On March 21, 2022, the Office of Federal Contract Compliance Programs (OFCCP) issued a Notice of Proposed Rulemaking (NPRM) dialing back the level of transparency and evidentiary standards for issuing pre-enforcement notices of a violation (NOVs) required by the November 2020 final rule titled Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination. The 2020 Rule, colloquially referred to as “the PDN Rule,” was applauded by the contractor community for its transparency and adherence to legal precedent.
According to a blog post by OFCCP Director Jenny Yang, the 2020 Rule “unduly constrained OFCCP’s broad enforcement discretion,” and “imposed inflexible evidentiary requirements early in the compliance evaluation process and attempted to codify complex evidentiary definitions for ‘qualitative’ and ‘quantitative’ evidence and other standards.”
Proposed Changes to the 2020 Rule
- Removal of Evidentiary Standards for Issuing PDNs and NOVs
PDNs, as the name suggests, provide contractors with notice of preliminary findings of discrimination and an opportunity to respond. OFCCP typically issues NOVs after an onsite, but prior to issuing a Show Cause Notice. The 2020 Rule required all PDNs and NOVs to include a discussion of the anecdotal as well as statistical evidence that supported the alleged findings. Further, the Agency was required to demonstrate that any disparity was both statically and practically significant.
The NPRM proposes retaining the PDN and NOV notices but eliminating the associated evidentiary requirements because they “are unnecessary and unduly constrain the agency’s broad enforcement discretion as to the cases it decides to litigate and those it does not.” OFCCP also contends these evidentiary requirements, specifically practical significance and anecdotal evidence, are inconsistent with Title VII’s standards and “led to delays in resolutions by increasing disagreements between OFCCP and contractors” about whether the Agency satisfied the requirements for issuing a PDN or NOV. OFCCP further proposed eliminating the anecdotal evidence requirement because disclosure of such evidence “may have a chilling effect” on the willingness of alleged victims and witnesses to participate in OFCCP’s investigation because of the potential for retaliation. The Agency also proposes eliminating the requirement that all PDNs receive the Director’s approval prior to issuance.
- Permitting New Allegations to be Raised for the First Time in the NOV or SCN
The 2020 Rule prohibited OFCCP from raising violations in an NOV or Show Cause Notice (SCN) that were not included in the PDN. The NPRM seeks to eliminate this requirement and proposes allowing OFCCP to raise additional violations for the first time in the NOV and the SCN.
- Reduction in the Amount of Time Contractors have to Respond to a PDN
The NPRM proposes reducing contractors’ time to respond to a PDN from 30 days to 15 days, which may be extended by OFCCP for “good cause.” Given that PDNs may be issued without prior notice to the contractor and may include multiple allegations, 15 days is hardly enough time to prepare a thorough and persuasive response.
Additionally, the NPRM proposes changes to the OFCCP’s pre-enforcement process that will significantly disadvantage contractors. If the proposed changes become final, OFCCP’s only obligation at the PDN stage will be to give contractors notice that it has identified a potential violation and provide the standard deviation, which could be as low as 1.96. OFCCP will be permitted to raise new violations for the first time in the NOV and in the SCN. No showing of practical significance and no supporting anecdotal evidence will be required.
The contractor community has an opportunity to submit comments to the proposed rule. But, contractors need to act quickly. The NPRM includes a limited 30-day comment period, which will close on April 21, 2022. Clients and/or contractors interested in submitting comments or supporting comments prepared by interested third parties, please contact Nancy Holt.
If you have any questions regarding this Alert, please contact the authors, Nancy Holt at nholt@fordharrison.com, or Erica Johnson at ejohnson@fordharrison.com. Of course, you can also contact the FordHarrison attorney with whom you usually work.