OPM & EEOC LAUNCH INITIATIVE TO REDUCE SEX-BASED PAY DISPARITIES IN GOVERNMENT

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

On August 16, 2011 OPM Director John Berry and EEOC Chair Jacqueline A. Berrien issued a memorandum to all civilian federal employees during EEOC's Examining Conflicts in Employment Law (EXCEL) conference in Baltimore. The memorandum promises “the most rigorous possible enforcement of our federal equal pay laws in federal sector employment” (see http://www.eeoc.gov/federal/memo_epa.cfm). The memorandum cites President Obama's 2010 State of the Union address, after which a National Equal Pay Enforcement Task Force representing collaboration between the OPM, EEOC, and the Departments of Labor and Justice was created. Also, in a proclamation issued by Obama on 7/2010, April 20 was declared “National Equal Pay Day”, since it marks the point in time when women’s wages catch up to men’s wages from the prior year. It was in that Proclamation that Obama requested the OPM and EEOC work together to “implement a strategy to improve the federal government's role as a model employer” (138 DLR AA-1, 7/20/10).

The Berry/Berrien memorandum cites findings from a 2009 GAO report showing that the “gender wage gap” decreased from 1998 to 2007 from 28 cents to 11 cents on the dollar. However, the GAO report also states that there remains a 7-cent gap after factors such as occupations, experience, and education levels are statistically controlled for.

The Berry/Berrien memorandum promises to rigorously enforce the Equal Pay Act, which requires equal pay for men and women for substantially equal work, including salary, overtime pay, bonuses, and all benefits. It also cites Title VII, which, among other things, proscribes pay discrimination based on race, color, religion, sex, and national origin. Berrien noted that “We cannot achieve our national commitment to equal employment opportunity until women are included as equal partners in every workplace, including the federal government” and that “the federal government should be a model employer in every regard—including equal pay.”

SEQUEL TO EEOC V. CINTAS

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

The purpose of this alert is to further explain the distinction between the McDonnell Douglas scenario for individual disparate treatment claims versus the Teamsters scenario for classwide pattern or practice claims.

The McDonnell Douglas scenario is also referenced in court cases as McDonnell-Burdine. It is so named after Supreme Court’s landmark ruling in McDonnell Douglas v. Green (1973) [422 U.S. 792], which established the scenario and a later ruling Texas Dept. of Community Affairs v. Burdine (1981) [450 US 248] in which the scenario was reaffirmed. In McDonnell v. Green, a black male (Percy Green) was legally engaged in civil rights activities during his prior employment at McDonnell Douglas. He participated in two illegal acts after a layoff: (1) a "stall-in", where cars parked to prevent employees from entering the plant, and (2) a "lock-in”, where an exit was padlocked to prevent employees from exiting the plant. When the company subsequently advertised for mechanics (Green's prior position), Green applied, was not rehired, and sued alleging race discrimination. The question reduced to whether Green was not rehired because of his legal civil rights activities prior to the layoff or his participation in illegal acts against the company after the layoff. To answer the question, the Supreme Court created the three-phase scenario depicted in the following table.

The McDonnell-Burdine Scenario

• Phase 1 - Plaintiff presents presumptive evidence of a violation: (protected group membership, qualification to perform the job, application for the job, rejection followed by continuation of the search)


• Phase 2 - Defendant must articulate a legitimate reason for the selection decision made in phase 1; proof is unnecessary (burden of production)


• Phase 3 - Plaintiff must provide direct or indirect evidence that the articulation by defendant in phase 2 is a pretext for discrimination (burden of persuasion)

The evidence in Phase 1 (also termed the “prima facie” phase) is light and presumptive. Or in Justice Powell’s words, Green had to establish the following:

(i) that he belongs to a racial minority; (ii) that he applied and was qualified for the job for which the employer was seeking applications; (iii) that, despite his qualifications, he was rejected; and (iv) that, after his rejection, the position remained open and the employer continued to seek applicants from persons of complainant's qualifications.

