technical assistance guides, online contractor courses, and 
webinars. Through these materials, OFCCP provides transparency on how 
the agency will conduct compliance evaluations and promote a proactive 
approach to compliance. Additionally, as discussed thoroughly in the 
NPRM and elsewhere in this final rule, the evidentiary standards that 
the 2020 rule required the agency to meet exceeded those required by 
Title VII in certain respects, and thus are particularly inappropriate 
to require in order to issue preliminary notices of potential 
discrimination issued while the agency's investigation is still 
ongoing.
---------------------------------------------------------------------------

    \44\ See Directive 2022-02, Effective Compliance Evaluations and 
Enforcement (Mar. 31, 2022), available at https://www.dol.gov/agencies/ofccp/directives/2022-02 (last accessed June 13, 2022); 
Directive 2022-01 Revision 1, Advancing Pay Equity Through 
Compensation Analysis (Aug. 18, 2022), available at https://www.dol.gov/agencies/ofccp/directives/2022-01-Revision1 (last 
accessed Aug. 25, 2022).
---------------------------------------------------------------------------

    Employer associations and law firms also expressed concerns that 
removing the evidentiary standards would infringe on contractors' due 
process by depriving them of the ability to evaluate alleged indicators 
of discrimination and impede their ability to meaningfully respond or 
correct problem areas. These commenters also stated that removing the 
evidentiary standards would lead to less transparency, resulting in 
lengthy disputes, fewer settlements, and increased litigation against 
the agency. Commenters also expressed concerns that removing the 2020 
rule's evidentiary standards would remove important ``guardrails'' 
against OFCCP's enforcement where the agency does not have to meet any 
standards for issuing a Predetermination Notice or Notice of Violation 
and contractors would be subjected to a ``vague, arbitrary, moving 
target.''
    In response, OFCCP notes that there are significant legal 
guardrails retained in this final rule that address concerns raised by 
commenters with regard to due process. This final rule will require the 
agency to issue to contractors three separate notices regarding any 
preliminary findings or findings the agency makes related to 
discrimination before the agency makes a final determination about 
whether to refer the matter to the Office of the Solicitor for 
enforcement. Each of these notices requires OFCCP to describe its 
findings to date and invite the contractor to respond. Prior to issuing 
a Predetermination Notice, OFCCP's field offices conduct thorough 
discussions of the preliminary findings of potential discrimination 
with senior leadership and consult with the Office of the 
Solicitor.\45\ These offices also confer with the agency's Branch of 
Expert Services to discuss statistical analyses related to the 
preliminary findings of potential discrimination. Prior to issuing a 
Notice of Violation and a Show Cause Notice, the agency assesses the 
information provided by the contractor in response to a 
Predetermination Notice and Notice of Violation, respectively, and 
conducts further investigation as a result of the contractor's response 
as necessary. After OFCCP issues a Show Cause Notice, it refers the 
matter to the Office of the Solicitor, which conducts its own 
independent review of OFCCP's investigative findings to determine if it 
will file an administrative complaint. Beyond these significant legal 
guardrails, OFCCP notes that the pre-enforcement notice process 
provides an opportunity for contractors to provide relevant information 
to inform OFCCP's understanding of the issues before the matter may 
proceed to a judicial forum, which provides notice and the opportunity 
to be heard before an impartial tribunal. Additionally, given the 
agency's finite resources, OFCCP is strongly disincentivized to spend 
significant time pursuing cases that are unlikely to ultimately prove 
successful in court. Accordingly, OFCCP disagrees with the assertions 
that contractors are not afforded due process or that there are ``no 
standards'' that the agency needs to meet. Rather, the agency is 
largely returning to its long-standing pre-enforcement resolution 
practices in effect for decades prior to the 2020 rule, which have long 
provided a functional framework in which OFCCP and contractors have 
successfully conciliated hundreds of matters.
---------------------------------------------------------------------------

    \45\ See FCCM at 8B02 (last updated Jan. 7, 2021), available at 
https://www.dol.gov/agencies/ofccp/manual/fccm (last accessed June 
13, 2022) (discussing consultation with senior leadership and the 
Office of the Solicitor).
---------------------------------------------------------------------------

    Further, this final rule provides consistency in the formal 
notification and conciliation process. While this final rule removes 
the overly formulaic standards in the 2020 rule that have hindered 
early discussion of issues and effective enforcement, the agency finds 
it beneficial to codify the formal notices it uses to communicate with 
the contractor community about potential violations throughout the 
stages of a review. Accordingly, this final rule retains the required 
use of the Predetermination Notice and Notice of Violation while 
rescinding the evidentiary standards for issuance of the 
Predetermination Notice and Notice of Violation.
2. Predetermination Notice Provisions
a. Retaining the Use of the Predetermination Notice
    In the NPRM, OFCCP proposed retaining the required use of the 
Predetermination Notice in the regulations to convey ``preliminary 
indicators of discrimination'' to the contractor. OFCCP received three 
comments from employer associations and a law firm supporting OFCCP's 
proposal to retain the Predetermination Notice in the regulations 
because it provides contractors an opportunity to understand the 
potential discrimination identified by OFCCP and potentially resolve 
matters at an earlier stage. The agency agrees with these comments, and 
the final rule retains the required use of the Predetermination Notice. 
However, as discussed elsewhere in this final rule, OFCCP has replaced 
the term ``preliminary indicators of discrimination'' with 
``preliminary findings of potential discrimination,'' to provide 
additional clarity in response to one of the public comments. By 
continuing to require the use of the Predetermination Notice, OFCCP 
furthers its commitment to transparency and fosters the exchange of 
information to promote an efficient resolution.
b. Issuing the Predetermination Notice
    In the NPRM, OFCCP proposed distinguishing the Predetermination 
Notice from the Notice of Violation and streamlining the compliance 
evaluation process by issuing the Predetermination Notice earlier than 
the 2020 rule allowed, where appropriate, to give the contractor an 
understanding of where the agency is seeing possible problems and 
focusing its investigative efforts. OFCCP will issue a Predetermination 
Notice to a contractor when it has preliminary findings of potential 
discrimination. OFCCP remains committed to providing notice of 
potential discrimination to contractors and as such has retained the 
required use of the Predetermination Notice in

[[Page 51725]]

the final rule as discussed earlier in this preamble. In some 
instances, depending on the facts and circumstances of the particular 
compliance evaluation, OFCCP may provide this notice after the agency 
completes the desk audit. In many instances, however, it may be at a 
later stage of the investigation, such as after the conclusion of the 
on-site review or after OFCCP has completed its off-site analysis of 
the information obtained during the on-site review. Providing 
contractors notice of preliminary findings of potential discrimination 
through the Predetermination Notice facilitates understanding and 
efficient resolution. This provides contractors the opportunity to 
share additional information about their compliance in response to the 
concerns raised by OFCCP before the agency, if appropriate, issues a 
Notice of Violation.
    Three comments addressed whether OFCCP should issue the 
Predetermination Notice based on preliminary indicators of 
discrimination. The commenters included a civil and human rights 
advocacy organization and two law firms. The civil and human rights 
advocacy organization expressed support, stating there is no 
requirement in applicable federal law that forces OFCCP to wait until 
it can prove a case of discrimination before engaging with a contractor 
to discuss preliminary indicators of discrimination. The two law firms 
did not support the change. One law firm believed that proceeding with 
a Predetermination Notice at a preliminary stage on the basis of ``mere 
`indicators of discrimination' '' marks a ``radical shift'' in OFCCP 
policy. This commenter expressed concern that OFCCP intended to issue 
Predetermination Notices based solely on the results of the initial 
desk audit analyses that typically serve as the basis for follow-up 
requests for information.
    OFCCP disagrees with this view that the proposal represents a 
``radical shift.'' As explained earlier, this final rule largely 
returns to the procedures that existed for years prior to December 
2020. To the extent this final rule is different than that prior 
process, it provides more certainty for contractors in that the rule 
codifies the requirement that the agency issue a Predetermination 
Notice in all matters involving potential discrimination. Further, the 
commenter may have misinterpreted the use of the term ``indicators of 
discrimination'' in the proposed regulatory text. To provide clarity, 
OFCCP has modified this portion of the final rule to remove the 
reference to ``preliminary indicators of discrimination'' and instead 
state that if a compliance evaluation indicates ``preliminary findings 
of potential discrimination,'' OFCCP will issue a Predetermination 
Notice describing those preliminary findings. As explained earlier in 
this preamble, this change in terminology is intended to convey that 
OFCCP will issue a Predetermination Notice only after OFCCP has 
reviewed the available evidence related to any disparity or other 
indicators and concluded that the record available suggests potentially 
unlawful discrimination. In the Predetermination Notice, OFCCP provides 
the contractor with information concerning the agency's preliminary 
findings of potential discrimination and requests that the contractor 
provide any additional information or documentation the contractor 
believes OFCCP should consider before making a final determination of 
compliance.
    This final rule allows OFCCP to tailor the issuance of the 
Predetermination Notice to the facts and circumstances of each 
compliance evaluation. By rescinding the rigid evidentiary standards, 
which functionally required that a predetermination notice could not be 
issued until the completion of the compliance evaluation, the final 
rule allows OFCCP to provide contractors with earlier written notice of 
preliminary findings of potential discrimination. This focuses the 
contractor's attention on specific issues as early as possible, 
allowing a more streamlined and efficient transfer of information.
    In the NPRM, in discussing when OFCCP will issue a Predetermination 
Notice after it has identified concerns indicating potential 
discrimination, OFCCP proposed changing the reference to ``preliminary 
findings'' to the term ``preliminary indicators'' to highlight the 
difference in purpose between the Predetermination Notice and the 
Notice of Violation.\46\ The Predetermination Notice conveys OFCCP's 
analysis of preliminary findings of potential discrimination, provides 
the contractor a formal opportunity to respond with additional 
information, and is issued prior to the agency's final determination of 
compliance. The Notice of Violation provides OFCCP's findings of 
violation(s) and their corresponding required corrective action(s) and 
invites the contractor to voluntarily enter into a conciliation 
agreement. The contractor may also provide additional information 
regarding its compliance after receipt of the Notice of Violation, or 
after receipt of a Show Cause Notice, although earlier responses 
promote a more efficient and effective process for both the contractor 
and OFCCP. As discussed above, to avoid confusion about the term 
``indicators of discrimination,'' the final rule adopts the term 
``preliminary findings of potential discrimination.''
---------------------------------------------------------------------------

