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New executive order bars LGBT discrimination and requires affirmative action by federal contractors, expands federal employee coverage to include gender identity

July 21st, 2014  |  Cynthia L. Hackerott  |  Add a Comment

Despite protections in some states and localities, “in too many states and in too many workplaces, simply being gay, lesbian, bisexual or transgender can still be a fireable offense,” President Obama said during a ceremony on Monday, July 21, 2014, where he signed an executive order (EO) banning discrimination against LGBT employees by federal contractors. The new EO amends the existing EO 11246 to add sexual orientation and gender identity to the list of categories of federal contractor employees protected from discrimination and also to the list of categories of employees in regard to which covered federal contractors must take affirmative action to ensure equal employment opportunity. It also amends the existing EO 11478 to ensure that federal employees, who are already protected on the basis of sexual orientation, are now formally protected from discrimination based on gender identity as well. Of note, the new EO does not contain any exemption for religious organizations beyond that made by President George W. Bush in 2002 that allows religiously affiliated contractors to favor individuals of a particular religion when making employment decisions.

“This is not speculative, this is not a matter of political correctness — people lose their jobs as a consequence of this. Their livelihoods are threatened, their families are threatened,” the President remarked. “In fact, more states now allow same-sex marriage than prohibit discrimination against LGBT workers. So I firmly believe that it’s time to address this injustice for every American.”

Federal worker coverage. EO 11478, issued by President Nixon in 1969, bars discrimination against federal employees on the basis of race, color, religion, sex, national origin, disability, and age, and was amended by President Clinton in 1998 through EO 13087 to include sexual orientation. President Obama’s new EO now adds gender identity to the list of protected categories in EO 11478.

Employees of federal contractors. President Lyndon B. Johnson issued the initial version of EO 11246 in September 1965. The order prohibits federal contractors and federally-assisted construction contractors and subcontractors, with more than $10,000 in government contracts annually, from discriminating in employment decisions on the basis of race, color, religion, sex, or national origin, and the new EO adds sexual orientation and gender identity to that list of protected categories. EO 11246 does not affect grants, and the new EO does not impact the administration of federal grants.

LGBT affirmative action requirement. In addition to its non-discrimination provisions, EO 11246 also requires covered federal contractors to “take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin.” The new EO — in Section 2, paragraph (b) — adds sexual orientation and gender identity to that list. Some commentators had speculated that, in order to ward off potential legal challenges, the new EO would only prohibit discrimination, and not require affirmative action, on the basis of sexual orientation and gender identity. Although clearly included in the new EO, the affirmative action component was not specifically noted in either the corresponding White House “Fact Sheet” or the President’s remarks at the signing ceremony.

No further religious exemption. In December 2012, President George W. Bush signed EO 13279, which amended Section 204 of EO 11246 to provide that a government contractor that is a “religious corporation, association, educational institution, or society” is exempt from the bar on religious discrimination in Section 202 of EO 11246 “with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.” The language of this exemption mirrors the language in Title VII that exempts religious organizations from Title VII’s bar on religious discrimination (See Title VII, Section 702 (42 USC §2000e-1)). Nevertheless, religious organizations that are government contractors subject to the requirements of EO 11246 are still required to comply with the other nondiscrimination and affirmative action rules set forth in EO 11246.

In the wake of last month’s Supreme Court ruling in Burwell v Hobby Lobby Stores, Inc — where the Court held that the Affordable Care Act’s contraceptive coverage regulations violate the religious rights of closely held private corporations — some advocates feared that the new EO might contain a sweeping religious exemption. However, the new EO does not allow for any further exemption for religious entities beyond the one added by President George W. Bush.

The White House “Fact Sheet” on the new EO notes also that: “under the First Amendment, religious entities are permitted to make employment decisions about their ministers as they see fit.”

