A small federal office is at the heart of Biden's equity agenda

The Office of Federal Contract Compliance at the Department of Labor may not be a household name but it plays a large role in conducting oversight of government contracts.

NOTE: This article first appeared on FCW.com.

A civil rights office tucked inside the Labor Department is gearing up to play an outsized part in the Biden administration's work on racial equity.

The Office of Federal Contract Compliance (OFCCP) might not be widely known, but it's familiar to federal contractors that fall under its purview. It has the power to check the internal human resources practices of private companies that perform work for the government.

"OFCCP, from a civil rights viewpoint, is probably the most impactful civil rights organization the government has, because it can tell contractors, 'this is how we want you to do things,'" said Anthony Kaylin, vice president at the American Society of Employers, a human resources trade association.

The reach of OFCCP extends into the affairs of 25,000 contractors and 120,000 other businesses, covering about 20% of the American workforce.

The office's director, Jenny Yang, wants to maximize on what she has called, "a chance to make the kind of transformative change…not seen since the 1960s." But first, she'll have to rebuild her workforce, which the smallest workforce in its history and finish turning back the machinery gutted Trump-era policies.

The office provides compliance assistance to contractors, investigates complaints and evaluates the employment practices and affirmative actions of companies. Yang and her team want to rebuild the office's enforcement program and focus on systemic discrimination in pay and hiring.

"Biden has made racial equity a core pillar of his administration," said Dariely Rodriguez, OFCCP's chief of staff, in an interview with FCW. "That falls squarely within OFCCP's mission to advance equity."

Biden, too, signaled the importance of the office when he appointed his pick to lead the office on his first day in office. Yang is an Obama-era veteran of the Equal Employment Opportunity Commission, where she worked on data collection efforts meant to tackle the pay gap.

"That was a really huge signal to the regulator community of how important OFCCP will be under the Biden administration," said David Cohen, the co-chair of the Institute for Workplace Equality and the president of DCI Consulting Group.

Biden also issued an executive order on his second day in office calling for a "whole-of-government equity agenda," in which he called on agencies to review their procurement practices for equity issues. OFCCP is involved in that process for the Labor Department, officials said.

The Office of Management and Budget released a request for information on May 5 following up on this, where they asked for information about "approaches and methods for assessing equity in agency procurement and contracting process."

Biden's budget request for fiscal year 2022 also referenced OFCCP's "critical opportunity" to contribute to advancing racial equity. The office is going to develop a "comprehensive initiative to advance racial equity at work" by helping to increase practices shown to help close racial pay gaps, for example.

Moving forward, the office will work on ensuring an equitable economic recovery from the pandemic, the effects of which were felt more by some communities than others, Rodriguez said.

Focus on contractors

Part of what gives the OFCCP its reach is into employers' HR offices is its focus on federal contractors.

"Because of their unique relationship they have with contractors, government has the authority to modify and describe what those terms and conditions of that relationship are," said Alan Chvotkin, former executive vice president and counsel of the Professional Services Counsel and current partner at Nichols Liu, a government contracting law firm.

In February, the office entered a settlement with Google to resolve allegations of systemic compensation and hiring discrimination in facilities in California and Washington. The office found problems in hiring rates and pay differences affecting female software engineers and female and Asian applicants during routine compliance evaluations. Google is paying over $3.8 million to over 5,500 current employees and applicants as part of the settlement.

Remedying pay discrimination is a good example of the office's power, Rodriguez said. It can find problems that employees or job applicants don't necessarily know about, or see disproportionate effects that stem from seemingly neutral policies.

"Because of the culture of secrecy, oftentimes workers just don't know if they're being paid less. So if you don't really know if you are being paid less, how can you even complain about it?" Rodriguez said. "We actually have the ability to analyze data and to see if there are any patterns that may indicate potential disparities and to then proactively remedy those."

For contractors, being required to comply with data reporting requirements can be illuminating in and of itself, said Mitchell Robinson, labor and employment attorney at Baker Hostetler.

"On a basic level, it means that we are in a situation where this is now on the record. That companies are forced to in many ways, because of these regulations, become more aware of equity issues they may have in the workplace," he said.

In 2020, OFCCP was the loser in a discrimination lawsuit against Oracle America Inc. The result called into OFCCP's analysis of the company's pay data. Yang said at an American Bar Association conference in April that she doesn't agree with the decision of the Labor Department's administrative law judge, and a new pay data collection tool could be in the offing.

OFCCP officials say that they are assessing how they evaluate companies for compliance and rebuilding and strengthening their enforcement programs. During the Trump administration, the office's focus was more on compliance assistance, as opposed to litigation.

In March, OFCCP updated its scheduling list of companies to be audited, removing some more focused audits related to veterans and employees with disabilities. The office will most likely focus on more full-blown compliance evaluations that aren't limited to certain issues, Cohen said.

"That was really designed to maximize our very limited resources," Rodriguez said.

Building back

OFCCP is at an "all-time low" with 421 employees, compared to a high-water mark of 755 employees in fiscal year 2011. The solicitor's office within the Labor Department, where the OFCCP can refer cases for litigation, is also understaffed, Cohen said.

"They are just running on fumes right now," Cohen said. "OFCCP is going to try to figure out how to do more with less, and be as efficient as possible."

During the Trump administration, there was an effort to merge the EEOC with the OFCCP into one civil rights organization to build on their existing coordination and maximize efficiency. Civil rights groups and employer groups both opposed it, he said.

Biden's budget request for FY 2022 asks for around a $35 million increase in funding for the OFCCP.

That money would help restaff the office, the request says. It would also go toward items including reinvigorating the office's program for construction contractors and subcontractors and finishing an interface started under the last administration for contractors to self-verify that they've done their affirmative action programs. It's pending approval from the Office of Management and Budget.

The office is also reversing course on program efforts launched under the Trump administration. In the fall of 2020, Trump issued an executive order cracking down on diversity and equity training involving "white privilege," "intersectionality," "critical race theory" and "unconscious bias," and other ideas considered "un-American propaganda."

The administration charged OFCCP with suppressing the trainings among contractors (the ban also applied to agencies themselves and grant recipients, which range from universities to nonprofits). From the outside, there was a sense that the order wasn't consistent with the office.

OFCCP officials "tried desperately to squeeze that round peg into a square hole for what they had," Chvotkin said.

Biden reversed the order on his first day in office, and the OFCCP dismantled the agency's machinery implementing it, but eliminating the consequences of that policy, which was widely derided by corporate America, is not as simple as signing an order.

"There's this ongoing concern that there's still a chilling effect for employers," Rodriguez said. "I think a lot of employers are probably still thinking, 'Okay. Are these training things that we should be undertaking? And if so, how? And what's the best way to use these trainings?'"

The office is surveying the evidence and research on diversity and equity training and coordinating with stakeholders to understand concerns alongside the EEOC, Rodriguez said, so that they can give assistance.

OFCCP has also signaled its intent to use the rulemaking process to reverse a controversial rule promulgated during the end of the Trump administration that allowed certain organizations that identified as religious to evade hiring discrimination rules. The change is under review at the Office of Management and Budget, Rodriguez said, and will include input from the public.