    \46\ 87 FR 16138, 16152-16154.
---------------------------------------------------------------------------

    Another law firm expressed concern that OFCCP could issue a 
Predetermination Notice after the desk audit and prior to the 
completion of the on-site phase of the compliance evaluation, noting 
that this could result in OFCCP issuing a Predetermination Notice prior 
to the contractor having any meaningful dialogue with the agency. The 
law firm believed issuing the Predetermination Notice prior to the 
completion of the on-site review would cause compliance officers to 
conduct an incomplete investigation and possibly make them vested in a 
particular outcome rather than conducting a full and neutral evaluation 
of the facts and circumstances of the particular compliance evaluation. 
As an initial matter, OFCCP does not agree with this assessment, which 
seems based in conjecture that, simply by issuing a Predetermination 
Notice earlier in the process to provide contractors with advance 
notice to understand and respond, compliance officers will conduct an 
inadequate investigation and become invested in a particular outcome. 
In addition, OFCCP will issue a Predetermination Notice to a contractor 
after OFCCP has reviewed the available facts and data and has reached a 
preliminary finding of potential discrimination.\47\ The appropriate 
time to issue this notice will depend upon the facts and circumstances 
of each matter. The agency will continue to conduct an onsite review 
before issuing a Predetermination Notice where it determines that 
further information is beneficial to assess whether preliminary 
findings of potential discrimination exist. Furthermore, OFCCP will 
offer training to its compliance officers regarding the provisions of 
this final rule, and under what conditions a Predetermination Notice 
may be issued to promote consistency across regions.
---------------------------------------------------------------------------

    \47\ FCCM, Chapter 8E03, Signature Authority, available at 
https://www.dol.gov/agencies/ofccp/manual/fccm/8e-predetermination-notice/8e03-signature-authority (last accessed Dec. 1, 2022).
---------------------------------------------------------------------------

    The law firm further recommended that OFCCP require compliance 
officers to seek the contractor's explanation for any identified 
selection or compensation disparity prior to issuing the 
Predetermination Notice, and then include an evaluation of the 
contractor's position in the Predetermination Notice.

[[Page 51726]]

OFCCP declines to adopt this suggestion. The resolution process set 
forth in the final rule related to Predetermination Notices remains the 
same as it always has been: the agency presents its preliminary 
findings, and then the contractor has an opportunity to respond. 
Building in an additional mandatory step to seek a response prior to 
issuing the Predetermination Notice would therefore be duplicative, 
which would run counter to the objective of this rule to increase 
efficiency. The Predetermination Notice is the first of three written 
notices in a multi-stage notification process that OFCCP uses to 
communicate preliminary findings of potential discrimination identified 
during a compliance evaluation. When OFCCP identifies preliminary 
findings of potential discrimination, it notifies the contractor and 
provides an opportunity for the contractor to respond. If after 
providing this opportunity, OFCCP finds a violation of an equal 
opportunity clause, the agency issues a Notice of Violation to the 
contractor requiring corrective action and inviting conciliation 
through a written agreement.\48\ If necessary, OFCCP thereafter will 
issue a Show Cause Notice. Each of these notice steps already provides 
the contractor an opportunity to respond.\49\ Further, the 
Predetermination Notice is far from the contractor's first 
communication with OFCCP during a compliance evaluation. OFCCP's 
communication with the contractor begins even before the contractor's 
deadline to submit its response to the Scheduling Letter notifying the 
contractor that OFCCP has selected the contractor for a compliance 
evaluation and requesting its affirmative action programs and itemized 
listing information. Within 15 calendar days of sending the Scheduling 
Letter, OFCCP contacts the contractor, or the contractor's 
representative, or both. At that time, OFCCP answers any questions the 
contractor may have, provides technical assistance on the contractor's 
obligations and the compliance evaluation process, and provides an 
overview of what to expect during the evaluation.\50\ OFCCP remains 
committed to regular and open communication by all parties at each 
stage of the compliance evaluation, further supporting OFCCP's 
overarching goal of providing notice of its findings throughout the 
process, allowing OFCCP and the contractor to resolve the matter 
efficiently.
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    \48\ This process is discussed more fully in the Overview 
section above.
    \49\ See 41 CFR 60-1.33; 41 CFR 60-300.62; 41 CFR 60-741.62 
(providing the contractor an opportunity to respond to the 
Predetermination Notice, Notice of Violation, and Show Cause 
Notice).
    \50\ See FCCM Chapter 1B04 Follow-Up Contact with Contractor and 
Jurisdiction Challenges, available at https://www.dol.gov/agencies/ofccp/manual/fccm/1b-pre-desk-audit-actions/1b04-follow-contact-contractor-and-jurisdiction (last accessed Nov. 15, 2022).
---------------------------------------------------------------------------

    This final rule adopts the proposal to retain agency-wide use of 
the Predetermination Notice when OFCCP has preliminary findings of 
potential discrimination, to advance OFCCP's commitment to transparency 
and clarity while ensuring consistency throughout its regions. The 
final rule also maintains the flexibility needed for OFCCP to provide 
notice to contractors of preliminary findings of potential 
discrimination by issuing the Predetermination Notice earlier in the 
compliance evaluation, where appropriate. This flexibility ensures that 
OFCCP can provide the contractor notice of potential discrimination 
concerns to facilitate understanding and efficient resolution. This 
benefits contractors by providing notice of preliminary findings 
earlier in the resolution process than the 2020 rule allowed with a 
full opportunity to respond.
c. Adding Violations Without Amending a Predetermination Notice
    In the NPRM, OFCCP also proposed adding a provision to Sec.  60-
1.33(a) that would allow OFCCP to add violations in a subsequent Notice 
of Violation without amending the Predetermination Notice. The agency 
received two comments on this proposed modification, both from employer 
associations. One commenter stated that this proposal deprived 
contractors of the opportunity to defend themselves against incorrect 
conclusions drawn by OFCCP. Another commenter expressed concern that 
this change would eliminate the purpose of the Predetermination Notice 
as the contractor would not be able to engage in meaningful discussions 
regarding all possible violations.
    After careful consideration of these comments, OFCCP has decided to 
move forward with this change, as proposed. The proposal provides 
sufficient opportunity for contractors to respond, as the 
Predetermination Notice is the first written notice in a notification 
and information exchange process with multiple stages. Following the 
Predetermination Notice, if the preliminary findings of potential 
discrimination are not adequately rebutted, the contractor has 
sufficient opportunities to respond following the Notice of Violation 
and Show Cause Notice, if issued. Throughout the process, contractors 
continue to have an opportunity to discuss any additional violations, 
confer with OFCCP, and provide relevant information for OFCCP's review 
and consideration. The Predetermination Notice is simply the first 
notice in this multi-stage process. Further, at the point OFCCP issues 
the Predetermination Notice, the agency may not have a full evidentiary 
record. Although the Predetermination Notice contains information on 
the preliminary findings of potential discrimination OFCCP has 
identified at that point in the investigation, OFCCP may make 
additional findings during this investigation, such as when it obtains 
additional information from the contractor or witnesses after the 
issuance of the Predetermination Notice. Issuing a new Predetermination 
Notice in these situations would be inefficient and would postpone 
remedies for victims, as the agency would have to wait until all 
allegations went through the pre-enforcement stages before it could 
refer the case to enforcement. Issuing a new Predetermination Notice is 
also unnecessary, as the Notice of Violation and Show Cause Notice 
provide sufficient opportunity for the contractor to respond.\51\
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    \51\ See 41 CFR 60-1.33; 41 CFR 60-300.62; 41 CFR 60-741.62 
(providing the contractor an opportunity to respond to the 
Predetermination Notice, Notice of Violation, and Show Cause 
Notice).
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d. Response Period for a Predetermination Notice
    To promote greater efficiency in resolving potential 
discrimination, OFCCP also proposed to modify the 2020 rule's provision 
that required a contractor to provide a response within 30 calendar 
days of receiving a Predetermination Notice. The proposal would have 
returned the Predetermination Notice response period to the 15-calendar 
day period in effect prior to the 2020 rule, which OFCCP could extend 
for good cause. In the proposal, OFCCP also clarified this provision to 
state that any response must be received by OFCCP within 15 calendar 
days, absent an extension. OFCCP received eight comments regarding the 
Predetermination Notice response period. The commenters included 
employer associations, law firms, a women's rights legal advocacy 
organization, a labor rights organization, and a civil and human rights 
advocacy organization.
    Three of the commenters, including the labor rights and advocacy 
organizations, supported OFCCP's proposal to return to a 15-calendar 
day period. These commenters noted that the Predetermination Notice is 
a

