FRITO-LAY DEFEATS THE OFCCP

by Art Gutman Ph.D., Professor, Florida Institute of Technology

On July 23, 2010, Administrative Law Judge Larry W. Price supported Frito-Lay on an issue that is critical to all DCI clients. The facts in this case are as follows. The OFCCP selected the Frito Lay Dallas Baked Snack facility for a compliance review and sent the standard scheduling letter. Item 10 of the scheduling letter specifically asks for information pertaining to applicants and hiring. More specifically, Item 10 requests:

Data on your employment activity (applicants, hires, promotions and terminations) for the preceding AAP year and, if you are six months or more into your current AAP year when you receive this listing, for the current AAP year.

Because Frito Lay was six months or more into its plan year, it sent the required 12 months (June of 2006 through May of 2007) of applicant flow data for the annual plan and the required six months of update data (June of 2007 through December of 2007). OFCCP conducted a desk audit review and identified “adverse impact” in the supplied applicant flow data. As a result, on November 10, 2009, OFCCP requested that Frito Lay supply more recent applicant and hire data from January 1, 2008 through October 31, 2009. Frito-Lay refused and the OFCCP filed an administrative complaint.

As stated in the ALJ Price’s ruling:

The issue before the Court is whether the temporal scope of the desk audit phase of a compliance review can be extended beyond the date that the contractor received its Scheduling Letter

Short and Sweet --- the answer is NO!!!. In the words of ALJ Price:

In summary, I find that the EO, regulations, case law and the FCCM contemplate that the temporal scope of the desk audit phase of a compliance review cannot be extended beyond the date that the contractor received its Scheduling Letter. Accordingly, Frito-Lay‟s Motion for Summary Decision should be granted.

Here’s wondering if they can re-open the Bank of America case.

Some potential implications of this significant ruling include the following:

1. This ruling makes it clear that OFCCP can go back two years from the receipt of the scheduling letter. However, OFCCP cannot ask for additional data going forward once the scheduling letter has been received. This is a significant ruling for federal contractors as requests for additional data going forward have been a common practice for OFCCP in recent compliance evaluations.

2. The decision reduces potential back pay exposures in pending audits to the two year period preceding the audit notice.

3. Frito Lay cited language from OFCCP’s Federal Contract Compliance Manual (FCCM) as its justification for NOT submitting the additional data going forward. The OFCCP basically said that the FCCM is “old and outdated” and did not have to abide it. The judge thought otherwise and stuck to guidance in the FCCM. Note that OFCCP is currently reviewing and revising the FCCM, so it will be interesting to see what changes are made to relevant data-related sections.

4. It is important to note that OFCCP could open a new audit for the “post-audit” period, but that location would have to be selected again from the ‘neutral’ FCCS system

A CALL TO ABOLISH THE UNIFORM GUIDELINES

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In his recent invited address to the International Personnel Assessment Council (IPAC) (July 2010), SIOP Fellow Dr. Michael A. McDaniel gave seven specific reasons (or flaws) for abolishing of the Uniform Guidelines. Mike has made available his slides for his talk.

Briefly, the flaws are as follows:

Flaw #1: Too Much Emphasis on local validation studies
The arguments here is that the Uniform Guidelines were published before the situational specificity hypothesis was refuted, and that newer publications such as the APA Standards and the SIOP Principles recognize the futility of conducting local validation studies without large sample sizes.

Flaw #2: Ignoring Meta-Analytic Research
The argument here is that meta-analytic studies have demonstrated validity generalization of employment tests, and that the Uniform Guidelines have not been updated to reflect this research, whereas the Standards and Principles have.

Flaw #3: “Job Analysis – My Way or the Highway”
The argument here is that the Uniform Guidelines endorse a specific approach to job analysis for demonstrating content validity, whereas the Standards and Principles endorse a variety of approaches for demonstrating validity.

Flaw #4: The “Assassination” of Construct Validity
The argument here is that the Uniform Guidelines define construct validity in a way such that nobody will want to use it.

