OMB CONCLUDES REVIEW OF OFCCP'S NOTICE TO RESCIND COMPENSATION STANDARDS AND GUIDELINES

On December 21, 2010, the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) concluded its review of OFCCP's "Notice of Proposed Rescission, Interpreting Nondiscrimination Requirements of Executive Order 11246 With Respect to Systemic Compensation Discrimination and Voluntary Guidelines for Self-Evaluation." This indicates that the notice should be published in the Federal Register in the near future.

OFCCP RELEASES FALL 2010 SEMI-ANNUAL REGULATORY AGENDA

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

OFCCP and other U.S. Department of Labor (DOL) agencies published their Fall 2010 regulatory agendas on December 20, 2010. The agenda is published twice a year and includes planned rulemaking actions for the agency for the next 6-12 months.

OFCCP included four items in the Fall 2010 agenda:

Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors; Evaluation of Recruitment and Placement Results Under the VEVRAA of 1974, As Amended

This will be a Notice of Proposed Rulemaking (NPRM) updating the AAP regulations for covered veterans, requiring contractors to "conduct more substantive analyses of recruitment and placement actions taken under VEVRAA and would require the use of numerical targets to measure the effectiveness of affirmative action efforts." This NPRM is carried over from the Spring 2010 agenda (which listed an original target date of December 2010), and now has a target publication date of January 2011, with the public comment period to end in April 2011.

Non Discrimination In Compensation: Compensation Data Collection Tool

This will be an Advanced Notice of Proposed Rulemaking (ANPRM) "will seek input from stakeholders on issues relating to the scope, content, and format" of a new data collection tool that contractors would be required to use, similar to the previous Equal Opportunity Survey. OFCCP is hoping to use the tool to identify contractors that are likely to violate Executive Order 11246 with regard to compensation, and is considering using the tool to "conduct establishment-specific, contractor-wide, and industry-wide analyses." This ANPRM is targeted for publication in February 2011.

Construction Contractor Affirmative Action Requirements

This will be an NPRM updating the regulations at 41 CFR 60-4, covering AAPs for construction contractors. The NPRM is slated for publication in July 2011.

Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors: Evaluation of Recruitment and Placement Results Under Section 503

This NPRM follows the ANPRM that was published on July 23, 2010, seeking input on updating the AAP regulations for individuals with a disability under Section 503 of the Rehabilitation Act of 1973. In the agenda listing, OFCCP states that the upcoming NPRM would "amend the regulations to require that Federal contractors and subcontractors increase linkages and conduct more substantive analyses of recruitment and placement actions taken under section 503" and "make revisions to recordkeeping requirements." Conspicuously absent from that description- given the extensive language in July's ANPRM and the comparable description of the VEVRAA NPRM updates above- is any reference to numerical targets or quantitative analyses involving availability data for persons with a disability. This omission, paired with recent news that the upcoming 2010 Census Special EEO File apparently will not contain disability data from the American Community Survey (ACS), may mean that the proposed "utilization analysis" AAP requirement for employees with a disability may not be part of the proposed updates to the Section 503 regulations when they are released. This NPRM is targeted for publication in August 2011.

OFCCP will be conducting a live web chat to discuss the regulatory agenda and answer questions from the public on Friday, January 7, 2011 at 1:30 PM EST.

OFCCP RESCINDS ACTIVE CASE MANAGEMENT DIRECTIVE

OFCCP Director Patricia Shiu officially discontinued the agency's Active Case Management (ACM) process on December 2, 2010 by rescinding Directive Number 285 as recommended by the National Equal Pay Enforcement Task Force in July, 2010. The Task Force reported to President Obama and was comprised of the Equal Employment Opportunity Commission (EEOC), the Department of Justice (DOJ), the Department of Labor (DOL), and the Office of Personnel Management (OPM).

The ACM process, which was detailed in Directive Number 285 issued on September 17, 2008 but actually had been adopted by the agency back in 2003, was designed to concentrate agency resources on identifying and remedying cases of systemic discrimination (defined as cases with a potential affected class of 10 or more people) and enable the agency to conduct compliance evaluations as efficiently as possible.

Included in the 2008 ACM directive as "quality control" measures were stipulations that full desk audits would be performed in every 25th review, and onsite evaluations in every 50th review. These evaluations were performed whether or not any indicators of discrimination were identified during the initial review of submitted desk audit information.

Director Shiu's rescission notice stated that although "ACM has identified a number of systemic cases since its implementation," the process "caused OFCCP to narrow [its] focus... and has eroded OFCCP's enforcement authority."

Rescinding the ACM directive continues OFCCP's recent efforts to reverse policies that were established under the previous administration, including:

• Rescinding the 2006 interpretive standards and voluntary guidelines on evaluating systemic compensation discrimination;
• Implementing Executive Order 13496 requirements, which replaced the Executive Order 13201 requirements from 2005; and
• Plans to publish an Advanced Notice of Proposed Rulemaking (ANPRM) in early 2011 for the purpose of reinstating the Equal Opportunity (EO) Survey that was rescinded in 2006.