Green easily passed each step: (i) he was black; (ii) his qualifications were acknowledged based on his prior work; (iii) he was not rehired; and (iv) the search continued after Green was excluded. In other words, factual proof of a violation is not required in phase 1; only a presumption of a violation that is easy for the plaintiff to make and equally easy for the defendant to refute.

In phase 2 (also known as the “defense” phase), there is a production in response to the plaintiff’s presumptive evidence of a violation. In Powell’s words, "the burden then must shift to the employer to articulate some legitimate, nondiscriminatory reason for the employee's rejection." In other words, the defendant need only verbalize, without proving, a legal reason for the challenged selection decision. To pass its burden, McDonnell-Douglas articulated that Green was not rehired because of his involvement in illegal activities during the layoff.

That leaves the only burden of persuasion on the plaintiff in Phase 3 (also known as the “pretext” phase) to prove with direct or indirect evidence that the articulation in Phase 2 is not the true reason for the selection decision. In Justice Powell’s words:

Especially relevant to such a showing would be evidence that white employees involved in acts against petitioner of comparable seriousness to "stall-in" were nevertheless retained or rehired. ..... Other evidence ..... includes facts as to the petitioner's treatment of respondent during his prior term of employment; petitioner's reaction, if any, to respondent's legitimate civil rights actives; and petitioner's general policy and practice with respect to minority employment.

In this example, proof that similarly situated white workers also committed an illegal act but were nevertheless rehired would constitute indirect (or circumstantial) evidence, whereas proof of prior racially discriminatory acts against Green and other minorities (e.g., documents, eyewitnesses, etc.) constitutes direct evidence. Generally, most disparate treatment claims are resolved in Phase 3 based on indirect evidence. However, where there is direct evidence of a violation, the court may require a so-called “mixed-motive” instruction in which the direct evidence is taken as proof of a violation in Phase 1 and the defendant must prove, in kind, a legal reason for the selection decision. The mixed motive scenario, though a disparate treatment scenario itself, should not be confused with the McDonnell-Burdine scenario. By the way, ultimately, Percy Green could not prove pretext and lost.

The Teamsters scenario for pattern or practice claims is depicted in the next table below. Notice that it can involve both classwide and individual claims. This follows because classwide claims are always accompanied by individual claims, and those individual claims are resolved using McDonnell-Burdine rules. The pattern or practice scenario was established by the Supreme Court in the aforementioned Teamsters case, and Hazelwood School District v. US (1977) [433 US 299]. These two were companion cases decided on the same day. The Department of Justice (DOJ), which was at the time responsible for pattern or practice cases, prosecuted both cases, and won in Teamsters but lost in Hazelwood.

The Teamsters Scenario

• Phase 1 Plaintiff provides statistical evidence of underrepresentation of minorities/females in the workforce or overrepresentation minorities/females in less desirable jobs


• Phase 2 Defendant can use McDonnell-Burdine defense for pattern statistics; defense for individual claims generally follows McDonnell-Burdine rules


• Phase 3 Plaintiff's requirement for showing pretext is same as previously discussed for McDonnell-Burdine cases for both the overall claim and individuals claims

The pattern or practice scenario differs from McDonnell-Burdine primarily in Phase 1, which, for all intents and purposes requires either of two types of stock statistical comparisons: (1) underrepresentation of protected group members in the workforce as compared to a relevant labor pool (also known as “composition” statistics) or (2) overrepresentation within the company of protected class members in less desirable jobs (also known as “cross-job” disparities). Beyond that, the defendant must explain why such disparities exist in Phase 2 and plaintiffs must discredit the explanation in Phase 3.