Flaw #5: A 1950’s Perspective of Separate Validity Methods
The argument here is that the Uniform Guidelines maintain an outdated “Trinitarian” view of methods of demonstrating validity (content, criterion & construct validity), with separate rules for each method. On the other hand, the Standards and Principals maintain a “Unitarian” approach in which different sources of evidence contribute to inferences drawn from selection procedures.

Flaw #6: The Diversity-Validity Dilemma
The argument here is that tests that best predict job performance tend to be the ones with the most race-based adverse impact, implying that diversity goals and merit selection are typically in conflict.

Flaw #7: The Uniform Guidelines offer recommendations on differential validity and differential prediction that are at odds with scientific knowledge and professional practice as codified in the Standards and Principles.

I’d like to thank Mike for sharing his thoughts and slides with us. I would add that there is no serious debate at this point that the Uniform Guidelines are outdated. Indeed, it is arguable that they were outdated in 1978, the year they were published. Several people (present company included) have cited many specific guidelines that have been struck down or reinterpreted in the courts. Furthermore, there is little doubt that the Standards and the Principles represent the most current thinking on test validity. Finally, Mike’s purpose in sharing with us is to elicit comments and criticisms. Please feel free to do so, both on the comment section at the end of this column and directly to Mike.

OFCCP ISSUES ANPRM SOLICITING COMMENTS ON UPDATING AAP REQUIREMENTS FOR PEOPLE WITH DISABILITIES

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

OFCCP has issued an Advanced Notice of Proposed Rulemaking (ANPRM) inviting the public to provide input on how the agency can strengthen the affirmative action requirements of the regulations implementing Section 503 of the Rehabilitation Act of 1973. The Section 503 regulations promote equal employment opportunity for applicants and employees with disabilities.

The ANPRM will be published in the Federal Register on July 23, 2010. All public comments must be received by September 21, 2010.

The Section 503 ANPRM is being published well ahead of schedule: based on the DOL's Spring 2010 Semi-Annual Agenda, which was issued in April, the ANPRM was slated to be published in December, 2010.

OFCCP is seeking comments on 18 listed items, including the following areas:

• Whether amended Section 503 regulations requiring contractors to collect self-identified disability information from applicants prior to an offer of employment would help contractors more effectively monitor their hiring practices with respect to applicants with disabilities


• What employment practices have been effective in recruiting, hiring, advancing and retaining qualified individuals with disabilities.


• What data are available that could be used to establish hiring goals and conduct utilization analyses of individuals with disabilities.


• How linkage agreements between federal contractors and organizations that focus on the employment of qualified individuals with disabilities can be strengthened to increase effectiveness.

Comments may be submitted through the Federal eRulemaking Portal, referencing RIN number 1250-AA02.

EO SURVEY 2.0 – IS IT COMING BACK?

by David Cohen, President, DCI Consulting Group

On July 10, 2010 Secretary of Labor Hilda Solis announced that the OFCCP will publish an Advanced Notice of Proposed Rulemaking (ANPM) early next year that will seek input from stakeholders on how to improve the Equal Opportunity (EO) survey. For those of you that are not familiar with the EO Survey, it was developed and implemented during the Clinton administration in the late 90’s. The information to be filled out by the contractor was establishment specific and the goal of the agency was to send out about 50,000 per year. It was estimated by OFCCP and approved by OMB that it would average approximately 21 hours to complete the survey. Contractors were given 45 days to fill out and return upon receipt.

Click here to read the full article about the EO Survey.

