Despite $1 million cut in OFCCP budget, neither agency nor President seem daunted by Congressional criticisms
Under the Consolidated Appropriations Act of 2016 (CAA), signed into law by President Obama on December 18, 2015 (Public Law No 114-113), the OFCCP was allotted $105,476,000 for Fiscal Year (FY) 2016, which is a $1 million cut from the OFCCP’s FY 2015 budget. This cut reflects disapproval in the Republican-controlled Congress of the OFCCP’s current enforcement practices, including the agency’s use of statistics and what some view as an unnecessarily aggressive approach to audits of federal contractors. While this budget reduction will slow down the agency’s ambitious regulatory and enforcement agenda, neither the OFCCP nor the President appears to be daunted by these Congressional concerns.
Request for almost $8.7 million budget increase. Despite the cut to the OFCCP’s FY 2016 budget, the President’s budget proposal for fiscal year 2017 would increase the agency’s budget by $8.693 million. In his FY 2017 budget proposal, released on February 9, 2016, President Obama requests $114.169 million for the OFCCP which includes 615 full-time equivalent (FTE) employees. The FY 2017 request would keep the OFCCP’s current (FY 2016) level of 615 FTE employees, which is down from 620 FTE employees in FY 2015. The proposal includes an increase of $1.890 million for the creation of two Skilled Resource Centers for compliance officer training and $3.3 million for the continued modernization of the agency’s core Case Management System.
Statistics and “quotas.” In both the House and Senate Appropriations Committees Reports on the bill, the Committees used the politically charged term “quotas” in expressing concerns that the OFCCP “has lost its focus on identifying and addressing real employment discrimination,” and is instead focusing on “quotas” by overly relying on statistics/statistical analysis in evaluating contractors. The Senate Report (114-74, p. 29) asserts that “[s]trict and exclusive use of statistical significance tests effectively requires contractors to use a quota hiring system in violation of the Civil Rights Act to avoid adverse impact claims by OFCCP.”
In the OFCCP’s FY 2017 Congressional Budget Justification, the agency responds by stating that its “regulations neither create nor enforce quotas,” and that it “does not insist on quotas in entry-level hiring or any other cases.” Rather, according to the agency, “following Supreme Court precedents, OFCCP considers statistical evidence to determine whether there are statistically significant disparities based on race, sex, or national origin among individuals who are qualified and available for the positions under review.” Moreover, the OFCCP “would not pursue a matter solely on the basis of a statistical disparity where a contractor establishes a legitimate and valid explanation for that difference or where the contractor has established that the statistical disparity does not exist,” the agency maintains.
The agency asserts that during compliance reviews, it “not only performs quantitative analyses but also assesses a variety of other evidence.” In cases with potentially significant statistical disparities, “OFCCP investigators will review documents and interview managers and workers.” Further, the agency “requests and considers any information that contractors are willing to provide to explain a disparity in hiring rates or any other employment practice.”
“When contractors provide credible, legitimate, nondiscriminatory, and legally sufficient explanations for potential violations that OFCCP has identified, the agency will adjust its findings accordingly. This includes explanations that address portions of the violation or information that would properly mitigate some portion of the back pay owed to affected workers,” the agency notes.
Aggressive audit practices. The Senate Report also notes “reports that OFCCP is increasingly subjecting contractors to overly broad and unnecessary document and data requests as well as unreasonably numerous and lengthy compliance reviews.” Disagreeing, the OFCCP asserts that it “does not subject contractors to unreasonable or unnecessary compliance reviews or document or data requests. Contractors are selected for compliance evaluations based on a neutral selection process that uses multiple information sources and factors to develop a scheduling list.” Moreover, the audit scheduling letter and accompanying itemized listing of documents and data that contractors are required to submit have been approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act, the OFCCP notes, adding that during the course of an evaluation, contractors may be asked to provide additional information as needed.
“[O]ver the last five years, administrative law judges and courts have repeatedly upheld the validity and constitutionality of this process and OFCCP’s authority to obtain the information requested in compliance evaluations,” the agency points out. It cites the 2011 decision by the federal district for the District of Columbia in United Space Alliance v. Solis which states that submission to OFCCP investigations “is the price of working as a federal contractor.”
The House Report (114-195, p. 16) asserts that the “OFCCP should end its reliance on threatening sanctions, including debarment and the costs associated with an extremely drawn-out administrative litigation process, to induce contractors to waive their legal rights and to enter into conciliation agreements that are not justified by the evidence.”
