Academic journal article ABA Banking Journal

OFCCP Comes Calling, Literally

Academic journal article ABA Banking Journal

OFCCP Comes Calling, Literally

Article excerpt

In the alphabet soup of regulatory agencies that banks should be aware of, the OFCCP has a relatively low profile. That may be changing, as this unit of the U.S. Department of Labor--officially, the Office of Federal Contract Compliance Programs--flexes its muscles and commits to a 20% increase in enforcement activities in 2011.

Banks with more than 50 employees are subject to Executive Order 11246. The order requires that federal contractors establish and maintain affirmative action plans (AAPs) for women and minorities, and undertake workforce reporting and other obligations. Banks with more than 50 employees are deemed "federal contractors" because of their federally insured status, the sale of U.S. bonds, and other products and services. Executive Order 11246 is enforced by OFCCP.

The order was issued by President Jimmy Carter, so it's been around for a long time, and many bank HR professionals have absorbed this burden into their routine. Over the last decade, very few banks have had their AAPs subjected to a compliance review. Last fall, however, OFCCP Secretary Patricia Shiu announced a 20% increase in compliance reviews, and, within the last month, she has made two additional moves, signaling how the bite of stepped-up enforcement will be felt.

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In a directive posted on the agency's website on Dec. 8, 2010, the office rescinded Bush-era case management standards. These standards allowed OFCCP investigators to close a compliance review after a brief "desk audit" (review of submitted documents) if the contractor's AAP and other employment data revealed no signs of "systemic discrimination." Now, contractors, including banks, can expect OFCCP investigators to pursue the review beyond a desk audit to an onsite investigation, including employee interviews. …

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