CALL FOR PASSAGE OF PAYCHECK FAIRNESS ACT (PFA)

by Art Gutman Ph.D., Professor, Florida Institute of Technology

There were two major calls on July 20, 2010 for the Senate to pass the PFA, one by President Obama, and one by Vice President Biden. The President called it a “common-sense bill” to ensure that men and women receive equal pay for equal work. The Vice President, speaking for a task force that includes officials from the DOL, EEOC, DOJ and OPM recommended that these agencies improve coordination and enforcement efforts. To that end, Labor Secretary Hilda Solis announced that the DOL will hire nearly 200 additional OFCCP staff to assist with the enforcement of its pay equity initiative. In addition, OFCCP will publish an Advanced Notice of Proposed Rulemaking early next year that will seek input from stakeholders on how to improve its EEO survey, to launch public education efforts by the Women’s Bureau with respect to its Equal Pay Checklist, create a revamped Equal Pay Employer Self-Audit tool, and hold an Equal Pay Research Summit.

Readers may recall that the House passed the PFA on August 1, 2008 as a companion bill to the Ledbetter Act. The Ledbetter Act was signed into law by President Obama on January 22, 2009, but the PFA has languished since that time. The text of the House Bill may be viewed here.

As written, the House bill amends the Equal Pay Act (EPA) of 1963 in five ways. First, it renames the factor other than sex (FOS) defense in the EPA to “bona fide factor other than sex (BFFOS) --- such as education, training or experience.” Also, as specified in the bill, the BFFOS defense borrows from the Title VII adverse impact defense, mandating that it:

(i) is not based upon or derived from a sex-based differential in compensation;
(ii) is job-related with respect to the position in question; and
(iii) is consistent with business necessity.

Also, as in Title VII adverse impact scenarios, the BFOS defense does not apply “where the employee demonstrates that an alternative employment practice exists that would serve the same business purpose without producing such differential and that the employer has refused to adopt such alternative practice.”

Second, the bill broadens the definition of “establishment” so that individuals are deemed to work for the same employer “at workplaces located in the same county or similar political subdivision of a State.”

Third, the bill changes wording relating to retaliation to explicitly incorporate the “opposition clause” (complaining about a practice) and the “participation clause” (filing an actual claim) from Title VII. There is also specific language proscribing retaliation by employers if an employee “has inquired about, discussed or disclosed the wages of the employee or another employee.”

Fourth, the bill extends the remedies in the EPA to be consistent with those in Title VII and the ADA. These include compensatory damages for pain and suffering and punitive damages “where the employee demonstrates that the employer acted with malice or reckless indifference.”

Fifth, the bill changes the procedures for class action lawsuits from currently existing “opt in” rules to “opt out” rules used in the Federal Rules for Civil Procedure, and used in Title VII.

These are major amendments to the EPA, and it will be interesting to see what, if any, modifications are made by the Senate.

ANOTHER REVERSE DISCRIMINATION FIREFIGHTER CASE

by Art Gutman Ph.D., Professor, Florida Institute of Technology

This one is Vivenzio v. City of Syracuse (2010 U.S. App. LEXIS 13464) decided by the 2nd Circuit on July 1, 2010. Neither side has won --- yet. Three white firefighters sued the City of Syracuse via Title VII, the 14th Amendment and New York State law because black applicants with lower test scores were selected ahead of them. The basis for selecting the lower scoring blacks was a consent decree fashioned in 1980 to settle two race discrimination claims pending at that time. The decree specified that the city would “on an interim basis” hire blacks who “successfully passed the applicable examinations” for 25% of all entry-level firefighter jobs until the percentage of black firefighters approximated the percentage of available blacks in the city’s labor pool. The issue here is was whether this goal has been satisfied.

District Court Judge Hurd granted summary judgment to the city on grounds that (1) the consent decree was never dissolved and (2) assuming even that the dissolve automatically, the goals were not met because the percentage of black firefighters was 16% in comparison to an adult black population in Syracuse of 25% (see 545 F. Supp. 2d 241). Circuit Court Judge Kearse agreed that the consent decree was a “legitimate nondiscriminatory reason” for preferring the black applicants, but that neither side presented relevant labor pool statistics from which to compare the percentage of black firefighters. The lower court ruling was therefore vacated and remanded.

However this case works out, it’s important to realize that the consent decree was nearly 28 years old at the time the case was initially tried. There must be many more like this one in various municipalities throughout the country.