Lack of federal legislation. “Currently, 18 states have already banned workplace discrimination based on sexual orientation and gender identity. And over 200 cities and localities have done the same,” the President noted during the signing ceremony. However, there is no federal law that protects employees working outside the federal government against discrimination in the workplace on the basis of sexual orientation or gender identity.

“Congress has spent 40 years — four decades  — considering legislation that would help solve the problem” but has still failed to pass such legislation, the President observed. Most recently, on November 7, 2013, the Employment Non-Discrimination Act (ENDA), a bill that would bar employment discrimination based on actual or perceived sexual orientation or gender identity, cleared the Senate with a bipartisan 64-32 vote. Yet, soon after, House Speaker John Boehner stated that he will not bring the bill up for a vote in the Republican-controlled House of Representatives.

“But I’m going to do what I can, with the authority I have, to act,” the President stated. “The rest of you, of course, need to keep putting pressure on Congress to pass federal legislation that resolves this problem once and for all.”

Effective dates and implementing regulations. The Labor Department’s OFCCP enforces EO 11246. Section 3 of the new EO specifically requires the department to, within 90 days of the order, “prepare regulations to implement” the changes to EO 11246, and Section 5 of the new EO provides that these changes will apply to contracts entered into on or after the effective date of the finalized regulations. However, due to the notice and comment requirements of the federal regulatory process, it will likely take at least six months for the OFCCP to finalize these regulations.

In contrast, the new EO provides that the changes to EO 11478 protecting federal employees from discrimination on the basis of gender identity will take effect immediately. EO 11478 states that the EEOC is responsible for directing and furthering the implementation of the policy contained therein.

Order long anticipated. As previously reported in Employment Law Daily and on this blog, speculation about a LGBT executive order has been in the press since at least early 2012. At that time, LGBT news publications began to report that the Obama Administration was considering expanding EO 11246 to include sexual orientation and gender identity. However, White House Press Secretary Jay Carney had maintained since April 2012 (when the Obama Administration publicly addressed the issue for the first time) that no such order was forthcoming and — until last month — Carney and his successor, Josh Earnest, repeatedly reiterated earlier statements that the President preferred legislative, rather than executive, action on this front.

However, the White House departed from that stance on June 16, 2014, when it announced via Twitter, and a White House official confirmed to Wolters Kluwer, that the President had directed his staff to prepare for his signature an executive order that prohibits federal contractors from discriminating on the basis of sexual orientation or gender identity. About two weeks later, on June 30, at the White House’s annual LGBT Pride Month reception, President Obama also announced his plans to sign an executive order protecting federal employees from discrimination on the basis of gender identity. The order signed on July 21 makes good on both of those promises.

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Employer’s very suggestion that employee take polygraph examination violates EPPA

July 17th, 2014  |  Ron Miller  |  Add a Comment

Issue: There has been a theft of inventory from your company’s retail outlet. In conducting the investigation into the theft, can you require your employees to take a lie-detector test?

Answer: The answer is “Yes,” but beware of pitfalls. As two employers recently discovered, if it cannot be shown that an employer’s conduct falls within one of the exceptions to the Employee Polygraph Protection Act (EPPA), the very suggestion that an employee take a polygraph examination violates the Act.

The EPPA prohibits most private employers from using lie-detector tests, either for pre-employment screening or during the course of employment. However, the Act includes limited exemptions where polygraph tests may be administered in the private sector, subject to certain restrictions. One such exemption allows the administration of polygraph tests to employees who are reasonably suspected of involvement in a workplace incident that results in economic loss to the employer and who had access to the property that is the subject of an investigation.

Refusal to take lie detector test. In Laney v Getty, an employer hired two outside firms to investigate the alleged theft of Native American artifacts from his wife by a former company manager. The employee subject to the polygraph request was not the target of the investigation. Still, during an interview, the outside investigators asked the employee if he took the documents and other items. The subject of a polygraph examination was subsequently brought up several times over the course of the interview. After the employee declined to take a polygraph, he was terminated the next day. No examination was ever administered.

