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GAO report issues recommendations for improved OFCCP, EEOC enforcement in technology sector

November 30th, 2017  |  Cynthia L. Hackerott

Both the EEOC and the OFCCP have taken steps to enforce equal employment and affirmative action requirements in the technology sector, but weaknesses in their enforcement processes hamper the effectiveness of their efforts, a newly released report by the U.S. Government Accountability Office (GAO) concludes. Based on its findings, the GAO issued six recommendations, including that the EEOC develop a timeline to improve industry data collection and that the OFCCP take steps toward requiring more specific minority placement goals by contractors and assess key aspects of its audit selection approach. In response, the EEOC neither agreed nor disagreed with the GAO’s recommendation, and the OFCCP stated the need for regulatory change to alter placement goal requirements.

The 76-page report, dated November 16, 2017, but not publicly released until November 30, examines (1) trends in the gender, racial, and ethnic composition of the technology sector workforce; and (2) EEOC and OFCCP oversight of technology companies’ compliance with equal employment and affirmative action requirements. For the report, the GAO analyzed: (1) workforce data from the American Community Survey for 2005-2015; (2) EEO-1 Report forms for 2007-2015, the latest data available during the analysis period; and (3) OFCCP data on compliance evaluations for fiscal years 2011-2016. It also interviewed agency officials, researchers, and workforce, industry, and company representatives.

The GAO also posted a link to an accompanying podcast.

Tech sector trends. Jobs in the high paying technology sector are projected to grow in coming years, yet, female, Black, and Hispanic workers, comprised a smaller proportion of technology workers compared to their representation in the general workforce from 2005 through 2015, and have also been less represented among technology workers inside the technology sector than outside it. The report found that the estimated percentage of minority technology workers increased from 2005 to 2015, but the GAO found that no growth occurred for female and Black workers, whereas Asian and Hispanic workers made statistically significant increases. Further, female, Black, and Hispanic workers remain a smaller proportion of the technology workforce—mathematics, computing, and engineering occupations—compared to their representation in the general workforce. These groups have also been less represented among technology workers inside the technology sector than outside it. In contrast, Asian workers were more represented in these occupations than in the general workforce. Stakeholders and researchers that the GAO interviewed identified several factors that may have contributed to the lower representation of certain groups, such as fewer women and minorities graduating with technical degrees and company hiring and retention practices.

EEOC not sufficiently tracking complaints by industry. Although the EEOC has identified barriers to recruitment and hiring in the technology sector as a strategic priority, when the agency conducts investigations, it does not systematically record the type of industry, therefore limiting sector-related analyses to help focus its efforts. The EEOC’s database of charges and enforcement actions—the Integrated Mission System (IMS)—has a data field for the North American Industry Classification System (NAICS) industry code, the standard used by federal statistical agencies in classifying business establishments, but the GAO found that this data field is completed for only about half the entries in the system. The GAO noted that the EEOC has plans to determine how to add missing industry codes but has not set a timeframe to do this.

In terms of systemic cases, according to the EEOC, as of June 2017, the commission had 255 systemic cases pending since fiscal year 2011 involving technology companies (13 of these were initiated as commissioner charges and 8 were directed investigations involving age discrimination or pay parity issues).

EEOC charges may not accurately reflect rate of workers who perceive discrimination. Several EEOC officials interviewed by the GAO noted that technology workers may be initiating few complaints at the federal level due to factors such as fear of retaliation from employers or the availability of other employment or legal options. They also said that technology workers may generally have greater wealth and can afford to hire private attorneys to sue in state court rather than go through the EEOC. Moreover, they said that some states, including California, have stronger employment discrimination laws that allow for better remedies than federal laws, which could lead employees to file charges at the state level rather than with the EEOC.

In addition, the EEOC has acknowledged in a 2016 report that binding arbitration policies, which require individuals to submit their claims to private arbiters rather than courts, can also deter workers from bringing discrimination claims to the agency, leaving significant violations in entire segments of the workforce unreported. That report stated that an increasing number of arbitration policies have added bans on class actions that prevent individuals from joining together to challenge practices in any forum. The report concluded that the use of arbitration policies hinders the EEOC’s ability to detect and remedy potential systemic violations. Researchers report that the use of such clauses has grown and data on federal civil filings for civil rights employment cases reflect a marked reduction in the number of such filings.

