Staying Ahead of OFCCP & DOJ Workforce Compliance Changes

Joe Young

Good afternoon and hello, HR GovCon friends. Welcome to the 19th episode of the GovCon HR Round-Up podcast. We hope everybody out there is enjoying the remaining days of our summer here. It's hard to believe that it's August already. Special welcome to any first-time listeners that are joining us today. And, obviously, welcome back to our growing legion of loyal listeners.

Legion may be a little aggressive. I'm not sure what the exact definition of legion is, but I like that word.

Declan Leonard
We'll take it.

Joe Young

We're going to go with legion, our legion of loyal listeners.

Declan Leonard

Throngs.

Joe Young

Yes. So, welcome back. And, good afternoon, everyone. Thank you for taking time to join us. My name is Joe Young. I am the President of GovConPay. We are the only outsourced payroll and HR service provider dedicated exclusively to serving the government contracting marketplace.

We are joining you live from the Tyson’s Corner studios of BLC Digital Strategies. The media affiliate of Berenzweig Leonard LLP, with the support of both of our teams and, in particular, our producer, Mr. Todd Castleberry. Before we jump in, we always want to take time and recognize our sponsor: The great folks at Berkshire Associates.

For those of you who are not aware, Berkshire are HR compliance experts with over 50 years of experience in providing compliance services and technology for organizations looking to build their ideal workforce through compliant nondiscrimination services, workforce analytics, and pay equity expertise.

Declan Leonard

And they have been busy, busy, busy.

Joe Young

They have been very busy. And yeah, we'll get into our topic again today. It kind of aligns with our sponsor again. But, definitely welcome to any Berkshire clients who are joining us today. Great to be back with my colleagues here on the roundup. So, managing partners of Berenzweig Leonard, Seth Berenzweig, Declan Leonard. Guys, why don't you introduce yourself to any of our first time listeners?

Declan Leonard

Yeah. No, it's great to be back. I actually missed at least one of these. I forget, I think I was, on travel maybe last month, so, but my colleague Nick Johnson, probably, more than filled in for my shoes here.

Seth Berenzweig

He has his fans in front of the building right now.

Declan Leonard

Yes. Yes, yes. Boy, are they going to be disappointed seeing me. They're going to throw subs at me when I go out there or something like that. You know, that seems to be the way to do it. So, I'm Declan Leonard, I am managing partner here at Berenzweig Leonard, and I head up the firm's employment law practice.

Seth Berenzweig

And I'm Seth Berenzweig, co-managing partner here at the firm. And I help head up our corporate and transactional practice. And, we're not throwing any Subway sandwiches on the show today.

Joe Young

I think I missed something in the news on Subway sandwiches.

Declan Leonard

Oh, you need to look this up! It's actually… So, somebody actually worked for the Department of Justice. I know we're off topic. But he was not happy with the show of force in DC with National Guard and stuff. So, he went up and attacked one of them with a subway sub, lost his job.

But now he's an icon and they have murals all around DC with this guy throwing a subway sub.

Seth Berenzweig

Someone put out a clip. With the background music, “Looking for a Hero.”

Joe Young

I have no idea how I've missed this, but, I will definitely, first thing I view after the show today. All right. Well, the show today and our topic, I'm going to share a little, you know, a little debate for the first time. A little, maybe ­- I won't say controversial.

Declan Leonard

What's our pushback here? What is our topic going to be?

Joe Young

We've been trying to be timely and not putting out topics. And we got together a few weeks ago and Seth and Declan are like, “Well, there's this new news in DEI.” And I'm like, “DEI? Again?” Like, how much can we talk about die? But I have to listen to the voice of counsel here.

So kind of almost in fun, the title of our topic today is “Why are we still talking about DEI and why you still need to pay close attention.” So, for any of you who are like, “Oh my God, they're doing DEI again,” and you're about to log off, stay. There is more breaking news on this topic and we look forward to jumping into it today.

So with that as a lead in, let’s start with you, Declan. As I feel like we've talked about this ad nauseum, why are we?

Declan Leonard

DEI needs to DIE.