Yet, the agency maintains that it “does not threaten contractors with debarment or other sanctions to induce them to enter into unjustified conciliation agreements”; rather, it “issues notices of discrimination violations only where there is an ample evidentiary record supporting findings of discrimination.” According to the OFCCP, when it “does issue a notice of violation, it attempts to negotiate a conciliation agreement and, as part of that negotiation, requests and considers any information that contractors provide.”
Finally the OFCCP says it “consistently seeks to resolve cases without litigation, a goal supported by the record. In FY 2015, OFCCP closed 518 cases with findings of violations but referred only 13 cases to the [Department of Labor’s] Solicitor’s Office for enforcement.”
Was an employer entitled to recoup the costs of a training program it provided for an employee who, upon completion, left for other employment? Or was the lawsuit pursued by the employer just an effort to circumvent the FLSA’s “free and clear” payment requirement with respect to wages, or an unlawful attempt to shift business expenses onto the employee in violation of the California Labor Code? In USS-POSCO Industries v. Case, a California appeals court affirmed a lower court’s grant of summary judgment in favor of the employer and had no trouble rejecting the employee’s various arguments as to why the reimbursement agreement should not be enforced.
Shortage of skilled workers. The employer was faced a shortage of skilled Maintenance Technical Electrical (MTE) workers. To address this problem, it entered into an agreement with a union implementing a learner program. Moreover, the employer and union recognized that due to the strong demand for MTE workers, the company needed to retain successful candidates as employees for a reasonable time in order to recoup its substantial investment—approximately $46,000— in their training. Thus, they agreed that candidates in the learner program would sign an agreement that would require reimbursement for a portion of the training should a candidate voluntarily terminate employment within 30 months of completion of the program.
This dispute arose when an employee who voluntarily enrolled in the three-year, employer-sponsored educational program quit his job with the employer just two months after completing the program. As required of candidates for the program, he had agreed to reimburse the employer a prorated portion of program costs. However, when the employer sought reimbursement, the employee balked at the $28,000 bill. After the employer sued for breach of contract and unjust enrichment, the employee filed a cross-complaint asserting that the reimbursement agreement was unenforceable.
In defending against the employer’s attempt to recoup the cost of the training, the employee unsuccessfully asserted, among his other defenses, that the employer was attempting to make an end-run around the various wage provisions of the California Labor Code and violated the FLSA’s “free and clear” payment requirement, among other claims. However, a trial court granted the employer’s motion for summary judgment on both its complaint and the employee’s cross-complaint.
No Labor Code breach. Labor Code sections 2802, 2804, and 450 prevent employers from passing certain operating expenses on to employees. The employee contended that the reimbursement agreement was an unlawful attempt to foist workforce costs onto employees. However, none of these statutes was implicated by a strictly voluntary, optional training program of the sort offered by the employer, the appeals court noted. The employee made no expenditure nor suffered any loss in direct consequence of the discharge of his duties or in obedience to the directions of the employer. Rather, it was the employer that fronted the costs of the advanced training voluntarily undertaken by the employee.
Not unconscionable. The appeals court next rejected the employee’s contention that the reimbursement agreement was procedurally unconscionable. First, the estimated cost of the program was $46,000, not the $30,000 ultimately specified in the reimbursement agreement. And there was no evidence the nearly three-year program was improperly valued. Also, the reimbursement terms were no surprise. Moreover, the employee was not contracting for necessities but for an optional, advanced educational program.
No taking of “wages.” Finally, the court rejected the employee’s contention that the employer’s reimbursement demand of $28,000 was an unlawful withholding of “wages” under Labor Code sections 221, 222, and 223. Those provisions addressed the proper payment of wages, and that was not an issue contemplated by the agreement to repay training expenses. Further, the employer’s complaint in no way alleged any part of the $28,000 sought was “wages” under any provision of the Labor Code.
Senator Patrick Leahy (D-Vt.) has introduced a bill that would curb mandatory arbitration in employment disputes, civil rights cases, and other lawsuits. The Restoring Statutory Rights Act is aimed at restoring “the rights of Americans who too often are forced into mandatory arbitration,” as Leahy put it. Senator Al Franken (D-Minn.) is the lead cosponsor of the legislation.
Introduced on February 4, the bill would ensure that when Congress or the states have created rights and remedies for injured victims, victims are able to enforce those rights and remedies in court, according to its sponsors. The legislation would clarify also that when states take action to address forced arbitration, like Vermont and other states have tried to do, federal law should not interfere.