SUPREME COURT TO REVIEW THIRD-PARTY RETALIATION CLAIM

by Art Gutman Ph.D., Professor, Florida Institute of Technology

On the final day of its 2009-2010 term, the U.S. Supreme Court agreed to review Thompson v. N. Am. Stainless LP (U.S., No. 09-291, cert. granted 6/29/10), in which Eric Thompson was fired after his fiancé, Miriam Regaldo, lodged a sex discrimination suit against North American Stainless. Thompson previously lost at both lower courts. The district court granted summary judgment for the defendant, a 3-judge panel of the 6th Circuit upheld the district court in a 2-1 decision, and 6th Circuit then upheld the 3-judge panel en banc in a 10-6 ruling. BNA provides an open document summary of the facts and history of this case. The question to be addressed by the Supreme Court is whether reprisal against a relative or close associate constitutes retaliation.

The defendant argued that Thompson’s termination was based on poor performance, and that Thompson himself had never opposed any employer policies, including Regaldo’s. Upon invitation from the Supreme Court, the Solicitor General, although agreeing that the case was mishandled, nevertheless opposed review of this case on two grounds: (1) there is no conflict among circuit courts on the issue in question and (2) Regal do, herself, should have lodged the claim. Thompson’s attorneys argued that the 6th Circuit ruling provides a “grotesque incentive” for employers to “adopt an express policy inflicting such reprisals.” They also argued that the EEOC Compliance Manual warns against reprisals for relatives and close associates.

Given prior friendly rulings for plaintiffs by the Supreme Court, it’s best to assume, in my opinion, that Thompson will prevail.

STATE OF GEORGIA AGREES TO SETTLEMENT IN AN ADEA CLAIM

by Art Gutman Ph.D., Professor, Florida Institute of Technology

On June 29, 2010, the EEOC announced that the State of Georgia agreed to pay 60K to settle an ADEA claim. The recipient is Margie Washington, who was terminated from her position of office manager after 25 years of service. The reason for noting this settlement is that the Supreme Court ruled 5-4 that the ADEA does not apply to state agencies in Kimel v. Board of Regents (2000) [528 US 62]. A similar ruling was rendered by the Supreme Court a year later in Bd. of Trustees of the University of Alabama v. Garrett (2001) [531 U.S. 356] with respect to the ADA. As a result individual plaintiffs such as Margie Washington have no private right to sue state agencies under the ADEA, and the same is true for ADA plaintiffs.

However, as decided by the Supreme Court in EEOC v. Waffle House (2002) [534 US 279], the EEOC has the independent right to sue state agencies for remedies on behalf of individual plaintiffs. The Waffle House ruling involved binding arbitration in the context of the ADA. Waffle House was then generalized to ADEA claims against state agencies by the 7th Circuit in EEOC v. Bd. of Regents of the University of Wisconsin (2002) [288 F.3d 296]). The settlement in favor of Margie Washington indicates that the EEOC will continue to pursue both ADEA and ADA claims on behalf of individual plaintiffs who, otherwise, do not have a private right to sue.

EEOC PRIVATE LETTER ON TITLE VII, ADEA & ADEA QUALIFICATION STANDARDS AND DISPARATE IMPACT

by Art Gutman Ph.D., Professor, Florida Institute of Technology

Using the Freedom of Information Act (FOIA), BNA has obtained a private letter “to respond to a request for public comment from a federal agency or department. The EEOC notes that the letter represents “an informal discussion of the noted issue and does not constitute an official opinion of the Commission.” The letter in its entirety may be viewed here.

The letter, dated May 19, 2010 addresses whether:

it is potentially a legal problem” to require a job applicant to possess knowledge, skills, or abilities (KSAs) that can be acquired or mastered in eight or fewer hours in order to be hired for a job. You are particularly concerned about the possible adverse impact that such requirements may have.