Joe Young

So why are we talking about this again in August?

Declan Leonard

Yeah, I know it's a good point. And I will say, as an employment lawyer, I deal with this stuff all the time. And I even am tempted to tune out when I hear this. It's like, okay, we get it already. DEI bad, you know? But, I think the reason why it's so important to talk about it, first off, the Department of Justice just issued a memorandum two weeks ago, that we’ll want to talk about today, because one of the criticisms, I guess, of the administration's actions when it came to DEI is they would say DEI is bad. And if you engage in illegal DEI, you're going to lose your funding, you're going to lose contracts, you're just not going to be in business anymore.

And then people would say back, “Well, okay, but what does that mean?” So we have a little bit more clarity. And we're going to try to get as granular as we can today throughout this podcast: What it is, what are things that this administration is going to look for? A lot has happened in the last - what is it? - six months?

And you think, if I can be candid, a lot of people with this administration think it's kind of like, “Hey, look, there's a squirrel.” They do things, and then they move on to the next thing. Even DoGE's kind of an example. We kind of hope that, like, DoGE maybe is subsiding a bit for a lot of our contract brands out there.

And things will start to get a lot more robust in the contracting industry. But the reason why we're talking about it here today is because it is not a fad. It was not something that they just rolled out and said we made our point, now let's move on. There are concrete actions that we're going to be talking about today such as this memo, and some other enforcement action that shows that they are very serious about this.

They are following through on this, and contractors have to pay attention.

Joe Young

Yeah. So, we're going to get into some of those specifics here obviously in our time this morning. But Seth, how worried should the run-of-the... Not the our people are run-of-the-mill - but the run-of-the-mill GovCon, for lack of better terms... How worried should they be that they'll be targeted?

Seth Berenzweig

So, the news that I saw just this week, just a couple of days ago, where my first reaction was, “This is kind of a big deal,” is when, as a result of this new, more detailed memo out from DOJ, which Declan was talking about, came out. It came with an announcement that the Justice Department is now threatening to use a very powerful tool in its toolbox called a civil investigative demand, or sometimes known as a CID (pronounced KID).

And it is a letter from the government to the recipient, noting that there is a fraud related investigation underway and that the company is required, within a defined period of time, to produce documents in reference to that. Now, the reason why this is a big deal is that even though it's called a civil investigative demand, I think that label’s a little bit misleading because this relates to allegations of fraud, potentially under statutes, such as the False Claims Act.

So, this is kind of a big deal. This is really where we've turned a new corner when it comes to DEI. And Declan, I agree with you. This isn't like, “When is the new squirrel coming out?” The squirrel is still very much just kind of right out on Front Street. And as a result of that, the companies that might be subject to some kind of a question or review, even if they've done nothing wrong, might be subject to this new heavy hammer that's being, brought out to bear by the Justice Department.

Declan Leonard

And you're right that while these are called civil, it really is a misnomer because, in essence, what it would require without any kind of a court proceeding or anything along those lines, you get this letter, and it is kind of an, “Oh, crap” moment because you're going to have to turn over a whole bunch of documents and records, and they're not telling you exactly what roadmap they're going on.

It's like you're kind of like turning over a bunch of stuff blindly. And there's no immunity by turning it over. This stuff could be very much providing the evidence that then results in some kind of bigger problem for the company.

Seth Berenzweig

Yeah. And unfortunately, much like a government subpoena, they tend to be usually a little bit overly broad. And, one of the things that you may be able to do through your legal counsel is to try to argue and narrow the scope. The problem is that it's more specific and it's more target intensive from a fraud allegation perspective than a general third-party witness subpoena.

So, it creates its own unique dimensions and demands when these things are issued by the Justice Department.

Joe Young

So, in the event one of our listeners is unfortunate enough to have one of these arrive in their mailbox, what's the immediate next steps they should be taking?

Declan Leonard

First off, take it very serious. Don't just be like, “Oh, what's going on now?” Definitely take it very serious. I would suggest - and again, it's a self-serving plug - but I would suggest contacting counsel immediately. And I say that for a couple of reasons. One is you want to make sure that everything you do, and every action that you take in every communication internally is cloaked with the attorney client privilege.

