HR Works and other industry experts recently attended the National Industry Liaison Group’s 2023 Annual Conference in Phoenix, Arizona. Aligning with the conference theme, “Transforming for Tomorrow”, Federal contractors and representatives from the OFCCP and EEOC came together to share news, discuss regulations, and share best practices aimed at preparing attendees for changes in the years to come.
Sessions covered a variety of topics including compensation practices, artificial intelligence, audit statistics and preparation, the increase in state and local laws, data tracking and maintenance, and the recent Supreme Court ruling related to Affirmative Action. Our team has identified important lessons for federal contractors and summarized the following key takeaways from this year’s conference:
Diversity, Equity, Inclusion and Accessibility (DEI&A)
DEI&A begins at the recruiting stage, where good faith efforts are made by performing targeted outreach aimed at women, minorities, protected veterans, and individuals with disabilities. Job postings should accurately convey job requirements, use inclusive language, and have an accommodation notice that is easily viewed. Affinity groups and diversity hiring committees are effective strategies to curb implicit biases that tend to occur in less diverse organizations. Contractors should be ensuring DEI&A at the promotion stage, as well. Oftentimes, disparities in compensation are caused by disparities in promotion activity. Organizations that have clear promotion pathways, mentorship and professional development programs, centralized oversite, and top-down support, will have greater success at ensuring equal opportunity in promotions.
Proposed Changes to OFCCP Scheduling Letter & Itemized Listing
Throughout the conference, there were numerous conversations centered around the proposed changes to the OFCCP’s Scheduling Letter and Itemized Listing. While the new audit Scheduling Letter is still waiting on OMB approval, it is expected to pass either as proposed or with only minor changes. Should the changes in the new Scheduling Letter be approved, contractors undergoing compliance evaluation will be required to provide much more information than they have in the past, including data, analyses, policy and process documents, and proof of implementation. Consultants and attorneys are seeing a trend of compliance officers asking for more detail at the onset of an audit, which can be challenging for contractors to prepare in the typical 30-day timeframe.
The proposed new portions of the Scheduling Letter will be extensive and time-consuming for contractors, with requests for information related to policies and procedures around all employment decisions (recruiting, hiring, promotion, and termination), an additional year of compensation data, and heftier proof that the employer is complying with affirmative action regulations. Contractors should focus their efforts on maintaining accurate personnel records and conducting thorough analysis, highlighting areas of disparity in compensation, hiring, promoting, and terminating. A plan should be executed to monitor statistical indicators of discrimination and to take corrective action to ensure equal opportunity in all selection decisions. OFCCP accepts various effective methods for compensation analysis, with multiple regression being the gold standard when sample size allows, followed by a situation-specific approach to remediating any pay disparities that are identified. No matter how companies choose to conduct their analyses, the goal is to maintain a working environment free of discrimination, and it all starts with proper data tracking.
The Significance of Artificial Intelligence (AI) in HR Processes
One of the most significant recent game-changers for human resource practitioners is the integration of artificial intelligence (AI) into HR processes. The conference shed light on several critical considerations for organizations as they navigate the complex terrain of AI-powered HR. In a world where efficiency and precision reign supreme, incorporating AI into HR processes has become a necessity to remain competitive. With 83% of employers already utilizing automated tools in their hiring processes, the question has shifted from ‘if’ to ‘how’ organizations should embrace AI. When used correctly, AI can serve as a tool to minimize workplace bias caused by human errors and implicit biases, paving the way for more diverse hiring and promoting inclusivity.
While the promise of AI is exciting, it comes with a slew of legal and ethical considerations. The conference emphasized that organizations must avoid discrimination claims by utilizing AI to complement, rather than replace, existing processes. State laws have taken the initiative to address the gaps in federal legislation regarding AI, providing valuable insights into potential future regulations. The conference also highlighted that international efforts and proposed regulations can shape US compliance and best practices for AI. By staying informed about global developments, organizations can proactively shape their AI strategies while adhering to evolving standards.
AI tools are only as good as the data they are fed, and vigilance is essential to avoid reinforcing biases. To prevent disparate impact, organizations must critically assess AI tools’ input data and avoid vendors who refuse to disclose how their tools function. Regular audits, testing, and transparency are crucial for maintaining AI tools’ functionality and fairness. It is imperative to set clear retention protocols with vendors, ensuring data is preserved to address potential audits or lawsuits.
Organizations must prioritize ethical considerations, vigilance against bias, and compliance with evolving regulations. By embracing AI as a tool for enhancement and inclusion, HR departments can drive efficiency, diversity, and fairness in their operations, ensuring a promising future for the field.
The Growing Emphasis on Pay Equity & Compensation
The emphasis on pay equity continues to grow rapidly at local, state, and federal levels.
In 2016, the EEOC voted to collect pay information from certain private sector employers and federal contractors, referred to as “Component 2” of the EEO-1 Report. The Trump Administration stayed the collection of this data, leading to a federal court later rescinding the stay and permitting the EEOC to complete its collection of 2017 and 2018 pay data under court order in 2020. Since then, many employers have questioned if pay data collection at the federal level through the EEO-1 report will return. The answer shared during the conference is a clear YES, but with some changes. The EEOC shared ideas for those changes, including using Box 5 from W-2 forms instead of Box 1, collecting hours worked for non-exempt employees but not for exempt employees, and adjusting the pay bands to better capture the highest paid members of each organization. With the recent swearing in of a new Democratic Commissioner, EEOC Chair Burrows now has the majority vote in favor of approving a new pay data collection. During her remarks at the conference, she indicated that this time around the agency plans to solicit comments from the public before requesting OMB approval of the form to be used.
Regardless of what action the EEOC takes, some states have started instituting their own requirements to address pay equity. Enacted in 2020, California law requires private employers with 100 or more employees and/or workers hired through labor contracts, that have at least 1 CA employee, to report pay, demographic, and other workforce data to the Civil Rights Department (CRD) annually. As of March 23, 2021, private employers with 100 or more employees in IL that are required to file EEO-1 with the EEOC are required to obtain an Equal Pay Registration Certificate.
The increase in state pay laws coupled with the return of EEO-1 pay data collection and the 2022 OFCCP Directive on Pay Equity are clear signs that all employers, and especially federal contractors, cannot wait any longer to pay careful attention to their own internal compensation systems, formalizing those systems and monitoring regularly for equity.
Underlying Theme: Train, Train, Train
Though topics ranged far and wide at this year’s conference, there was an underlying theme to each session regardless of the main topic: train your managers and audit your policies.
Managers can make or break an organization’s compliance efforts by following policies, procedures, and data tracking correctly, or not. This is especially true within selection and compensation decisions. Now is the time to ensure all managers are aware of the policies and procedures in place, that they know how to follow them and have the tools they need to do so, and that they know what steps are expected of them when faced with variation or unknown circumstances.
Transforming for Tomorrow with a Partner Like HR Works
As HR Works closely watches the progression of these trends and legislative updates, we understand the impact each new change has on your business. Our team of Affirmative Action experts is dedicated to helping each of our clients take the necessary steps to ensure compliance and build a diverse workforce. Whether we are developing your 100% audit-ready Affirmative Action Plan, conducting an OFCCP Pay Equity Analysis, filing required State & Federal reports, or training your management team, you can feel confident that HR Works is preparing your organization for the future.
For more information about how our comprehensive suite of Affirmative Action Services can assist you with the issues discussed at the 2023 NILG Conference, contact us today!