Along with what has to be one of the more disingenuous press releases I've read recently (and in Chicago, that's saying something), the OFCCP issued proposed rules for federal contractors that effectively mandate that 7% of their workforces will be people with disabilities, or else.
The rules require particular efforts by contractors to recruit and hire disabled workers, along with the associated burdensome record-keeping, similar to what is already in place under the OFCCP's affirmative action requirements for women and minorities. The proposed rules also include requirements for written disability accommodation procedures and annual job description reviews.
What's particularly interesting is the OFCCP setting a "goal" of having 7% of a workforce classified as "disabled" under federal law. The OFCCP leadership is saying that this figure is only "aspirational". But it's very clear that the "goal" is actually a hard floor for companies that want to avoid the expense of a full OFCCP audit. Apparently frustrated at the fact that the relatively higher unemployment rate for disabled workers has resisted the four decade-long combined efforts of the EEOC, the courts and state law, the OFCCP has now decided that it's not enough to oversee and tune the process of hiring and promotions--it wants the outcome to resemble some federal best guess of what the workforce should look like.
In a particularly ironic statement, the OFCCP Director says that what gets "measured" gets done. But of course, there is no "measure" for disabled employees. The OFCCP has no idea how many people who qualify as disabled are actually working in federal contractor jobs. No one does. Unlike gender or racial differences, many disabilities (especially mental or psychiatric conditions) do not manifest themselves to employers, and employees rarely go out of their way to identify themselves as disabled. What is clear is that whatever the official number is now, it is certainly lower than the actual value. This fact not only means that the OFCCP's program appears to be a solution in search of a problem, it means that it will be impossible to verify compliance, absent some type of highly intrusive inquiry of employee health conditions. Exactly the type of inquiry that is currently illegal under federal law.
Another reason to avoid contracting with the federal government.
Showing posts with label OFCCP. Show all posts
Showing posts with label OFCCP. Show all posts
Monday, December 26, 2011
Thursday, November 17, 2011
Why It's Often a Mistake to Rely on Representations from Government Officials
File this one under "you can't believe your lying eyes." A major law firm, O'Melveny & Myers, signed a contract with the Department of Energy to provide it with legal services in connection with the sale of a petroleum reserve. As with virtually all federal contracts, this one contained clauses indicating that the parties were subject to particular paragraphs of the Federal Acquisition Regulation requiring them to comply with federal executive orders relating to employment discrimination against minorities and women, the disabled, and Vietnam era veterans. In other words, the contract required the law firm to submit to the jurisdiction of the OFCCP and its compliance process.
For whatever reason, the firm elected to disregard these provisions, and instead relied on the oral pronouncements of the chief of the OFCCP's Defense Contracts Administration in Los Angeles that the provision of legal services under these circumstances was not within OFCCP's jurisdiction.
(As an aside, I typically counsel my clients to never, ever, rely on anything they are told over a telephone, or even in person, by a federal or state employee with respect to an interpretation of the regulations or laws the employee routinely enforces).
Law firms traditionally shy away from doing anything that will make them subject to the OFCCP's oversight. The large firms with which I've worked assiduously assessed whether they might be obligated to respond to an OFCCP request for information, and carefully avoided doing things that would bring them under OFCCP supervision. That's because virtually no law firm that I'm aware of could withstand an OFCCP audit of its employment practices. The numerical disparities involving women, minorities, and veterans in big law leadership would raise red flags under the most benign employment audits, nevermind what would happen under the tilted OFCCP process.
In any event, when the OFCCP compliance officers appeared on the law firm's doorstep, asking for the law firm's pay and compensation data, the firm blew them off, and cited the above-mentioned opinion of the OFCCP official. At the resulting hearing before an administrative law judge, the firm tried to argue that, notwithstanding the presence of its signature on the contract with DOE, it was not a party to a "federal contract" (I think even the administrative law judge had difficulty swallowing that one), and, even if it was, it was not providing "nonpersonal services", as required for OFCCP jurisdiction. The ALJ brushed aside the firm's interpretation of the requirement, noting that similar arguments in the healthcare industry had been rejected last year.