In Amarosa v Doctor John’s, Inc, a salesperson for an adult lingerie store was accused of theft by her district manager. The employee was later called to mandatory meeting and she subsequently recorded an individual meeting in which the district manager told her she would be polygraphed and given a questionnaire. The employee was fired when she refused to take the polygraph or complete the questionnaire, and she also declined to resign. Even after telling the employee that he was firing her, the district manager continued to badger her about taking a polygraph examination.

The employers in both of these cases were found to have committed violations of the EPPA, even though no polygraph was actually administered. Under the EPPA, it is unlawful for an employer “directly or indirectly, to require, request, suggest, or cause any employee or prospective employee to take or submit to any lie detector test.” “Because the statute is phrased in the alternative, its plain language prohibits an employer from requesting or suggesting that an employee submit to a polygraph exam, even where the test is ultimately not administered and no adverse employment action is taken as a consequence.” Further, “because the statutory text clearly prohibits a covered employer’s request or suggestion that an employee submit to a lie detector exam, the EPPA’s language both begins and ends [the] inquiry.”

Ongoing investigations exemption. The EPPA provides an exemption for ongoing investigations of workplace incidents involving economic loss. When polygraph examinations are allowed, they are subject to strict standards for the conduct of the test, including the pretesting, testing, and post-testing phases. An examiner must be licensed and bonded or have professional liability coverage. In addition, the Act strictly limits the disclosure of information obtained during a polygraph test.

Under the exemption, the EPPA will not prohibit an employer from requesting an employee to submit to a polygraph test if: (1) the test is administered in connection with an ongoing involving economic loss or injury to the business; (2) the employee had access to the property that is the subject of the investigation; (3) the employer has a reasonable suspicion that the employee was involved in the incident or activity under investigation; and (4) the employer provides a statement to the employee setting forth with particularity the specific incident being investigated. To invoke the ongoing investigation exemption, an employer must comply with each of these requirements.

Employer liability. In Laney, the employer sought to shield itself from a violation of the EPPA based on the fact that the investigators were independent contractors, as opposed to its employees, and that they acted outside the scope of their retention. At the same time, the investigators sought to avoid liability by asserting the “ongoing investigation” exemption. Here, the investigators, while acting on behalf of the employer, unequivocally requested that the employee submit to a polygraph at least three times.

The court rejected the employer’s contention that it should not be held liable for the actions of the investigators because violating the EPPA was not within the scope of their employment. According to the employer, it never discussed the idea of a polygraph examination with the investigators. However, under the EPPA, an employer is broadly defined as “any person acting directly or indirectly in the interest of an employer in relation to an employee or prospective employee.” Thus, because the investigators were acting on behalf of the employer, its attempt to evade liability was unsuccessful.

Nor were the investigators entitled to the exemption for polygraphs administered during the course of an ongoing investigation. The circumstances of this case did not come within the exemption. Under the exemption, an “ongoing investigation” must necessarily involve economic loss or injury to an employer’s business. It was not clear that the missing artifacts had any bearing on the economic or business status of the employer. Moreover, the employee did not have independent access to the area where the documents were stored, and the employer had no grounds to accuse the employee of stealing the documents. Rather, the issue of the polygraph examination arose in a “fishing expedition.” Thus, the investigators were not exempt from the EPPA.

In Amarosa, the employer argued that the EPPA did not apply because the employee did not, in fact, take a lie detector test. Moreover, it asserted that the circumstances involved an ongoing theft investigation. Here, the sole question presented was whether the undisputed facts showed a violation of the EPPA.

In this instance, the court observed that the EPPA prohibits even preliminary actions to require an employee to take a polygraph examination. Further, because the employer did not provide the employee with a statement that “set forth with particularity the specific incident or activity being investigated and the basis for testing particular employees” and certain other details about the incident under investigation, the ongoing investigation exception to the EPPA did not apply. Because the employer failed to provide such a statement, the exception did not apply.