The EEOC’s response includes the caveat that any facially neutral practice that has a significant disparate impact on a protected group is illegal unless the practice is “job related and consistent with a business necessity.” The EEOC also states that even if the practice is job-related and consistent with business necessity, the employer may nonetheless be liable if there is an alternative practice “that would be equally effective in predicting job performance, but that would not disproportionately exclude the protected group.”

So far … nothing new.

The EEOC’s answer to the question seems soothing. It is:

We know of no reason to think that a KSA would have an unlawful disparate impact on the bases of race, sex, color, national origin, religion, age, or disability simply because it would take fewer than eight hours to learn it. To the contrary, we think it highly unlikely that impact could be established on this basis alone. The reason for the policy or the availability of less discriminatory alternatives or reasonable accommodations would arise only if impact were established.

However, I would caution readers to read between the lines. The EEOC says they “know of no reason” why there would be “unlawful disparate impact simply because it would take fewer than eight hours to learn it.” I can think of some. For example, it might take an assembler less than 8 hours to learn to use a microscope to inspect wafer products for imperfections. A test of this ability (which the author happened to create for a large southeastern semiconductor company in 1991) could easily produce adverse impact, and therefore, would have to be validated. Just my opinion … but this letter carries no “formal” value, and should be read for what it is --- a hypothetical answer to a hypothetical question.

OFCCP SETTLEMENT REVIEW IN INDUSTRIAL-ORGANIZATIONAL PSYCHOLOGY JOURNAL

by Art Gutman Ph.D., Professor, Florida Institute of Technology

Art Gutman reviewed the administrative law judge ruling in favor of OFCCP/against Bank of America here in February 2010. Gutman and Dunleavy have written a more detailed review of the ruling and consideration of some potential implications. The article was published in the July 2010 version of The Industrial-Organizational Psychologist (p. 73-80). If you have any questions or comments about the article or the ruling feel free to use the comments section below to exchange ideas.

PRESIDENT, TASK FORCE EMPHASIZE PAYCHECK FAIRNESS ACT EFFORTS

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

At a White House Middle Class Task Force forum today, U.S. Secretary of Labor Hilda L. Solis announced new initiatives aimed at addressing pay equity and wage discrimination.

Of particular interest to Federal contractors was the announcement that OFCCP will be publishing an Advanced Notice of Proposed Rulemaking in early 2011 to seek input on how to improve the Equal Opportunity Survey.

In related news, President Obama today called on the U.S. Senate to pass the Paycheck Fairness Act. The Senate bill includes a provision to reinstate the Equal Opportunity Survey and would expand OFCCP's ability to investigate and enforce identified pay discrimination against women.

If the Paycheck Fairness Act were to be defeated- or passed with altered language removing the EO Survey provision- OFCCP could still reinstate the survey, but the agency would be forced to go through a more lengthy rulemaking and approval process to do so.

DCI RELEASES WHITE PAPER SERIES ON ADVERSE IMPACT ANALYSIS

by David Cohen, President, DCI Consulting Group

The landscape of Affirmative Action and Equal Employment Opportunity has changed in recent years due to updated EEO laws and innovative new enforcement agency strategies.

One recent change that has had significant implications for the EEO community is the implementation of systemic discrimination initiatives at major enforcement agencies like the EEOC and OFCCP. These initiatives have generally focused on identifying and eliminating discrimination that affects a large class of victims, often via organizational policies and practices like hiring, compensation, termination, etc.

DCI is pleased to introduce a series of white papers written by DCI staff on the topic of adverse impact analysis. These papers are intended to introduce the concept of adverse impact, review history, provide reference for the data management and statistical issues involved in impact analyses, and offer strategies for conducting analyses that mirror the reality of employment decision-making.

The series includes the following papers:

• A Historical Primer on Adverse Impact



• Disposition Codes and Implications for Adverse Impact



• Statistical Significance Testing for Adverse Impact Measurement



• Practical Significance Testing for Adverse Impact Measurement



• A Case Law Review of Adverse Impact Measurement