(a) Predetermination Notice. If a compliance review or other review by OFCCP indicates evidence sufficient to support a preliminary finding of disparate treatment and/or disparate impact discrimination, OFCCP may issue a Predetermination Notice, subject to the following parameters and the approval of the Director or acting agency head:
(1) For allegations included in a Predetermination Notice involving a disparate treatment theory of liability, OFCCP must:
(i) Provide quantitative evidence as defined in this part;
(ii) Demonstrate that the unexplained disparity is practically significant; and
(iii) Provide qualitative evidence as defined in this part that, in combination with other evidence, supports both a finding of discriminatory intent by the contractor and a finding that the contractor's discriminatory intent caused the disparate treatment.
(2) OFCCP may issue a Predetermination Notice under a disparate treatment theory of liability without satisfying all three components listed in paragraph (a)(1) of this section only if:
(i) The qualitative evidence by itself is sufficient to support a preliminary finding of disparate treatment;
(ii) The evidence of disparity between a favored and disfavored group is so extraordinarily compelling that by itself it is sufficient to support a preliminary finding of disparate treatment; or
(iii) Paragraphs (a)(1)(i) and (ii) of this section are satisfied and the contractor denied OFCCP access to sources of evidence that may be relevant to a preliminary finding of discriminatory intent. This may include denying access to its employees during a compliance evaluation or destroying or failing to produce records the contractor is legally required to create and maintain.
(3) For allegations included in a Predetermination Notice involving a disparate impact theory of liability, OFCCP must:
(i) Provide quantitative evidence as defined in this part;
(ii) Demonstrate the unexplained disparity is practically significant; and
(iii) Identify the specific policy or practice of the contractor causing the adverse impact, unless OFCCP can demonstrate that the elements of the contractor's selection procedures are incapable of separation for analysis.
(4) The Predetermination Notice must disclose the quantitative and qualitative evidence relied on by OFCCP in sufficient detail to allow contractors to investigate allegations and meaningfully respond. OFCCP will seek to obtain qualitative evidence in all cases in which it issues a Predetermination Notice; however, if the exception in paragraph (a)(2)(ii) of this section applies, OFCCP will disclose why, in the absence of qualitative evidence, the agency is issuing the Predetermination Notice based on evidence of an extraordinarily compelling disparity alone. In addition, upon the contractor's request, OFCCP must also provide the model and variables used in any statistical analysis and an explanation for why any variable proposed by the contractor was excluded from that analysis. However, OFCCP may withhold personal identifying information from the description of the qualitative evidence if the information is protected from disclosure under recognized governmental privileges, or otherwise if providing that information would violate confidentiality or privacy protections afforded by law.
(5) Any response to a Predetermination Notice must be submitted by the contractor within 30 calendar days of receipt of the Notice, which deadline OFCCP may extend for good cause.
(b) Notice of Violation.
(1) If, following OFCCP's review of any response by the contractor pursuant to paragraph (a)(5) of this section, the agency has evidence sufficient to support a finding of disparate treatment and/or disparate impact discrimination, as established in the parameters and exceptions in paragraph (a) of this section, or that the contractor has committed other material violations of the equal opportunity clause (with the exception of violations for denying access or failing to submit records in response to OFCCP's Office of Management and Budget (OMB)-approved Scheduling Letters, for which OFCCP may proceed directly to issuing a Show Cause Notice), OFCCP may issue a Notice of Violation to the contractor requiring corrective action and inviting conciliation through a written agreement, subject to approval by the Director or acting agency head.
(2) OFCCP may issue a Notice of Violation alleging a finding of discrimination following issuance of a Predetermination Notice if the contractor does not respond or provide a sufficient response within 30 calendar days of receipt of the Predetermination Notice, subject to approval by the Director or acting agency head, unless OFCCP has extended the Predetermination Notice response time for good cause shown.
(3) The Notice of Violation must disclose the quantitative and qualitative evidence relied on by OFCCP in sufficient detail to allow contractors to investigate allegations and meaningfully respond. OFCCP will seek to obtain qualitative evidence in all cases in which it issues a Notice of Violation, however, if the exception in paragraph (a)(2)(ii) of this section applies, OFCCP will disclose why, in the absence of qualitative evidence, the agency is issuing the Notice of Violation based on evidence of an extraordinarily compelling disparity alone. In addition, upon the contractor's request, OFCCP must also provide the model and variables used in any statistical analysis and an explanation why any variable proposed by the contractor was excluded from that analysis. However, OFCCP may withhold personal identifying information from the description of the qualitative evidence if the information is protected from disclosure under recognized governmental privileges, or otherwise if providing that information would violate confidentiality or privacy protections afforded by law.
(4) The Notice of Violation must address all relevant concerns and defenses raised by the contractor in response to the Predetermination Notice.
(c) Conciliation agreement. If a compliance review, complaint investigation, or other review by OFCCP or its representative indicates a material violation of the equal opportunity clause, and:
(1) If the contractor, subcontractor or bidder is willing to correct the violations and/or deficiencies; and
(2) If OFCCP or its representative determines that settlement (rather than referral for consideration of formal enforcement) is appropriate, a written agreement shall be required. The agreement shall provide for such remedial action as may be necessary to correct the violations and/or deficiencies noted, including, where appropriate (but not necessarily limited to), remedies such as back pay and retroactive seniority.
(d) Remedial benchmarks. The remedial action referenced in paragraph (c) of this section may include the establishment of benchmarks for the contractor's outreach, recruitment, hiring, or other employment activities. The purpose of such benchmarks is to create a quantifiable method by which the contractor's progress in correcting identified violations and/or deficiencies can be measured.
(e) Expedited conciliation option. A contractor may voluntarily waive the procedures set forth in paragraphs (a) and/or (b) of this section to enter directly into a conciliation agreement. OFCCP may inform the contractor of this expedited conciliation option, but may not require or insist that the contractor avail itself of the expedited conciliation option.
(f) Severability. Should a court of competent jurisdiction hold any provision(s) of this section to be invalid, such action will not affect any other provision of this section.
[85 FR 71574, Nov. 10, 2020]