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While many specifics of proposed OFCCP merger into EEOC remain unclear, experts discuss range of issues presented

September 8th, 2017  |  Published in Blog

Because many blanks are yet to be filled in as to the White House’s proposal to merge the OFCCP into the EEOC, Employment Law Daily reached out to three labor and employment law experts, including two former OFCCP officials, to get their thoughts on the mechanics of how the merger might occur as well as its implications for employers. In separate interviews, the three attorneysLawrence Z. Lorber, Senior Counsel in the Washington, DC office of Seyfarth Shaw, and former OFCCP Director; John C. Fox, former OFCCP official and current President of Fox, Wang & Morgan, P.C. in Los Gatos, California; and David Gabor, a Partner in Boston, Massachusetts office of The Wagner Law Groupdiscussed the legal, technical, practical, and political issues presented by the proposed merger. Among the topics covered were: potential budget savings, efficiencies, and other improvements to enforcement functions that might be achieved by the proposal; what will become of the affirmative action component of the OFCCP’s mission; whether the proposed merger timeline is realistic; and options for the agencies to work together even if political considerations ultimately doom the merger.

Proposed merger. The White House’s proposed Fiscal Year (FY) 2018 budget, released on May 23, 2017, would decrease OFCCP funding by about $17 million and merge the agency into the EEOC by the end of FY 2018. The Appendix section for the proposed DOL budget, at page 749, states: “The 2018 Budget proposes merging OFCCP into the Equal Employment Opportunity Commission (EEOC), creating one agency to combat employment discrimination. OFCCP and EEOC will work collaboratively to coordinate this transition to the EEOC by the end of FY 2018. This builds on the existing tradition of operational coordination between the two agencies. The transition of OFCCP and integration of these two agencies will reduce operational redundancies, promote efficiencies, improve services to citizens, and strengthen civil rights enforcement.”

Proposal not well-received among stakeholders. Even before getting into the technical aspects of what would be required to undergo the merger, there is the issue of how the mere idea of such a merger is being received. As previously reported in Employment Law Daily, this proposal has also not been well-received among business/employer groups, who fear that the proposed merger could result in a ‘super EEO enforcement agency’ empowered by broader jurisdiction and the ability to impose greater remedies for non-compliance. In addition, the National Industry Liaison Group (NILG) sent a letter to Secretary of Labor Alexander Acosta and Office of Management and Budget Director Mick Mulvaney, on June 12, 2017, expressing its opposition to the proposal stating in part: “We fear that by eliminating the OFCCP, the focus of audits will become full blown EEOC lawsuits.” The NILG letter also expressed concern that budget reductions will “create a situation where compliance is no longer a significant concern for most federal contractors,” and that the substantial work required by the government to combine the agencies “will have deleterious effects on both the federal government’s procurement process and federal contractor compliance.”

Civil rights groups have also expressed opposition. For example, 73 national civil rights organizations, including the ACLU, the NAACP, and the American Association for Access, Equity and Diversity, have signed onto a letter addressed to Secretary Acosta and OMB Director Mulvaney calling on the Trump Administration to abandon the proposal. Acting Commission Chair Victoria Lipnic was copied on the letter, dated May 26, 2017. The proposal “would impede the work of both the OFCCP and the EEOC as each have distinct missions and expertise, and would thereby undermine the civil rights protections that employers and workers have relied on for almost fifty years,” the letter states.

Issues affecting consideration. “There are three issues which affect consideration [of this proposal],” Fox noted. First, “as a purely technical and administrative decision, it is hard to argue against. If you were a Martian landing on earth and one day stumbled upon the OFCCP and the EEOC, you would wonder why these civil rights agency twins had ever been separated at birth. One can find technical issues to debate, but those are details with multiple potential solutions. Unfortunately for those opposing the merger, there are no “deal stoppers” [with regard to this merger proposal].”

Second, “as a political proposition, the merger is very difficult and will continue to be poorly received as proposed because it drives together ‘strange bedfellows’ in opposition,” Fox continued. “Indeed, the precise form of the merger (all of OFCCP, not parts of its authority and budget) may be so politically unpalatable that the merger proposal may well be ‘Dead on Arrival.’ In addition, the 16.5 percent budget reduction the White House has proposed for the OFCCP is hard to separate in the minds of most government contractors and civil rights groups from the political decision—even though the White House is treating OFCCP better than most other USDOL agencies as to which the White House has proposed more than a 16.5 percent budget cut.”

Third, “as an emotional proposition, the merger is also difficult for many government contractors to accept because people are always and inherently resistant to change. Moreover, the government contractor community is quite accustomed to the OFCCP it knows and currently also fears what it does not know (which is all the details of the proposed merger).”

“So, depending on which of the above three issue(s) drives one’s thinking, you are either pro or con the merger proposal,” Fox observed.

Would the combined agencies be more efficient? As stated above, the White House asserts that combining the agencies will “reduce operational redundancies” and “promote efficiencies.” The experts differed on the extent to which efficiencies would result from the merger.

“The significant differences in authority, procedures and enforcement processes, call into question what efficiencies and savings the merger would achieve if the current functions of both agencies are to remain,” said Lorber. “The agencies actually have complimentary but different missions. The OFCCP and its predecessors were established with the primary mission of promoting and enhancing affirmative action outreach efforts aimed at increasing the pool of qualified employees from historically disadvantaged groups available to work on federal contracts.  It is an audit based agency which does not establish rights to pursue private law suits, but instead reviews contractor establishments to determine compliance.

“The EEOC, on the other hand, is a discrimination charge based agency with a mandate to conciliate charges but who may also establish rights to bring private litigation.  While the two statutes and Executive Order which guide OFCCP’s actions do prohibit discrimination, they are not part of federal government’s core responsibility to combat discrimination. That responsibility derives from Title VII, the ADA and USERRA, among other laws, which each establish specific prohibitions against discrimination. Title VII, the ADA, and other laws are administered by the EEOC.”

How the merger is actually carried will be key a factor in the extent of efficiencies that might occur, according to Gabor. “Without knowing the specifics, it sounds like a merger of EEOC and OFCCP makes a great deal of sense,” he said. “They perform related functions and a merger might create efficiencies and consistency in administration. One of the challenges that companies often face is conflicting messages from different agencies. How effective a merger might be is dependent on how it is executed. There will need to be solid communication between teams from the EEOC and the OFCCP. If that fails and the framework of the merger is not solid, then the merger will not be effective.”

Realistic timeline for merger? The merger plan calls for the OFCCP and the EEOC to establish a transition workgroup to strategically plan and implement the transition process throughout FY 2018 and for the merger to be completed by the beginning of FY 2019. Considering that the proposed transfer of operations would touch upon every aspect of the OFCCP’s operations including compliance evaluations, compliance assistance, policy, training, stakeholder outreach and education, personnel, contracting and procurement, and information technology, some stakeholders have questioned whether the timeline specified in the White House’s budget documents is realistic. Indeed, in a recent letter to the Institute for Workplace Equality (IWE), Acting OFCCP Director/Deputy Director Thomas M. Dowd acknowledged that the proposal “includes several challenging transition issues,” and indicated that the legislative and regulatory actions necessary to effectuate  the proposed merger “will likely prove time consuming and could delay the expected FY 2019 start for the proposed consolidation.”

“The Congress and the agencies would have to determine the efficacy of the timeline for the merger and how resources would be allocated,” Lorber said, adding “[t]he timeline does seem to be somewhat ambitious.”

“I do not believe that the timeline is realistic unless adequate resources are available to manage the transition,” Gabor said. “To that end, it appears that this plan is contingent on a number of other things happening. If one of those things fails, there may be a domino effect.”

Yet, Fox pointed out that “[b]usiness mergers of billion dollar companies sometime happen in less than two weeks. It won’t be pretty and the OFCCP may go into an ‘enforcement pause’ for a year or so.”

“If there is a Continuing Resolution of the FY 2018 Budget, the continuing uncertainty of the Congress’ direction could also slow transition planning because of the uncertainty of the Congress’ eventual approval of the merger proposal,” Fox continued. “However, I strongly suspect that Ms. Lipnic and Secretary of Labor Acosta will continue to plan the transfer of the OFCCP to the EEOC despite any Continuing Resolution and absent direction from the Congress that it will not support and fund the merger.”

Budget savings. All three attorneys agreed there would be some budget savings if a merger occurs, but not right away.

“If it goes forward there should be budget savings inasmuch as this would eliminate duplication of services,” Gabor said.

“Any budget savings would be determined by how the merger is effectuated and how the responsibilities and resources are reallocated,” Lorber stated. “There would seem to be a need to cross-train OFCCP compliance staff and EEOC investigators and intake staff on the functions and procedures of the other agency. It may therefore be difficult to realize immediate savings.”

“It is hard to quantify, but my sense is probably $20 million per year even apart from the increased enforcement capability of an OFCCP owned and operated by the EEOC,” Fox said, noting that economies of scale will be a factor.

Delving into some detail, Fox noted that in terms of financial efficiency, “[t]here is no doubt the combined agencies would save a substantial amount of money.” He explained that there would be just one budget for discrimination law enforcement, statistics, recordkeeping, and interviewing training. Money will also be saved via “the elimination of 60 some-odd offices currently co-located throughout the country and presumably (but not necessarily)  elimination of the Office of Administrative Law Judge process at USDOL in exchange for the EEOC’s traditional access to the federal courts.”

“The savings in leasehold expense will be very large as OFCCP has shrunk in recent years by over 30 personnel from almost 800 employees to about 550 on roll today and heading, perhaps to an authorized payroll of only 440 employees) leaving the agency with many offices which are 50 percent or more empty,” he continued.

“There will, however, be a large one-time cost to intake the OFCCP personnel into the EEOC,” he noted, adding that, ”[t]he EEOC should treat the OFCCP personnel as new hires off the street and train them in every law and system at the EEOC to disengage OFCCP’s bad habits and fill in the many gaps in OFCCP training.”

