OFCCP’s New Directive on Predetermination Notices Gives Contractors a Second Chance

Effective February 27, 2018, the Office of Federal Contract Compliance Programs (OFCCP), which is charged with ensuring federal contractors and subcontractors provide equal employment opportunity, issued Directive 2018-01, announcing that predetermination notices (PDNs) will be sent to federal contractors and subcontractors for all audits and compliance reviews where a finding of unlawful employment discrimination is imminent. 

A PDN informs contractors of OFCCP’s preliminary findings of employment discrimination during the end stages of an audit or compliance review.  It is sent prior to issuing a Notice of Violation (NOV), which is a formal finding by the Agency that sufficient evidence exists that discrimination occurred.  At the point where a NOV is issued, OFCCP seeks monetary and non-monetary remedies for the alleged violations, either through conciliation or enforcement proceedings against the contractor.  A PDN gives contractors notice that a NOV is on the horizon and specifies the factual basis for the Agency’s findings.  This advance notice allows the contractor time to respond to the preliminary findings by sending in additional information before a NOV is issued.  In the past, PDNs were usually sent only in cases of alleged systemic discrimination, and OFCCP officers had discretion to decide whether to send a PDN or simply move forward with issuing a NOV to contractors.  According to OFCCP, the new directive will “achieve consistency across regional and district offices, increase transparency about preliminary findings with contractors, and encourage communication throughout the compliance evaluation process.”

As federal contractors well know, the best way to successfully pass an OFCCP audit is to begin preparing for it long before OFCCP schedules it.  We have previously written on how contractors should work to avoid a finding of discrimination by OFCCP by becoming familiar with changes to the guidelines and revisiting workplace policies often.  In addition, it is important to ensure that audits are handled carefully and with the assistance of experienced counsel.  However, this move gives contractors an additional opportunity to convince the Agency that its findings are unwarranted.  While it remains to be seen how this change will affect the number of NOVs issued, it is a step to ensure that contractors have an opportunity to respond to the allegations against them prior to expensive and protracted conciliation or enforcement proceedings where the basis for the finding is often unclear.  In addition, it will hopefully stem the tide of hair-trigger NOVs previously issued by the Agency. In the meantime, contractors should continue to work with experienced counsel on the front end to ensure compliance and during audits to address any Agency flags.