THIRD CIRCUIT FAVORS AGGREGATION OF DATA IN CALCULATING ADVERSE IMPACT

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

The case is Stagi v. AMTRAK (2010 U.S. App. Lexis 17261, 8/16/10) in which a class of women alleged that a policy of requiring union employees to have one year of service in a current position before being promoted to a management position adversely impacted previously laid off women, a policy termed a “one-year blocking rule.” The case was filed by two named plaintiffs, both of whom were in management positions when their jobs were eliminated. Both women applied for management positions in the year following their layoff, and both were prevented from doing so and had to accept “bump down” positions based on their seniority. The case itself features a battle of experts. The plaintiff’s expert (Dr. Killingworth) found adverse impact when he aggregated data from 716 feeder pools into a large aggregated pool, whereas AMTRAK’s expert (Dr. Griffin) found no adverse impact by analyzing each individual feeder pool. The District Court for the Eastern District of Pennsylvania granted summary judgment for AMTRAK, ruling that the plaintiff’s evidence of adverse impact lacked both statistical and practical significance (U.S. Dist. LEXIS 71207, 8/12/09). In reversing the district court, the 3rd Circuit ruled:

Although it was a close case, the district court should not have granted the employer's motion for summary judgment. The employees' expert's decision to aggregate the data, although not obviously correct, was also not obviously incorrect, and so there remained a genuine issue of material fact--whether the one-year rule caused a disparate impact on the employer's female employees.

The 3rd Circuit cited “good reasons” for aggregating the data as opposed to “picking and choosing a model which will generate the most favorable results for the plaintiffs’ case” and that there is “no compelling reason” to not use aggregated data. The 3rd Circuit also noted that increased numbers makes it more likely to exclude chance as a cause of adverse impact. The 3rd Circuit cited other cases in which compelling arguments for aggregating data were made (Lilly v. Harris-Teeter Supermarket (CA4, 1983), Eldredge v. Carpenters (CA9 1987), Cook v. Boorstin (CA DC 1985) & Capaci v. Katz & Besthoff (CA5 1983). Obviously, these are older cases. Thus, we should stay tuned to other cases on this issue as they emerge.

AKAI SECURITY AGREES TO 1.62 MILLION DOLLAR SETTLEMENT IN CLASS ACTION PREGNANCY DISCRIMINATION SUIT

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

The EEOC announced on 12/1/10 that Akai Security, the the largest provider of contract security services to the federal government, will pay $1.62 million to a class of 26 female security guards, settling a pregnancy discrimination lawsuit filed by the EEOC. The EEOC alleged that beginning in 2004, Akai engaged in a pattern or practice of forcing pregnant contract security guards to take forced leaves of absence. They were also accused of subjecting pregnant women to less favorable terms and conditions of employment, including preventing them from completing their annual physical agility and firearms tests or forcing them to take such tests before their certifications had expired. Akal was also accused retaliating against one of the women who complained about the discrimination by filing baseless criminal charges against her. The suit was filed in 2008 (EEOC v, Akai Security, Inc., Case No. 08-1274-JTM-KMH), and the class includes 26 women. Usually, pregnancy discrimination cases involve single cases. As far as we can tell, this is the first class action pregnancy discrimination case since the 1970s (i.e., before the Pregnancy Discrimination Act of 1978).

LEDBETTER ACT DOES NOT APPLY TO PENSION CHECKS

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

In a ruling on an issue of first impression, the EEOC ruled on November 30, 2010 that the Ledbetter Act does not apply to pension checks (Brakeall v. EPA, EEOC, No. 0120093805, 11/30/10). The facts are as follows. Carol Brakeall starting working for the Environmental Protection Agency (EPA) in 1990 as a GS-13. She was promoted to branch chief in 1994, but remained at GS-13. In 2009, after her final paycheck, Brakeall complained to an EEO officer that she was the only woman working as a branch chief, and all other branch chiefs were at GS-15. There are two rulings here. First, the EEOC noted that Brakeall “reasonably suspected discrimination during her employment with the Agency.” Therefore, her complaint would be untimely even if discrimination occurred. Second, and more importantly for present purposes, the EEOC ruled “the record reflects that Complainant reasonably suspected discrimination during her employment with the Agency.” Thus, although there is a continuing violation in the Ledbetter Act for each paycheck (assuming a discriminatory act), there is no such violation with each pension check.

SUPREME COURT TO REVIEW DUKES V. WAL-MART

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

Not surprisingly, the Supreme Court agreed to review the 9th Circuit en banc ruling in Dukes v. Wal-Mart (Wal-Mart Stores Inc. v. Dukes, U.S., No. 10-277, cert. granted 12/6/10). The case was initiated by six named female plaintiffs filed on June 8, 2001. The plaintiffs claimed that (1) women are paid less then men in comparable positions even when women have higher performance rating and more seniority and, and (2) that they are they less likely to be promoted and wait longer for their promotions than men. The plaintiffs charged that: "Wal-Mart’s strong, centralized structure fosters or facilitates gender stereotyping and discrimination, that the policies and practices underlying this discriminatory treatment are consistent throughout Wal-Mart stores, and that this discrimination is common to all women who work or have worked in Wal-Mart stores.”