If you all start talking amongst yourselves and company… Let's say the CEO and the COO and the CFO are all having this group chat, that's all very much discoverable. So, they really need to be careful if they say things that are incriminating or create liability on the civil side. So, very important to engage counsel and make sure you set up that attorney client privilege so that you can shield those communications.

Seth Berenzweig

I'll give an example of that, because I think that that's really important. Let's say that this comes in and, before engaging counsel, you send out an email to the C-suite and just say, “Look, we're going to have a meeting at 4:30 today, and we're going to talk about this. If you have any thoughts ahead of time, let me know. And then we'll send out a Zoom link.” If the attorney for the company is not caught on that email, that is going to be discoverable. However, if you simply CC your attorney and keep him or her involved, even tangentially, in the loop that can be included in the privilege log, and then that communication does not have to be produced to the government.

The devil's in the details, and you don't have to do a lot to get the attorney involved. But I agree that that it's something that you really need to think about from step one.

Joe Young

Great. Yeah. One thing I forgot to mention at the beginning is, if anybody has any questions, like always, feel free to put those in the chat. Our team will monitor those and they'll put those up and we'll try and address them. Why we're on here today. So just wanted to remind everybody about that.

So Declan, you kind of mentioned earlier, part of the frustration as we were dealing with this, two days after inauguration and then in the months leading was like they were mentioning the things like DEI but there was kind of lack of definition. What does this really mean? It seems like that's changed.

Declan Leonard

Yeah.

Joe Young

I mean, there's more definition, more concrete.

Declan Leonard

This memo. And the memo, by the way, they make it clear that the memo is nonbinding. I don't know what that means because it's a memo from DOJ. So, I would take it very seriously. I think, arguing that it's nonbinding, it's only because procedurally, they were able to issue it that way, and that's how they were able to do it.

It does provide a little bit more specifics. I'm not going to come in here today and say, “Here's an exhaustive list of all the things that they're going to be looking for.” But definitely, the one thing we do know from this administration is that not all protected classes and not all discrimination is viewed the same way.

This administration focuses mainly its target on race and gender actions that they believe are discriminatory. And so you've got things like training sessions - we've heard about these and certainly during the Biden administration, they made some news – where people would have to go into employment training where they would talk about things like white privilege, toxic masculinity, we heard these phrases. If you have training sessions now, those will be absolutely a target by this administration. Those are absolutely a no go nowadays. The safe spaces. This memo didn't just touch on employment. It talked about a couple of different things including, colleges, but any place that's like a safe space that caters to specific minority groups, again, those are illegal DEI. Those could get you one of these civil CIDs that could be the subject of a court action, which are all very disruptive and very costly. One of the examples they gave is a black employee support network. If you have that within your company, that has to be disbanded.

I mean, according to the administration in this memo, and also during the interview process, you hear about things, questions like your cultural background. If they delve into your cultural background, if they say, “What are obstacles you have overcome?” Your first generation status. Do you come from an underserved geography?

When it comes to some of these jobs, those are what this administration and the DOJ memo calls proxy for eliciting DEI. So, in other words, you're not asking specifically, “Hey, how does your race help you in doing your work here?” But instead, it's they believe that these are just sort of proxy ways to elicit illegal DEI.

Seth Berenzweig

And I would say also that those, even if you could view those as - let's just use the phrase soft offenses, just say - where the government can try to peer in, one of the problems that this strikes in my mind is the element of the former disgruntled employee. Because if you have someone out there, who has an axe to grind, these kind of soft violations could really be fodder for them to file a complaint.

And the government is more than happy to receive these kinds of complaints. So, you know, I can imagine HR directors listening to this right now, just saying, “Oh, come on, give me a break. Really?” But yeah, that's the environment that we're operating in right now. And you just have to be aware of it and your managers have to be aware of it as well.

Declan Leonard

Yeah, I didn't make these up. These are coming from the memo. These are coming from the memo. These are the things that they're watching out for. And they want nothing more than to make a high-profile example. And you don't want to be that company.

