U.S. Office of Federal Contract Compliance Programs (OFCCP)

As discussed in last week’s Fox Workplace Watch Alert, the Office of Federal Contract Compliance Programs (OFCCP) announced its largest pay equity recovery to date – a $5 million settlement of gender and racial pay discrimination claims it brought against State Street Corporation after a six-year investigation into the financial services firm’s compensation practices.  In essence, OFCCP alleged that a statistically significant disparity existed between the compensation paid to hundreds of women, and more than a dozen black, executives than that paid to their similarly situated male and white coworkers, respectively.

OFCCP’s action demonstrates how it can marshal sophisticated analytics to tease out pay disparities that otherwise may have gone unnoticed.  Like many other issues championed by the prior administration, it remains to be seen whether OFCCP’s recent focus on this issue will continue in the Trump Administration.  But federal contractors should pay attention to this settlement and take the opportunity to perform internal audits and address any potential issues before being the subject of a pay equity action (not to mention blog posts and alerts!).

Today’s post was written by Justin Schwam, an associate in our Labor and Employment Department in the Morristown office.

Back in February, our Labor and Employment Department issued a Client Alert regarding efforts by the Equal Employment Opportunity Commission (“EEOC”) to revise and update employer responsibilities on  Form EEO-1, a longstanding joint information collection of EEOC and the U.S. Department of  Labor’s Office of Federal Contract Compliance Programs (“OFCCP”).  Currently, the form seeks from covered employers information on race, ethnicity, sex and job category.

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The proposed changes, which would be fully implemented in 2018, would also require that salary information be provided for each employee.  The rationale behind the addition would be to uncover evidence of a pay gap between covered classifications and their peers.

Ahead of a second public comment period, the EEOC today released a copy of the new proposed form.  You may view the form here.

Our advice now is the same now as it was then.  Covered employers should begin by finding a mechanism to easily harvest the data, and address any technological deficiencies that hinder that collection as soon as possible.  There is uncertainly, especially given that it is a presidential election year, that the proposed changes will come to fruition.  But if the changes are ultimately implemented, employers need to begin to address the issue now so as not to be caught flat-footed.

As always, feel free to contact us with any questions.

Tomorrow is Veteran’s Day.  A day to remember and honor the sacrifices made by our men and women who have served in our military.

Our partner, Patrick Murphy, is co-hosting a one-hour prime time television special on the Triumph Games which will air at 7 pm on CBS Sports tomorrow night.  Another of our partners, Jody Simon, served as General Counsel for the show, so this one is definitely close to us here at Fox Rothschild.

The Triumph Games will feature 12 veteran athletes competing in adaptive games for $240,000 in prize money.  The games should be inspiring to say the least.

We wanted to take this moment to encourage you to watch the games, but also to remind government contractors that the OFCCP’s benchmark for hiring protected veterans is currently set at 7%. Under the final Vietnam Era Veterans’ Readjustment Assistance Act regulations that went into effect last year, covered federal contractors are required to establish a hiring benchmark for protected veterans.  Contractors are required to compare the percentage of employees who are protected veterans to this benchmark.  Contractors should use this comparison to determine how effective their veterans outreach efforts have been.

The OFCCP has set two options for establishing the benchmark.  More details can be found on the DOL’s website here.

We would like to thank everyone who has served for their service. We would also like to wish that those who are currently serving and are in harm’s way come home safely.

Finally, we would like to wish the Marines a Happy 240th Birthday!

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17674277_sPrivate employers with 100 or more employees must file an EEO-1 Report each year.  This year’s deadline for filing is September 30, 2014.

The preferred method for completing the EEO-1 report is the web-based online filing system, which can be accessed at the EEOC’s website here.

The EEO-1 report requires covered employers to set forth for each job classification the numbers of employees in each of six ethnic groups.

If you are an employer who has had more than 100 employees for years and has never filed an EEO-1 report, don’t panic.  The remedy for failure to file is that a court may simply order you to file the required report.

That does not mean that you should continue to not file the required reports to try to stay off the EEOC’s radar.  Steps should immediately be taken to file for this year.  Filling out the report may take some time, especially if you have not been tracking the demographics of your employees all along, so don’t leave this for the last minute.

How do you know to which ethnic group an employee belongs?  The EEOC prefers that employers give employees an opportunity to self-identify and then if they decline to do so, the employer may put down the ethnic group that you believe the employee belongs to based on a visual inspection.  When sending out surveys to employees, employers should be careful to note that the survey is for reporting purposes, is voluntary, and will not be used in making any employment-related determinations.

14982166_sThe Office of Federal Contract Compliance Programs (“OFCCP”) announced that it has reached a settlement with Lincoln Electric, Inc. on behalf of 5557 black workers who the OFCCP alleges were discriminatorily not hired.  In addition to paying $1 million, the company has agreed to offer entry-level jobs to 48 members of the class as the jobs become available.

The OFCCP, a division of the Department of Labor which addresses discrimination issues with federal contractors, has had Lincoln Electric in its sights for quite a while.  According to the OFCCP press release announcing the settlement, this is the second $1 million dollar settlement in eleven years.

One would think that one seven-figure settlement for discriminatory hiring practices would be enough to cause a serious review of those practices. We’re not sure what happened here, but rest assured, if a governmental agency has just entered into huge settlement of a discrimination case, that employer is going to be on the radar for a while.

There are plenty of reasons to settle a case, even where the employer has not done anything wrong, including trying to avoid the hassles of litigation.  Just a quick reminder to employers before they put those cases to bed, it is a good idea to review whatever process or issue was in question and make changes even though that case is now going away.  After all, you would not ignore a leaky faucet just because you got a new sink.