The problem. The proposed legislation, S. 2506, takes issue, among other things, with recent court decisions, namely the Supreme Court’s AT&T Mobility v. Concepcion and American Express Co. v. Italian Colors Restaurant, which “have interpreted the Federal Arbitration Act to broadly preempt rights and remedies established under substantive State and Federal law.” As a result, business entities are able “to avoid or nullify legal duties created by congressional enactment, resulting in millions of people in the United States being unable to vindicate their rights in State and Federal courts,” the proposal explains.
“This problem has meaningful, real-world implications for Americans’ ability to seek justice,” Leahy said in a prepared statement. “When victims are forced into private arbitration, their cases proceed without public record. The cases cannot serve as precedent for future injustices, and the plaintiffs—hardworking consumers—cannot obtain a meaningful appeal. An arbitrator is selected by the corporate defendant, creating incentives that favor repeat corporate players. In many cases, forced arbitration stops victims’ legal actions altogether: by requiring victims to waive their legal right to join with other victims in a class action, arbitration clauses often remove the crucial tool that plaintiffs need to afford pursuing their claims.”
The solution. The bill would solve the problem by clarifying that “congressionally established rights and remedies may not be waived prior to the institution of a dispute by the party intended to be protected by such statute.” The legislation is also intended to “reinstate and reaffirm existing rights and remedies of the people of the United States enacted since the enactment of the Federal Arbitration Act regarding access to the courts that have, or may have been, abrogated or diminished.”
Violations of state and federal law or constitutions. The Restoring Statutory Rights Act would amend the FAA, 9 U.S.C. Section 2, to exclude enforcement of a written provision that mandates arbitration of a claim for damages or injunctive relief that is brought by an individual or small business concern (as defined in Sec. 3 of the Small Business Act), in either an individual or representative capacity, that arises from an alleged violation of a state or federal statute, U.S. Constitution, or a state constitution, unless the written arbitration “is entered into by both parties after the claim has arisen and pertains solely to an existing claim.” (Emphasis added)
Grounds for revocation. The bill would also clarify that reasons for not enforcing an arbitration agreement, “grounds as exist at law or in equity for the revocation of a contract,” include a state or federal statute, or a state or federal court finding “that prohibits the agreement to arbitrate on grounds that the agreement is unconscionable, invalid because there was no meeting of the minds, or otherwise unenforceable as a matter of contract law or public policy.”
Who decides validity and enforcement? Notably, S. 2506 leaves the determination of whether the arbitration agreement is valid and enforceable under the FAA to the courts, rather than arbitrators, “irrespective of whether the party resisting arbitration challenges the agreement to arbitrate specifically or in conjunction with other terms of the contract containing such agreement.”
“When Americans sign cell phone agreements, rent an apartment, or accept a contract for a job, most of us focus on the service we are about to receive or that we are about to provide,” Leahy said. “What Americans do not realize—until it is too late—is that too often we are also signing away crucial legal rights. Legal fine print tips the scales against us. It is forcing consumers into private arbitration, denying us of our Constitutional right to protect ourselves in court.”
Praise. The measure immediately garnered praise from the National Employment Lawyers Association: “Introduction of the Restoring Statutory Rights Act affirms that access to the courts by employees to seek resolution of employment disputes is fundamental to achieving fairness and justice in the workplace. Indeed, employees whose workplace rights are violated by their employers should not also be robbed of their day in court by employer-imposed forced arbitration clauses.”
Additional cosponsors of the Restoring Statutory Rights Act include Senators Richard Blumenthal (D-Conn.), Dick Durbin (D-Ill.), and Sheldon Whitehouse (D-R.I.).
Religious accommodation of an atheist employee, protecting a male employee against sexual harassment, and prohibiting discrimination against white employees, are just a few recent examples of the broad reach of our federal anti-discrimination laws. Those laws may have developed in reaction to injustices against particular groups of individuals (e.g., African-Americans), but the law today is more focused on categorical discrimination (e.g., discrimination based on race—any race). Moreover, those categories, including race, gender, religion, disability, and more, are expanding. Some recent examples:
Atheist employee fired for taping over religious message on ID badge. An atheist employee, who was fired after refusing to remove the tape covering an employer’s religious mission statement on the back of his company ID badge, can proceed to trial on his Title VII and state law failure-to-accommodate and retaliation claims, ruled a federal district court in Pennsylvania. Whether the accommodation would impose an undue hardship on the employer will be determined at trial (Mathis v. Christian Heating and Air Conditioning, Inc.).