Operational efficiency. Looking at operational efficiency, Fox observed that “[t]he EEOC is a very well run agency by most measures and the OFCCP is among the very lowest performing agencies in the federal government. The strong training and organizational tradition of the EEOC would greatly increase the OFCCP’s operational and enforcement efficiency through sturdy and reliable discrimination training programs the EEOC has large staffs to update and deliver.” In contrast, “the OFCCP has not offered training programs in three years and most of its employees have never been trained in discrimination law, investigation procedures, interview techniques, statistics, recordkeeping during investigations, etc.

“As one example, the EEOC during the Obama Administration launched a pilot ‘systemic discrimination’ program in selected EEOC offices to mirror the systemic program at OFCCP. In only three years, the EEOC systemic program, with about the same number of employees as OFCCP employs, has last fiscal year collected over three times more than the OFCCP’s entire back pay collection.” [Wolters Kluwer Note: According to the agencies’ statistics for FY 2016, the EEOC obtained approximately $38 million in relief for victims of systemic discrimination, while the OFCCP obtained just over $10.5 million total from compliance evaluations and complaint investigations.]

“Indeed, one of the contractor community’s fears about the transfer of the OFCCP to the EEOC is that the EEOC would undoubtedly make the OFCCP a more efficient, functional and fearsome agency instead of the heavily damaged and burdened agency it now is,” Fox explained, adding that the OFCCP is an agency “which does not strike much fear currently in corporate General Counsel offices throughout the United States.”

“Also, the EEOC would get the OFCCP on schedule,” he continued. “[The] OFCCP is chronically tardy, brings lawsuits often 10 years after the events in question without explanation or remorse, [it] has thousands of audits now 4-8 years old and has no internal operating deadlines whatsoever (since FY 2016). [Thus,] the EEOC’s structured and mature infrastructure will help organize the decayed OFCCP management structure.”

What’s driving the opposition? Fox identified three primary drivers behind the government contractor community galvanizing in opposition to the merger. The first is the fear that “the EEOC will make the OFCCP a much more effective and feared agency the contractor community can no longer control,” he said, adding that is the great “elephant in the room” that few are discussing publicly because it is “not a compelling reason to oppose the merger.”

The second driver is “distrust of the White House’s intentions as to civil rights, causing an automatic reflex ‘knee-jerk’ reaction to resist anything the White House does [in this area].” Elaborating on this point, he said “just imagine how differently the civil rights and government contractor communities might have received the White House’s merger proposal had the Trump White House recommended, let’s say, a doubling of the OFCCP’s budget AND merger with the EEOC; thus, engendering confidence that the White House was well-intentioned as to its merger decision.”

The third driver is the “fear that the transfer means a diminished role for the OFCCP. [Thereby,] threatening the livelihoods of hundreds of vendors, thousands of corporate affirmative action personnel and thousands of lawyers servicing government contractors.”  However, Secretary Acosta’s June 7 testimony at the House subcommittee hearing should now remove this third concern, he said. “The 16.5 percent reduction the White House has proposed to the OFCCP’s budget does not diminish the integrity of the merger decision since the White House is not differentially reducing the OFCCP’s budget. Rather, the White House has launched a broad-frontal attack on the budget of the entire federal Executive Branch—not just the OFCCP— with only a few exceptions, such as defense and veterans programs,” he noted.

“There are usually varied reasons for disparate groups to take positions on legislative or policy proposals,” Lorber said. “Civil Rights organizations have traditionally argued that government contractors should face enhanced oversight of their personnel practices. Employer and contractor organizations seem to argue that the OFCCP should focus its efforts on affirmative action, diversity and inclusion and recognize the long standing Memorandum of Understanding (MOU) with the EEOC which charges the EEOC with the responsibility for discrimination reviews. There is a concern that the mingling of different authorities and responsibilities could lead to the EEOC using the OFCCP authority to have unlimited access to all personnel records and threaten procurement action in Title VII or ADA complaint situations and the OFCCP using the EEOC authority to demand punitive and compensatory damages and access to federal courts to further put pressure on contractors it has under review.”

“The only way a ‘Super EEO Enforcement Agency’ would be created would be if the authorities of the two agencies were intermingled,” Lorber continued.  “It would perhaps be helpful if the decision makers reviewed the legislative history of the 1972 Equal Employment Opportunity Act to familiarize themselves with the arguments which led to the defeat of the proposal then to merge the agencies.”

“The current administration is under terrific pressure from all sides,” Gabor said. “It is difficult to predict how that pressure will influence its decision making. At the same time, it is not always clear what will ultimately influence its decisions.”

Affirmative action. Neither the Appendix section regarding the OFCCP nor the DOL Budget Justification for the OFCCP mention what the combined agency would do regarding affirmative action. At a House Appropriations Labor, Health and Human Services, Education, and Related Agencies Subcommittee hearing on June 7, 2017, Secretary of Labor Alexander Acosta indicated that there would not be a reduction in the scope of EO 11246.

Among the issues with merging the two agencies is the fact that the EEOC doesn’t have statutory authority to enforce EO 11246, VEVRAA or Section 503 of the Rehab Act. While the non-discrimination requirements of the laws enforced by the OFCCP largely overlap with the those of the laws enforced by the EEOC, whether the affirmative action areas that are unique to OFCCP enforcement will stay within the DOL, be transferred to the EEOC, or be eliminated entirely, is still an issue, Fox has explained. Any of these options would require some Congressional action as well as the President amending EO 11246. All three attorneys said there was a lack of clear direction on this issue.

“We all wait to learn more about directives from Washington,” Gabor observed. “It is extremely difficult to predict what will happen down the road.”

“There has been no guidance as to how the affirmative action functions would continue and what changes would be made in EO 11246, Section 503 of the Rehabilitation Act or VEVRAA other than that the responsibility would be shifted to the EEOC,” Lorber noted. “It is somewhat implicit in the Budget guidance that the OFCCP’s authority over procurement would be even more directed at addressing discrimination since the justification suggested that the agencies had the same responsibilities but there has been no further explanation.  The absence of any more specifics may reflect the fact that implementing this change would require legislative changes.”

“The White House has purposely not thought through the details of the transfer,” Fox said. “This may turn out in retrospect to be a poor strategic decision from the White House’s perspective since the fear of the unknown is rallying opposition to the merger proposal among the government contractor community. The White House was ‘painting’ the merger idea with a broad and simple brush: just merge two civil rights agencies in a time the federal government can no longer financially afford the luxury of redundant agencies. The White House thinks of this transfer as a simple, obvious, streamlining activity like any of the thousands of business mergers which occur each year in America. Politics did not drive the White House’s merger decision. Rather, the White House has left it to senior Department of Labor officials and EEOC Acting Chair Lipnic to spend the next year planning the details of the merger.”

As to those details, “there are many ways to ‘skin the cat,’’ Fox noted. “Ms. Lipnic is likely going to be the key architect of the transfer and will decide: (1) whether she will create separate affirmative action teams different from the Commission’s discrimination investigation teams; and (2) whether the OFCCP program will be run centrallyperhaps only from Washington D.C. (as the Government Accountability Office (GAO) has charged the OFCCP to consider) or through EEOC regional officesor whether to continue the OFCCP’s decentralized enforcement design.”

Required Congressional actions. On top of the affirmative action issue, the EEOC does not currently have the authority to do several other things that the OFCCP does, including bringing administrative actions to debar federal contractors. The DOL’s budget justification as to the OFCCP calls on the agency to draft and review: (1) legislative proposals to amend VEVRAA and Section 503; and (2) a new Executive Order amending EO 11246. In addition, the agency would need to draft/revise its EO 11246, VEVRAA, and Section 503 regulations to implement the transfer of authority. The attorneys all agreed that no changes to the statutes enforced by the EEOC would be required to effectuate this transition.

Opportunity to change laws enforced by the EEOC? Even so, Employment Law Daily asked if Congress might still take such a merger process as an opportunity to make changes to the laws enforced by the EEOC. “No,” Fox said. “Not in a modern Republican Administration which is not intent on expanding the administrative state. The last Republican who believed in and supported the administrative state was Richard Nixon.”

“Also, the tide seems to have turned in America against ‘big government’ and a smaller federal government  now appears to very much be a national goal, except among progressive Democrats. The FY 2018 budget will be a telling referendum on the fate of the administrative state. This debate is important because OFCCP’s budget is caught up, like most federal executive agencies currently, in that over-arching political debate in Washington D.C.”

Noting his previous comment regarding the MOU between the two agencies, Lorber said, “it would be helpful if the OFCCP followed the Memorandum of Understanding and did not try to replicate the functions of charge driven investigation and enforcement. Functions would not have to be merged if the existing protocols and procedures were followed. The agencies could certainly be more cooperative if these policies were followed and if the agencies followed the prescripts of Section 715 of Title VII [Equal Employment Opportunity Coordinating Council] and Section 12117(b) of the ADA [which covers the coordination of the EEOC’s ADA enforcement and the OFCCP’s Section 503 enforcement].

“There has been a push to amend the ADEA to make it more consistent with Title VII in order to avoid disparate impact and illegal hiring practices,” Gabor noted. “The ADEA was written roughly three years after Title VII and left out some of the language contained in Title VII.”

Skilled Regional Centers. The proposed budget allows for the OFCCP to continue with its plan to establish two Skilled Regional Centers located in the Pacific (San Francisco) and Northeast (New York) regions. These centers would have highly skilled and specialized compliance officers capable of handling various large, complex compliance evaluations in specific industries, such as financial services or information technology. In addition, they would reduce the need for a network of field area and district offices, according to the proposal.