Steps in addition to charge investigations. Aside from pursuing charges, the EEOC has taken some steps to address diversity in the technology sector including research and outreach efforts. In May 2016, citing the technology sector as a source for an increasing number of U.S. jobs, the EEOC released a report analyzing EEO-1 data on diversity in the technology sector in tandem with a commission meeting raising awareness on the topic.56 In addition, EEOC’s fiscal year 2017- 2021 Strategic Enforcement Plan identified barriers to hiring and recruiting in the technology sector as a strategic priority. The EEOC has also been involved in outreach efforts with the technology sector. For example, the EEOC Pacific Region described more than 15 in-person or webinar events since 2014 in collaboration with OFCCP and local organizations focused on diversity in the technology sector. The topics of these events included equity in pay and the activities of these two agencies in enforcing nondiscrimination laws. Finally, in fall 2016, the EEOC initiated an internal working group to identify practices to help improve gender and racial diversity in technology, but as of June 2017 had no progress to report.

OFCCP placement goals lack specificity. The OFCCP’s regulations may hinder its ability to enforce contractors’ compliance because these regulations direct contractors to set placement goals for all minorities as a group rather than for specific racial/ethnic groups, the GAO found. By not requiring contractors to disaggregate demographic data for the purpose of establishing placement goals, the OFCCP has limited assurance that these contractors are setting goals that will address potential underrepresentation in certain minority groups, the GAO concluded.

Audits. While evaluation of technology contractors occurs in the course of the OFCCP’s routine activities, it does not currently use type of industry as a selection factor, according to agency officials. Although the OFCCP plans to incorporate information on disparities by industry into its process for selecting establishments for compliance evaluations, it has not fully assessed its planned methods. Without such assessment, the agency may use a process that does not effectively identify the industries at greatest risk of potential noncompliance.

In addition, the OFCCP faces delays in its compliance review process, but it has not analyzed its closed evaluations to understand the causes of these delays and whether its processes need to be modified to reduce them.

Violation statistics. The GAO found that few (less than 1 percent) of the OFCCP’s 2,911 closed technology contractor evaluations from fiscal years 2011 through 2016 resulted in discrimination violations, though 13 percent resulted in other violations, such as recordkeeping violations and failure to establish an affirmative action program (AAP). Technology contractor evaluations that had discrimination violations resulted in back pay, salary adjustments, or other benefits totaling more than $4.5 million for 15,316 individuals (averaging about $300 per award) for fiscal years 2011 through 2016. The vast majority of discrimination violations were on the basis of gender or race/ethnicity rather than disability or veteran status.

Other steps. In terms of other steps to conduct oversight of the technology sector, OFCCP officials in the Pacific Region told the GAO that they are hiring compliance officers with legal training to be better able to address needs for reviews in the technology sector, such as responding to lawyers representing technology contractors. Officials in both the Pacific and Northeast regions work closely with statisticians and labor economists on their cases, an effort officials said has increased over the past few years. Moreover, the OFCCP has requested funding in its fiscal year 2018 congressional budget justification to establish centers in San Francisco and New York that would develop expertise to handle large, complex compliance evaluations in specific industries, including information technology.

FAAP participation. Furthermore, key aspects of the OFCCP’s approach to compliance reviews of contractors’ affirmative action efforts have not changed in over 50 years, even though changes have occurred in how workplaces are structured. The OFCCP has developed an alternative affirmative action program for multi-establishment contractors— its Functional Affirmative Action Program (FAAP)—but few contractors participate in this program. Because the agency has not evaluated the program, it does not have information to determine why there has not been greater uptake and whether it provides a more effective alternative to an establishment-based AAP.

Recommendations. The GAO’s first recommendation was that the EEOC Chair should develop a timeline to complete the planned effort to clean IMS data for a one-year period and add missing industry code data. The other five recommendations were that the OFCCP should:

(1) analyze internal process data from closed evaluations to better understand the cause of delays that occur during compliance evaluations and make changes accordingly.

(2) take steps toward requiring contractors to disaggregate demographic data for the purpose of setting placement goals in the AAP rather than setting a single goal for all minorities, incorporating any appropriate accommodation for company size. For example, OFCCP could provide guidance to contractors to include more specific goals in their AAP or assess the feasibility of amending their regulations to require them to do so.

(3) assess the quality of the methods it uses to incorporate consideration of disparities by industry into its process for selecting contractor establishments for compliance evaluation. It should use the results of this assessment in finalizing its procedures for identifying contractor establishments at greatest risk of noncompliance.