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Lousy pay ain’t the only problem

July 15th, 2014  |  Lisa Milam-Perez  |  1 Comment

By Lisa Milam-Perez, J.D.

Something about the case just miffed me. You get court decisions like that sometimes, the ones that don’t sit right with you, and you summarize them as an impartial observer as steam comes out your ears. In this instance, it wasn’t the court’s disposition, it was the facts alleged that riled me: Employees of a national retailer were seeking pay under the FLSA for (among other things) the time they spent working “on call” shifts, during which they were to remain within two hours of the store, restricting their movements, without pay for their troubles. Ultimately, the court said the retail workers had failed to allege that they were unable to spend their on-call time as they saw fit, so that time was not compensable.

But really, is on-call time your own— encumbered, as it is, by the anticipatory tyranny of the dreaded phone call? And is this the standard practice in the retail world these days? In my previous life as a retail worker, such burdens fell mainly to the (typically unionized and far better paid) public service employees and others who might need to respond in short order to emergencies far more pressing than a mad rush of shoppers at the mall.

Adding to my consternation: fresh in my mind as I wrote was a recent report on the plight of low-wage workers. The study, co-authored by Women Employed, the Center for Law and Social Policy, and the Retail Action Project, focused not on the workers’ lousy pay so much as on their “unstable and unpredictable” work schedules.

“Imagine if your work schedule changed from week to week or even from day to day, jumping from night shifts to day shifts,” the authors implore. “Imagine being scheduled to work 40 hours one week and 15 hours the next, with no expected pattern or warning of these fluctuations. Imagine paying for your children’s daycare and trekking across the city, only to have your manager send you home without pay, claiming there aren’t enough customers for you to work your shift.” Imagine nervously sweating an on-call stint at one part-time job while working a shift at the other…

“For many lower-wage workers, it doesn’t take much imagination at all to conjure up these scenarios,” the authors note. “Unpredictable and unstable work schedules leave them in a constant state of economic instability and personal turmoil. Unfortunately, for a growing number of employers, these scheduling practices are becoming business as usual.”

A corresponding fact sheet sheds further light on the plight of this growing segment of our workforce:

• Work schedules can change from week to week or even day to day (the night shift one day, the day shift the next), and employees are often given only two or three days’ notice of their work schedule. Because of their wildly fluctuating work hours, these workers can’t go back to school to improve their prospects because their schedule won’t allow regular class attendance. And they can’t get good daycare for their kids, because most daycare services won’t accept children on a sporadic basis or at night.
• Because they can’t count on a steady paycheck, these workers often need to take two or more jobs to make ends meet. But their various work schedules regularly conflict. “You sometimes have to choose which job to skip, and your employers brand you as irresponsible,” the study points out. (Of course, even landing a second gig can be tough, with employers increasingly citing “ability to work flexible hours” as a minimum job qualification.)
• Because workers can’t predict their compensation from week to week, they also can’t save for emergencies, buy a house or car (that might ease their busy work schedule), or plan for retirement.
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Never mind that these workers typically don’t enjoy the benefits and sundry legal protections of full-time employment; never mind the stagnant federal minimum wage. It’s the growing prevalence of “just-in-time scheduling” that has exacerbated their plight. With this emerging practice, the authors explain, “managers are expected to carefully control the relationship between consumer demand and expenditures on wages. If customer traffic or sales seem to be lagging on a given day, the expectation is that immediate changes to workers’ hours should ensue.” Use of this tactic is increasingly the norm in the service sector, the study notes.

The report suggests two legislative fixes to ease the problem of schedule instability: guaranteed minimum-hours laws (or voluntary minimum-hours policies), which set a floor under which an employee’s weekly work hours must not fall; and “show-up” or reporting-pay laws, mandating that employees are paid for a minimum number of hours when they are sent home, “ensuring they receive the wages they depend on and can cover the costs they incurred (e.g., childcare, transportation) to enable them to show up at work.”

A minimum wage hike wouldn’t hurt either.