The Teamsters case involved cross-job disparities. Prior to and beyond July 2, 1965, the effective date of Title VII, many blacks and Hispanics were "city drivers, " a lower paying (or less desirable) job, but none were "line drivers," a higher paying (or more desirable) job. Speaking for a unanimous Supreme Court, Justice Stewart ruled that the Government had the initial burden to present prima facie evidence of discrimination and the ultimate burden to persuade the court that the pattern or practice of discrimination was a "standard operating procedure." Or in Stewart’s words:

As the plaintiff, the Government bore the initial burden of making out a prima facie case of discrimination .... and because it alleged a system-wide pattern or practice of resistance to the full enjoyment of Title VII rights, the Government ultimately had to prove more than the mere occurrence of isolated or "accidental" or sporadic discriminatory acts. It had to establish by a preponderance of the evidence that racial discrimination was the company's standard operating procedure - the regular rather than the unusual practice.

This case was an easy victory based on the statistical evidence alone. Among 6,742 bus drivers, 1,828 were line drivers and 4,914 were city drivers. Collectively, 571 (or 8.5%) of all drivers were minorities. The key, however, was that for higher paying line driving job, there were only 13 minorities (or 2.2% out of 571), each hired after the lawsuit was filed. Thus, prior to the lawsuit, there was an inexorable zero for the better paying of two similar jobs. The defense argued that “statistics can never in and of themselves prove the existence of a pattern or practice of discrimination, or even establish a prima facie case shifting to the employer the burden of rebutting the inference raised by the figures”, to which Justice Stewart responded that Stewart responded that "gross" statistical disparities are "probative", and require "explanation", as in McDonnell-Burdine. And in this regard, Stewart ruled that the “company’s inability to rebut the inference of discrimination came not from the misuse of statistics, but from the inexorable zero.” In short, the Teamsters had a facially discriminatory policy that left no plausible legal explanation of why more than 500 minorities were segregated into the lower paying job, with none in the higher paying job.

Hazelwood is a landmark case because it illustrates what happens when there is a stock statistical disparity that falls far short of an “inexorable zero.” The Supreme Court therefore needed an operational definition of “gross” disparity, which it imported from Castaneda v. Partida (1977) [430 US 482], a case decided three months prior to Teamsters and Hazelwood. Castaneda was a pattern or practice jury pool case in which the charge was underrepresentation of Mexican Americans on jury pool in a county that was predominantly Mexican American.

An operational definition of gross disparity was not required in Teamsters because of the inexorable zero. However, a definition was required in Hazelwood, which lacked the inexorable zero. The charge was underrepresentation of black teachers in the workforce in comparison to availability of licensed black teachers in the relevant labor pool. The Hazelwood Court established rules for determining (a) how much of a disparity is necessary for a prima facie case, and (b) the relevant labor pool for assessing the alleged composition disparity (the percentage of adult Mexican-Americans in the county was 79.1% compared to 39% in the jury pool). The Castaneda Court accepted social scientific testimony to establish the now well-known two-standard deviation rule. Accordingly:

As a general rule for such large samples, if the difference between the expected value and the observed number is greater than two or three standard deviations, then the hypothesis that the jury drawing was random would be suspect to a social scientist.

The disparity between expected and observed Mexican-Americans in the jury pool was roughly 29 standard deviations, thus establishing the prima facie case.

Returning to Hazelwood, the charges in this case sounded as compelling as those in Teamsters. In the words of Justice Stewart:

The Government mounted its "pattern or practice" attack in the District Court upon four different fronts. It adduced evidence of (1) a history of alleged racial discriminatory practices, (2) statistical disparities in hiring, (3) standardless and largely subjective hiring practices, and (4) specific instances of alleged discrimination against 55 unsuccessful applicants for teaching jobs.

Ultimately, however, two factors favored the defendants. The first factor related to the question of the proper composition disparity. Prior to the EEO Act of 1972, which added Title VII coverage of public entities, only 0.6% of the teachers in the Hazelwood School District were black. This percentage grew to 1.8% in 1972, and to 3.7% at the time the suit was filed. The percentage of licensed black teachers in the Hazelwood School District was 5.7% as compared to 15.4% in the county as a whole, which included St. Louis. Statistically, the percentage of qualified black teachers hired when the suit was filed (3.7%) was significantly less than the percentage living in the county as a whole (15.4%), but was not significantly less than the percentage living within and around the Hazelwood School District (5.7%). Justice Stewart ruled that the relevant labor pool included only the immediate area surrounding the Hazelwood School District, and the DOJ lost because the disparity in question (3.7% vs. 5.7) was not statistically significant.