(4) evaluate the current approach used for identifying entities for compliance review and determine whether modifications are needed to reflect current workplace structures and locations or to ensure that subcontractors are included; and

(5) evaluate the agency’s Functional Affirmative Action Program to assess its usefulness as an effective alternative to an establishment-based program, and determine what improvements, if any, could be made to better encourage contractor participation.

Employer’s attempt to contractually shorten limitations period on FMLA claim fails

November 28th, 2017  |  Ron Miller

A contractual provision in an on-line job application which purported to provide for a six-month limitations period for any employment-related claims was unenforceable with respect to an employee’s FMLA claims, ruled a federal district court in Utah in Zisumbo v. Convergys Corp. Finding that the FMLA provides a right employees would not otherwise enjoy, the court concluded that a contractual provision purporting to limit the FMLA’s two-year limitations period impeded that right and therefore violated public policy.

Contractual limitations period. In 2012, the employee submitted an on-line application for employment. The application stated that the employee agreed that any employment-related claims must be brought no more than six months after the action arose, and waived any statute of limitations that was longer than six months. Ultimately, the employee was hired, but was fired just over a year later on June 28, 2013. During her employment, she had taken some medical leave before being fired. She subsequently received notice from the employer that her health insurance policy through the company had been retroactively cancelled months before her termination, leaving her responsible for various unpaid medical bills.

Subsequently, a collections agency sued the employee to collect on unpaid medical bills. Those claims were settled and the employee brought a third-party complaint asserting FMLA and ERISA claims against the employer.

The employee’s complaint was filed on June 25, 2014, just under a year after her termination. Thus, her claims were timely under the statutory limitations period for the FMLA (two years) and ERISA (six years), but untimely under the restricted six-month contractual limitations period. The question then was whether her employment application validly altered the statutory limitations period for any claims under the FMLA and ERISA. The parties filed cross-motions for summary judgment.

FMLA claims. With regard to her FMLA claim, the employee argued that the application’s provision purporting to limit the two-year FMLA statutory limitations period to six-months was unenforceable because it violated public policy. While the general rule is that parties may contract to limit the statutorily-prescribed time to bring a lawsuit, their ability to do so is limited in two ways: (1) there must be no “controlling statute to the contrary,” and (2) the shorter limitations period must otherwise be reasonable.

District courts that have addressed the issue of whether parties may contractually limit the FMLA’s two-year limitations period have split on the issue. At the heart of the split is whether limitations periods are more properly considered a right employees or a procedural protection afforded employers. The FMLA itself prohibits an employer from interfering with or restraining an employee’s rights under the FMLA (but says nothing of expanding procedural protections for employers.)

The majority view is that a contract shortening the statutory two-year limitations period impedes that right and therefore violates public policy. However, a minority of district courts have concluded that statutes of limitations are not “rights” given to employees but instead “more correctly exist for the protection of defendants,” so contractually restricting them does not implicate statutory and regulatory provisions prohibiting interference with or waiver of FMLA rights.

In Zisumbo, the district court observed that while the Tenth Circuit had not weighed in on the matter, it nevertheless concluded that the majority interpretation was the better argument—that is, that contractual provisions restricting the statutory FMLA limitations period violated public policy and was therefore unenforceable.

The court noted that the FMLA expressly prohibits an employer from interfering with or restraining an employee’s rights under the FMLA, including the right to bring a federal suit within two years of any violation. Here, the six-month limitations period in the employment application interfered with those rights, and consequently ran afoul of the proscription on interfering with rights under the FMLA. Accordingly, the application’s shortened limitations period was contrary to public policy, and not enforceable.

ERISA claims. With regard to the employee’s ERISA claim, the district court noted that ERISA has no analogous provision precluding an employer from contractually restricting the statutory limitations period. In fact, both the Supreme Court and the Tenth Circuit have recognized that parties may contractually limit the time to bring ERISA claims. Therefore, the court concluded that the contractual six-month limitations period did not violate public policy as applied to the employee’s ERISA claim.

Class Action Trends Report deep-dives into minimum wage claims

November 16th, 2017  |  Lisa Milam

“Rare indeed is the employer that is unaware most employees must be paid at least an hourly wage that does not fall below a minimum rate set by law. Equally rare is the employer that, cognizant of this mandate, deliberately flouts it. More commonly, employers faced with the complexities of the state and federal laws governing wage payment commit inadvertent technical violations of the statute,” the attorneys of Jackson Lewis write in the Fall 2017 edition of the Jackson Lewis Class Action Trends Report.

In the second in a series of Trends reports focused on wage-and-hour class claims, attorneys in the firm’s Class Action and Complex Litigation Practice Group discuss those complexities, and offer guidance for avoiding common minimum wage “traps.”