“If the agencies were merged, operational differences or initiatives such as the Skilled Regional Centers would obviously have to be reconsidered,” Lorber noted.  “The key question is ‘what is the purpose of the merger?’ If the purpose of the merger is to achieve some degree of economy of scale, then agency specific functions such as the Skilled Regional Centers would have to be reviewed for continued viability.”

“This [merger] will logically present logistical challenges that may impact [the combined agencies’] ability to cover the nation.” Gabor observed. “I don’t think that employers should be wary of a Super EEO Enforcement Agency. The greater question would be the resources that the agency has.”

“Ms. Lipnic will work this issue through,” Fox said, noting again that there are many ways to approach this task. “However, the EEOC already has ready and harmonious administrative vehicles to accommodate the OFCCP’s two Skill Centers in that the EEOC has already created specialized systemic discrimination units in San Francisco and New York,” he observed.

EEO-1 Report. Federal regulations currently require that all employers in the private sector with 100 or more employees, and some federal contractors with 50 or more employees, annually file the EEO-1 Report, with the Joint Reporting Committee — a joint committee consisting of the EEOC and the OFCCP.

“Another effect of the merger would undoubtedly be to examine how the EEO-1 Report would be compiled as there are different standards for government contractors and Title VII covered employers,” Lorber said.

A controversial pay data reporting requirement, added to the EEO-1 by the Obama Administration back in September 2016, was stayed by the Trump Administration on August 29, 2017. Neomi Rao, Administrator of the OMB’s Office of Information and Regulatory Affairs informed the EEOC via a memo that the OMB, pursuant to  its authority under the Paperwork Reduction Act, is initiating a review of the effectiveness of that pay data collection component.

That compensation data reporting requirement would have required employers “to present a tremendous amount of information to the EEOC that employers have never before been required to produce,” Gabor stated. “To me, [such a requirement would have presented a] much greater risk of enforcement action.”

Both the OMB and the EEOC had the power to reverse course on the compensation reporting component, Fox has noted; but the action came from the OMB because the Republicans won’t have a 3-2 majority on the Commission, and presumably the votes withdraw the requirement, until President Trump has all his appointments in place. Currently still pending Senate confirmation are President Trump’s selection of Janet Dhillon, to be EEOC Chair, and Daniel M. Gade to be a Commissioner. Acting EEOC Chair Lipnic voted against the pay data reporting requirement when it was before the Commission during the Obama Administration.

Issues identified by 2016 GAO report. On September 22, 2016, the GAO issued a report identifying and discussing multiple deficiencies with OFCCP enforcement. The report concluded that the OFCCP’s process in selecting federal contractors for compliance evaluations, the agency’s primary tool for enforcement, is not designed to focus on contractors with the greatest risk of noncompliance. Among its other findings, the report determined that the OFCCP is not providing consistency in its enforcement efforts across its offices because it is failing to timely train new compliance officers and provide essential ongoing professional training for all of its compliance officers. The proposed merger would “[a]bsolutely” help remedy some of the problems identified in the report, Fox said.

“The OFCCP would have to devote resources to adequately train its compliance officers in response to the GAO report regardless of the merger,” Lorber noted.  “EEOC personnel assigned to OFCCP functions would have to be trained in the full gamut of OFCCP activities.”

“One of the benefits from the merger would be the prospect of better education and training that would help employers avoid potential conflicts,” Gabor said.

Other ways to improve efficiencies? Even if this full merger doesn’t happen, are there ways the two agencies could work together to improve efficiencies?

“Yes,” Fox said, “but the efficiencies and cost savings of the two agencies working more closely together but without merging are ‘small change.’”

“From a procedural standpoint, it would be great of the agencies would have joint mission statements and joint enforcement memoranda,” Gabor said. “This would also be true of other agencies such as the NLRB and the DOL. Imagine if employers could ‘one stop shop’ to remain current on what is coming out of Washington.”

“The OFCCP could again exercise its discretion, interrupted in the waning days of the Obama Administration, to refer as much of its complaint docket to the EEOC as possible,” Fox explained. As an example, he said the OFCCP could return to the “historic policy” of referring individual complaints of discrimination under EO 11246 and Section 503 to the EEOC for investigation and prosecution.

“But, remember, the White House consciously chose not to bifurcate the OFCCP’s authority and did NOT propose to send OFCCP’s discrimination law authority to the EEOC while keeping the affirmative action authority at the DOL. So, if the merger fails, I believe The White House will continue to try to treat the OFCCP like it is treating almost all other federal agencies: by substantially reducing it in size.”

Budget will continue to be a concern. “Also, if merger fails, OFCCP still has all the same administrative, training and enforcement problems it has now and with inadequate budget and no plan to fix the agency,” Fox pointed out. “The EEOC merger proposal may well look, at this point in time, like Carpathia unto Titanic to OFCCP personnel.”

The White House’s FY 2018 budget proposal calls for $88 million in funding for the OFCCP, down from the current $105 million funding level. This funding level would include 440 full-time equivalent (FTE) employees, down from the current FY 2017 estimate of 571 FTEs. On top of reducing the overall number of FTEs, the proposed budget calls for the OFCCP to consider reducing the number of its field office locations. On July 19, 2017, the House Appropriations Committee approved the draft FY 2018 Labor, Health and Human Services, and Education funding bill which would allot the OFCCP $94.5 million. The Senate has yet to propose its FY 2018 budget for the DOL/OFCCP.

“If the White House’s FY 2018 budget proposal for OFCCP comes to pass, the merger will not be the primary concern as to OFCCP,” Fox said. “Rather, the small size of the agency will drive civil rights concerns and government contractor vendor concern since the agency, at an $88M budget figure and with only 440 resulting employees, would cease to be large enough to function effectively…like cutting the roots while the plant above the ground otherwise appears to be healthy, for the moment. Even at OFCCP’s current 551 authorized employee headcount (571 minus the 20 employee loss occasioned by the recently passed FY 2017 budget), OFCCP is too small to function effectively and efficiently. This is another reason why a merger with the EEOC (and OFCCP’s overnight acquisition of the EEOC’s mature infrastructure, significantly better managerial staff, and extensive training college) would make great sense from an administrative point of view, even if not a compelling political action.”

Buyouts. In addition, Fox noted that the OFCCP’s union estimates that as many as 50-75 OFCCP employees from across all OFCCP offices and ranks could leave the agency as a result of two buyout offers (Voluntary Separation Incentive Payments and Voluntary Early Retirement Authority) detailed by Acting Director/Deputy Director Dowd in an August 18, 2017 memo sent to agency employees (Fox posted the memo as part of his August 28 blog for Direct Employer’s OFCCP Week in Review). The OFCCP will have to reduce staff out of necessity due to budget reductions and increased agency operating costs, he explained. Interestingly, “Secretary Acosta has decided to down-size OFCCP EVEN BEFORE the Senate weighs in with its FY 2018 budget for the DOL and the OFCCP,” Fox observed.

Given these anticipated staff reductions, which will likely result in the elimination of some of the agency’s brick and mortar offices, “a merger of OFCCP and EEOC is almost pre-ordained,” Fox concluded. “The question then becomes not whether, but only when.”

[Wolters Kluwer Note: After press time on September 7, 2017, the date this article was published in Employment Law Daily, the Senate Appropriations Committee announced its approval, by a 29-2 vote, of the FY 2018 Labor, Health and Human Services, and Education and Related Agencies Appropriations Bill. In its report on the bill, posted the following day, the Committee rejected the proposed merger and recommended $103,476,000 in FY 2018 funding for the OFCCP. It also instructed the OFCCP to report to the Committee within 180 days with an inventory of its current infrastructure and a plan to consolidate and “right size” the agency. See the September 11 post on this blog for more details, including expert commentary, about that development.]

Company pays more than $100,000 to resolve INA discrimination claims

September 6th, 2017  |  Published in Blog

A Louisiana company has paid more than $100,000 to settle allegations that it failed to consider or improperly rejected U.S. workers because of their citizenship. According to the Justice Department, the payment was part of a settlement reached with Barrios Street Realty, LLC, a company based in Lockport, Louisiana, to resolve claims the company violated the Immigration and Nationality Act (INA).

In its investigation leading up to the settlement, the Justice Department determined that from 2014 through 2015, the company and its agent, Jorge Arturo Guerrero Rodriguez, failed to consider or improperly rejected U.S. workers who applied for positions as sheet metal roofers or laborers, and then sought to fill the vacancies with foreign workers under the H-2B visa program. According to the Department, the company’s petition for foreign workers falsely claimed that it could not find qualified U.S. workers. Refusing to consider or hire qualified U.S. workers because of their citizenship violates the anti-discrimination provision of the INA.

The settlement required Barrios to pay $30,000 in civil penalties and up to $115,000 in back pay to compensate U.S. workers who were denied employment because of the company’s reliance on H-2B visa workers. After entering the settlement, DOJ determined that 12 U.S. workers were entitled to receive back pay totaling approximately $108,000, and the company made the final payments to the workers in August.

Acting Assistant Attorney General John Gore of the Civil Rights Division stated the DOJ will not tolerate employers misusing visa programs to discriminate against U.S. workers.  “We will vigorously prosecute claims against companies that place U.S. workers in a disfavored status.”

Formally known as the Office of Special Counsel for Immigration-Related Unfair Employment Practices, the Civil Rights Division’s Immigrant and Employee Rights Section (IER) is responsible for enforcing the anti-discrimination provision of the INA.

Reality check: When is a franchisor a joint employer of franchisee employees?

August 29th, 2017  |  Published in Blog

By Lorene D. Park, J.D.

The increase in court battles over franchisors’ liability as “joint employers” when franchisees violate Title VII, the Fair Labor Standards Act, or other labor laws could reflect the ongoing search by plaintiffs for deep pockets, or increased efforts by businesses to skirt labor laws—depending on your point of view. Many believe it reflects our political divide and the uncertainty of a changing “patchwork” of tests for joint-employer status issued by courts and agencies.