Male victims of sexual harassment. Recent cases indicate male employees are not taken as seriously as female employees when they complain of sexual harassment, but courts interpret Title VII to afford them the same protections. For example, when a male mechanic repeatedly complained that a male coworker followed him into the restroom, made sexually inappropriate comments, discussed homosexual sex acts, and touched him physically, his supervisor treated the complaint as a joke. The mechanic then complained to HR, which encouraged him to “do what was right for the company,” especially considering how a complaint over “gay rights” would appear. Perhaps unsurprisingly, a federal court sent his hostile work environment claim under Title VII to trial (Davis v. Gregory Poole Equipment Co.).
In another case, when a male maintenance worker complained that a female manager made unwanted advances, remarked on his looks, and sexted him, a safety director suggested the texts were meant for someone else and told the worker to confront her and work things out himself. After he was fired and filed suit, the director admitted he might have reacted differently if the alleged victim of harassment had been female. Though the employee’s sexual harassment claim failed because the misconduct wasn’t severe or pervasive, his retaliation claim survived summary judgment to the extent it was based on his complaint to the director, that had he been female and the harasser male, the employer would have reacted differently. The employer failed to oppose this argument (Gilley v. Kelly & Picerne, Inc. dba Alabaster Bay Apartment Homes).
Sexual harassment by wannabe mother-in-law. In one rather unusual case, a court found that a TV station employee stated a plausible sexual harassment claim where she alleged not a single sexual advance. Instead, she claimed that a female supervisor had her fired after she rejected the ongoing attempts by the supervisor to get the employee marry her son, who was also the company’s CEO. At one point, on a business trip, the supervisor said “I’m going to be your mother one way or another. Either you will marry [the CEO] or I will marry your father and be your stepmother” (Allen v. TV One, LLC).
White employee fired for policy violation while minorities were not. An employee at an early education center claimed her employer violated Title VII by firing her because she is white. She had asked an African-American coworker, who was also a student’s grandmother, to ask her daughter to call the school about substituting Almond Milk for regular milk with respect to the student. The employee was fired for allegedly discussing private information with someone other than a parent or guardian. Finding triable issues of fact on her race discrimination claim, the court noted evidence that African-American employees also violated policy but were not fired, and that the employee’s conduct may not actually have violated confidentiality requirements (Callaway v. Region 10 Education Service Center).
Associational discrimination – disability. Another type of discrimination recognized under federal laws involves bias against an employee based on close association with someone who falls within a protected category (e.g., partner, child, other family member). These types of cases often occur under the ADA, which specifically prohibits discrimination against a qualified individual because of the disability of an individual with whom he or she is known to have a relationship or association. In one case, a senior VP’s note that an employee was “given special consideration” and her supervisor’s remark about her “retarded brother” suggested that her relationship with her blind and severely autistic brother-in-law was a factor in the decision to fire her, so her association discrimination claims would go to trial (Smith v. First Tennessee Bank, N.A.). In another case, an employee who alleged he was fired after missing several weeks to care for his ailing wife, who had spinal meningitis, stated a plausible claim for relief under the ADA’s discrimination by association provision (Pollere v. USIG Pennsylvania, Inc.).
Interracial couples and associational discrimination. Another type of associational discrimination involves interracial couples. In one recent Title VII case, two employees were treated differently after they started dating because one was black and the other was white. They were told by their supervisors that their relationship was “disgusting” and “sickening” and supervisors started enforcing rules against them (like no personal calls at work, and no eating lunch at another employee’s work station) but did not enforce those rules against others (Autrey v. State of Maryland). In another case, a Native American employee who was dating an African-American man will have a jury decide whether her supervisors subjected her to a hostile work environment based on her association with her boyfriend. She claimed they repeatedly engaged in offensive and threatening behavior, including calling biracial couples “n***er lovers” and biracial kids “half n***er” (Maddox v. Grimmer Realty).
Age discrimination as between two older employees. Under the ADEA, it is unlawful to discriminate based on someone’s older age (age 40 and over, to be specific) but not against someone who is younger than 40. In that respect, there really is no “reverse” age discrimination under the ADEA. However, the Act is still flexible in that, as between two employees who are both over the age of 40, employers cannot unlawfully favor the younger of the two if the age difference is “substantial” (most courts find 10 years or more to be significant). Yet difference in ages is not the only consideration. In one case, a border patrol agent in his mid-50’s who was denied a promotion given to four individuals in their 40’s did not have an age difference of more than 10 years, but other factors suggested age was considered, including the decisionmaker’s questions on the employee’s plan for retirement and an expressed preference for hiring “young, dynamic agents” for the new positions (France v. Johnson).
