Beware of Increased OFCCP Activity

9/6/2012

The Office of Federal Contract Compliance Programs (OFCCP) is on track to have a strong year in settlements.
 
  • Shipping giant FedEx to pay $3 million to settle charges of hiring discrimination brought by U.S. Department of Labor.
  • Baldor Electric to pay $2 million to settle hiring discrimination case with U.S. Labor Department.
  • U.S. Labor Department settles charges of hiring discrimination with federal contractor Leprino Foods.

These are just a few of the headlines on the Department of Labor’s OFCCP web site. These settlements may be the result of the Memorandum of Understanding issued on November 9, 2011, between the OFCCP and the Equal Employment Opportunity Commission (EEOC). The Memorandum stated that the two agencies would work together to ensure equal employment opportunities for applicants and employees under Title VII of the Civil Rights Act of 1964 (Title VII) and Executive Order 11246 (E.O. 11246). The agencies have begun to coordinate their efforts to ensure compliance with the laws.

Under E.O. 11246, “federal government contractors” with at least $10,000 in government contracts are prohibited from discriminating against any employee or applicant because of race, color, religion, sex, national origin, disabled veteran, veteran of the Vietnam era or other covered veteran status, or physical or mental disability. Additionally, federal government contractors are required to have an Affirmative Action Plan if they have at least 50 employees and have a contract to supply at least $50,000 of goods or services to the federal government (either directly or as a subcontractor). Further, any financial institution that has 50 or more employees is covered if it serves as a depository of federal government funds in any amount or is an issuing and paying agent for U.S. Savings Bonds and Notes.

Employers under the OFCCP’s jurisdiction are obligated to take affirmative action to ensure that applicants are employed and that employees are treated the same during the application process and employment without regard to any of the protected categories. However, employers have no obligation to place unqualified minorities and women in the workforce nor are they required to provide preferential treatment to women and minorities.

So, what did FedEx, Baldor Electric and Leprino Foods do to receive such huge penalties? FedEx had hiring processes and selection procedures that violated E.O. 11246. According to the DOL, FedEx discriminated “on the basis of sex, race and/or national origin against specific groups identified at 23 facilities in 15 states... affected workers include[d] men and women as well as African-American, Caucasian and Native American job seekers, as well as job seekers of Hispanic and Asian descent.”

The OFCCP found that Baldor Electric’s applicant screening process violated E.O. 11246. “As a result, 795 qualified women, African-Americans and job seekers of Asian and Hispanic descent were denied the opportunity to advance to the interview stage when applying for production and laborer positions.”

Leprino Foods was also found to have discriminatory hiring practices. Leprino Foods used a pre-employment test that selected hires for on-call laborer decisions that resulted in discrimination against African-American, Asian and Hispanic applicants. The pre-employment test was not job-related because it tested applicants’ skills in mathematics, locating information and observation. These skills did not relate to entry-level tasks performed by on-call laborers which included inspecting products, monitoring equipment and facility sanitation.

As the cases above illustrate, the OFCCP has increased its focus on adverse impact, particularly in hiring and selection processes.

What is adverse impact? Adverse impact refers to a review of employment decisions to determine whether there are any disparities based on gender, race or ethnicity. By performing this analysis, the OFCCP and employers are able to determine whether there is evidence of disparate treatment of applicants and employees.

So, why now? It is an election year and a number of sources have indicated that the female and minority vote will be critical to both political parties. The OFCCP began ramping up in December 2011 by issuing a proposed rule that would require federal contractors and subcontractors to set a hiring goal to increase people with disabilities in the workforce. Additionally, in January 2012, the OFCCP issued a pending proposal for the rescission of the 2006 Compensation Guidelines and consideration of a new pay data collection tool. The OFCCP claims that these actions would allow the OFCCP to more effectively identify potential violators of E.O. 11246.

In April, the OFCCP released its 2013 budget requests. It seems the OFCCP plans to be more active in 2013, stating that its goal is to complete more and higher quality audits. The OFCCP plans to use the audits to combat against pay discrimination. The OFCCP also plans to implement a “strategic” selection process to prioritize enforcement efforts and pinpoint multi-establishment and industry-wide deficiencies and violations, and there will be greater focus on the construction industry.

The OFCCP’s activity should be a warning to employers to review their policies and practices to make sure no discriminatory behavior exists.

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