Joe Young

So, a couple questions just came in. They kind of speak almost specifically to this. So, a company has an internship program that has a close connection in this sense. It says Howard University. Consider any maybe historically black college. Is that a problem under the current administration?

Declan Leonard

Yeah. I mean, it's… So, in a vacuum, I would say yes. But I think if they also have an internship program where they, for lack of a better phrase, fish from many ponds, like, they go out to Silicon Valley, they go to all different areas. But if they are specifically targeting, HBCUs, that to me would be a problem.

And that gets to obviously race and race is a big target in this administration.

Seth Berenzweig

That's a great point. So, the answer as a practical standpoint isn’t, “Oh, you have to get rid of it.” Perhaps one of the remedies is fish from a whole bunch of different kinds of ponds. Yeah. One of the examples that we were reflecting on is whether, when you single out employees who are new moms, in a company newsletter.

What about new dads? You know, again, not to make too fine a point on it, but if you fish from many ponds, it doesn't mean that you can't fish from one in particular. As long as you're showing that that you're not giving undue favoritism in that regard.

Declan Leonard

Yeah. I would not advise a client to disband that internship program. I would just say you need to broaden the number of colleges and universities the first year.

Joe Young

Diversify.

Seth Berenzweig

Yeah, yeah,

Declan Leonard

Don't say diversify.

Joe Young

Yeah, yeah, I shouldn’t say that. As I said it, I almost I caught myself, I was like, “That's probably not the right word to use.”

Seth Berenzweig

We almost had an ICE guy bust in here behind your back.

Joe Young

All right. So we're talking about, obviously, the administration. This is pressing as it relates to employees. What do we think is next as it relates to GovCons and the ADA program? Like it becomes kind of the next step.

Declan Leonard

This is this is the question that all the contractors in our area are asking themselves.

Seth Berenzweig

Yeah, it's the one that people know that they're thinking about but that they don't want to talk about.

Joe Young

Nobody wants to talk about it. Yeah.

Seth Berenzweig

I mean, it doesn't take… There's always a crack in our crystal ball. We don't know exactly what's going to happen next, but you can see that gender and race preferences in the granting of contract awards. Within, for example, the ADA world, it’s something that is probably somewhere in the back of Trump's mind now, and I think that those kinds of set aside programs, the best way that I would describe it is that I would just place them on watch.

Now, of course, people that are listening to this are saying, “Look, that's a different ballgame because a lot of these are statutorily prescribed.” Well, first of all, that doesn't mean that Congress can't get into the Act. Second of all, I don't know if you've noticed, but Trump is not a very shy person. So, he may do, at a minimum, issuing a directive for agencies to start to conduct an “administrative review” of whether or not to continue those programs.

And by the way, some of those agencies have already started to do reviews and audits of ADA programs and awards. So, this is something that I would describe as being on watch. This will not likely affect veterans and disabled people because those are, two categories that the administration does not similarly view. But what do you think, Declan?

Declan Leonard

Yeah. No, no, I do agree. There are ways while the Trump administration, because this is congressionally codified, the ADA program, they can't just disbanded without congressional action. But there are ways to chip around it. I mean, they can direct contracting officers to use different vehicles, so that they really erode it, as opposed to eliminate it.

And then they can also turn their sights on these companies and start to really scrutinize a lot more carefully. You say you're a women-owned small business. Okay, let's look at this. How deeply involved are the women, especially in a spousal business ownership.

Seth Berenzweig

That's the way that they would go first. Yeah, that's the way that you would go first. Because if a company, and I know that none of our clients are like this, but if there's a company out there that's taking some liberties, not giving respect to the idea that the person who is socially disadvantaged isn't running the day-to-day management, oversight, and operations of the company? That is the lowest hanging fruit, right?

Declan Leonard

Yeah. Yeah. So I think they'll chip away at it. I think that that's probably in the short run what's going to happen. But then they could galvanize support in Congress. He's been able to get his way, let's put it that way. So it may be something that they take on. an interesting.