As practice group Co-Leaders Will Anthony and Stephanie Adler-Paindiris note: “Knowledge and proactive compliance can spring these traps before your business becomes embroiled in a lawsuit or Department of Labor action.”

Check out our latest collaboration with  Jackson Lewis.

Florida city attorney Craig E. Leen slated for senior DOL post—OFCCP Director?

November 14th, 2017  |  Cynthia L. Hackerott

Various news sources are reporting that Coral Gables, Florida, city attorney Craig E. Leen will be the next OFCCP Director. The primary source of these reports appears to be a November 9, 2017, article in the Miami Herald, which reported that Leen was leaving his post as Coral Gables City Attorney “to take a senior position at the Labor Department under President Donald Trump.” In the article, Leen described his post as one “overseeing compliance rules for government contractors.”

Prior to taking over at the DOL, Secretary of Labor Acosta was the Dean of the Florida International University College of Law. According to Leen’s bio page on the City of Coral Cables website, Leen has taught as an adjunct professor at the Florida International University College of Law, where he has taught Local Government, Evidence, and Legal Skills and Values III. The Miami Herald article states that Leen said Acosta contacted him over the summer and requested he join him in Washington.

Mr. Leen received his Juris Doctor degree from Columbia Law School in 2000 and his Bachelor of Arts degree, cum laude, from Georgetown University in 1997, where he double majored in Government and Economics, and completed the Honors Program for the Department of Government. Leen, who is Board Certified by the Florida Bar in City, County, and Local Government Law, has also taught State & Local Government Law and Real Property & Government adjunct professor for the University of Miami School of Law.

Prior to his job as the Coral Gables City Attorney, Leen worked for the Miami-Dade County Attorney’s Office as an Assistant County Attorney, where he served as Chief of the Federal Litigation Section and previously as Chief of the Appeals Section. He has also worked in the private sector for firms including: Morgan, Lewis & Bockius, LLP (Miami), Skadden, Arps, Slate, Meagher & Flom, LLP (Boston), and Cleary, Gottlieb, Steen & Hamilton LLP (N.Y.). In addition, Leen served as a Law Clerk to the Honorable Robert E. Keeton, United States District Judge for the District of Massachusetts.

According to the Miami Herald, Leen’s wife, Ana, a child psychiatrist, has already moved to the Washington area, and they will be living there with their two children. The couple has been active in the Miami area promoting inclusion for people with autism.

Is Senate confirmation necessary? The Obama Administration eliminated the Department of Labor’s Employment Standards Administration (ESA) in November 2009 but maintained the four component agencies previously under the ESA umbrella – the OFCCP, the Wage and Hour Division, the Office of Labor Management Standards, and the Office of Workers’ Compensation Programs. Thus, the heads of the four sub-agencies currently have the authority to report directly to the Secretary of Labor. Whether this current structure will require Senate confirmation of the OFCCP Director is unclear.

As of press time, the Department of Labor has not responded to Employment Law Daily’s inquiry regarding these reports.

Airline discriminated against employee with HIV

November 7th, 2017  |  Deborah Hammonds

A federal jury awarded $1.3 million, including $800,000 in punitive damages, after finding Delta Air Lines failed to accommodate an employee with HIV and then terminated him.

The employee’s Americans with Disabilities Act lawsuit alleged he was denied an accommodation provided for by federal law when he got ill when Delta’s medical insurance failed to provide timely medication, and was wrongfully terminated for the two days he was ill with a protected absence due to his disability.

According to the jury’s verdict, the employee was both denied an accommodation provided for by federal law when he got ill when Delta’s medical insurance failed to provide timely medication, and was wrongfully terminated for the two days he was ill with a protected absence due to his disability. The employee filed his lawsuit under the Americans with Disabilities Act.

The unanimous verdict, announced on October 20, came after an almost four-day trial in a federal district court in Nevada. Finding Delta’s actions were knowing and reckless, the jury awarded punitive damages. Back pay, front pay and legal fees have yet to be determined.

The employee was represented by Stone & Woodrow LLP of Charlottesville, Virginia, with Thatcher A. Stone and William T. Woodrow III as lead trial counsel and Nevada State Senator Richard Segerblom. In a press statement, Segerblom said the verdict was “likely to be the largest verdict for employment discrimination in Nevada history.”

Delta was represented by Scott Mahoney of the Las Vegas office of Fisher and Phillips and Kelly Giustina, a Delta lawyer.