Even though the DOJ lost on the prima facie claim, the Supreme Court discussed a second factor, which was whether the defendant could explain the disparity relative to the entire county. Justice Stewart stated that assuming even that a prima facie case could be made, the defense had two legitimate articulations: (1) that competition from the city of St. Louis made it difficult to recruit black teachers; and (2) that the school district’s affirmative action plan significantly raised minority hiring rates after the EEO Act of 1972 was passed. Had the case proceeded past this point (to Phase 3), it would have been the DOJ’s burden to prove that these articulations were pretext.

There are three additional points to note. First, it easy to confuse pattern or practice with adverse impact because both involve classwide assertions based on statistical evidence. However, critically, in Title VII case law adverse impact cases rely on flow statistics (i.e., statistically significant disparities in selection ratios between minority or female applicants based on an identified selection test or procedure, whereas Title VII pattern or practice cases follow from the aforementioned stock statistical comparisons. Second, adding to the potential confusion, the two-standard deviation rule established in Castaneda has been incorporated into adverse impact as well as pattern or practice cases.

Lastly, when comparing title VII case law to OFCCP enforcement of Executive Order 11246, the difference between pattern or practice and adverse impact becomes ambiguous. Based on OFCCP conciliation agreements and consent decrees, it appears that OFCCP consistently applies a pattern or practice theory of discrimination to applicant flow disparities, particularly when a selection system is ambiguous and not clearly organized into specific steps that could be challenged under an adverse impact theory. For example, perhaps a hiring process is not organized into clear steps, but at some point work experience is evaluated subjectively and used as a pass/fail criterion. However, the employer only applies the experience requirement for female applicants and not for male applicants, and adverse impact exists for the overall selection system. In this scenario, applying a pattern and practice theory of discrimination may lead to a reasonable inference of discrimination (it isn’t an adverse impact scenario), yet this is not consistent with Title VII case law.

I could say more, but if you’ve gotten this far, you’ve shown incredible patience. If you want more on the adverse impact vs. pattern or practice issue, let me know.

EEOC ORDERED TO PAY 2.6 MILLION FOR DEFENDANT FEES AND COSTS IN EEOC V. CINTAS

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

In a ruling handed down on August 4, 2011, District Court Judge Sean F. Cox ordered the EEOC to pay 2.6 million dollars for attorneys’ fees and costs in the case of EEOC v. Cintas [2011 U.S. Dist. LEXIS 86228].

Déjà Vu? In March 2010, we reported that in EEOC v. CRST Van Expedited [2010 U.S. Dist. LEXIS 11125], a trial judge for the Northern District of Iowa struck down a pattern or practice sexual harassment claim on behalf of 68 women and awarded $4,004,371.65 in attorneys' fees and $463,071.25 in expenses to CRST. The crux of that ruling was that the EEOC investigated the claim of one woman, and filed the lawsuit before it knew of or investigated the claims of the other 67 women. The judge ruled that the EEOC used the discovery process to find the additional women, and therefore, “wholly abandoned its statutory duties as to the remaining 67 allegedly aggrieved persons in this case.” The judge also noted that the EEOC pursued a “sue first, ask questions later litigation strategy.”

The Cintas case is a complicated one with a 10-year history. It began when 13 female plaintiffs sued Cintas for sex discrimination. In December 2005, the EEOC intervened and filed a pattern or practice suit under Section 706 of Title VII. In September 2010, the court issued a summary judgment opinion that dismissed with prejudice all of EEOC's claims against Cintas for failure to exhaust administrative remedies, and at the same time, rejected the plaintiffs’ claims based on merits. For present purposes, the key issue is that the August 4, 2011 order for attorneys’ fees and costs is based on the EEOC’s failure to investigate the 13 individual claims, as well as its failure to “engage in any conciliation measures”, a requirement of Section 706.