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Barnes & Noble pays the price for breastfeeding mother being told to cover up or leave store

July 11th, 2014  |  Deborah Hammonds  |  1 Comment

Earlier this week, New York Attorney General Eric T. Schneiderman and bookseller Barnes & Noble announced the settlement of a complaint stemming from an incident between an assistant manager and a female customer who was breastfeeding her son. The incident illustrates how important it is for employers to ensure their staff is familiar with all applicable antidiscrimination laws.

On March 16, an assistant manager approached a woman in the company’s Nanuet, New York store and asked her to cover up or leave the store while breastfeeding her son. The New York Attorney General’s Civil Rights Bureau opened an investigation into the national chain after the woman filed a complaint about the incident. Under New York State law, a mother may breastfeed her baby in any location, so long as she otherwise has the right to be there, regardless of whether she is covered while nursing. This year marks the 20th anniversary of the law’s passage.

Under the agreement, Barnes & Noble will train all New York store employees and managers on its breastfeeding policy, which prohibits employees from interfering with a mother’s right to breastfeed at its stores. The agreement also requires the retailer to strengthen its customer complaint resolution procedures with respect to the handling of complaints received from breastfeeding mothers and display the international symbol for breastfeeding at the entrances to its New York stores. In addition, the company will pay $10,000 to Rockland County to support the activities of its Breastfeeding Promotion and Support Program.

“All New York residents, including breastfeeding mothers, must be afforded equal protection under the law,” Schneiderman said in a July 9 statement. “No mother should endure harassment for breastfeeding her baby in public. There is one set of rules for everyone in New York, and I applaud Barnes & Noble for taking steps to ensure that moms are not harassed or discriminated against.”

Barnes & Noble, the nation’s largest retail bookseller, operates 42 stores in New York State.

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Federal district court in DC rules Bank of America consented to OFCCP desk audit, probable cause existed for on-site review

July 9th, 2014  |  Cynthia L. Hackerott  |  Add a Comment

Adopting the bulk of a magistrate’s recommendations, the federal district court for the District of Columbia has ruled that substantial evidence supported a DOL Administrative Review Board (ARB) decision — finding that Bank of America (BOA) consented to the desk audit portion of an OFCCP compliance review and that there was specific evidence of a violation of Executive Order (EO) 11246 to support the OFCCP’s decision to conduct an on-site review. The court declined, however, to adopt the magistrate’s determination to the extent that she found that a desk audit was equivalent to an administrative subpoena for the purposes of Fourth Amendment analysis and that the OFCCP did not apply neutral administrative criteria for selecting a certain BOA branch location for a compliance review (Bank of Am v Solis, July 2, 2014, Sullivan, E).

Background. In 2004, the OFCCP conducted a desk audit of a BOA facility in Charlotte, North Carolina. Via the itemized listing that accompanies every audit scheduling letter, the OFCCP requested that the contractor provide the agency with its affirmative action programs (AAPs) and specified supporting documents and records, and BOA complied. By letter dated September 23, 2004, the OFCCP informed the bank that the data it submitted revealed indicators of a need for further in-depth investigation of the bank’s compensation practices. Included in this letter were tables indicating that BOA paid men more than women and non-minorities more than minorities in several job classifications. The letter requested that BOA submit additional data, and the bank complied, submitting the requested data as well as its explanation for the differences in employee pay at the facility.

In November 2004, the OFCCP performed a statistical regression analysis of the data it received during the desk audit and concluded that the data revealed indicators of salary disparities against women. Based on this analysis, the agency decided that an on-site investigation was necessary. Thus, in March 2005, the OFCCP informed BOA that it wanted to come onsite to interview certain employees and review certain categories of documents. After BOA refused to allow the OFCCP to conduct the on-site review, the OFCCP filed an administrative complaint alleging that BOA violated EO 11246 and its implementing regulations.