The Department of Labor announced that it had reached a $3 million settlement with two FedEx Corp. subsidiaries to address discriminatory hiring practices.  The settlement also requires FedEx to change its hiring practices and provide anti-discrimination training.

 

As we have noted in several prior posts, the OFCCP is ramping up its enforcement efforts.  This is the latest big money settlement achieved by the OFCCP in a matter of months.  (10/11 Cavines Beef $600,000 settlement and 9/11 Tyson Foods $2.25 million settlements to name a few).

 

In statements to Reuters, FedEx denied any wrongdoing and noted that the OFCCP filed a complaint based solely on statistical analysis and not based on any individual complaints.  Interestingly in cases like this, it means lots of individuals will be receiving a check without probably even knowing they were discriminated against or that a complaint had even been filed.

 

It is important for all employers, not just federal contractors, to insure that they have records of applicants and hiring decisions in order to defend against such failure to hire cases.  If you do not have a record retention policy, we suggest you implement one asap.

On December 9, 2012, the Office of Federal Contract Compliance Programs ("OFCCP") issued a notice of proposed rulemaking that would set an "aspirational" goal for federal contractors’ to employ more people with disabilities.  Under the proposed rule, the goal would be that people with disabilities would make up 7% of a federal contractors’ and sub-contractors’ workforce.

 

If you are thinking to yourself, that this does not affect my company, we’re not federal contractors or sub-contractors, don’t be so hasty. 

 

Who is and who is not a federal contractor can be a complex question when an entity receives grants from the federal government.  Certainly, receipt of most grants given by the federal government to provide financial assistance will not make an employer a federal contractor.  In certain situations where the government and the employer are both receiving a benefit, that grant may in fact be a federal contract.  In any case, it is prudent for employers who receive federal grants to periodically have the grants reviewed to determine if that grant is actually a federal contract, making the employer subject to the OFCCP’s jurisdiction.

 

So, what have employers who are federal contractors and manufacturing groups been commenting so far? 

 

Many groups who have already commented on the proposed regulations have concerns that the revised regulations would set a hiring quota.  Although Secretary Solis denies that is the case, the regulations if adopted as proposed, would increase federal contractors obligations to keep records regarding its employees with disabilities, including requiring employers to have applicants voluntarily self-identify and to give existing employees an opportunity to self-identify on an annual basis.

 

After receiving numerous requests to extend the comment period, including one from Congress’ Committee on Education and the Workforce, the OFCCP has granted an extension of only 14 days.  If employers wish to comment, comments must be submitted no later than February 21, 2012.  Comments can be made electronically at regulations.gov

 Photo courtesy of Tulane Public Relations.

 

 

Where’s the beef?  Or in this case, the defense to a charge of discriminatory hiring.  Caviness Beef Packers Ltd. is likely asking itself that very question.

A mere month after announcing a $2 million dollar settlement was reached between the Office of Federal Contract Compliance Programs (OFCCP) and Tyson Foods, the OFCCP announces a $600,000 settlement with Caviness Beef.

The OFCCP alleged that Caviness Beef discriminated against nearly 750 applicants based upon race and gender.  Like in the Tyson Foods case, the complaint appears to have been initiated not because of an individual complaint, but because of a statistical analysis that showed males and Hispanics were hired in greater proportions to females and other races.

The similarities to the Tyson Foods case do not stop there.  In a statement, Caviness Beef admitted that it had no records to show why applicants were not selected.  As we noted in our September 21, 2011 blog, the failure to have such records also likely caused Tyson Foods to agree to its $2 million settlement.

The OFCCP is not the only governmental agency that has been increasing enforcement efforts.  Employers may certainly see an increase in similar complaints from the Equal Employment Opportunities Commission.  Just another reminder to document, document, document.

 

Tyson Foods recently entered into a $2.25 million settlement with the Office of Federal Contract Compliance Programs ("OFCCP") after the OFCCP alleged that Tyson discriminated against at least 1650 female applicants. 

 

Tyson continues to deny any wrongdoing, which is not unusual in a case.  What is slightly unusual in this case, is that the OFCCP investigation did not start from a complaint by any of the female applicants.  Rather, the OFCCP initiated the complaint on its own after coming to conduct compliance checks relating to a 2008 settlement with Tyson regarding similar claims of hiring bias, in that case based on race.

 

The first reaction to hearing this news is yikes — $2.25 million to pay for people who were never hired and may not even still work for Tyson even if they had been hired?  That seems high at first blush. 

 

However, once you break down the math, that settlement only amounts to a little more than $1,600 per applicant.  In any type of discrimination case, $1,600 is probably one of the lowest settlements you would find, so it is not hard to imagine even larger settlements or judgments being entered against employers in a failure to hire case.

 

There are two lessons to be learned by employers from this case.  The first is once you get on an agency’s or plaintiff’s attorney’s radar and are found guilty of discrimination, you better review any and all hiring, disciplinary, leave and termination policies, to make sure there is not a future problem.  Along those lines, employers may want to seriously consider management training on those issues.  Especially because a fair amount of discrimination verdicts are actually caused by manager’s inexperience, not by malice.

 

The second lesson to be learned is document, document, document. 

 

Reading between the lines of a statement issued by the company, lack of documentation as to why hiring decisions were made, contributed to Tyson’s inability to successfully demonstrate that it had not engaged in gender discrimination.    Not only is documentation critical to demonstrating that there was a legitimate non-discriminatory reason for not hiring an applicant, EEOC regulations require applicant’s records to be kept for at least one year.