There are related and more complicated issues at stake in both the CRST and Cintas cases as relates to pattern or practice lawsuits by the EEOC. Readers interested in the full complexity of these issues are directed to a presentation by Donald R. Livingston on “EEOC Pattern or Practice Litigation”, presented at the ABA National Conference on EEO Law in San Antonio, Texas in March 2010 (the text of which is available here).

For present purposes, the key issues involve Section 706 v. Section 707 of Title VII as relates to pattern or practice cases. Section 706 cases may be filed by the EEOC for equitable (e.g., back pay) and legal relief (e.g. compensatory and punitive damages), but the case must be tried under the McDonnell Douglas v. Green (1973) [422 U.S. 792] burden-shifting framework for individual claims of disparate treatment. The EEOC also has the alternative option of using Section 707, which permits the classwide type of burden shifting as in International Brotherhood v. Teamsters (1977) [431 U.S. 324]. Furthermore, Section 707 permits equitable and injunctive relief. However, it does not permit legal relief.

The bottom line for present purposes is that Judge Cox ruled that the EEOC could not use the Teamsters framework because of their failure to plead pattern or practice under Section 707. Therefore, EEOC had to use Section 706 rules and prove each case individually and McDonnell Douglas rules. Of course, the court had previously ruled that these individual cases lacked merit, and because the EEOC failed to investigate and conciliate in this case, Cintas was awarded the 2.6 million dollars.

2ND CIRCUIT VACATES AND REMANDS IN BRISCOE V. NEW HAVEN

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

I reported on the district court ruling on this case in a DCI Alert dated May 17, 2010. To refresh your memory, Michael Briscoe was an applicant for lieutenant in the Ricci v. DeStefano case [129 S. Ct. 2658 (2009)]. After the Supreme Court’s ruling, District Court Judge Janet Bond Arteton certified the promotions to lieutenant and captain based on the 2003 exams central to the Ricci case. Briscoe then lodged an adverse impact claim that was dismissed on April 28, 2010 by District Court Judge Charles S. Haight, Jr. Briscoe alleged that he should be able to sit for testing related to promotion to Director of Training scheduled for April 30 and May 1, 2010, a position open for lieutenants and captains. Biscoe claimed that he was eligible for the position on the basis that he would win his adverse impact claim.

Briscoe’s main beef was the 60-40 weighting for written versus oral tests. He was the top scorer among 77 applicants for lieutenant on the oral exam, but ranked 24th overall because of his poor performance on the written test. Briscoe claimed that a 70-30 oral versus written weighting “would be equally good or better at identifying the best-qualified candidates for promotion, and would have less disparate impact on racial minorities.”

Judge Haight ruled that Ricci precluded Briscoe’s claims because the City of New Haven was protected for making the promotions because it now had a strong basis in evidence for believing it would lose a disparate treatment claim if these promotions were not made. He emphasized that the proper times for Briscoe to challenge the weighting were in 2003, when the exams were administered, and in 2004, when the Ricci plaintiffs sued. He also stressed the narrowness of his ruling as follows:

It is important to emphasize the narrow boundaries of this opinion. I am concerned only with the effect of Ricci upon Briscoe's disparate-impact challenge to the 2003 examinations. That limited reach is dictated by the fact that the complaints of the Ricci plaintiffs and Briscoe relate solely to the 2003 examinations. Nothing in this opinion would foreclose or diminish the rights of Briscoe or any other firefighter to challenge a subsequent NHFD promotional examination on the same grounds that Briscoe seeks to assert in this case with respect to the 2003 examinations.