Administrative rulings. On May 22, 2007, the ALJ issued a “Recommended Order Enforcing On-Site Review” (ALJ Case No 2006-OFC-003) and on September 30, 2009, the ARB issued its final decision and order (ARB No 07-090).

Stating that it is “well settled” that one of the specifically established exceptions to the requirements of both a warrant and probable cause is a search that is conducted pursuant to consent, the ARB noted that during the desk audit stage, BOA turned over its AAP and supporting documents to the OFCCP knowingly and voluntarily, and the OFCCP did not coerce or mislead the bank to obtain its consent. Thus, the ALJ concluded that BOA consented to the first part of the compliance review, including selection of the branch for review. The ARB found that a preponderance of the evidence supported the ALJ’s determination. Further, the ARB refused to adopt BOA’s assertion that the agency’s compliance review scheduling letter was coercive or misrepresented the OFCCP’s authority, and thereby, negated any voluntary consent.

Since it was clear that BOA did not consent to the agency’s proposed on-site visit, the ARB next considered whether the proposed visit conformed to Fourth Amendment requirements. The OFCCP argued before the ALJ that the results of the November 2004 statistical regression analysis provided sufficient evidence of an existing violation. However, BOA’s expert demonstrated “conclusively” to the ALJ that the analysis was too flawed to support any conclusions about the bank’s personnel practices.

However, the ALJ noted that there is no requirement that the OFCCP base its decision to seek an on-site review on a regression analysis. That the regression analysis lacked probative value did not mean that the OFCCP lacked a reasonable basis to conduct such an on-site review. The ALJ found such basis in the agency’s September 23, 2004 letter to BOA, which contained tables that indicated that, for certain groups of employees, the average salaries of males were approximately 9 to 23 percent higher than those of females, and that the average salaries of non-minorities were approximately 5 to 23 percent higher than those of minorities. Indeed, the ALJ commented that “given this raw data, one wonders why OFCCP thought it needed a regression analysis to justify an on-site review.”

Like the ALJ, the ARB found that there was no evidence in the record disputing this data. Thus, the ARB held that the proposed on-site records inspection and employee interviews would not violate the Fourth Amendment, and directed BOA to give the OFCCP the requested access.

Magistrate’s recommendation. On October 26, 2009, the bank commenced the present action in the DC federal district court, petitioning the court to “hold unlawful and set aside” the final order of the ARB. In turn, the OFCCP moved for summary judgment. On December 13, 2011, the magistrate issued her report and recommended that the court: (1) deny BOA’s petition to set aside the ARB’s final order; and (2) grant the OFCCP’s motion for summary judgment (95 EPD ¶44,370).

Court’s ruling. The district court’s decision addressed the objections to the magistrate’s recommendations made by both parties. BOA objected to the magistrate’s findings generally, and made the specific objections to the following three findings: (1) that the OFCCP desk audit was equivalent to an administrative subpoena; (2) that the bank consented to the desk audit; and (3) that there was specific evidence of a violation of EO 11246 sufficient to support the constitutionality of an on-site review. The OFCCP only had one objection — that the magistrate should not have reached the conclusion that the OFCCP did not provide sufficient evidence that it applied a neutral administrative plan in initially selecting the bank facility at issue for a compliance review.

Fourth Amendment. The court explained that different standards apply to administrative warrants and subpoenas under the Fourth Amendment. For an administrative warrant to issue, the government must have either specific evidence of an existing violation or the ability to show that reasonable legislative or administrative standards such as a general administrative plan derived from neutral sources justify the warrant (i.e. a showing of “probable cause”).  A lower standard applies to administrative subpoenas; in order to be enforceable; the Fourth Amendment requires that the subpoena be sufficiently limited in scope, relevant in purpose, and specific in directive so that compliance will not be unreasonably burdensome.

Initial selection. In this case, BOA challenged two stages of the compliance review process: (1) its initial selection for audit, and (2) the OFCCP’s request to conduct an on-site review. Ultimately, both the ARB and the magistrate determined that whether the bank’s initial selection complied with the Fourth Amendment was immaterial because it had consented to the desk audit.