Joe Young

Interesting. Yes. Obviously, a topic that everybody will be paying attention to if things start to head down that road. With all of these things we talk a lot about the contractors’ responsibilities. But there's always a situation of the prime contractors or what responsibilities they have for their subs. So, what are the scenarios now as primes that have subs and how they have to be not only looking at their own direct organization, but monitoring the activity and the policies of their subs to make sure that this doesn't flow up?

Declan Leonard

Yeah, this was an interesting component of the DOJ memo. Because it's one of those things where it's hard enough to police your own company. But now what they're basically saying for primes is, “Look, you also need to make sure that your subcontractors are not engaged in illegal DEI.”

And they specifically mentioned the phrase “monitor,” that the prime would serve as a monitor. So how you do that? I don't know. It's hard enough for some of these companies to even know exactly if there is any kind of illegal DEI in their own operations, let alone subcontractors.

So, it's going to be important for primes, in their contracts, to make sure that at least they say that you will not engage in any illegal DEI. They can reference as many documents, potentially even reference this DOJ memo. Just to kind of CYA as best they can put.

Seth Berenzweig

Put it in a teaming agreement. Why not?

Declan Leonard

Yeah. All of that stuff. It's going to have to be in there. And then, how they actually monitor it beyond that is going to be a different issue. And then, it's a double-edged sword because the more a prime tries to insert themselves into a subcontracts operations, then they run a risk of like, “Okay, are you a joint employer at this point?”

You don't you want… You always try as a prime to maintain some separateness with your subcontractor. So this really is this is going to be a bit of a double-edged sword for primes. It puts them in a very, very tough situation.

Seth Berenzweig

Yeah. No, I agree. And it reminds me of the phrase “no good deed goes unpunished.”

Declan Leonard

Yeah, yeah.

Joe Young

Yeah. So to wrap this up, I guess here, Seth, at the end. We again find ourselves in somewhat of a bit of a mystery of what GovCons should do. But, what's your advice to our listeners as far as, based on these rules as far as you know, what are the active steps? What are the things you need to be paying attention to?

Seth Berenzweig

I think that the easiest and most cost-effective step is really to do an efficient self audit. Why not just lift up the hood, you know? Check on the carburetors and see how you’re doing with regard to the most current iteration of your hiring practices, your onboarding policies, obviously your handbooks. If you do that process and if you review it with your legal counsel, alluding to something that Declan noted a few minutes ago, that would be subject to attorney client privilege, so that if you have observations and opinions that are reflected in those documents, those observations and opinions are privileged. And then you can go ahead and you can create and modify this and an ounce of prevention is definitely the way to go here. So be proactive, be self-reflective. It's a very cost-effective way to just take a look at the problem. And also, even an hour's worth of training with your managers is something. As long as people are aware of it and you can demonstrate that, I think that you're going to definitely get extra points with the Justice Department.

Declan Leonard

I agree. Yeah.

Joe Young

Do you have any clients as far as these letters going out and will there be a sense on the street of people starting to receive these?

Declan Leonard

I have not gotten any indication from any clients that they've gotten one of these CIDs. They have had to sign those certifications for pay applications that basically say we don't engage in any illegal DEI, and that alone sets them up for a false claims act potential claim themselves.

This administration is coming at it many different ways. They're encouraging employees to file Qui Tam actions, which are actions like we’re telling on our company that they're doing this stuff and it's financially lucrative for a potential employee if they win. So they have different avenues. They're sort of circling the wagons around these companies.

And that's why I think it's it's not a fad. It's very, very, very potent concern that companies should have.

Seth Berenzweig

Yeah. The other thing that I would mention is, if you zoom out from a procurement perspective, use it as a feather in your cap. And just be able to demonstrate that, as a responsible contractor - which is something that you need to be able to demonstrate to have baseline qualifications under the FAR to be able to submit for government contracts - that you have the appropriate and necessary internal controls and procedures to be able to provide that representation, which, again, could be a false Claims Act issue as far as an overexcited federal official is concerned.

But if you do this, give yourself a gold star for that and make sure that you put that out there so that the contracting officer or the relevant review authority at the agency is aware of the fact that you're doing this. It's obviously going to be much more to your credit to be able to be proactive.

