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Contractors say OFCCP audit selection violated their 4th Amendment rights

By Cynthia L. Hackerott, J.D.

Six subsidiaries of Entergy Corporation have filed a federal court complaint alleging that the manner in which the OFCCP selected 11 of their establishments for compliance reviews violated their Fourth Amendment rights to be free from “unreasonable searches and seizures.” They are seeking review of a May 2014 decision by the Department of Labor’s (DOL) Administrative Review Board (ARB) which held that only the OFCCP, and not federal contractors such as the plaintiffs, can initiate an action with the DOL’s  Office of Administrative Law Judges (OALJ).

In their complaint, filed in the Eastern District of Louisiana on July 1, the plaintiffs, including lead plaintiff Entergy Services, Inc. (collectively, “Entergy”), claim that the OFCCP violated the Fourth Amendment by selecting the establishments at issue for potential audit in May 2012, without reference to a “neutral administrative plan” and without evidence of a current violation of any of the laws enforced by the agency — Executive Order (EO) 11246, Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 — or corresponding regulations.

As to relief, the plaintiffs ask the court to vacate the ARB’s ruling and remand the matter back to the department for a hearing and consideration of the plaintiffs’ claims for declaratory relief on the merits. In the alternative, the plaintiffs request that the court itself consider their claims for declaratory relief on the merits.

Factual allegations. On October 26, 2012, the plaintiffs filed an administrative complaint with the OALJ seeking declaratory relief, on Fourth Amendment grounds, from compliance reviews at 12 of their establishments selected for potential audit by the OFCCP in May 2012. According to the federal court complaint, a present and actual controversy existed, and continues to exist, between Entergy and the agency because the OFCCP has sent Notices to Show Cause for 11 of the 12 establishments selected for potential audit, thus putting in controversy 11 attempted audits at Entergy establishments. Moreover, the complaint points out that two of these establishments have been selected to undergo a special form of OFCCP audit known as a Corporate Management Compliance Evaluation (CMCE) that must include an onsite inspection pursuant to longstanding OFCCP practice.

In addition, the court complaint states that the plaintiffs “noticed several anomalies in the sites OFCCP selected for potential audit” that were contrary the agency’s “longstanding practices.” For example, four Entergy establishments with fewer than 50 employees received an audit scheduling letter and the headquarters establishment for Entergy Systems received an audit scheduling letter even though the agency administratively closed an audit, with a finding of full compliance, at that establishment less than two years prior.

The plaintiffs further assert in the court complaint that “a spike to 11 expensive and burdensome OFCCP audits in one 12- month period was unprecedented in Entergy’s history with OFCCP during which Entergy System companies rarely collectively received more than one or two audits per year and in some years received none.” The complaint also notes that the plaintiffs objected to each of the OFCCP’s audit Scheduling Letters and requested that the agency administratively close the audits. They also contacted the OFCCP’s national office in Washington, D.C. on July 10 and July 25, 2012, seeking a meeting to express their concerns, but the agency refused to meet with them about the selection process and, to date, has not closed any of the audits.

According to the plaintiffs, the agency has also refused to advise Entergy of either the neutral administrative plan which led the OFCCP to schedule the audits at issue or to advise Entergy of the evidence the OFCCP had, if any, that the plaintiffs engaged in conduct that violated one or more of the laws or regulations enforced by the OFCCP. To date, the OFCCP has not filed an administrative complaint as to any of the 11 Notices to Show Cause at issue, the court compliant states.

ALJ ruling. On November 27, 2012, ALJ Stephen Purcell dismissed Entergy’s administrative complaint for lack of subject matter jurisdiction (ALJ No 2013-OFC-1). The ALJ determined that the contractor’s arguments asserting that the OALJ had subject matter jurisdiction over the action, pursuant to the Administrative Procedure Act and the regulations governing the adjudication of OFCCP matters before the OALJ, were unavailing.

ARB ruling. On December 12, 2012, Entergy appealed the ALJ’s ruling to the ARB. Deciding that the ALJ correctly determined that Entergy’s complaint for declaratory relief was not properly before the OALJ, the ARB found no authorization in the laws enforced by the OFCCP or their implementing regulations empowering any party other than the OFCCP, represented by the DOL Solicitor’s Office, to file a complaint under these laws (ARB No 13-025).