Changes are coming . . . It appears lawmakers are making headway toward a uniform standard, given the July 12 hearing before the House Committee on Education and the Workforce and its introduction on July 27, 2017, of the Save Local Business Act. The Act would amend the NLRA and the FLSA to restore what the bill’s sponsors called “the commonsense definition of what it means to be an employer.” The bill (H.R. 3441), which has bipartisan support, would toss the standard articulated in the NLRB’s recent Browning-Ferris Industries decision and clarify that two or more employers must have “actual, direct, and immediate” control over employees to be considered joint employers. As we await the outcome of these efforts, and regardless of your point of view, it’s worth looking at recent court decisions on when franchisors may be liable under a joint employment theory—for the moment, at least.

First, the patchwork. To provide some context for the court decisions, it helps to understand the tests for joint employer status—they vary by statute and jurisdiction. As noted in a now-withdrawn interpretation by former WHD administrator David Weil, joint employment is defined more broadly under the FLSA and Migrant and Seasonal Agricultural Worker Protection Act (MSPA) than under the common law relied on by courts in the context of Title VII and other statutes. The common law focuses on the control a franchisor exercises over franchisee employees on a day-to-day basis, including how and where the work is done. Courts consider the terms of the franchise agreement or policies; mandatory training; mandatory recordkeeping; whether the franchisor inspects or audits; and the right to terminate, among other things.

In FLSA and MSPA cases, courts look broadly at an individual’s economic dependence on the company (the “suffer or permit to work” language), but the right to control is still important; increased control signals economic dependence. Other factors include: control of employment conditions (method of pay, power to fire); the permanency of the relationship; the skill required (little training indicates greater dependence); whether the work is integral to the business; and whether the franchisor performs administrative functions (e.g., payroll, workers’ comp, taxes).

There is also a “hybrid” test used by the Fourth and Fifth Circuits, among other courts, with respect to Title VII, ADEA, and other statutes. The hybrid test considers elements of both the common law and the economic reality tests. In the Fourth Circuit, for example, nine factors are considered, but three are most important: authority to hire and fire; day-to-day supervision and control of the putative employee; and where and how the work takes place.

Recent cases on franchisor liability. Clearly there is overlap in the various tests. Thus, while employers should focus on cases in their jurisdictions, much can be learned from other as well:

Fourth Circuit has nine factors for ADEA, six for FLSA. In one case, a federal court in Maryland found that a pizza restaurant manager sufficiently alleged that franchisor Ledo Pizza Systems was his joint employer. As to his ADEA claim that he was fired in retaliation for refusing to terminate an older worker, the court looked to the nine-factor hybrid test from the Fourth Circuit in Butler v. Drive Automotive Industries of America, Inc. The allegations suggested Ledo, acting through its corporate employee, had control over hiring and firing, day-to-day supervision, and formal or informal training. Also refusing to dismiss the FLSA retaliation claim, the court found joint employer status well-pleaded through allegations of significant ties between the franchisor and franchisee, suggesting a long-lasting relationship and control by the franchisor. The plaintiff claimed Ledo had at least some power to control and supervise workers and to hire, fire, or modify employment conditions. For example, Ledo required him to provide daily and weekly reports, told him what to stock in the bar, set employee schedules, hired a bartender, and told the plaintiff he was fired. To the court, at least the first four of the six factors set forth by the Fourth Circuit in Salinas v. Commercial Interiors, Inc., could weigh in the plaintiff’s favor (Lora v. Ledo Pizza Systems, Inc.).

Functional control indicates employer status. A federal court in New York refused to dismiss an FLSA collective action by servers, housemen, waiters, housekeepers, and other employees of a hotel franchisee who plausibly claimed the franchisor defendants asserted “functional control” over hotel staff to be liable as joint employers (formal control was not addressed). To establish functional control, they alleged the franchisor defendants: (1) imposed mandatory training programs for hotel staff; (2) maintained the right to inspect the hotel; (3) imposed mandatory recordkeeping requirements; (4) established “standards, specifications[,] and policies for construction, furnishing, operation, appearance, and service of the Hotel;” (5) required that a particular software be used to track hotel revenue and operations; (6) retained the unlimited right to change the manner in which the hotel was operated; (7) performed audits and inspections of compliance with franchisor standards; (8) maintained the right to terminate the franchise, which could cause the termination of staff; and (9) knew the plaintiffs were not paid gratuities but failed to stop the unlawful practices. To the court, this was enough to plausibly allege that the franchisor defendants were joint employers under the FLSA and NYLL (Ocampo v. 455 Hospitality LLC).

Logos and uniforms showed control over franchise, but not workers. An employee of a landscaping franchisee could not show the franchisor exercised enough control over her employment or that other factors suggested it should be held liable as a “joint employer” or “single, integrated employer” under Title VII for the alleged unlawful acts of the franchisee. She relied on the franchisor’s control over logos, uniforms, letterhead, and vehicle color, but a federal court in Virginia explained that control over the franchisee was not relevant and it was control over the plaintiff’s employment that mattered—which was lacking here. The court reviewed the nine factors set forth by the Fourth Circuit in Butler and noted that while not one factor is dispositive, the “common-law element of control remains the principal guidepost’ in the analysis.” (Wright v. Mountain View Lawn Care, LLC).

Franchisor’s training program not enough for joint employer status. In a suit by a Church’s Chicken employee in Alabama who claimed she was not paid proper minimum wages and overtime, a federal court concluded that her general assertion that two franchisors had a management role in a franchisee’s restaurant operations did not render those entities her “employer” under the FLSA. Although a franchise agreement required the franchisee to send its employees to attend a “manager training” program conducted by the franchisors, the training program alone did not turn the franchisors into the employee’s employer. The employee did not allege any facts showing that the franchisors had the power to hire or fire, or make personnel decisions, supervise work schedules, determine pay rate, or maintain records of the franchisee’s employees (Rodriguez v. America’s Favorite Chicken Co. dba Church’s Chicken).

“Ministerial functions” of payroll not enough for liability. In a suit filed under the FLSA and Oregon wage and hour law, a federal court found that Jack in the Box was not the plaintiffs’ “joint employer” after the date it franchised several corporate-owned restaurants to franchisee Northwest Group, Inc. Applying the “economic reality” factors outlined by the Ninth Circuit, the court found that Jack in the Box established that it did not have the power to hire and fire franchisee employees, and it was not involved in franchise employee work schedules, salaries, insurance, fringe benefits, or hours. Although the franchisee was required to use Jack in the Box’s payroll system, such “ministerial functions are insufficient to support plaintiffs’ argument that [defendant] controls labor relations.” Summary judgment was granted for Jack in the Box on this issue (Gessele v. Jack in the Box, Inc.).

Recommending personnel policies not enough. A window cleaning franchisor did not become a joint employer of its franchisee’s employees merely by recommending personnel policies, held a federal district court in Wisconsin, granting summary judgment in favor of the franchisor on employee wage-hour claims. To prove the franchisor was their joint employer, the employees had to show more than that they received a copy of the franchisor’s employee manual and that the franchisee followed the franchisor’s recommendation to pay them on a commission basis. The “critical issue” was that the franchisee was not obligated to follow the manual as drafted. In addition, the franchisor did not have the power to hire and fire them and did not maintain employment records for them. In sum, the court found the minimal control exerted by the franchisor here “nothing like” what would be necessary to demonstrate employer status (Pope v. Espeseth, Inc.).

Creating master franchise plan not enough absent day-to-day control. A national franchisor that created a master franchise plan for commercial cleaning businesses was not the employer of unit franchisee owners under California law, ruled a federal district court in California. The unit franchisees failed to offer any evidence of the franchisor’s actual control over their day-to-day activities, or that it reserved the right to exercise such control. Nor was there evidence that the franchisor controlled their wages or had the authority to stop them from working. Consequently, the court granted the franchisor’s motion for summary judgment (Roman v. Jan-Pro Franchising International, Inc.).

Jani-King cases. Cleaning service franchisor Jani-King is defending suits in several jurisdictions, the main dispute being whether it misclassified franchisees as independent contractors. In one, the Third Circuit affirmed that whether the franchise agreement and manuals gave Jani-King sufficient day-to-day control to make franchisees “employees” will be determined on a class-wide basis. Rule 23’s commonality and predominance requirements were met because the dispute could be resolved by common evidence, including the agreement and manuals, which put controls on franchisees including: where to solicit business, how often to communicate with customers, what to wear, what records to keep, how to advertise, and more. The documents also addressed the nature of the work, tools, and termination (Williams v. Jani-King of Philadelphia, Inc.). Jani-King did score a win in Oklahoma, though, when a DOL enforcement action was dismissed with prejudice because in claiming that all franchisees were “employees,” the agency lumped together the franchisors who were individuals and those franchised through corporate entities, which cannot be “employees” as defined by the FLSA (Acosta v. Jani-King of Oklahoma, Inc.).

Minimizing liability. These decisions suggest steps franchisors can take to decrease the chance of being liable, as a joint employer of franchisee workers, for employment law violations:

Make intent clear. Put it in the franchisor agreement that the franchisor is not the employer, does not have the power to hire, promote, or fire franchisee employees. Have franchisees state in job applications that individuals are hired by the franchisee, not the franchisor.

Stay true to franchise model. Stick to controlling product and service standards on a general level. It is okay to require the use of certain templates or to maintain the brand (e.g., logos, uniforms, letterhead, typical customer greetings, and the like), but don’t micromanage. Remember, courts look to control over an individual’s employment, not over the franchisee.

Leave HR functions to franchisees. In practice, leave to the franchisees the typical human resources and employer functions, such as: hiring/firing, wage rates, scheduling, payroll, staffing levels, performance evaluations, promotions, workers’ compensation insurance, taxes, employee complaints, discipline, and recordkeeping. To the extent template personnel policies are provided to franchisees, make clear that the policies are optional.