Sex stereotyping. Discrimination based on a failure to conform to the stereotype of masculine and feminine is considered sex discrimination. In one case, evidence that harassment such as being threatened, physically restrained, punched, and poked in the anal region was directed at male employees of an oil and gas company crew who were considered “less manly” was enough to send one harassed employee’s Title VII claims to the jury (Arredondo v. Estrada). In another case, a federal court in Oregon held that a jury should decide the sex discrimination claims of a medical technician who alleged that her employment contract was not renewed because she was considered a “strong woman” who wanted to do things “her way” (Tornabene v. Northwest Permanente, P.C.). Similarly, a federal court in Michigan found triable issues of fact on a hotel housekeeper’s Title VII claim that she was terminated because she failed to conform to traditional gender stereotypes. Specifically, the supervisor allegedly said the housekeeper was too “mannish” and that the supervisor didn’t want to work with her because she “acted too manly” (Reed v. South Bend Nights, Inc. dba Best Western Hospitality Hotel).
Transgender discrimination. Some interesting issues are emerging in discrimination cases by transgender employees. In one case, the Eleventh Circuit reversed summary judgment on a Title VII claim, finding that comments by a company owner that he was “very nervous” about a auto mechanic’s gender transition and the “possible ramifications” that it might affect business, as well as the imposition of discipline only after the mechanic announced her gender transition, raised triable questions on whether gender bias was a motivating factor in the decision to terminate the mechanic (Chavez v. Credit Nation Auto Sales, LLC). In another case involving claims that an employer fostered a hostile work environment by demanding an employee provide overly intrusive personal information on his anatomical changes, among other actions, the employer sought the same kind of information in discovery, including details on the employee’s surgeries and hormone therapy. Finding the requests “grossly out of proportion” to what the employer legitimately needed for its defense, the court denied its motion to compel production of the evidence (Roberts v. Clark County School District).
What about sexual orientation? One question that crops up repeatedly is: Why do courts consider it to be sex discrimination to treat someone unfavorably because they do not fit sexual stereotypes, yet most courts don’t consider discrimination against homosexual individuals to be discrimination “based on sex?” Recently, the EEOC filed an amicus brief with the Eleventh Circuit in Burrows v. College of Central Florida, asserting that sexual orientation is equal to sex discrimination because: 1) it necessarily involves sex stereotyping; 2) it amounts to gender-based associational discrimination; and 3) Title VII generally bars sex-based considerations in employment and sexual orientation discrimination necessarily requires consideration of an individual’s gender.
I think the EEOC has it right in this case and, given the ways in which federal anti-discrimination laws have been interpreted in recent years, courts will likely adopt its reasoning. Interestingly, one federal court agreed with the EEOC while addressing a case under a New York City law, and it noted that a “change towards federal protection has been primarily a result of [the EEOC’s] sensitivity to the problem.” In the case at bar, the court refused to overturn a $100,000 award to a lesbian UPS employee who endured years of harassment due to her sexual orientation. It explained that appeals to the Bible could not justify management’s condoning the harassment and, noting the company’s “cavalier” attitude toward the employee’s repeated complaints, the court found plenty of evidence to support the verdict in the employee’s favor under the New York City Human Rights Law (Roberts v. United Parcel Service, Inc.).
The Wolters Kluwer Legal Scholar program, in its third year, allows current law students to compete for the chance to have their work published in a Wolters Kluwer publication. Wolters Kluwer will accept submissions through Friday, April 1, 2016.
One submission per category may be submitted by any student currently enrolled in an ABA-accredited law school. Categories for submission are:
- Employment law (including wage/hour, labor, and discrimination)
- Health law (including Medicare, Medicaid, life sciences, and health reform)
- Cybersecurity (including banking and financial privacy, securities, health care, and insurance)
- Products liability and consumer safety
Depending on the number of entries, one to two winners per category will be selected and published in a Wolters Kluwer publication, to be determined based on the submission’s topic.
Winners will be notified by April 22, 2016. The winning submissions will be featured in a Wolters Kluwer publication the week of April 25, 2016, along with a biographical paragraph about the author.
For information and full contest rules, visit Legal Scholars.