[[Page 51727]]

preliminary notification that engages employers in a dialogue with the 
agency and that a longer response period potentially prolongs 
discrimination and delays securing a remedy for victims of 
discrimination.
    Five commenters, including employer associations and law firms, 
opposed returning to a 15-calendar day response period. The commenters 
expressed concern that 15 calendar days is an insufficient amount of 
time to review, evaluate, and respond to the Predetermination Notice 
because it may be the first notice the contractor receives after a 
complex investigation. Also, in some situations, the contractors may 
choose to retain experts to understand the information provided which 
may require more than 15 calendar days. They also expressed concerns 
that OFCCP would not use its discretion to grant extensions for good 
cause. Three commenters proposed a response period of at least 60 days. 
One of the commenters recommended a two-phase response in which a 
contractor first has 30 days to review and reply with any questions and 
then, after the contractor's questions have been answered, a second 60-
day period in which to provide a substantive response.
    After careful consideration of these comments, OFCCP has decided to 
keep the 15-calendar day response period.\52\ In so doing, OFCCP notes 
that this is consistent with the time originally permitted for 
responses in its 2018 Predetermination Notice Directive.\53\ Prior to 
the 2020 rule, contractors were generally providing responses within 
this 15-day timeframe or receiving extensions for good cause. With this 
modification, OFCCP will continue to provide extensions to contractors 
where OFCCP determines the request is supported by good cause. Further, 
while the Predetermination Notice is the first formal notice that the 
agency provides, OFCCP communicates with the contractor about the 
preliminary findings before a Predetermination Notice is even issued.
---------------------------------------------------------------------------

    \52\ The final rule clarifies that OFCCP must receive the 
contractor's response within 15 calendar days.
    \53\ See Directive 2018-01, Use of Predetermination Notices, 
(Feb. 27, 2018), available at https://www.dol.gov/agencies/ofccp/directives/2018-01 (last accessed Dec. 1, 2022).
---------------------------------------------------------------------------

    OFCCP declines to adopt a multi-stage response period to the 
Predetermination Notice. OFCCP determined that a two-phase response 
period in which a contractor first has 30 days to review and reply with 
any questions and then, after the contractor's questions have been 
answered, a second 60-day period in which to provide a substantive 
response would introduce confusion about when a contractor needs to 
respond to the preliminary findings of potential discrimination and 
would prolong the pre-enforcement process. This 15-day response period 
will allow OFCCP to move compliance evaluations along expeditiously, 
while providing contractors with a reasonable period to review and 
respond to the Predetermination Notice and the opportunity to obtain an 
extension if needed.
e. Responding to Evidence Provided by a Contractor in Advance of 
Issuing a Notice of Violation
    A law firm requested that the regulations state specifically that 
OFCCP must address the employer's evidence provided in response to the 
Predetermination Notice prior to issuing a Notice of Violation. OFCCP 
did not propose this additional requirement in the NPRM. OFCCP declines 
to include this requirement in the final rule. Should the agency decide 
to issue a Notice of Violation, it will incorporate relevant 
information that the contractor provides in response to the 
Predetermination Notice. Requiring another pre-enforcement notice or 
response letter would be duplicative, and a regulation requiring that 
OFCCP address the employer's evidence is likely to generate dispute 
over the application and meaning of such a requirement. As part of its 
investigations, OFCCP carefully reviews and considers the evidence 
provided, and the agency determines what information is relevant and 
how best to respond to contractors' concerns. In making this 
determination, OFCCP will continue to engage with the contractor 
throughout the compliance evaluation process to promote a mutual 
understanding of the issues.
3. Notice of Violation Provisions
    In Sec.  60-1.33(b), OFCCP proposed adding a provision that will 
allow the agency to include additional violations in a subsequent Show 
Cause Notice without amending the Notice of Violation. The reasons for 
allowing this are the same as the reasons discussed above for allowing 
OFCCP to include new findings in a Notice of Violation that were made 
after a Predetermination Notice had already been issued. An employer 
association expressed concern that adding a violation in a subsequent 
Show Cause Notice without amending the Notice of Violation would limit 
a contractor's ability to respond to and rebut OFCCP's findings. 
However, in the proposal, OFCCP addressed this concern by explicitly 
stating in the regulations that the agency will provide contractors an 
opportunity to conciliate additional violations identified in the Show 
Cause Notice. If OFCCP's investigation identifies additional violations 
at a later stage, requiring OFCCP to restart the three-stage notice 
process from the beginning creates yet more inefficiency, as the agency 
would have to wait until all allegations went through the pre-
enforcement stages before it could refer the case to enforcement. This 
negatively impacts workers by prolonging the resolution of 
discrimination findings and constraining OFCCP's ability to effectively 
enforce its protections.
4. Conciliation Agreements
    In the NPRM, OFCCP proposed minor changes to the existing 
provisions at Sec.  60-1.33(c). The proposed changes included 
clarifying that the written agreement required to resolve a material 
violation of the equal opportunity clause is a ``written conciliation 
agreement'' that identifies the violations and/or deficiencies. The 
proposal also clarified the remedial actions which may be necessary to 
correct the identified violations and/or deficiencies. OFCCP received 
no comments on these proposed changes. Accordingly, OFCCP adopts these 
changes in the final rule as proposed.
5. Clarifications to the Show Cause Notice Provisions
    In Sec.  60-1.33(d) of the NPRM, OFCCP proposed to clarify its use 
of the Show Cause Notice including when a contractor denies access to 
its premises, to witnesses, or to records. The proposed changes also 
clarify that the Show Cause Notice will include each violation that 
OFCCP has identified at the time of issuance and, where OFCCP 
identifies additional violations after issuing a Show Cause Notice, 
OFCCP will modify or amend the Show Cause Notice. OFCCP received no 
comments regarding the proposed provision. Accordingly, OFCCP adopts 
the proposed provision without any changes in the final rule.
    For clarity, OFCCP also proposed relocating the ``Show Cause 
Notices'' provisions to Sec.  60-1.33 with the other pre-enforcement 
notices in part 60-1 and removing and reserving Sec.  60-1.28. OFCCP 
did not receive any comments on this change and adopts it into the 
final rule as proposed.
6. Expedited Conciliation
    In the NPRM, OFCCP proposed retaining the expedited conciliation 
option and made general edits to improve procedural efficacy and 
clarify

[[Page 51728]]

OFCCP's role in the expedited conciliation process. The agency received 
four comments addressing expedited conciliation. Commenters included 
employer associations, a women's rights legal advocacy organization, 
and a civil and human rights advocacy organization. All commenters 
supported retaining the expedited conciliation option in the 
regulations, noting that this option improves efficiency and promotes 
expeditious resolutions. OFCCP did not receive any comments regarding 
the proposed clarifying edits to the expedited conciliation provisions. 
Accordingly, the final rule adopts the changes as proposed.
7. Reasonable Efforts Standard
    In the NPRM, OFCCP proposed to modify Sec.  60-1.20(b) to clarify 
that the ``reasonable efforts'' standard that OFCCP must satisfy when 
attempting to secure compliance with its authorities through 
conciliation and persuasion should be interpreted consistent with Title 
VII language requiring EEOC to ``endeavor to'' remedy discrimination 
through conciliation, persuasion, and conference.\54\ OFCCP proposed 
two modifications to Sec.  60-1.20(b), first adding a clause stating 
OFCCP will make reasonable efforts to secure compliance through 
conciliation and persuasion pursuant to Sec.  60-1.33. Second, OFCCP 
proposed that its regulatory ``reasonable efforts'' standard must be 
interpreted consistently with EEOC's ``endeavor'' standard.\55\ OFCCP 
received one comment from a law firm regarding these modifications. The 
commenter opposed the modifications, stating that reliance on the 
Supreme Court's interpretation of Title VII's conciliation provisions 
in Mach Mining v. EEOC, 575 U.S. 480, 486 (2015), is misplaced because 
the Court analyzed the specific Title VII conciliation provision, which 
does not contain the ``reasonable efforts'' requirement found in E.O. 
11246. In response to this comment, OFCCP notes that it is well 
established that the legal standards developed under Title VII apply to 
cases brought under E.O. 11246.\56\ That principle should apply here 
because OFCCP's regulation is functionally similar in purpose and 
meaning to the section of Title VII that the Supreme Court analyzed in 
Mach Mining. Where OFCCP finds deficiencies in a compliance evaluation, 
OFCCP's regulation requires it to make ``reasonable efforts . . . to 
secure compliance through conciliation and persuasion.'' \57\ 
Similarly, where EEOC believes a charge of discrimination is true, it 
must ``endeavor to eliminate any . . . alleged unlawful employment 
practice by informal methods of conference, conciliation, and 
persuasion.'' \58\ A plain reading of the text in both provisions 
indicates a similar purpose and meaning: to attempt to resolve 
discrimination through conciliation and informal means like persuasion 
and communication. Given that OFCCP traditionally applies Title VII 
principles to the interpretation and application of E.O. 11246, and 
given the similarity between the two provisions, OFCCP determined that 
the text of its regulations on securing compliance to remedy 
discrimination through conciliation should be interpreted to be 
consistent with the Title VII provision on endeavoring to eliminate 
unlawful discrimination by conciliation. This interpretation would be 
consistent with a stated policy goal of this final rule to align the 
regulations with Title VII standards, to ensure that OFCCP has the same 
flexibility as EEOC in the administration of its authorities. For these 
reasons, OFCCP adopts this modification as proposed.
---------------------------------------------------------------------------

    \54\ 42 U.S.C. 2000e-5(b).
    \55\ The NPRM included an extended discussion of the EEOC's 
conciliation procedures, including a law passed by Congress that 
disapproved and annulled a rule which codified rigid requirements 
the EEOC had to meet during conciliation, which we include here by 
reference.
    \56\ See Greenwood Mills, Inc., 2002 WL 31932547, at *4.
    \57\ See 41 CFR 60-1.20(b).
    \58\ 42 U.S.C. 2000e-5(b).
---------------------------------------------------------------------------