Look under the hood. Report that as being a responsible contractor. If you do that versus being reactive, it really can make a world of difference.

Declan Leonard

Yep. Totally makes sense.

Joe Young

Well, I hope after this 25 minutes that our listeners are like, “Yeah, I'm glad I stayed on. Yes, there was more to learn. Yes, there is more news.” As has been our practice the past few months, we have not picked a topic for next month.

Declan Leonard

It’s already going to be DEI.

Joe Young

It's served us well. If it's DEI, there may be a new host. I may not be in this chair. You know, can we come up with something lighter next month? I feel bad for our listeners.

We need to bring something that maybe after the the half hour our listeners aren’t, like, “Ugh.”

Declan Leonard

Well, we'll be knee deep into NFL season so we can talk. Commanders on a winning streak. The Eagles maybe not living up to expectations, but.

Joe Young

We'll see if we can find something not related to DEI next month. Something maybe a little lighter. I hope we didn't ruin people's afternoons or just, like, add one more thing. I know that you have to kind of deal with in the ever-changing world of being an HR professional.

Seth Berenzweig

Look on the bright side. It may be a while now that we don't have to talk about DEI. We don't have to talk about DoGE. We never talk about all these things. And now, with the new fiscal year coming around there are reasons to really consider the glass half full, right?

Declan Leonard

Yeah. I mean, two developments. We've got two more minutes left. Two other developments, the OFCCP, remember, up until January, federal contractors have long had to file these affirmative action plans, basically saying what affirmative steps have they taken to hire minorities? And they were kind of onerous requirements.

Those have now gone away. And the OFCCP has now announced that they've disbanded all investigations, all active investigations. And from now on, going forward, the only affirmative action will relate to the hiring of veterans and the disabled.

Joe Young

So that is our good news for today. Yeah. You weren't aware of that already, but thank you for lighting it and bringing us some good news.

Declan Leonard

But wait, there's more. Because the National Labor Relations Board - and we actually spent a couple of our roundtables, at least a couple of them, talking about the National Labor Relations Board, the NLRB, because they were incredibly active during the Biden administration. They were the ones we did one of these on how primes and subs were going to be considered joint employers under the National Labor Relations Board.

Well, guess what? The NLRB may very well be going away. There was a Fifth Circuit Court of Appeals, a very powerful, federal appellate court that basically just ruled that the NLRB, because of its structure - and we would need two hours to get into why - but because of its structure, it may very well be an unconstitutional executive function.

And the NLRB is the one that also handles all union activity, unfair labor practices. So people out there with Service Contract Act contracts... A lot of times along the lines of that, you have unions that, if you have a complaint, I don't know where you go if the NLRB is gone.

Seth Berenzweig

Can you imagine the conservative justices in the Supreme Court building just licking their chops, hoping that they get an application for review on that one? They would gobble that up for a lunch. They would love that case.

Declan Leonard

So, you think that they would disband the NLRB?

Seth Berenzweig

In a heartbeat.

Declan Leonard

Yeah. Because they think that it's usurping congressional power. It is basically putting too much power as a separation of powers into the executive branch.

Seth Berenzweig

It's a regulatory overreach, especially when you look at the recent Supreme Court decision that blows up Chevron and all of that progeny. Yeah, if that happens, I mean… You've already got a big deal going there. I wasn't even aware. I knew that that case was pending. But I didn't know that that was really…

Declan Leonard

Yeah. Yeah, that's a big one. That's a big one.

Joe Young

That sounds like a roundup podcast topic of the future.

Declan Leonard

Yes, yes yes, yes. We will put our hats on and figure something out. Good. Yeah.

Joe Young

All right. Well everyone, thank you so much for joining us again. We hope you found great value with our experts here, Seth and Declan, today. Enjoy the rest of your summer. We will be back in September on our normal Thursday time. That will be September the 18th. Topic to be determined based on the landscape ahead of us.

So we'll keep an eye on it and make sure we're bringing you the latest and the greatest when we see it next month. Thanks again. And, take care.