Train judiciously. Train your franchisee owners and managers on policies and provide resources for training, but otherwise leave training and rule enforcement to franchisees.

Additional FY 2017 OFCCP settlements not publicized via agency press releases posted

August 24th, 2017  |  Published in Blog

Three additional settlement agreements regarding which the OFCCP did not issue a corresponding press release have been posted on the agency’s Class Member Locator webpage and FOIA Reading Room) since Employment Law Daily last reported on such agreements in mid-May 2017. In all of the cases listed below, the contractor did not admit liability.

Aramark Uniform Services. As the result of a compliance review, the OFCCP concluded that, between January 1, 2012 and October 20, 2014,  manufacturer Aramark Uniform Services discriminated against 41 qualified female employees, who were placed into lower paying production positions, and, as a result subsequently, between August 22, 2012 and October 20, 2014, discriminated against 246 qualified males who were denied employment opportunities into the lower paying production positions within the “Operatives Job Group” at its Evansville, Indiana facility. Pursuant to a conciliation agreement, signed between May 5-22, 2017, the contractor agreed to pay $1,903.68 to settle the allegations of placement discrimination against female employees and $194,255.00 to resolve the hiring allegations against male applicants. Aramark will also extend 28 job opportunities and revise its placement and selection procedures.

Kappler, Inc. In a conciliation agreement, signed early to mid-May 2017, Kappler, Inc., a chemical protective clothing and accessories company, agreed to pay a total of $5,500.00 to resolve allegations of job placement discrimination at its Guntersville, Alabama facility. According to the OFCCP, from December 24, 2012 to December 24, 2014, the company discriminated against eleven qualified women who were not placed into “Cutter” or “Floor Worker” positions. Under the agreement, Kappler, Inc. will also extend two job opportunities and retroactive seniority.

Vulcan Information Packaging. Vulcan Information Packaging, a manufacturer of custom binders and promotional packages for local businesses, has agreed to pay a total of $56,000.00 to settle allegations of gender discrimination in job placement at its Vincent, Alabama facility. Between July 1, 2013 and July 1, 2015, the contractor placed 21 female employees into lower paying entry-level positions and paid these women less than similarly qualified men steered into non-entry level higher-paying positions, according to the result of an OFCCP compliance review. On top of the monetary settlement, the conciliation agreement, signed May 22-25, 2017, provides that Vulcan will revise its compensation and job placement policies and procedures.

No absolute right to presence of union representative in investigatory hearing

August 22nd, 2017  |  Published in Blog

It has been long held under NLRB v. J. Weingarten, Inc., that an employee must be allowed to bring a union representative to any investigatory interview she is required to attend if she reasonably believes the interview might result in disciplinary action. However, the D.C. Circuit recently reminded us that there is no absolute right to a union representative in the exercise of an employee’s Weingarten rights. In Midwest Division – MMC, LLC dba Menorah Medical Center v. NLRB, the appeals court observed that when employees are not obligated to take part in an investigatory hearing, there is no requirement that they be permitted to bring a union representative if they elect to participate. As a result, the NLRB’s determination that a hospital improperly denied the request of two nurses for union representation in peer-review-committee hearings was set aside by the appeals court.

Peer-review program. Kansas law calls for hospitals to establish an internal peer-review program to monitor the quality of care furnished by their medical professionals. As required by state law, the employer formed a peer-review committee for its nursing staff. The committee examines alleged violations of the applicable standard of care by the hospital’s nurses and reports serious breaches to the state licensing agency. The peer review committee does not itself impose any form of discipline, but reports to the appropriate licensing agency if it finds grounds for disciplinary action.

Investigation of substandard conduct. This case arose out of the peer-review committee’s investigation of two nurses for substandard conduct. In May 2012, the nurses received letters from the hospital’s risk manager alleging they had exhibited unprofessional conduct. They were reminded that a “Care Level 4″ determination must be reported to the Kansas Board of Nursing for potential disciplinary action. The nurses were afforded an opportunity to address the peer review committee if they chose. Both nurses asked to be allowed a union representative before the committee, but the employer denied the requests.

In response to the employer’s actions, the union filed unfair labor practice charges against the hospital. The Board ultimately found the hospital had violated the NLRA as alleged. The employer petitioned for review of the Board’s order, while the Board sought enforcement.

Denial of representation request. The appeals court considered whether the hospital violated the NLRA by denying the nurses’ request for union representation in connection with the peer-review hearings. In this instance, the court determined the Board’s ruling that the employer violated the nurses’ Weingarten rights could not be sustained. An employee’s Weingarten right is infringed when an employer compels him to appear at an interview that may put his job in jeopardy. However, absent compulsory attendance, the right to union representation recognized in Weingarten does not arise.

Here, the nurses were given precisely that choice. The letters advising them of the charges against them expressly “afforded an opportunity” to appear before the committee. However, neither nurse was compelled to attend a committee hearing so as to trigger a right to union representation under Weingarten.

Investigatory interview. Section 8 of the NLRA imposes three obligations on employers. First, an employee must be allowed to bring a union representative to any investigatory interview she is required to attend if she reasonably believes the interview might result in disciplinary action. Second, absent an overriding need for confidentiality, an employer must furnish labor unions (upon request) information bearing on the administration of a collective bargaining agreement. Third, employees presumptively must be permitted to communicate with one another in service of their Section 7 rights.

NELP, NELA, and unions weigh in on class waivers in employer arbitration agreements

August 17th, 2017  |  Published in Blog

The National Employment Law Project (NELP), 10 international labor unions, and the National Employment Lawyers Association (NELA) are making their voices heard in an upcoming U.S. Supreme Court case that they say could radically tilt the legal landscape in favor of big corporations that break workplace laws. The amicus brief these groups filed on August 16, 2017, in consolidated cases, asking the Justices to rule on the lawfulness of class waivers in employer arbitration agreements, contends that employers cannot be allowed to use arbitration agreements to force workers challenging employer misconduct to give up their legally protected right to pursue legal action together as a class or group.

NELA describes itself as a non-profit professional membership organization composed of attorneys who represent workers in labor, employment, and civil rights disputes. NELP is a New York-based nationwide nonprofit organization that partners with community-based worker centers and other low-wage worker representatives to advocate for the rights of unorganized workers.

Hot-button question. In NLRB v. Murphy Oil USA, Inc. (No. 16-307), along with two other cases, Epic Systems Corporation v. Lewis (No. 16-285) and Ernst and Young LLP v. Morris (No. 16-300), the Justices will resolve the question of whether arbitration agreements that bar employees from pursuing work-related claims on a collective or class basis in any forum violate the National Labor Relations Act. In these cases, the NLRA bumps up against the Federal Arbitration Act, which favors enforcement of arbitration agreements. The cases explore what has become such a hot-button issue that the Trump Administration reversed its position under the Obama Administration when the NLRB was seeking certiorari, not only leaving the NLRB to fend for itself on the merits of the case, but actually opposing the Labor Board’s position on the class waiver issue in all of the consolidated cases.

Far-reaching impact. The case will have far-reaching and potentially devastating effects on the ability of workers to pursue legal action when employers break the law, according to NELP. The employers in the consolidated cases assert that the FAA permits them to require employees, as a condition of employment, to submit any legal dispute to private arbitration on an individual, worker-by-worker basis. This type of forced arbitration clause would prohibit every form of group legal action, including class actions, as well as any type of joint or group legal challenge, whether a case brought by two or more workers, a single worker soliciting the joinder of workers, or any other type of similar case, NELP explained.

The brief filed by NELP, the unions, and NELA underscores that the right of employees “to act in concert for mutual aid or protection” is a foundational cornerstone of national labor policy. It is also crucial to addressing the enormous disparity in economic power between individual workers and their employers.

Employees disfavored by arbitration. NELP pointed to recent research showing that arbitration can enable employers to erode enforcement of legal protections. Mandatory arbitration reduces workplace claims to “a miniscule number,” according to Jean R. Sternlight, a law professor at the University of Nevada at Las Vegas. While millions of employees are bound by forced arbitration clauses nationwide, fewer than 2,000 file arbitration claims annually. Even when workers pursue claims in arbitration, they win less frequently and obtain lower awards than workers who have access to the court system, research has shown.

Keeping bad behavior out of public eye. Another problem with forcing workers into individual arbitration proceedings is that it can make people dealing with the same issue proceed one by one, in secret proceedings outside of the public court system, NELP suggested, citing the recent sexual harassment cases at Fox News. These requirements often mean that companies are able to keep repeat violations and egregious corporate behavior out of the public eye.

“The state of forced arbitration in this country is a bald example of wealthy corporations writing the rules for the rest of us,” said NELP Executive Director Christine Owens. “In the fine print, big companies are rewriting the rules and taking away ordinary Americans’ day in court. Class actions and other types of group litigation are crucial for workers in holding big companies accountable when they break the law.”

According to Michael Rubin, a partner at the law firm Altshuler Berzon and primary author of the amicus brief, “If the Supreme Court upholds the forced waiver of employee rights through these arbitration clauses, it will spell the end of class-action employment litigation as we know it. No well-counseled employer will forgo the opportunity to both privatize and individualize potential lawsuits.”

Grievance reveals possible Hatch Act violations

August 10th, 2017  |  Published in Blog

A government lawyer was given a five-day suspension for (1)  “inappropriate conduct” towards a female supervisor, which involved loud talking or shouting that was deemed disrespectful and (2) inappropriate conduct regarding use of government property. The lawyer filed a grievance (U.S. Department of Education and AFGE. 17-2 ARB ¶6945. Thomas Coyne).