8. Severability Clauses
    In the NPRM, OFCCP proposed deleting the severability clause that 
applied just to certain sections of OFCCP's regulations and replace it 
with severability clauses covering the entirety of each part of OFCCP's 
regulatory scheme. OFCCP received no comments on this issue and adopts 
this change into the final rule, as proposed.\59\
---------------------------------------------------------------------------

    \59\ Beyond these severability clauses, OFCCP did not consider 
nor propose making any additional changes to the existing 
regulations at 41 CFR parts 60-2, 60-3, 60-4, 60-20, 60-30, 60-40, 
and 60-50, and any comments regarding those parts were not 
considered and responded to as they were beyond the scope of the 
proposed rule.
---------------------------------------------------------------------------

9. Reasonable Reliance Interests
    OFCCP received a comment from a law firm stating that the NPRM did 
not address contractors' reasonable reliance interests during pending 
compliance evaluations. Although the commenter did not cite any 
specific reliance interests, it did state its belief that pre-
enforcement notices already issued should be held to conform to the 
regulatory standards in existence at the time the notice was issued and 
asserted that OFCCP's proposal did not address this issue. A women's 
rights legal advocacy organization stated that OFCCP's need to fulfill 
its mission and mitigate the harm of discrimination outweighs any 
reliance interests by contractors. It noted that the Title VII 
framework has long applied to OFCCP's compliance process and noted that 
the agency already publicly stated its intention to modify the 2020 
rule in 2021.
    Reliance interests are one factor among many that agencies must 
consider during rulemaking.\60\ While ``[a]gencies are not compelled to 
explore `every alternative device . . . [they are] required to assess 
whether there were reliance interests, determine whether they were 
significant, and weigh any such interests against competing policy 
concerns.'' \61\ The 2020 rule took effect on December 10, 2020, 
approximately 16 months before OFCCP issued the NPRM proposing to 
modify the 2020 rule; prior to the 2020 rule, OFCCP relied on well-
established Title VII principles in its pre-enforcement and notice and 
conciliation procedures. Considering the short period of time the 2020 
rule was in place, OFCCP determined that restoring flexibility to its 
pre-enforcement process by relying on well-established Title VII 
standards in an effort to more efficiently resolve findings of 
discrimination outweighs any possible reliance interest the 2020 rule 
may have created among the regulated community.
---------------------------------------------------------------------------

    \60\ See Dep't of Homeland Sec. v. Regents of the Univ. of 
California, 140 S. Ct. 1891, 1914 (2020).
    \61\ Id. at 1916 (internal citations omitted).
---------------------------------------------------------------------------

    For clarification, this final rule would apply to any pre-
enforcement notices and actions issued on or after the effective date 
of this rulemaking, 30 days after publication in the Federal Register. 
For example, OFCCP may have issued a Predetermination Notice to a 
contractor under the standards in the 2020 rule, but if it then 
proceeds to issue a Notice of Violation or Show Cause Notice after the 
effective date of this final rule, the standards in this final rule 
would apply to those notices. OFCCP believes that through the notice 
and comment process, the agency has adequately provided contractors 
with notice of the changes. OFCCP will also continue to support 
contractors in understanding this final rule through compliance 
assistance materials.

[[Page 51729]]

10. Comments Regarding the Need for the Rulemaking
    OFCCP received four comments that emphasized the need for modifying 
the 2020 rule. The commenters included a women's rights legal advocacy 
organization, a civil and human rights advocacy organization, a labor 
rights organization, and an individual. These commenters described the 
prevalence of employment discrimination against workers and asserted 
that the 2020 rule's onerous requirements prevented OFCCP from 
effectively enforcing its nondiscrimination authorities. They believed 
that modifying the 2020 rule would restore the flexibility the agency 
needs to carry out its important mission of protecting workers.
    OFCCP received five comments from employer associations and law 
firms that believed that the agency failed to show how the 2020 rule 
constrained its enforcement efforts. For example, one of these 
commenters stated that the Administrative Procedure Act (APA) requires 
that revisions to existing regulations be firmly based on a substantial 
factual record, and that OFCCP failed to meet this requirement.\62\ 
This commenter asserted that the NPRM proposed ``sweeping changes'' 
without any factual basis, and compared this with the 2020 rule, which 
the commenter asserted had provided ``extensive'' factual 
justification. Despite this assertion, the comment did not identify 
with any specificity any facts underlying the 2020 rule, let alone what 
comprised an ``extensive'' factual justification.
---------------------------------------------------------------------------

    \62\ This comment also stated that the NPRM failed to meet the 
basic requirements of the APA because the agency failed to consider 
``less disruptive'' alternatives to the proposed rule. OFCCP 
disagrees with this comment. As detailed in the ``Alternatives'' 
discussion in the Regulatory Procedures section below, OFCCP 
carefully considered alternatives when proceeding with this 
rulemaking and determined that proceeding with the rulemaking as 
proposed would enable the agency to best meet its mission and ensure 
equal employment opportunity.
---------------------------------------------------------------------------

    At the outset, we note the regulations at issue here are 
distinguishable from those analyzed in the cases the commenter cites, 
which created or rescinded standards applicable to regulated entities 
and thus affected the burdens of compliance for those regulated 
entities. In contrast, the 2020 rule, and this rule, deal entirely with 
the internal standards to which the agency will hold itself during the 
conduct of compliance evaluations prior to enforcement. The 2020 rule 
explicitly noted that it was undertaken as ``an exercise of enforcement 
discretion'' that was not ``compelled . . . by Title VII or OFCCP case 
law,'' and further ``add[ed] no new requirements or burdens on 
contractors.'' \63\
---------------------------------------------------------------------------

    \63\ 85 FR 71554; 87 FR 16151.
---------------------------------------------------------------------------

    Nevertheless, as explained in the NPRM, and again here, OFCCP has 
identified a factual basis to conclude the 2020 rule has not met the 
objectives it asserted. When promulgating the 2020 rule, OFCCP stated 
that it believed the rule would ``increase clarity and transparency for 
Federal contractors, establish clear parameters for OFCCP enforcement 
proceedings, and enhance the efficient enforcement of the law.'' \64\ 
Further, two stated objectives of the 2020 rule were to increase the 
number of contractors the agency evaluates and focus on resolving 
stronger cases through the strategic allocation of limited agency 
resources.\65\ However, the 2020 rule has not met these objectives. 
While the 2020 rule acknowledges that the heightened evidentiary 
standards are not compelled by Title VII,\66\ some contractors have 
nonetheless asserted that OFCCP must meet the heightened evidentiary 
standards to prove discrimination in cases. The NPRM described specific 
examples of this problem based on OFCCP's experience enforcing the 2020 
rule, including:
---------------------------------------------------------------------------

    \64\ 85 FR 71554.
    \65\ Id.
    \66\ 87 FR 16138.
---------------------------------------------------------------------------

     Contractors asserting that the evidence that OFCCP shared 
to support its case failed to meet the ``qualitative evidence'' 
definition included in the 2020 rule.\67\
---------------------------------------------------------------------------

    \67\ 87 FR 16138, 16145.
---------------------------------------------------------------------------

     Contractors asserting that the qualitative evidence that 
OFCCP provided was insufficient because the agency failed to disclose 
the identity of the interviewees who provided relevant statements at 
the Predetermination Notice stage; \68\ and
---------------------------------------------------------------------------

    \68\ Id.
---------------------------------------------------------------------------

     Contractors disputing whether OFCCP met the required 
threshold for practical significance under the 2020 rule, arguing that 
the agency has failed to meet the threshold or even disagreeing with 
the 2020 rule's standard altogether.\69\
---------------------------------------------------------------------------

    \69\ Id.
---------------------------------------------------------------------------

    As these examples illustrate, the 2020 rule has not met its stated 
objectives to increase clarity and promote efficiency. Rather, the 
evidentiary mandates have spawned collateral disputes that hinder 
OFCCP's ability to pursue cases that would otherwise be actionable 
under Title VII's more flexible standards. By rescinding the 2020 
rule's heightened evidentiary standards, OFCCP can restore its 
enforcement discretion as to the cases it decides to pursue and return 
to its long-standing practice of applying Title VII principles to the 
facts and circumstances of each compliance evaluation, a process which 
applies established evidentiary standards under Title VII.
    The commenter also noted the agency's rationale for rescinding the 
requirement to provide qualitative evidence when issuing a 
Predetermination Notice is based on ``pure speculation'' that the 
disclosure of such evidence may have a chilling effect. While the 
agency maintains that the 2020 rule's requirement to disclose anecdotal 
evidence creates a risk of chilling workers from coming forward, we 
note that the NPRM, and in turn this final rule, in fact relied on 
multiple rationales for rescinding the requirement to provide 
qualitative evidence. For example, requiring proof of qualitative 
evidence before issuing a Predetermination Notice is not only 
inconsistent with Title VII standards and interpretive case law, but 
such evidence may not yet be available to the agency at such a 
preliminary investigative stage.\70\ Ultimately, OFCCP has found that 
the 2020 rule's inflexible evidentiary requirements, which apply while 
the matter is still under investigation and OFCCP is making preliminary 
findings, have hindered the agency's ability to pursue potentially 
actionable cases.
---------------------------------------------------------------------------

    \70\ Id. at 16143-45.
---------------------------------------------------------------------------

    The commenter also asserted that the NPRM failed to explain its 
rationale as to how mandating the same evidentiary requirements for the 
Predetermination Notice as the Notice of Violation creates 
inefficiency. To the contrary, in the NPRM and in this final rule, 
OFCCP has discussed the distinct purposes that the Predetermination 
Notice and the Notice of Violation are intended to serve. Specifically, 
the Predetermination Notice is intended to provide the contractor with 
early notice of the agency's preliminary findings of potential 
discrimination, allowing the contractor to focus on specific, discrete 
areas of concern prior to a finding of violation, thereby facilitating 
an early exchange of information and shared understanding that in turn 
could lead to faster resolutions. By contrast, the 2020 rule's 
heightened evidentiary requirements functionally required the agency to 
complete its entire investigation and have litigation-ready evidence at 
hand before it could issue a preliminary notice to the contractor 
regarding its investigation. Imposing these same heightened evidentiary 
standards to both the Predetermination