The end result, then, is that the law firm was ordered to comply with OFCCP procedures. I suspect there will be an appeal on this case, but regardless, this is a warning shot across the bows of law firms that are not only providing services directly to federal agencies, but that are providing services in support of federal contractors. OFCCP jurisdiction is quite expansive, and has been known to reach out and ensnare not only federal contractors, but companies working with federal contractors, sometimes even the companies that are not involved in the performance or support of the federal contract in any way. This case is a powerful warning that firms need to assess whether their work for federal contractor clients might entangle them in OFCCP jurisdiction, with all the accompanying affirmative action headaches and disclosures.
For whatever reason, the firm elected to disregard these provisions, and instead relied on the oral pronouncements of the chief of the OFCCP's Defense Contracts Administration in Los Angeles that the provision of legal services under these circumstances was not within OFCCP's jurisdiction.
(As an aside, I typically counsel my clients to never, ever, rely on anything they are told over a telephone, or even in person, by a federal or state employee with respect to an interpretation of the regulations or laws the employee routinely enforces).
Law firms traditionally shy away from doing anything that will make them subject to the OFCCP's oversight. The large firms with which I've worked assiduously assessed whether they might be obligated to respond to an OFCCP request for information, and carefully avoided doing things that would bring them under OFCCP supervision. That's because virtually no law firm that I'm aware of could withstand an OFCCP audit of its employment practices. The numerical disparities involving women, minorities, and veterans in big law leadership would raise red flags under the most benign employment audits, nevermind what would happen under the tilted OFCCP process.
In any event, when the OFCCP compliance officers appeared on the law firm's doorstep, asking for the law firm's pay and compensation data, the firm blew them off, and cited the above-mentioned opinion of the OFCCP official. At the resulting hearing before an administrative law judge, the firm tried to argue that, notwithstanding the presence of its signature on the contract with DOE, it was not a party to a "federal contract" (I think even the administrative law judge had difficulty swallowing that one), and, even if it was, it was not providing "nonpersonal services", as required for OFCCP jurisdiction. The ALJ brushed aside the firm's interpretation of the requirement, noting that similar arguments in the healthcare industry had been rejected last year.
The end result, then, is that the law firm was ordered to comply with OFCCP procedures. I suspect there will be an appeal on this case, but regardless, this is a warning shot across the bows of law firms that are not only providing services directly to federal agencies, but that are providing services in support of federal contractors. OFCCP jurisdiction is quite expansive, and has been known to reach out and ensnare not only federal contractors, but companies working with federal contractors, sometimes even the companies that are not involved in the performance or support of the federal contract in any way. This case is a powerful warning that firms need to assess whether their work for federal contractor clients might entangle them in OFCCP jurisdiction, with all the accompanying affirmative action headaches and disclosures.
Wednesday, November 16, 2011
Federal Contractor Blues
'When I use a word,' Humpty Dumpty said, in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less.'
---Through the Looking Glass, by Lewis Carroll
There are many advantages to being a federal contractor, the biggest, of course, being that your main customer won't go bankrupt, and tolerates a level of inefficiency that would be certain death in the private sector. This is especially true if you are providing a unique product, such as building tanks, or nuclear submarines. The flipside of working for a client that simply prints more money for its vendors is that you are subject to the vagaries of the federal executive's social engineering programs.
One example of this is the OFCCP, an antiquated federal employment practices watchdog that engages regularly in highly intrusive reviews of workforces using standards that mutate based on, well I don't know.
A recent federal case out of the District of Columbia illustrates perfectly why nobody wants to be involved with the agency. A company receives notice that it is in the crosshairs of the OFCCP for something referred to as a "desk audit". This is a relatively benign process by which the agency requests annualized compensation data broken down by race, gender, and employee salaries, grade, and/or workforce level within the organization.
The initial analysis yields a threshold ratio determined by measuring the extent of pay differential between minorities, women, and white male employees within discrete job classifications. Above the threshold, and the employer is subject to the next phase of the OFCCP review. Or at least that's the way it's supposed to work in theory.