The plaintiffs sought to certify a class of women working at any Wal-Mart store on or after December 26, 1998. Since Wal-Mart had 3,400 stores in 41 regions, the estimated size of the class in the original claim was approximately 1.5 to 1.6 million women. In 2004, the District Court for the Northern District of California certified a proposed class of females on issues relating to alleged discrimination, including liability for punitive damages, injunctive relief, and declaratory relief, but rejected a proposed class for back pay determination. In 2007, a three-judge panel of the 9th Circuit ruled 2 to 1 to affirm the district court ruling. Wal-Mart then appealed for the en banc review, in which a 6-5 majority ruled that Rule 23 was satisfied for injunctive relief, declaratory relief, and back pay, for females employed at Wal-Mart on or after June 8, 2001 (approximately 500,000 females), but remanded to the district court regardind a separate class of current female employees seeking punitive damages relating to the promotion claims and a separate class of female employees no longer working at Wal-Mart at the time the suit was filed.

The five dissenting judges argued that the majority rulings were “made with virtually no analysis” and is “wrong both as a matter of law and fact”, and that it establishes a split among circuit courts.

As reported by BNA:

The court limited review to the first question raised in Wal-Mart's petition: whether claims for monetary relief can be certified under Rule 23(b)(2) of the Federal Rules of Civil Procedure, or instead are limited to suits seeking injunctive and declaratory relief, and if so under what circumstances. The justices also asked the parties to address whether the class certification ordered under Rule 23(b)(2) is “consistent with Rule 23(a)” of the Federal Rules of Civil Procedure.

The ruling in this case will have implications for several other cases, most notably, Velez v. Novartis Corp., in which a jury nearly 3.4 million dollars to 12 named female plaintiffs after a 5-week trial in front of District Court Judge Colleen McMahon of the Southern District of New York, and four days later, awarded 250 million dollars in punitive damages for a class of 5,600 current or former female sales reps employed between 2002 and 2007.

OFCCP SUES MEYER TOOL, INC. FOR SYSTEMIC DISCRIMINATION AGAINST AFRICAN AMERICANS

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

In a release dated 11/23/10, the OFCCP filed an administrative complaint against Meyer Tool. Meyer Tool is a federal contractor that manufactures engine parts for the aerospace industry and has a 176.1 million prime contract with the Department of Defense. The company is located in Ohio and has 1,000 employees in Cincinnati and northern Kentucky. The complaint alleges that there were statistical indicators of adverse impact against black applicants for entry-level machinist positions between January 1, 2004 and December 31, 2004. In particular, the OFCCP alleges that the difference in selection rates for whites and blacks was 3.48 standard deviations. According to BNA, the DOL estimated the class size at “over 50”. The complaint also alleges failure to comply with recordkeeping, applicant tracking, and affirmative action obligations under Executive Order 11246 and its implementing regulations at 41 C.F.R. Part 60.

The OFCCP reviewed Meyer Tool’s Cincinnati facility beginning in March 2005 and conducted an onsite review in February 2008. A predetermination notice was filed with the company in March 2008, and a notice of violations was made in April 2008. Subsequent negotiations between OFCCP and Meyer Tool failed to elicit a settlement. The complaint seeks remedies, including lost wages (and interest) for the affect class and for Meyer Tool to hire at least 14 class members. The OFCCP threatened potential sanctions against Meyer Tool, including cancellation of current contract and debarment from future contracts.

What’s not clear from either OFCCP or BNA reports, or the text of the complaint (case number 2011-OFC-3) is what the cause was of the alleged adverse impact.

OFCCP SENDS FALL CSAL NOTICES TO FEDERAL CONTRACTORS THIS WEEK

DCI has learned that this week, federal contractors are beginning to receive Corporate Scheduling Announcement Letters (CSALs) addressed to the chief executive officers at their corporate headquarters locations, including lists of their establishments that have been identified for potential scheduling of compliance reviews during Fall 2011 of OFCCP's fiscal year.

For the past few years, OFCCP has sent CSALs to contractors in the Fall and Spring of each year when a contractor has at least two establishments that have been identified by the agency's Federal Contractor Selection System (FCSS) for possible scheduling of a compliance evaluation during the current scheduling cycle. The letter explains that the enclosed list is not all-inclusive, due to the possibility of additional establishments being scheduled as a result of a pre-award notice, conciliation agreement monitoring, an individual complaint, or other agency initiatives.

As in last year's letters, the Fall 2011 CSAL states that there will be no limit to the number of new compliance evaluations of a contractor's facilities that OFCCP will conduct during the fiscal year.