[[Page 51730]]

Notice and the Notice of Violation created duplication in the use of 
these notices. By removing these barriers, OFCCP is able to utilize the 
Predetermination Notice to provide notice of preliminary findings of 
potential discrimination at an earlier stage before the agency has made 
findings to support a Notice of Violation.\71\
---------------------------------------------------------------------------

    \71\ Id.
---------------------------------------------------------------------------

    As illustrated by the case examples above, OFCCP has found that the 
stated intentions in the 2020 rule are not being fulfilled, and indeed 
in some situations have hindered OFCCP's ability to efficiently resolve 
preliminary findings of potential discrimination. Accordingly, OFCCP 
has provided a reasoned explanation for modifying the 2020 rule--the 
agency has demonstrated benefits to both the agency and contractors by 
modifying the 2020 rule, including alignment with well-established 
standards under Title VII and strengthening OFCCP's ability to bring 
meritorious cases. The agency has also shown it believes these 
modifications to be better than the requirements set forth in the 2020 
rule to effectuate efficient enforcement.\72\
---------------------------------------------------------------------------

    \72\ F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515 
(2009) (stating that an agency ``need not demonstrate . . . that the 
reasons for the new policy are better than the reasons for the old 
one''); id. at 537 (stating that when changing or modifying policy, 
an agency may act arbitrarily and capriciously if it ignores or 
countermands its earlier factual findings without reasoned 
explanation for doing so) (Kennedy, J. concurring in part and 
concurring in judgment); see also Bernhardt, 472 F. Supp. 3d at 591 
(explaining that the standard of review for assessing whether an 
agency action is arbitrary and capricious is `` `highly deferential, 
presuming the agency action to be valid and affirming the agency 
action if a reasonable basis exists for its decision' '') (citing 
Nw. Ecosystem All. v. United States Fish & Wildlife Serv., 475 F. 3d 
1136, 1140 (9th Cir. 2007) (quoting Indep. Acceptance Co. v. 
California, 204 F.3d 1247, 1251 (9th Cir. 2000))).
---------------------------------------------------------------------------

    Some commenters also stated that the rule has not been in effect 
for enough time to warrant revisions. These groups generally expressed 
favorable opinions of the 2020 rule, with some asserting that it 
promoted certainty, efficiency, and transparency in OFCCP's 
enforcement. OFCCP disagrees with these comments. As described in the 
NPRM and repeated herein, soon after implementation, OFCCP saw that the 
2020 rule's heightened evidentiary standards spawned collateral 
disputes about the interpretation of these evidentiary standards and 
hampered OFCCP's ability to provide contractors with notification of 
preliminary findings of potential discrimination.

B. Modifications to 41 CFR Parts 60-300 and 60-741

    OFCCP has separate regulations for E.O. 11246, VEVRAA, and Section 
503. In the Section 503 and VEVRAA regulations, OFCCP proposed parallel 
changes to the definitions, evidentiary requirements, and pre-
enforcement and resolution procedures as those described above for E.O. 
11246. No commenter suggested that these changes should apply 
differently depending on the authority the agency is enforcing. For the 
reasons discussed above, OFCCP thus adopts the same modifications and 
provisions in 41 CFR part 60-300 (VEVRAA) and 41 CFR part 60-741 
(Section 503) that are described above for the E.O. 11246 regulations.

C. Other Comments

    OFCCP received two comments that are not addressed above because 
they lacked relevance to the proposed rule.

V. Regulatory Procedures

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

    Under Executive Order 12866 (E.O. 12866), the Office of Management 
and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) 
determines whether a regulatory action is significant and, therefore, 
subject to the requirements of E.O. 12866 and OMB review. Section 3(f) 
of E.O. 12866 defines a ``significant regulatory action'' as an action 
that is likely to result in a rule that: (1) has an annual effect on 
the economy of $100 million or more, or adversely affects in a material 
way a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; (2) creates serious inconsistency or 
otherwise interferes with an action taken or planned by another agency; 
(3) materially alters the budgetary impacts of entitlement grants, user 
fees, or loan programs, or the rights and obligations of recipients 
thereof; or (4) raises novel legal or policy issues arising out of 
legal mandates, the President's priorities, or the principles set forth 
in E.O 12866. This final rule has been designated a ``significant 
regulatory action,'' although not significant within the scope of 
section 3(f)(1) of E.O. 12866. OMB has reviewed the final rule. 
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), OIRA 
designated the rule as not a ``major rule,'' as defined by 5 U.S.C. 
804(2).
    Executive Order 13563 (E.O. 13563) directs agencies to adopt a 
regulation only upon a reasoned determination that its benefits justify 
its costs; tailor the regulation to impose the least burden on society, 
consistent with obtaining the regulatory objectives; and in choosing 
among alternative regulatory approaches, select those approaches that 
maximize net benefits. E.O. 13563 recognizes that some benefits are 
difficult to quantify and provides that, where appropriate and 
permitted by law, agencies may consider and discuss qualitatively 
values that are difficult or impossible to quantify, including equity, 
human dignity, fairness, and distributive impacts.
1. Need for Rulemaking
    As discussed in the preamble, OFCCP received comments both 
supporting and opposing the proposal. Those that supported the proposal 
agree that the 2020 rule imposed onerous evidentiary standards that are 
inconsistent with the preliminary nature of the pre-enforcement 
notices, required OFCCP to share unnecessarily detailed evidence with 
contractors during the investigatory stage, and made it more difficult 
for the agency to protect workers from discrimination. These commenters 
remarked that the heightened requirements conflict with Title VII and 
OFCCP precedent, and had no basis in law and imposed unnecessary, 
burdensome, and confusing enforcement standards onto OFCCP's pre-
enforcement processes that serve to hamper the ability of OFCCP to 
engage with Federal contractors at the earliest stages to remedy 
potential discrimination.
    Commenters in opposition generally stated the 2020 rule provided 
transparency, efficiency, and clarity to contractors and argued OFCCP 
did not provide enough evidence in the proposal to modify the 2020 
rule. For example, one commenter asserted that rescinding the 2020 rule 
would prevent both OFCCP compliance officers and contractors from 
focusing resources on true problem areas, leading to longer, less 
efficient reviews.
    After considering the comments received, OFCCP concluded the 2020 
rule created rigid constraints, many of which are not required by Title 
VII and are particularly inappropriate to apply to preliminary notices 
long before the agency has committed to bring an enforcement action. 
OFCCP determined that the 2020 rule narrowed the scope of the agency's 
authority to protect workers and impeded the agency's effective 
enforcement of E.O. 11246, Section 503, and VEVRAA. The 2020 rule 
prescribed that OFCCP could only

[[Page 51731]]

issue a Predetermination Notice if it provided certain quantitative 
evidence and qualitative evidence, with only limited exceptions. Under 
the 2020 rule, if after providing the contractor an opportunity to 
respond to the Predetermination Notice, OFCCP found a violation of an 
equal opportunity clause, OFCCP issued a Notice of Violation, which 
imposed the same rigid parameters that it imposed on the 
Predetermination Notice. The purpose of a Predetermination Notice is to 
provide the contractor with prompt written notice of preliminary 
findings of potential discrimination and to provide the contractor an 
opportunity to respond with additional information. As illustrated by 
the case examples discussed above, requiring the agency to meet 
heightened and formulaic standards of proof before it can proceed with 
notifying the contractor of preliminary findings of potential 
discrimination has limited the agency's ability to efficiently conduct 
a compliance review tailored to the facts and evidence presented. In 
addition, the 2020 rule has resulted in collateral disputes at the 
Predetermination Notice stage over the implementation of the rule's 
regulatory standards--diverting limited agency and contractor resources 
away from resolving concerns of discrimination. As discussed above, 
this diversion of resources has hindered OFCCP's ability to pursue 
meritorious cases.
    This final rule aims to create a streamlined, efficient, and 
flexible process to ensure OFCCP utilizes its limited resources as 
strategically as possible to advance the agency's mission. In a return 
to agency policy prior to the 2020 rule, in place since 1988, OFCCP 
will require a case-by-case evaluation of the facts and circumstances 
of each compliance evaluation, including during the pre-enforcement 
notice and conciliation stages. Doing so will remove unnecessary 
constraints that impede effective enforcement and delay resolutions. 
Removing the blanket regulatory requirements applied to early, pre-
enforcement procedural notices will also allow OFCCP to pursue 
enforcement in the full scope of cases that would be actionable under 
Title VII rather than the more limited scope of fact patterns that 
conform to the evidentiary requirements set forth under the 2020 rule. 
OFCCP remains committed to providing contractors with an explanation of 
the basis for the agency's preliminary findings of potential 
discrimination during a compliance evaluation. Such notice is mutually 
beneficial for OFCCP and the contractor under review because it 
provides the contractor with an earlier opportunity to respond to 
potential issues before OFCCP makes a determination on violations. 
Providing earlier notice to contractors can result in the prompt and 
mutually satisfactory resolution of compliance evaluations, which 
minimizes unnecessary burdens on contractors and agency staff. Going 
forward, OFCCP will provide updated training to its compliance officers 
on the pre-enforcement procedures. This training will reflect current 
case law and provide consistency across the agency, while providing 
OFCCP needed flexibility to adapt to the legal standards and 
statistical techniques as they evolve.
2. Discussion of Impacts
    In this section, OFCCP presents a summary of the costs associated 
with the final rule. OFCCP utilizes the Employment Information Report 
(EEO-1) data, which identifies the number of supply and service 
contractors that could be scheduled for a compliance evaluation and 
thus impacted by the rule. The EEO-1 Report must be filed by covered 
Federal contractors that: (1) have 50 or more employees; (2) are prime 
contractors or first-tier subcontractors; and (3) have a contract, 
subcontract, or purchase order amounting to $50,000 or more. OFCCP 
schedules only contractors that meet those thresholds for compliance 
evaluations. The number of supply and service contractors possibly 
impacted by the rule is 19,586.\73\
---------------------------------------------------------------------------