The hearing was scheduled for 9 am one December morning in 2014. It was at this point that the grievance took a strange turn. Neither party showed up for the hearing. When the arbitrator called them, they said that they were in an adjacent room and would be there shortly. When they arrived, they told the arbitrator that the lawyer and the supervisor had resolved their differences on issue #1 and that he had been reinstated. They jointly informed the arbitrator of their intent to withdraw the grievance. They only briefly mentioned issue #2, noting that a report had been made and that the employer was considering whether to pursue criminal charges.

The arbitrator, however, refused to accept their settlement and dismiss the grievance. Even though no testimony was ever given at the hearing, the parties had submitted a series of exhibits prior to the hearing. Some of those exhibits revealed that the charge underlying issue #2 was the use of a government computer to send emails prior to the 2008 presidential election extolling one of the candidates, possibly in violation of the Hatch Act. More than 800 government employees had apparently sent email messages to school superintendents reminding them that they could lose public funding if the other candidate won. The arbitrator’s justification for refusing to dismiss the grievance was found in the “heavy damages to the general public caused by Issue item 2.” The arbitrator also characterized the joint effort to dismiss a grievance based on an argument between employees as a conspiracy to keep the real issue secret until after the statute of limitations had expired. It is reasonable to presume, the arbitrator said, that the results of the 2008 and 2012 national elections would have been different had criminal charges been made against these employees.

Manipulating a free national election is a crime, he said. If these acts go unpunished, government employees at other agencies will feel free to manipulate future elections. Democracy itself is at risk. As a result, the arbitrator denied the grievance based on issue #1. As for issue #2, he ordered the employer to terminate the lawyer and any other employees who manipulated the election, and he ordered the employer to deny them any benefits, including their pensions. In addition, he ordered prison terms and fines (times and amounts to be determined) for any person found in the exhibit to have violated the Hatch Act as a result of the employer’s internal investigation.

Bill protecting pregnant workers’ rights enacted in Massachusetts

August 3rd, 2017  |  Published in Blog

Massachusetts Governor Charlie Baker recently signed H. 3680, “An Act Establishing the Massachusetts Pregnant Workers Fairness Act,” a bipartisan bill to extend protections to pregnant workers in the Commonwealth. The legislation will prohibit workplace and hiring discrimination related to pregnancy and nursing, and require employers to provide reasonable accommodations for expectant and new mothers in the workplace. This includes access to less strenuous workloads, altered work schedules, time off with or without pay and private nursing space. The law closes gaps in federal law for employers of six or more.

“This bipartisan legislation extends critical protections to women in the workplace and I thank the Legislature for their collaboration with advocates from both the women’s health and business communities,” said Governor Baker. “These provisions are important to expectant and working moms supporting their families and raising healthy children.”

Governor Baker was joined by Lieutenant Governor Karyn Polito and members of the state’s legislature at the signing ceremony at the State House on July 27.

As a working mom, I know how important it is to balance job responsibilities and family life to support our kids,” said Lieutenant Governor Karyn Polito. “Ensuring women in the workplace raising their children have access to these protections is important to the strength and safety of our economy, families and communities.”

“No expecting mother should have to choose between a healthy pregnancy and a paycheck,” said Massachusetts Senate President Stan Rosenberg. “This legislation would ensure that women’s medical needs are addressed without imposing undue burden on employers throughout Massachusetts.”

Representative David Rogers said, “Today, once again, Massachusetts has acted boldly to advance the cause of civil rights, women’s rights, and equal opportunity.  The Pregnant Workers Fairness Act, a bill I introduced, makes clear that women seeking reasonable assistance from their employers for certain conditions or needs related to their pregnancy must be treated fairly. I thank Speaker DeLeo for his leadership, the ninety-nine of my House colleagues who co-sponsored this legislation and, most of all, the many courageous women who stepped forward to tell their stories while the bill was under consideration. Together today we send a powerful message in support of equal opportunity in our Commonwealth.  And we must be mindful of the moment. It is particularly heartening that Massachusetts is taking this action at a time when many in our national government seem determined to go in the wrong direction on women’s rights.”

DOJ and EEOC battle in the Second Circuit over sexual orientation discrimination

July 27th, 2017  |  Published in Blog

On the same day that President Trump announced via Twitter that transgendered individuals would no longer be permitted to serve in the U.S. military, the Department of Justice filed an amicus brief in the Second Circuit asserting that Title VII does not include protection against discrimination based on sexual orientation. The move is perhaps another sign of the Trump Administration’s confused approach to LGBTQ rights—negotiating the space between Trump’s January 2017 promise of protection and the demands of a conservative base—given that earlier in the same case, the EEOC filed an amicus brief contending that Title VII’s ban on discrimination based on sex does extend to sexual orientation.

The controversy also may mark a trend of independent federal agencies refusing to toe the line on the Trump Administration’s agenda.

In Zarda v. Altitude Express dba Skydive Long Island, the Second Circuit will hold an en banc rehearing of a three-judge panel’s decision that would not reconsider the employee’s request that it overturn Simonton v. Runyon, a 2000 decision holding that Title VII does not prohibit discrimination based on sexual orientation. Instead, the appeals court adhered to its position in the March 2016 ruling in Christiansen v. Omnicom Group, Inc. that Simonton can only be overturned by the entire court sitting en banc. As such, it held that a gay skydiving instructor had no recourse under Title VII after allegedly being fired based on his sexual orientation. The Second Circuit granted the petition for en banc rehearing on May 25. The case is set for oral argument September 26, 2017.

DOJ sees narrow Title VII scope. The two federal agencies are at loggerheads as to the scope of Title VII’s prohibition against employment discrimination based on sex. To take the wind out of the EEOC’s sails, the DOJ says that while the EEOC enforces Title VII as to private employers, the United States, through the Attorney General, enforces Title VII against state and local governments, and is itself subject to the statute in its capacity as the nation’s largest employer. The EEOC, the DOJ stressed, is not speaking for the United States and is not entitled to deference other than the Commission’s power to persuade.

The Justice Department argues that none of the theories advanced by the EEOC, and the Seventh Circuit in its Hively v. Ivy Tech Community College of Indiana, can “overcome Title VII’s plain text” and the longstanding precedent of the Second Circuit and other courts. “The essential element of sex discrimination under Title VII is that employees of one sex must be treated worse than similarly situated employees of the other sex, and sexual orientation discrimination simply does not have that effect.”

Congress, through its actions and inactions, has made clear that Title VII’s prohibition of sex discrimination does not encompass sexual orientation discrimination, according to the DOJ. “Other statutes and rules may prohibit such discrimination, but Title VII does not do so as a matter of law, and whether it should do so as a matter of policy remains a question for Congress to decide.”

But not so fast . . . In a brief filed a month earlier, on June 23 the EEOC noted that it is the “primary agency” charged with interpreting Title VII. The Commission argues that because claims of sexual orientation discrimination “necessarily involve impermissible consideration of a plaintiff’s sex, gender-based associational discrimination, and sex stereotyping,” they fall “squarely within Title VII’s prohibition against discrimination on the basis of sex.”

The EEOC observed that 17 years ago, in Simonton v. Runyon, the Second Circuit concluded that “Title VII does not prohibit harassment or discrimination because of sexual orientation.” But in the intervening years, the EEOC and an increasing number of courts, including the Seventh Circuit sitting en banc, have analyzed the issue and reached the opposite conclusion. Those courts repeatedly focused on three arguments about sexual orientation discrimination, none of which were addressed in Simonton or Dawson v. Bumble & Bumble (2nd Cir. 2005): that sexual orientation discrimination (1) involves impermissible sex-based considerations, (2) amounts to gender-based associational discrimination, and (3) relies on sex stereotyping. For each of these reasons, sexual orientation discrimination is sex discrimination in violation of the Title VII, according to the EEOC.

The Commission offered additional reasons to overrule Simonton and its progeny: The primary authorities on which that case relied are no longer followed, and as many courts have concluded, the line the Second Circuit drew in Simonton and Dawson between sexual orientation discrimination and discrimination based on sex stereotypes is unworkable and leads to absurd results. Therefore, the EEOC asserted, both precedent and practicality dictate overruling Simonton.

Trump Administration vs. independent agencies. Notably, the EEOC is an independent federal agency that, presumably, is at liberty to follow its own interpretation of Title VII—at least until the Commission’s membership tilts the other direction. This is not the first time the Trump Administration has taken a position adverse to that of an independent agency.

In June, the National Labor Relations Board found itself in a similar posture before the Supreme Court. In NLRB v. Murphy Oil USA, Inc. (No. 16-307), where the Board challenges the lawfulness of class arbitration waivers in employment agreements, the DOJ not only refused to represent the NLRB on the merits, it filed an amicus brief opposing the Board’s position and reversing its own stance in the petition for certiorari (see OJ switches sides in NLRB class action waiver cases, June 19, 2017). The DOJ also argued against the Board’s take in the two cases consolidated with Murphy Oil in the Court’s grant of certiorari, Epic Systems Corporation v. Lewis (No. 16-285) and Ernst and Young LLP v. Morris (No. 16-300).

The case, Zarda v. Altitude Express dba Skydive Long Island, is No. 15-3775.