Of note, the magistrate concluded that the record showed the OFCCP did not comply with the standard set forth in the DC district court’s 2000 decision in Beverly Enterprises v Herman (79 EPD ¶40,258) regarding the initial selection of BOA for review. Beverly requires that for such a selection to be valid, it must be made pursuant to a neutral administrative plan. Although the record showed that BOA was not singled out for a compliance review, the OFCCP failed to document whether that it actually applied its neutral administrative plan (the Equal Employment Data System or EEDS which generates a random list of contractors) in a neutral manner with regard to the selection at issue, the magistrate found.

Voluntary consent. However, the OFCCP’s failure to meet the Beverly standard did not matter here because the magistrate determined, and the district court agreed, that BOA consented to the desk audit. An administrative search conducted without probable cause is nonetheless valid if conducted pursuant to voluntary, contemporaneous consent, the court noted. Observing that BOA “is a sophisticated financial institution that is not new to the compliance review process” and not a novice “when it comes to challenging the OFCCP’s efforts to complete compliance reviews,” the court found the facts presented belied the bank’s contention that its consent was anything but voluntary.

The audit scheduling letter was not coercive in nature, the court found. The letter provided basic information about the stages of a compliance review and cited to the relevant statutory authority, and it was not suffused with threats to induce compliance. Moreover, although BOA did make inquiries into whether its facility had been selected as a result of a neutral administrative plan and not the result of the unfettered discretion of an officer in the field, the bank continued to make subsequent submissions of documents in response to the OFCCP’s requests.

Alternate ground for desk audit validity. As an alternative ground for finding that the desk audit was valid under the Fourth Amendment, the magistrate determined that the desk audit was equivalent to an administrative subpoena, and that the OFCCP complied with the administrative subpoena standard in the way it conducted the desk audit. The court determined that it did not need to address BOA’s objection regarding this alternative finding because the court adopted the magistrate’s conclusion that the bank consented to the desk audit.

On-site review. While the bank had consented to the desk audit portion of the compliance review, that consent was withdrawn for the on-site portion of the review. Therefore, as explained above, probable cause was required to justify an on-site review under the Fourth Amendment. Agreeing with the magistrate, the court determined that the ARB’s final order, finding there was specific evidence of an existing violation of EO 11246 – i.e. probable cause – to justify an on-site review, was supported by substantial evidence. Even though the OFCCP asserted in the administrative proceedings that the on-site review was justified based on its regression analysis, which was later found to be unreliable, the ALJ and ARB reached the same conclusion (that the on-site review was justified) based on the results from the desk audit, to which BOA consented. Specifically, the ALJ and the ARB found that the raw desk audit data set that was captured in the September 23, 2004, letter (as detailed above) provided the likelihood of specific evidence of an existing violation regarding the BOA facility under audit.

Regardless of whether the OFCCP relied on the raw desk audit data or on a flawed regression analysis, the court found that the pay disparities identified in the raw data were sufficient to provide the agency with a reasonable suspicion of a violation. As such, the court affirmed the portion of magistrate’s recommendation finding that there was specific evidence of an existing violation of EO 11246 to justify the OFCCP’s proposed on-site review.

Neutral administrative plan. The OFCCP argued, and the court agreed, that the magistrate should not have reached the conclusion that the OFCCP did not provide sufficient evidence that it applied a neutral administrative plan in initially selecting the BOA facility for a compliance review because that conclusion exceeded the scope of the court’s review. The ARB determined that it need not consider whether the OFCCP selected the bank facility at issue for compliance review in accordance with a neutral administrative plan because BOA consented to the desk audit; thus, because the magistrate’s findings on this issue were outside the scope of its review, the court did not adopt them.

Accordingly, the court granted the OFCCP’s motion for summary judgment and denied BOA’s motion to set aside the ARB’s order.

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