    \73\ OFCCP obtained the total number of supply and service 
contractors from the most recent EEO-1 Report data available, which 
is from fiscal year (FY) 2020.
---------------------------------------------------------------------------

    OFCCP also utilizes USASpending data, which identifies the number 
of construction contractors that could be scheduled for a compliance 
evaluation and thus impacted by the rule. The USASpending data accounts 
for all construction contractors with contracts greater than $10,000 
that meet the thresholds for compliance evaluations. The number of 
construction contractors possibly impacted by the proposed modification 
is 11,557.\74\
---------------------------------------------------------------------------

    \74\ OFCCP obtained the total number of construction contractor 
establishments from the FY 2021 USASpending data, available at 
https://www.usaspending.gov/#/download_center/award_data_archive 
(last accessed August 15, 2022).
---------------------------------------------------------------------------

    The total number of contractors eligible to be scheduled that are 
possibly impacted by the rule is 31,143.\75\ While OFCCP acknowledges 
that all Federal contractors that could be scheduled for a compliance 
evaluation may learn the requirements to comply with the laws that 
OFCCP enforces, only those contractors who are actually scheduled are 
likely to have a need to know the pre-enforcement procedures and will 
be directly impacted by the rule. For this reason, the total number of 
contractors impacted by the final rule is likely an overestimation 
because not all of the eligible contractors will be scheduled for a 
compliance evaluation.
---------------------------------------------------------------------------

    \75\ 19,586 supply and service contractors + 11,557 construction 
contractors = 31,143 contractors.
---------------------------------------------------------------------------

    OFCCP has determined that either a Human Resources Manager (SOC 11-
3121) or a Lawyer (SOC 23-1011) would review the rule. OFCCP estimates 
that 50 percent of the reviewers would be human resources managers and 
50 percent would be in-house counsel. Thus, the mean hourly wage rate 
reflects a \50/50\ split between human resources managers and lawyers. 
The mean hourly wage of a human resources manager is $65.67, and the 
mean hourly wage of a lawyer is $71.17.\76\
---------------------------------------------------------------------------

    \76\ BLS, Occupational Employment Statistics, Occupational 
Employment and Wages, May 2021, available at https://www.bls.gov/oes/current/oes_nat.htm (last accessed June 9, 2022).
---------------------------------------------------------------------------

    Therefore, the average hourly wage rate is $68.42 (($65.67 + 
$71.17)/2). OFCCP adjusted this wage rate to reflect fringe benefits 
such as health insurance and retirement benefits, as well as overhead 
costs such as rent, utilities, and office equipment. OFCCP uses a 
fringe benefits rate of 45 percent \77\ and an overhead rate of 17 
percent,\78\ resulting in a fully loaded hourly compensation rate of 
$110.84 ($68.42 + ($68.42 x 45 percent) + ($68.42 x 17 percent)). The 
estimated labor cost to contractors is reflected in Table 1, below.
---------------------------------------------------------------------------

    \77\ BLS, Employer Costs for Employee Compensation, available at 
https://www.bls.gov/ncs/data.htm (last accessed August 15, 2022). 
Wages and salaries averaged $28.16 per hour worked in March 2022, 
while benefit costs averaged $12.74, which is a benefits rate of 45 
percent.
    \78\ Cody Rice, U.S. Environmental Protection Agency, ``Wage 
Rates for Economic Analyses of the Toxics Release Inventory 
Program,'' (June 10, 2002), available at www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005 (last accessed June 9, 2022).

[[Page 51732]]



                                               Table 1--Labor Cost
----------------------------------------------------------------------------------------------------------------
                                                                                                   Fully loaded
                                               Average hourly   Fringe benefit   Overhead rate        hourly
          Major occupational groups              wage rate         rate (%)           (%)          compensation
                                                                                                       (%)
----------------------------------------------------------------------------------------------------------------
Human Resources Managers and Lawyers........          $68.42               45               17          $110.84
----------------------------------------------------------------------------------------------------------------

a. Cost of Rule Familiarization
    OFCCP acknowledges that 5 CFR 1320.3(b)(1)(i) requires agencies to 
include in the burden analysis for a rule the estimated time it takes 
for contractors to review and understand the instructions for 
compliance. To minimize the burden, OFCCP will publish compliance 
assistance materials regarding the final rule.
    OFCCP received one comment opposing the burden estimate of 30 
minutes for rule familiarization. The commenter stated, ``While reading 
time for the NPRM per se may be 30 minutes for the fastest of readers, 
it will be impossible to understand the background, history, and 
practical implications of the new rule.''
    OFCCP considered the comment and declines to make any changes in 
the final rule. Both the NPRM and this final rule state that the 30-
minute estimate for rule familiarization is the average amount of time 
it will take someone to familiarize themselves with the new regulations 
by reading the regulatory text. OFCCP emphasizes that the 30-minute 
estimate is an average across all contractors and acknowledges that the 
precise amount of time each company will take is difficult to estimate.
    OFCCP believes that a human resources manager or lawyer will take a 
minimum of 30 minutes (.5 hours) to read the regulatory text. 
Consequently, the estimated burden for rule familiarization is 15,572 
hours (31,143 contractor firms x .5 hours). OFCCP calculates the total 
estimated cost of rule familiarization as $1,726,000 (15,572 hours x 
$110.84/hour) in the first year, which amounts to a 10-year annualized 
cost of $196,446 at a discount rate of 3 percent (which is $6.31 per 
contractor firm) or $229,667 at a discount rate of 7 percent (which is 
$7.37 per contractor firm). Table 2, below, reflects the estimated rule 
familiarization costs.

                   Table 2--Rule Familiarization Cost
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total number of contractors...............  31,143.
Time for rule familiarization.............  30 minutes.
Human Resources Managers fully loaded       $110.84.
 hourly compensation.
Rule familiarization cost in the first      $1,726,000.
 year.
Annualized cost with 3 percent discounting  $196,446.
Annualized cost per contractor with 3       $6.31.
 percent discounting.
Annualized cost with 7 percent discounting  $229,667.
Annualized cost per contractor with 7       $7.37.
 percent discounting.
------------------------------------------------------------------------

b. Benefits
    E.O. 13563 recognizes that some rules have benefits that are 
difficult to quantify or monetize but are nevertheless important and 
states that agencies may consider such benefits. This rule has several 
benefits, including equity and fairness benefits, which are explicitly 
recognized in E.O. 13563. Key benefits include:
     Supporting more effective enforcement of OFCCP's equal 
opportunity laws by eliminating procedural inefficiencies and 
heightened evidentiary standards created by the 2020 rule;
     Facilitating earlier and more efficient resolutions;
     Ensuring greater certainty and consistency in case 
resolutions by maintaining adherence to Title VII and OFCCP case law 
standards;
     Promoting transparency by codifying the required use of 
the Predetermination Notice when the agency identifies preliminary 
findings of potential discrimination;
     Allowing OFCCP to tailor the pre-enforcement process to 
the specific facts and circumstances of each case, consistent with 
judicial interpretations of the applicable legal authorities as they 
evolve, which will in turn allow OFCCP to more effectively redress 
unlawful discrimination;
     Advancing a policy of promoting consistency between Title 
VII and E.O. 11246 and removing unnecessary constraints on the agency's 
ability to pursue meritorious cases. This approach will help OFCCP 
advance the overriding policy goal of promoting nondiscrimination by 
strengthening the enforcement of federal protections under E.O. 11246;
     Reducing time-consuming disputes over unnecessary 
standards that are inherently fact-specific; and
     Furthering the strategic allocation of agency resources.
3. Alternatives
    In response to the NPRM, OFCCP received one comment stating the 
agency's proposed modifications did not meet the APA requirement of 
considering less disruptive alternatives. However, OFCCP clearly 
addressed the alternatives in the NPRM and describes in detail the 
alternative approaches that were considered prior to finalizing the 
rule below.\79\
---------------------------------------------------------------------------

    \79\ See 87 FR 16138, 16151 (describing alternative approaches 
OFCCP considered).
---------------------------------------------------------------------------

    Specifically, OFCCP considered maintaining the current regulations 
established in the 2020 rule. However, as discussed earlier in this 
preamble, OFCCP determined that creating rigid regulatory standards to 
govern its pre-enforcement compliance evaluation notice and 
conciliation procedures is incompatible with the flexibility needed for 
effective enforcement. Moreover, the 2020 rule places certain 
obligations on OFCCP at this preliminary stage before its review can 
proceed that go beyond the substantive legal requirements that E.O. 
11246, Title VII, and interpretive case law require to state a claim 
and prove discrimination at a much later stage, upon a full evidentiary 
record. OFCCP has determined that imposing such rigid and heightened 
standards early in its pre-enforcement proceedings unduly constrains 
its ability to pursue

[[Page 51733]]

the full range of discrimination under its authority. The 2020 rule 
also created an inefficient process where OFCCP's Predetermination 
Notice (intended to notify the contractor of potential discrimination 
and to invite the contractor to provide additional information on its 
compliance before OFCCP makes its determination) and the Notice of 
Violation (intended to inform the contractor of violations that require 
corrective action and to invite conciliation through a written 
agreement) were largely duplicative. Further, mandating regulatory 
requirements to make inherently fact-specific determinations invites 
time-consuming disputes over the application of the rule's 
requirements, as OFCCP has already experienced in compliance 
evaluations since the 2020 rule took effect. Modifying the 2020 rule 
helps restore the enforcement discretion and flexibility OFCCP needs to 
facilitate compliance through conciliation by providing pre-enforcement 
notice of preliminary findings of potential discrimination and findings 
of discrimination and applying Title VII to the facts and circumstances 
of each compliance evaluation. OFCCP is modifying the regulatory text 
to create a more streamlined and effective process for the agency to 
communicate preliminary findings of potential discrimination to 
contractors, provide contractors an opportunity to respond, notify 
contractors of violations, and ultimately facilitate greater 
understanding to obtain resolution through conciliation.
    OFCCP also considered modifying the 2020 rule to rescind the 
entirety of the rule except the correction to OFCCP's agency head title 
or modifying the 2020 rule by eliminating the Predetermination Notice 
entirely since it currently functions as a procedural redundancy. 
However, OFCCP determined that retaining both pre-enforcement notices 
in the regulatory text while rescinding the inflexible evidentiary 
requirements for the Predetermination Notice and Notice of Violation 
allows the contractor and OFCCP to engage in earlier discussions that 
can lead to more efficient resolutions.