ALJ orders Google to provide only a portion of information sought by OFCCP in suit over denial of access to compensation records

July 25th, 2017  |  Published in Blog

In an opinion largely favorably to the interests of federal contractors, ALJ Steven Berlin ordered Google to provide only a portion of the information sought by the OFCCP in an administrative action where the agency asserted that Google unlawfully denied it access to requested compensation records. The ALJ found that portions of the OFCCP’s requests were unreasonable, and therefore, failed  Fourth Amendment requirements. These requests, seeking salary history, job history, and related informed “exceed[ed even the considerable deference owed OFCCP on a determination of relevance, and as they create an unreasonable burden on Google and its employees,” the ALJ ruled. He also expressed his concerns about this information being subject to data breeches. As such, the OFCCP will have to do more, specified in the order, if Google is to be ordered to provide this data. Judge Berlin also ordered the parties to engage in further conciliation, noting that the exchange of information provided by witness testimony at the hearing in this matter had occurred earlier, it may have prevented the litigation altogether. (OFCCP v. Google, Inc., DOL ALJ No 2017-OFC-4, July 14, 2017)

Dispute background. Since its formation in 1998, Google has been a federal contractor covered by the requirements of Executive Order (EO) 11246 at various times. Google had its first government contract in 2007, and it was a government contractor at various unspecified times between 2007 and 2012. On June 2, 2014, the General Services Administration (GSA) accepted Google’s bid on a contract for “Advertising and Marketing Solutions” (the AIMS contract). There was no evidence in the record to show that Google was a government contractor or subcontractor in 2013 or any of 2014 prior to being awarded the AIMS contract.

In its administrative complaint, the OFCCP asserted that Google violated the laws enforced by the agency and breached its obligations as a federal contractor when it refused to provide certain requested information as part of a routine compliance evaluation of the multinational company’s Mountain View, California headquarters. The agency initiated the review in September 2015 with its standard audit scheduling letter, and, in November 2015, Google produced information and documentation responsive to the demands in that letter. Google also produced further information in response to the OFCCP’s follow-up demands, both before and after the OFCCP filed its complaint, but it did not produce everything the agency OFCCP requested.

Following Google’s repeated refusal to produce the requested information, the agency issued a Notice to Show Cause on September 16, 2016; the agency’s complaint, signed on December 29, 2016, alleges that, as of that date, Google has "persisted in its refusal" to produce the items at issue.

Still at issue in the case was Google’s refusal to provide the following information:

  • A compensation snapshot (i.e. a moment frozen in time) as of September 1, 2014;
  • Job and salary history for employees in a September 1, 2015 compensation snapshot that Google had already produced and the requested September 1, 2014 snapshot, including starting salary, starting position, starting "compa-ratio," starting job code, starting job family, starting job level, starting organization, and changes to the foregoing; and
  • The names and contact information for employees in the previously produced September 1, 2015 snapshot and the requested September 1, 2014 snapshot.

Hearing and previous rulings in the case. On February 21, 2017, the ALJ granted the OFCCP’s request to apply expedited hearing procedures pursuant to the agency’s regulations at 41 C.F.R. §§ 60-30.31-60-30. On March 15, 2017, the ALJ denied the OFCCP’s motion for summary judgment because the regulations providing for expedited procedures do not permit such motions. Further, the ALJ stated that, even he were to reach the merits, he would deny the motion, finding that much of the OFCCP’s data demands were unduly burdensome. In particular, he pointed out that the cost of meeting the OFCCP’s data demands would greatly exceed the revenue generated from Google’s government contract.

The expedited hearing began on April 7, 2017. ALJ Berlin adjourned the hearing mid-afternoon to allow Google time to file a motion to dismiss. On May 2, 2017, the ALJ denied that motion.  Google’s motion was based on in its claim that statements made to the press by an OFCCP Regional Solicitor indicated that the agency had completed its investigation. However, ALJ Steven Berlin found those statements, although ill-advised, did not carry as much weight as hearing testimony in the matter by OFCCP Pacific Regional Director Janette Wipper due to the differing contexts in which the statements were made. The hearing resumed by stipulation on May 26, 2017, and concluded on that day.

Witness testimony. Over the two hearing days, the OFCCP called as witnesses Regional Director Wipper, Deputy Regional Director Jane Suhr, and contractor Michael Brunetti, Ph.D., who is an economist and statistician. Google called its Vice President of Compensation Frank Wagner and Senior Legal Operations Manager Kristin Zrmhal.

ALJ orders further conciliation. In the present ruling, ALJ Berlin first ordered the parties to engage in further conciliation. While observing that the parties had “exchanged views a number of times before reaching an impasse,” the ALJ found that circumstances had changed by the time of his order such that further conciliation was appropriate.

The primary reason for the parties’ impasse concerned Google’s demand to know what issues OFCCP was continuing to investigate and in what part of Google’s operations these issues arose. Google argued that collaboration with the agency was difficult because the OFCCP had offered no information about the issues it was finding with the information the company had already provided, which prevented Google from evaluating whether OFCCP’s additional requests were relevant to the investigation. As late as its March 2017 motion for summary judgment, the OFCCP maintained that it would not disclose any information about its internal deliberations concerning the ongoing compliance evaluation. Yet, at the hearing, the OFCCP reversed course when Regional Director Wipper testified that the September 1, 2015 snapshot showed systemic compensation disparities against women pretty much across the entire Google headquarters workforce and that the agency sought follow-up information, including earlier compensation data, to understand the cause of the disparity. It appeared that Wipper’s testimony, which  “[o]bviously surprised” Google, nevertheless, provided the contractor with the information it had been requesting, the ALJ stated.

Likely, the OFCCP’s reversal was made in good faith following the denial of the agency’s summary judgment motion, the ALJ concluded. Included in that ruling was the ALJ’s finding that much of the OFCCP’s data demands were unduly burdensome. In particular, he pointed out that the cost of meeting the OFCCP’s data demands would greatly exceed the revenue generated from the AIMS contract.

Prior to the hearing, the OFCCP’s understanding of Google’s organizational structure and pay policies and practices was lacking, but Wagner’s testimony corrected errors and filled in gaps, the ALJ noted. Wagner “delivered an organized, complete description of those policies and practices”, the judge wrote (and the ALJ’s order included a detailed description of that testimony). ALJ Berlin, clearly impressed with Wagner’s credibility, wrote that his testimony, “reflected Wagner’s extensive, personal knowledge of the matters under discussion that he has derived from his work in Google’s executive leadership on compensation issues over the past ten years.” In the judge’s view, it was evident that the questions OFCCP investigators posed to Wagner during the onsite review failed to elicit the quality of description that Wagner provided at the hearing because “the interviewers did not entirely understand the information that they did elicit.”

“Had OFCCP made its disclosures and had Google presented Wagner’s information earlier, it might have made the present litigation unnecessary,” the ALJ observed.

Fourth Amendment standards. The parties agreed that the OFCCP’s request for information in this case is akin to an administrative subpoena. Under the Supreme Court’s 1984 ruling in Donovan v Lone Steer, the Fourth Amendment requires that an administrative subpoena be sufficiently limited in scope, relevant in purpose, and specific in directive so that compliance will not be unreasonably burdensome. The U.S. District Court for the District of Columbia applied the Lone Steer standard to an OFCCP compliance evaluation dispute in its November 2011 decision in United Space Alliance, LLC v. Solis. For the purposes of this litigation, Google stipulated that it would not dispute that OFCCP based its selection of Google on specific neutral criteria

Government contract does not waive Fourth Amendment rights. Citing the U.S. Supreme Court’s 1946 decision in Zap v. U.S., the OFCCP argued that Google waived its Fourth Amendment rights in their entirety when it agreed in the AIMS contract to give the government access to its records and other material relevant to the investigation and its compliance with EO 11246. Zap was a criminal case involving the FBI’s warrantless seizure of a falsified check that the defendant allegedly used to defraud the Navy on a cost-plus contract. The ALJ found a multitude of deficiencies with the OFCCP’s reliance on Zap. First, the Zap Court vacated its decision on rehearing and ordered the district court to dismiss the indictment. Second, Zap concerned administrative warrants, not administrative subpoenas, and the Court still required that the search be reasonable. Moreover, (1) the Zap Court did not find that the contractual agreement to make records available was a waiver of all Fourth Amendment protection;  (2) the portions of the decision on which OFCCP relies were dicta; (3) Zap was an early application of the exclusionary rule, and the law has changed since 1946; and (4) the Zap decision occurred less than a year after the end of World War II, and thus, the Court had motivation to affirm the conviction of a war profiteer who relied on what the Court viewed as a “technicality” to escape the consequences of defrauding the Navy.

More on point here was the Supreme Court’s 2017 decision in McLane Co., Inc. v. EEOC , where the Court found that Title VII grants the EEOC subpoena authority to obtain evidence “relevant to the charge under consideration.” Still the High Court ruled that relevance alone is not enough; an EEOC subpoena is not enforceable if it is too indefinite, is issued for an improper purpose (e.g., beyond the agency’s authority), or is unduly burdensome, the ALJ explained.

Portions of information requests unreasonable. Although the scope of judicial review in an administrative subpoena enforcement proceeding is quite narrow, the government must still show that: (1) Congress has granted the authority to investigate; (2) the applicable procedural requirements have been followed; and (3) the evidence is relevant and material to the investigation. While finding that the OFCCP was acting within its authority, the ALJ nevertheless found that portions of the agency’s requests were unreasonable, and thus, failed Fourth Amendment requirements.

Because the dispute here was based on an audit, rather than a pending complaint or charge, there was a vast amount of information that could potentially be relevant. “[The] OFCCP must search, not only for causes of the disparity that are actionable, but also those that are lawful. It is difficult to imagine a broader search in the employment law context,” the ALJ observed.

Under the OFCCP’s Directive 307, compensation investigations require an iterative process involving a wide range of experts, tools, sources, steps, and case-by-case adjustments as the OFCCP learns more, and the investigation must be tailored to the contractor’s compensation practices. Here, the agency identified two areas of focus: (1) data on factors relevant to compensation decisions; and (2) information going to a theory of causation for which it contends there are some indicators. This theory is that women, on average, are less successful negotiators that men, and that because Google negotiates starting pay women have entered Google’s workforce with lower pay relative to men. Further, raises during employment are based on existing pay rates, meaning that women’s lower pay at hire leads to ongoing pay disparity even for female employees who have worked at Google since the company was formed in 1998.