In actuality, if a company workforce meets the threshold test, i.e., there's no indication of discrimination in pay, and the compliance officer either decides or is directed to find discrimination somewhere, the OFCCP can run the compensation data through a variety of other statistical tests of dubious validity in an effort to try to find some test that will deliver a result indicating that there is a pay disparity. This pernicious determination opens the door to a far more intrusive, expensive, and likely rigged investigatory process. I use the word "rigged" advisedly-the OFCCP has every incentive to find some discrimination in order to justify its existence. Enough findings of no problems, and some congressional budget hawk might decide to allow the EEOC, which also has jurisdiction over federal contractors, to simply manage the discrimination issues by itself. This, of course, would be a disaster for all those career bureaucrats at the OFCCP.
And so this luckless federal contractor found itself meeting the threshold test, but then discovered that the OFCCP compliance officer decided to run a few more tests that-surprise!-showed some type of discrimination. The company objected to this post hoc determination by the agency, and the case moved on to federal court. Unfortunately, federal administrative law being what it is, federal agencies have wide discretion as to how they conducts their tests, even to the extent of changing the rules in midstream. To its credit, the OFCCP doesn't try to obfuscate this, but says in its public documents that its measurement thresholds are not static, but "subject to changes as OFCCP continues to evaluate its targeting methodology". The end result, though, is a moving target for employers that are trying to run a business without opening the door to an investigation that can cost thousands of dollars, and hundreds of hours in employer time and effort.
---Through the Looking Glass, by Lewis Carroll
There are many advantages to being a federal contractor, the biggest, of course, being that your main customer won't go bankrupt, and tolerates a level of inefficiency that would be certain death in the private sector. This is especially true if you are providing a unique product, such as building tanks, or nuclear submarines. The flipside of working for a client that simply prints more money for its vendors is that you are subject to the vagaries of the federal executive's social engineering programs.
One example of this is the OFCCP, an antiquated federal employment practices watchdog that engages regularly in highly intrusive reviews of workforces using standards that mutate based on, well I don't know.
A recent federal case out of the District of Columbia illustrates perfectly why nobody wants to be involved with the agency. A company receives notice that it is in the crosshairs of the OFCCP for something referred to as a "desk audit". This is a relatively benign process by which the agency requests annualized compensation data broken down by race, gender, and employee salaries, grade, and/or workforce level within the organization.
The initial analysis yields a threshold ratio determined by measuring the extent of pay differential between minorities, women, and white male employees within discrete job classifications. Above the threshold, and the employer is subject to the next phase of the OFCCP review. Or at least that's the way it's supposed to work in theory.
In actuality, if a company workforce meets the threshold test, i.e., there's no indication of discrimination in pay, and the compliance officer either decides or is directed to find discrimination somewhere, the OFCCP can run the compensation data through a variety of other statistical tests of dubious validity in an effort to try to find some test that will deliver a result indicating that there is a pay disparity. This pernicious determination opens the door to a far more intrusive, expensive, and likely rigged investigatory process. I use the word "rigged" advisedly-the OFCCP has every incentive to find some discrimination in order to justify its existence. Enough findings of no problems, and some congressional budget hawk might decide to allow the EEOC, which also has jurisdiction over federal contractors, to simply manage the discrimination issues by itself. This, of course, would be a disaster for all those career bureaucrats at the OFCCP.
And so this luckless federal contractor found itself meeting the threshold test, but then discovered that the OFCCP compliance officer decided to run a few more tests that-surprise!-showed some type of discrimination. The company objected to this post hoc determination by the agency, and the case moved on to federal court. Unfortunately, federal administrative law being what it is, federal agencies have wide discretion as to how they conducts their tests, even to the extent of changing the rules in midstream. To its credit, the OFCCP doesn't try to obfuscate this, but says in its public documents that its measurement thresholds are not static, but "subject to changes as OFCCP continues to evaluate its targeting methodology". The end result, though, is a moving target for employers that are trying to run a business without opening the door to an investigation that can cost thousands of dollars, and hundreds of hours in employer time and effort.
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