B. Regulatory Flexibility Act and Executive Order 13272 (Consideration 
of Small Entities)

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the businesses, organizations, and governmental jurisdictions 
subject to regulation.'' Public Law 96-354, section 2(b). The RFA 
requires agencies to consider the impact of a regulatory action on a 
wide range of small entities, including small businesses, nonprofit 
organizations, and small governmental jurisdictions.
    Agencies must review whether a regulatory action would have a 
significant economic impact on a substantial number of small entities. 
See 5 U.S.C. 603. If the regulatory action would, then the agency must 
prepare a regulatory flexibility analysis as described in the RFA. See 
id. However, if the agency determines that the regulatory action would 
not be expected to have a significant economic impact on a substantial 
number of small entities, then the head of the agency may so certify 
and the RFA does not require a regulatory flexibility analysis. See 5 
U.S.C. 605. The certification must provide the factual basis for this 
determination.
    The final rule will not have a significant economic impact on a 
substantial number of small entities. The first-year cost for small 
entities at a discount rate of 7 percent for rule familiarization is 
$51.80 per entity which is far less than 1 percent of the annual 
revenue of the smallest of the small entities affected by the rule. 
Accordingly, OFCCP certifies that the final rule will not have a 
significant economic impact on a substantial number of small entities.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 requires that OFCCP consider 
the impact of paperwork and other information collection burdens 
imposed on the public. See 44 U.S.C. 3507(d). An agency may not collect 
or sponsor the collection of information or impose an information 
collection requirement unless the information collection instrument 
displays a currently valid OMB control number. See 5 CFR 1320.5(b)(1).
    OFCCP has determined that there would be no new requirement for 
information collection associated with this final rule. The information 
collections contained in the existing Executive Order 11246, Section 
503, and VEVRAA regulations are currently approved under OMB Control 
Number 1250-0001 (Construction Recordkeeping and Reporting 
Requirements), OMB Control Number 1250-0003 (Supply and Service 
Program), OMB Control Number 1250-0004 (Recordkeeping and Reporting 
Requirements Under the Vietnam Era Veterans' Readjustment Assistance 
Act of 1974, as Amended), and OMB Control Number 1250-0005 
(Recordkeeping and Reporting Requirements Under Rehabilitation Act of 
1973, as Amended Section 503). Consequently, this final rule does not 
require review by OMB under the authority of the Paperwork Reduction 
Act.

D. Unfunded Mandates Reform Act of 1995

    For purposes of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532, this final rule would not include any federal mandate that may 
result in excess of $100 million in expenditures by state, local, and 
tribal governments in the aggregate or by the private sector.

E. Executive Order 13132 (Federalism)

    OFCCP has reviewed this final rule in accordance with Executive 
Order 13132 regarding federalism and has determined that it does not 
have ``federalism implications.'' The final rule will not ``have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government.''

F. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    This final rule does not have tribal implications under Executive 
Order 13175 that would require a tribal summary impact statement. The 
final rule does not ``have substantial direct effects on one or more 
Indian tribes, on the relationship between the Federal Government and 
Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.''

List of Subjects

41 CFR Part 60-1

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

41 CFR Part 60-2

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

41 CFR Part 60-4

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

[[Page 51734]]

41 CFR Part 60-20

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

41 CFR Part 60-30

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

41 CFR Part 60-40

    Freedom of information, Reporting and recordkeeping requirements.

41 CFR Part 60-50

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

41 CFR Parts 60-300 and 60-741

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

Michele Hodge,
Acting Director, Office of Federal Contract Compliance Programs.

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

PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

0
1. The authority citation for part 60-1 continues to read as follows:

    Authority:  Sec. 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-1965 
Comp., p. 339, as amended by E.O. 11375, 32 FR 14303, 3 CFR, 1966-
1970 Comp., p. 684, E.O. 12086, 43 FR 46501, 3 CFR, 1978 Comp., p. 
230, E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258 and E.O. 
13672, 79 FR 42971.


0
2. Amend Sec.  60-1.3 by removing the definitions for ``Qualitative 
evidence'' and ``Quantitative evidence.''


0
3. Revise Sec.  60-1.20(b) to read as follows:
* * * * *
    (b) Where deficiencies are found to exist, OFCCP will make 
reasonable efforts to secure compliance through conciliation and 
persuasion, pursuant to Sec.  60-1.33. The ``reasonable efforts'' 
standard shall be interpreted consistently with title VII of the Civil 
Rights Act of 1964 and its requirement that the Equal Employment 
Opportunity Commission endeavor to remove any such alleged unlawful 
employment practice by informal methods of conference, conciliation, 
and persuasion. Before the contractor can be found to be in compliance 
with the order, it must make a specific commitment, in writing, to 
correct any such deficiencies. The commitment must include the precise 
action to be taken and dates for completion. The time period allotted 
shall be no longer than the minimum period necessary to effect such 
changes. Upon approval of the commitment, the contractor may be 
considered in compliance, on condition that the commitments are 
faithfully kept. The contractor shall be notified that making such 
commitments does not preclude future determinations of noncompliance 
based on a finding that the commitments are not sufficient to achieve 
compliance.
* * * * *


Sec.  60-1.28  [Removed and reserved]

0
4. Remove and reserve Sec.  60-1.28.

0
5. Revise Sec.  60-1.33 to read as follows:


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

    (a) Predetermination Notice. If a compliance evaluation by OFCCP 
indicates preliminary findings of potential discrimination, OFCCP will 
issue a Predetermination Notice that describes the preliminary findings 
and provides the contractor an opportunity to respond. The 
Predetermination Notice may also include preliminary findings of other 
potential violations that OFCCP has identified at that stage of the 
review. After OFCCP issues the Predetermination Notice, the agency may 
identify additional violations and include them in a subsequent Notice 
of Violation or Show Cause Notice without amending the Predetermination 
Notice. OFCCP will provide the contractor an opportunity to conciliate 
additional violations identified in the Notice of Violation or Show 
Cause Notice. Any response to a Predetermination Notice must be 
received by OFCCP within 15 calendar days of receipt of the Notice, 
which deadline OFCCP may extend for good cause. If the contractor does 
not respond or OFCCP determines that the contractor's response and any 
additional investigation undertaken by the agency did not resolve the 
preliminary findings of potential discrimination or other violations 
identified in the Predetermination Notice, OFCCP will proceed to issue 
a Notice of Violation.
    (b) Notice of Violation. If a compliance evaluation by OFCCP 
indicates a violation of the equal opportunity clause, OFCCP will issue 
a Notice of Violation to the contractor requiring corrective action. 
The Notice of Violation will identify the violations found and describe 
the recommended corrective actions. The Notice of Violation will invite 
the contractor to conciliate the matter and resolve the findings 
through a written conciliation agreement. After the Notice of Violation 
is issued, OFCCP may include additional violations in a subsequent Show 
Cause Notice without amendment to the Notice of Violation. OFCCP will 
provide the contractor an opportunity to conciliate additional 
violations identified in the Show Cause Notice.
    (c) Conciliation agreement. If a compliance review, complaint 
investigation, or other review by OFCCP or its representative indicates 
a material violation of the equal opportunity clause, and:
    (1) If the contractor, subcontractor, or bidder is willing to 
correct the violations and/or deficiencies; and
    (2) If OFCCP or its representative determines that settlement 
(rather than referral for consideration of formal enforcement) is 
appropriate, a written conciliation agreement shall be required. The 
agreement shall provide for such remedial action as may be necessary to 
correct the violations and/or deficiencies identified, including, where 
appropriate (but not limited to), remedies such as back pay, salary 
adjustments, and retroactive seniority.
    (d) Show Cause Notice. When the Director has reasonable cause to 
believe that a contractor has violated the equal opportunity clause the 
Director may issue a notice requiring the contractor to show cause, 
within 30 days, why monitoring, enforcement proceedings, or other 
appropriate action to ensure compliance should not be instituted. OFCCP 
may issue a Show Cause Notice without first issuing a Predetermination 
Notice or Notice of Violation when the contractor has failed to provide 
access to its premises for an on-site review or refused to provide 
access to witnesses, records, or other information. The Show Cause 
Notice will include each violation that OFCCP has identified at the 
time of issuance. Where OFCCP identifies additional violations after 
issuing a Show Cause Notice, OFCCP will modify or amend the Show Cause 
Notice.
    (e) Expedited conciliation option. OFCCP may agree to waive the 
procedures set forth in paragraphs (a) and/or (b) of this section to 
enter directly into a conciliation agreement with a contractor. OFCCP 
may offer the

[[Page 51735]]

contractor this expedited conciliation option but may not require or 
insist that the contractor avail itself of the expedited conciliation 
option.

