For manufacturers that contract with the government, failing an OFCCP audit could risk your relationship with local and federal government agencies and result in steep financial penalties.
The Office of the Federal Contract Compliance Programs (OFCCP) is responsible for keeping companies like yours up to specific standards in areas like recruitment, hiring, and compensation.
The best way to make sure you’re prepared when its audit time is to get ready now when you’re not being audited.
Keeping your company ready for an OFCCP audit at all times is better than waiting to react to an audit notice. If you start from scratch upon receiving your audit letter, you may not have time to put together the necessary paperwork. Worse, you could realize too late that you’re not entirely compliant and don’t have time to avoid the resulting fine(s).
Here’s how you can prepare your manufacturing business for the event of an OFCCP audit.
Conduct an Internal Audit of Your Hiring Practices
According to the OFCCP, there are six areas that most commonly cause companies to fail their audit — the areas cited relate to job listing and recruiting, recordkeeping, hiring, and compensation. It’s wise to pay special attention to these requirements and other common OFCCP violations at all times, maintaining compliance long before you ever have to prove it to the OFCCP.
One way to ensure compliance is to conduct a voluntary, internal audit of your own company. As part of your internal audit, check to make sure:
- You are listing all job openings with local and state employment agencies. The only positions excepted from this requirement are executive positions, jobs meant to be filled internally, and positions that only last three days or fewer.
- You have cultivated positive relationships with recruitment partners. Does your company have a list of trusted recruitment partners who can offer qualified referrals?
- Your company can prove that you have effective recruitment processes. Are you attracting qualified candidates who are disabled and/or protected veterans? Can you provide a track record of successful recruiting efforts for a diverse group of hires?
- You have been tracking your recruitment and hiring data. Can you produce data that clearly shows the race, gender, and veteran status of each applicant? Are all relevant employees trained to keep and maintain this data?
- You are using fair hiring and interview processes. Are you asking only questions that are relevant and job-related? Can you track when each candidate fell out of the hiring process and why?
- You are evaluating the pay for current employees to ensure pay gaps are explained or salaries are adjusted to correct them. Document the starting pay for all employees and establish meaningful pay ranges. Can you honestly say you are addressing gender or racial pay gaps and will your documented salaries back you up?
Auditing your own compliance now can save you a lot of stress in the future. Another key component of an official audit will be examining your Affirmative Action Plan or AAP. Your human resources department should always have a current AAP on file. This plan should be adjusted based on your company’s hiring practices and needs from year to year.
It’s not enough to have your data on hand – it must be organized in a way that proves your compliance with the OFCCP. For instance, employee data fields such as race, gender, disability status, census code, and location will all affect your AAP calculations. Accordingly, they must be carefully organized and accurate.
If you collect some of your data using paper records, you are permitted to transfer the data to a digital format in most cases. Just make sure that the original paper records are accurately duplicated in the electronic version, the electronic records constitute an original copy under federal law standards, and the digital records can be converted back into a legible paper copy (in other words, they can be printed). You can dispose of the paper records at any time once an acceptable electronic version has been created.
Post All Required Notices in Your Business
Your company should post equal employment opportunity laws within your physical workspace. The information must be posted where it is clearly visible by both current employees and candidates who come in for an interview. Equal employment opportunity posters explain the laws as they pertain to protecting employees, and they also outline how an employee or applicant can go about filing a complaint.
If you don’t currently have this poster on display, don’t fret — this one is an easy fix. You can download posters in a number of different languages for free from the United States Department of Labor. In the event of a physical audit, the inspector will confirm that you have the poster up in a highly trafficked area.
Become Familiar with the Deadlines and Audit Process
In addition to collecting all necessary data, evaluating the fairness of your hiring practices, and posting EEO laws, take the time to learn what the audit process looks like in advance. If you are audited by the OFCCP, you will be on a relatively tight deadline to get your materials back to them. Knowing what to expect ahead of time will allow you to be more efficient during your audit.
The initial audit phase allows for 30 days for you to submit the requested materials. You should get an itemized list from the OFCCP, so make sure you can check off every item in full before you send the information back. Depending on the detail and quality of your submissions, you may be asked follow-up questions. In this case, respond fully and promptly — and within the deadline. If you’re unable to satisfy the OFCCP query about your compliance, you could end up being subjected to an on-site audit.
An OFCCP audit doesn’t have to be stressful – as long as you’re prepared. When you are confident that your data is securely stored and organized in compliance with OFCCP laws, the audit process can be smooth sailing. No more scrambling through old employee applications to organize data into a report within the 30-day window. Get organized ahead of time to breeze through your OFCCP audit.