Information requests at issue. Turning to the information requests at issue, the ALJ first addressed the request for the September 1, 2014 snapshot, ruling that Google must provide it within 60 days after his order becomes final, with certain limitations described below. The OFCCP argued that an additional snapshot is relevant because it will show whether the same indications of a possible adverse impact violation existed over time, not just on the single day reflected on the September 1, 2015 snapshot. The ALJ found this request sufficiently relevant to meet the deferential standard that applies in the narrow Fourth Amendment review appropriate to administrative subpoenas. The OFCCP showed that Google managers exercise discretion on several compensation decisions. In addition, about 17,000 of the employees working for Google on September 1, 2014, also worked for Google on the date of the snapshot Google already provided for September 1, 2015. Also, the information sought pertained to a time when Google was performing the AIMS contract.

Yet, the ALJ modified the scope of the data that Google must to produce regarding the other requested information. Specifically, the judge ruled that the following:

  • The categories that the Office of Management and Budget approved and are listed in Item 19 of the scheduling letter are relevant, not burdensome, and must be included.
  • If OFCCP’s request includes categories concerning place of birth, citizenship, and visa status these (which it appeared not be requesting), its request for an order requiring them is denied.
  • Because the OFCCP has withdrawn the request for “any other factors related to compensation,” Google need not provide that information, but it may be in the company’s interest to volunteer it.
  • Google need not include information regarding job and salary histories in the September 1, 2014 snapshot. The OFCCP generally limits compliance review investigations to the two-year period preceding issuance of the scheduling letter, yet the agency here was seeking information that could in some cases go back to Google’s formation in 1998. As stated above, there was no evidence that Google was a government contractor prior to 2007, or that Google even had the requisite number of employees to be covered under Title VII when it first formed. The ALJ also found that the Supreme Court’s 2007 decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc. and the subsequent Lilly Ledbetter Fair Pay Act of 2009, which revises the statute of limitations as to Title VII compensation claims, had no bearing on the present case. In any event, the provision in the Federal Contract Compliance Manual (Directive 307) allowing OFCCP investigators to look back more than two years only when a potential continuing violation is at issue “does not imply that OFCCP investigators can look back across decades,” the judge wrote. The OFCCP should be able to accomplish its task by looking back three or four years, and if the agency finds discrimination consistent with its theory, it can look back somewhat further if it chooses, again consistent with the iterative approach in Directive 307. “Or perhaps, instead, it could conciliate with Google and arrive at a resolution that will compensate adversely affected employees promptly and correct the unlawful practices discovered,” the judge encouraged.
  • The OFCCP’s request for each employee’s date of birth was not relevant because age discrimination is not an area of enforcement within OFCCP’s authority.
  • The request for locality information is unduly burdensome because the single defining characteristic of all of the employees is that, on the date of the snapshot, the employee worked at Google’s Mountain View headquarters.
  • Google must include in the snapshot for September 1, 2014, responses to each of the other categories on OFCCP’s follow-up June 1, 2016 list for each employee within the headquarters affirmative action plan, to the extent that Google has that information within its possession, custody, or control.

Hacking concerns regarding employee contact information. As to the OFCCP’s request for the names and contact information for employees in the previously produced September 1, 2015 snapshot and the requested September 1, 2014 snapshot, the ALJ was persuaded that anecdotal information obtained from employees was relevant to OFCCP’s systemic adverse impact investigation. Even though ALJ Berlin found Wagner’s testimony credible, he said that Wagner could not know with certainty that Google’s managers were faithfully implementing Google’s policies and practice. In addition, the ALJ noted the Ninth Circuit’s recent decision in EEOC v. McLane Co., Inc. , where the court held as a matter of law that an EEOC subpoena for contact information was relevant to the EEOC’s investigation involving whether an individual charge of discrimination should be expanded to cover systemic disparate treatment.

Still, the ALJ found that OFCCP’s request for contact information to be unreasonable in that it is over-broad, intrusive on employee privacy, unduly burdensome, and insufficiently focused on obtaining the relevant information.

“My concern centers on to extent to which the employee contact information, once at OFCCP, will be secure from hacking, OFCCP employee misuse, and similar potential intrusions or disclosures,” the judge wrote. “OFCCP has already collected for 21,114 employees information such as name, date of birth, place of birth, citizenship status, visa status, salary, and stock grants. That information, if hacked or misused, could subject tens of thousands of employees to risk of identity theft, other fraud, or the improper public disclosure of private facts. Adding contact data, such as personal phone numbers and email addresses, increases the risk of harm to Google’s employees. The contact information could ease the efforts of malicious hackers or misdirected government employees.”

Even though Wipper testified that she was not aware of any data breaches sustained by the OFCCP, and that the agency gives “high priority” to data security, the ALJ pointed out the federal government generally, and the DOL in particular, are not immune to hacking or to the improper release of confidential, private materials about people involved in departmental investigations. Among the examples he cited were data breaches in 2015 at the Office of Personnel Management that resulted in the exposure of private, personally identifiable information (including, for example, fingerprints) for millions of current and former federal employees and applicants for federal employment. Moreover, [a]nyone alive today likely is aware of data breaches surrounding this country’s most recent Presidential election,” he wrote.  Indeed, the Department of Labor, of which OFCCP is a part, was recently attacked with ransomware, and even the DOL’s Office of Administrative Law judges has been hacked, he observed.

In addition, Google would likely have legal exposure to its employees if it unnecessarily revealed their private information. At the least, this intrusion into Google’s employees’ privacy might negatively impact its relationship with the impacted employees as well as Google’s reputation as an employer, and Google’s ability to recruit and retain the best employees.

To address these concerns, the ALJ ordered the OFCCP to: (1) take reasonable steps to protect the information it obtains, and (2) limit the number of employees whose contact information Google will supply. After receiving the Google’s second snapshot, the OFCCP may submit to Google the names of up to 5,000 employees from among those listed on either snapshot. Google must provide the OFCCP with a list organized by name, showing the personal address, personal telephone number, and personal email address for each of the employees whom the agency selected. The judge excused Google from providing any information that it does not have in its records. For follow-up interviews, the OFCCP was allowed to obtain from Google a second list of up to 3,000 additional names.

Adverse impact theory. The ALJ also expressed concern with the OFCCP’s adverse impact theory. Earlier this year, the Ninth Circuit, in Rizo v. Yovino, rejected an assertion that an employer’s use of prior salary in setting starting salaries at hire cannot be justified as a decision based on a factor other than sex and motivated by a legitimate business purpose. In light of this case precedent, the OFCCP’s proffered theory is that research shows that women proportionately are not as effective negotiators as men, and that this (rather than prior salaries) has resulted in the alleged sex-based wage disparity. However, the OFCCP spent two days with a group of investigators interviewing Google’s relevant executives and managers, and it has not established that Google engages in what most would consider negotiation when it sets starting salaries, the ALJ pointed out.  Moreover, the OFCCP essentially conceded, and the record showed, that Google does not negotiate starting salaries at all. Indeed, for many of these hires, the applicant never had a previous job. In cases were starting salaries are based on previous jobs or competing job offers, rates are determined by a compensation team that does not have knowledge of the applicants gender. The evidence on record also showed that promotions and merit increases are determined by non-objective means that do not factor in gender.

In any event, the record showed that the OFCCP has not taken sufficient steps to learn how Google’s compensation system works, identify actual policies and practices that might cause the disparity, and then craft focused requests for information that bears on these identified potential causes. Without such information, the requests become unreasonable: unfocused, irrelevant, and unduly burdensome, the ALJ noted.

Cost of Google’s efforts to provide requested information. The ALJ also spent a considerable portion of the order discussing Google’s economic capacity to comply with the OFCCP’s requests. When the audit began, Google had over 21,000 employees covered under its EO 11246-mandated affirmative action plan (AAP) for its Mountain View headquarters establishment, the ALJ noted, adding that “[t]his explains how the Google compliance review became the largest in the OFCCP’s Pacific Region. He also explained that, to collect and produce the information that Google did make available to the OFCCP, the contractor initially relied on its own employees in a litigation support unit. When extra help was needed, the company hired an outside contractor. In all, Google expended about 2,300 person hours on these tasks, with almost half of that time  spent on attorneys, including outside counsel, who reviewed the materials to be certain that private employee information was properly protected. Making this task more complicated was Google’s practice, designed to protect employee privacy, of storing much information about individual applicants and employees in different locations and in ways that are intentionally difficult to access. Indeed, Google engineers had to develop tools to access the information OFCCP wanted. Although the OFCCP offered to do some of the work in accessing this data, the ALJ found that, even with security information from Google, it was not at all certain that OFCCP could have developed the needed scripts. The contractor produced nearly 1.3 million data points about its applicant flow; 400,000 to 500,000 data points on compensation; and 329,000 documents, totaling about 740,000 pages. The project cost Google about $500,000, a significant amount when compared to the $600,000 gross total that GSA paid Google under the AIMS contract from June 2014 through December 29, 2016, the ALJ stated.

Moreover, the burdens at issue were not merely financial; Google’s compliance with the OFCCP’s earlier demands hindered its normal operations, and the additional steps that required in the ALJ’s present order will add to that burden, the judge noted.

Offer of conciliation must accompany any further information requests. Finally, the ALJ ordered that, before re-asserting its requests for job and salary history or any similar request, the OFCCP must offer to engage with Google in meaningful, good faith conciliation to resolve any dispute, including by showing why the information sought is reasonable, relevant, focused, and not unduly burdensome. If Google offers information that tends to show the request is unreasonable, irrelevant, unfocused, or unduly burdensome, the OFCCP must consider Google’s information, determine whether it is accurate, determine how it affects the relevance of the request or the burden of compliance, modify the request if appropriate, and only then may the agency go forward with the request. If Google chooses not conciliate or does not conciliate in good faith, the OFCCP has fulfilled its conciliation obligation under the order.