0
6. Add Sec.  60-1.48 to subpart C to read as follows:


Sec.  60-1.48  Severability.

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

PART 60-2--AFFIRMATIVE ACTION PROGRAMS

0
7. The authority citation for part 60-2 continues to read as follows:

    Authority:  Sec. 201, E.O. 11246, 30 FR 12319, E.O. 11375, 32 FR 
14303, as amended by E.O. 12086, 43 FR 46501, and E.O. 13672, 79 FR 
42971.


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


Sec.  60-2.36  Severability.

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

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

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

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


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


Sec.  60-4.10  Severability.

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

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

0
11. The authority citation for part 60-20 continues to read as follows:

    Authority:  Sec. 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-1965 
Comp., p. 339 as amended by E.O. 11375, 32 FR 14303, 3 CFR 1966-1970 
Comp., p. 684; E.O. 12086, 43 FR 46501, 3 CFR 1978 Comp., p. 230; 
E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258; and E.O. 13672, 
79 FR 42971.


0
12. Add Sec.  60-20.9 to read as follows:


Sec.  60-20.9  Severability.

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

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

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

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


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


Sec.  60-30.38  Severability.

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

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

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

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


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


Sec.  60-40.9  Severability.

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

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

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

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


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


Sec.  60-50.6  Severability.

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

PART 60-300--AFFIRMATIVE ACTION AND NONDISCRIMINATION OBLIGATIONS 
OF FEDERAL CONTRACTORS AND SUBCONTRACTORS REGARDING DISABLED 
VETERANS, RECENTLY SEPARATED VETERANS, ACTIVE DUTY WARTIME OR 
CAMPAIGN BADGE VETERANS, AND ARMED FORCES SERVICE MEDAL VETERANS

0
19. The authority citation for part 60-300 continues to read as 
follows:

    Authority: 29 U.S.C. 793; 38 U.S.C. 4211 and 4212; E.O. 11758 (3 
CFR, 1971-1975 Comp., p. 841).


Sec.  60-300.2  [Amended]

0
20. Amend Sec.  60-300.2 by removing the definitions for ``Qualitative 
evidence'' and ``Quantitative evidence.''


0
21. Revise Sec.  60-300.60(b) to read as follows:


Sec.  60-300.60  Compliance evaluations.

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

0
22. Revise Sec.  60-300.62 to read as follows:


Sec.  60-300.62  Pre-enforcement notice and conciliation procedures.

    (a) Predetermination Notice. If a compliance evaluation by OFCCP 
indicates preliminary findings of potential discrimination, OFCCP will 
issue a Predetermination Notice that describes the preliminary findings 
and provides the contractor an opportunity to respond. The 
Predetermination Notice may also include preliminary findings of other 
potential violations that OFCCP has identified at that stage of the 
review. After OFCCP issues the Predetermination Notice, the agency may 
identify additional violations and include them in a subsequent Notice 
of Violation or Show Cause Notice without amending the Predetermination 
Notice. OFCCP will provide the contractor an opportunity to conciliate 
additional violations identified in the Notice of Violation or Show 
Cause Notice. Any response to a Predetermination Notice must be 
received by OFCCP within 15 calendar days of receipt of the Notice, 
which deadline OFCCP may extend for good cause. If the contractor does 
not respond or OFCCP determines that the contractor's response and any 
additional investigation undertaken by the agency did not resolve the 
preliminary findings of potential discrimination or other violations 
identified in the Predetermination Notice, OFCCP will proceed to issue 
a Notice of Violation.
    (b) Notice of Violation. If a compliance evaluation by OFCCP 
indicates a violation of the equal opportunity clause, OFCCP will issue 
a Notice of Violation to the contractor

[[Page 51736]]

requiring corrective action. The Notice of Violation will identify the 
violations found and describe the recommended corrective actions. The 
Notice of Violation will invite the contractor to conciliate the matter 
and resolve the findings through a written conciliation agreement. 
After the Notice of Violation is issued, OFCCP may include additional 
violations in a subsequent Show Cause Notice without amendment to the 
Notice of Violation. OFCCP will provide the contractor an opportunity 
to conciliate additional violations identified in the Show Cause 
Notice.
    (c) Conciliation agreement. If a compliance review, complaint 
investigation, or other review by OFCCP or its representative indicates 
a material violation of the equal opportunity clause, and:
    (1) If the contractor, subcontractor, or bidder is willing to 
correct the violations and/or deficiencies; and
    (2) If OFCCP or its representative determines that settlement 
(rather than referral for consideration of formal enforcement) is 
appropriate, a written conciliation agreement shall be required. The 
agreement shall provide for such remedial action as may be necessary to 
correct the violations and/or deficiencies identified, including, where 
appropriate (but not limited to), remedies such as back pay, salary 
adjustments, and retroactive seniority.
    (d) Show Cause Notice. When the Director has reasonable cause to 
believe that a contractor has violated the equal opportunity clause the 
Director may issue a notice requiring the contractor to show cause, 
within 30 days, why monitoring, enforcement proceedings, or other 
appropriate action to ensure compliance should not be instituted. OFCCP 
may issue a Show Cause Notice without first issuing a Predetermination 
Notice or Notice of Violation when the contractor has failed to provide 
access to its premises for an on-site review or refused to provide 
access to witnesses, records, or other information. The Show Cause 
Notice will include each violation that OFCCP has identified at the 
time of issuance. Where OFCCP identifies additional violations after 
issuing a Show Cause Notice, OFCCP will modify or amend the Show Cause 
Notice.
    (e) Expedited conciliation option. OFCCP may agree to waive the 
procedures set forth in paragraphs (a) and/or (b) of this section to 
enter directly into a conciliation agreement with a contractor. OFCCP 
may offer the contractor this expedited conciliation option, but may 
not require or insist that the contractor avail itself of the expedited 
conciliation option.


Sec.  60-300.64  [Removed and Reserved]

0
23. Remove and reserve Sec.  60-300.64.


0
24. Add Sec.  60-300.85 to subpart D to read as follows:


Sec.  60-300.85  Severability.

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

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

0
25. The authority citation for part 60-741 continues to read as 
follows:

    Authority: 29 U.S.C. 705 and 793; E.O. 11758 (3 CFR, 1971-1975 
Comp., p. 841).

0
26. Amend Sec.  60-741.2 by removing the definitions for ``Qualitative 
evidence'' and ``Quantitative evidence.''

0
27. Revise Sec.  60-741.60(b) to read as follows:


Sec.  60-741.60  Compliance evaluations.

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

0
28. Revise Sec.  60-741.62 to read as follows:


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

    (a) Predetermination Notice. If a compliance evaluation by OFCCP 
indicates preliminary findings of potential discrimination, OFCCP will 
issue a Predetermination Notice that describes the preliminary findings 
and provides the contractor an opportunity to respond. The 
Predetermination Notice may also include preliminary findings of other 
potential violations that OFCCP has identified at that stage of the 
review. After OFCCP issues the Predetermination Notice, the agency may 
identify additional violations and include them in a subsequent Notice 
of Violation or Show Cause Notice without amending the Predetermination 
Notice. OFCCP will provide the contractor an opportunity to conciliate 
additional violations identified in the Notice of Violation or Show 
Cause Notice. Any response to a Predetermination Notice must be 
received by OFCCP within 15 calendar days of receipt of the Notice, 
which deadline OFCCP may extend for good cause. If the contractor does 
not respond or OFCCP determines that the contractor's response and any 
additional investigation undertaken by the agency did not resolve the 
preliminary findings of potential discrimination or other violations 
identified in the Predetermination Notice, OFCCP will proceed to issue 
a Notice of Violation.
    (b) Notice of Violation. If a compliance evaluation by OFCCP 
indicates a violation of the equal opportunity clause, OFCCP will issue 
a Notice of Violation to the contractor requiring corrective action. 
The Notice of Violation will identify the violations found and describe 
the recommended corrective actions. The Notice of Violation will invite 
the contractor to conciliate the matter and resolve the findings 
through a written conciliation agreement. After the Notice of Violation 
is issued, OFCCP may include additional violations in a subsequent Show 
Cause Notice without amendment to the Notice of Violation. OFCCP will 
provide the contractor an opportunity to conciliate additional 
violations identified in the Show Cause Notice.
    (c) Conciliation agreement. If a compliance review, complaint 
investigation, or other review by OFCCP or its representative indicates 
a material violation of the equal opportunity clause, and:
    (1) If the contractor, subcontractor, or bidder is willing to 
correct the violations and/or deficiencies; and
    (2) If OFCCP or its representative determines that settlement 
(rather than referral for consideration of formal enforcement) is 
appropriate, a written conciliation agreement shall be required. The 
agreement shall provide for such remedial action as may be necessary to 
correct the violations and/or deficiencies identified, including, where 
appropriate (but not limited to), remedies such as back pay, salary 
adjustments, and retroactive seniority.
    (d) Remedial benchmarks. The remedial action referenced in 
paragraph (c) of this section may include the establishment of 
benchmarks for the contractor's outreach, recruitment, hiring, or other 
employment activities. The purpose of such benchmarks is to create a 
quantifiable method by which the contractor's progress in correcting 
identified violations and/or deficiencies can be measured.

[[Page 51737]]

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


Sec.  60-741.64  [Removed and Reserved]

0
29. Remove and reserve Sec.  60-741.64.

0
30. Add Sec.  60-741.84 to read as follows:


Sec.  60-741.84  Severability.

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

[FR Doc. 2023-16098 Filed 8-3-23; 8:45 am]
BILLING CODE 4510-CM-P