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Do Hospitals Have to Comply with OFCCP Requirements? An update.

December 17, 2015


A quiet battle has been going on between the Office of the Federal Contract Compliance Programs (OFCCP) and hospitals. Under the United States Department of Labor, the OFCCP enforces equal employment opportunity requirements for those doing business with the Federal Government. Hospitals, of course, are subject to EEOC requirements, but should they also face OFCCP audits and possible penalties? This issue has been unsuccessfully litigated by hospitals in Pennsylvania and in Florida without relief for hospitals. See, UPMC Braddock v. Solis and OFCCP v. Florida Hospital of Orlando. 76808356

In December of 2010, the Office of Federal Contract Compliance Programs (OFCCP) took the position that hospitals were subject to their jurisdiction as a result of contracts to provide care under TRICARE, the federal government’s healthcare program for active duty and retired military and their families. Congress and President Obama gave hospitals some relief with the National Defense Authorization Act for Fiscal Year 2012. Section 715 of that law states that network providers and providers of medical service are specifically NOT subcontractors subject to OFCCP jurisdiction based solely on TRICARE participation. This provision only addressed jurisdiction based on TRICARE participation. The law did not affect other bases for coverage, such as contracts with the Veterans Administration, the Department of Defense, or other federal agencies. The OFCCP, certainly, didn’t believe the issue was dead. OFCCP Director Shiu claimed that the NDAA provision was "likely to create confusion and will unfairly deny many workers the benefits and protections that our laws ensure."

Now, a proposed bill may broaden the protection against OFCCP jurisdiction. HR 3633 aims to more broadly prevent the OFCCP from categorizing hospitals and other healthcare providers as contractors.

Supporters of the bill argue that hospitals already face heavy compliance and regulation, and the classification would create additional burdens. The American Hospital Association (AHA) fears the OFCCP would classify healthcare facilities as such "virtually overnight," without warning, Curt Kirschner, designated outside counsel for the AHA, testified.

Kirschner said that "within the past few years . . . the agency has laid the groundwork for a jurisdictional land grab based on essentially meaningless distinctions between the ways healthcare providers participate in federally funded health benefit programs." To learn more, click here.

What does all of this mean? Ted Kinney, Ph.D. is Director of Research and Development for Select International and an expert in EEOC and OFCCP challenges to hiring and selection systems. According to Dr. Kinney,

“Our advice remains the same whether the OFCCP has jurisdiction or not: ensuring job-related and legally defensible selection processes is a best practice. While this new legislation should provide a little breathing room for many healthcare providers, it does not suggest that our employment laws are less important or that compliance is an obsolete consideration. Organizations should still focus on documenting selection decisions, minimizing adverse impact while maximizing prediction, and designing hiring processes for efficiency and consistency. In the end, we should view our employment laws as reminders to make decisions based only on job related factors that predict future work behavior. By doing so, we will remain compliant AND will continue to make sound business decisions by selecting only the top talent in our candidate pool based on those data points most predictive of future success.”

What should you do?

  1. Obviously, hope that HR 3633 becomes law because it will decrease the likelihood of you facing an OFCCP audit.
  2. Be aware that there are other reasons for a sound, legally defensible selection system – not the least of which is the EEOC.
  3. Review your current selection practices to see how they’d fare under OFCCP or EEOC scrutiny. Could you defend every selection decision?

To learn more, see our Whitepaper on Evidence-Based Hiring:

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Bryan Warren Bryan Warren is the President of J3 Personica, a consulting, assessment, training, and coaching firm, and a guest blogger for PSI. Bryan is an expert in progressive talent strategies, with a particular focus on leader and physician selection and development.