At the time, I opined that the central argument by Biscoe, though defeated by the district court in this particular case, was still “fair game” for future cases. Apparently, the argument still lives for the Briscoe case.

What’s particularly interesting in the appeals case is that the City abandoned its “preclusion” theory and argued instead that the “strong basis in evidence” test for disparate treatment applies equally to adverse impact claims. The City’s basis for this argument is from that part of the Supreme Court ruling in Ricci that states:

If, after it certifies the test results, the City faces a disparate-impact suit, then in light of our holding today it should be clear that the City would avoid disparate-impact liability based on the strong basis in evidence that, had it not certified the results, it would have been subject to disparate-treatment liability.

That seems like a fairly clear statement. However, a three-judge panel of the 2nd Circuit questioned the generality of this “one sentence dicta.” In an opinion written by Circuit Court Judge Dennis J. Jacobs, the court ruled:

The city characterizes this one sentence of dicta as establishing a symmetrical companion to Ricci's earlier holding that an employer may avoid disparate-treatment claims based on a "strong basis in evidence" of disparate-impact liability. That is, the city argues that an employer may defeat a disparate-impact claim if it had a strong basis in evidence that it would have been subject to disparate-treatment liability. The city argues that Briscoe's suit was properly dismissed not because it was precluded but because the Supreme Court's Ricci mandate itself supplied the strong basis in evidence of disparate-treatment liability (for not certifying the results).

Judge Jacobs conceded that Supreme Court anticipated Briscoe’s lawsuit. However, at the same time, he also ruled that to favor the City in this case, “we would have to conclude that the Supreme Court intended to effect a substantial change in Title VII disparate-impact litigation in a single sentence of dicta targeted only at the parties in this action”, to which he concluded that “Ricci did not substantially change Title VII disparate-impact litigation or preclusion principles in the single sentence of dicta targeted at the parties in this action. Jacobs then vacated the district court ruling and remanded, expressing “no view as to whether other issues … may warrant dismissal of the action, including relevant statutes of limitations, the doctrine of laches, or the unavailability of the requested relief because of Title VII'S anti-alteration provision (42 U.S.C. ß 2000e-2(l)).”

Clearly, this case is not over. However, it’s not clear where it goes from here. Stay tuned --- we will keep you abreast of any further actions in this case.

OFCCP TO ISSUE ANPRM FOR A NEW COMPENSATION DATA COLLECTION TOOL

Following the completed OMB review of OFCCP’s Advance Notice of Proposed Rulemaking (ANPRM) for a new Compensation Data Collection Tool, OFCCP will issue its ANPRM for the tool in the August 10, 2011 edition of the Federal Register. The agency notes that possible uses for the collected compensation data include:

• Generating insight into potential problems of compensation discrimination at the establishment level, that warrant further review or evaluation by OFCCP or contractor self-audit, and;


• To conduct analyses at the establishment level, as well as to identify and analyze industry trends, Federal contractors’ compensation practices, and potential equal employment-related issues.

The agency is seeking comments specifically addressing questions about the design and implementation of the new tool. Among the more interesting queries included in the ANPRM, are questions surrounding the following:

• Factors related to potential compensation discrimination (e.g., starting salary, pay raises, bonuses, etc.);


• Categories by which data should be collected (e.g., EEO-1 categories, AAP job groups, Standard Occupational Classification Codes, O*NET Occupational Classification Codes, etc.);


• Elements of compensation that should be collected (e.g., total W-2 earnings, base salary, holiday pay, shift differential, etc.);


• Types of trend analyses that would be appropriate to conduct on an industry-wide basis;


• Categories by which data could be collected for the purpose of nationwide multi-establishment reviews across contractor establishments;


• Design that would allow contractors to conduct self-assessments of their compensation decisions;


• Strengths and weaknesses of the 2000 EO Survey (a copy will be made available at www.regulations.gov);


• Factors to consider for requiring electronic data submission;


• Benefits and drawbacks for the possibility of requiring businesses that are bidding on future Federal contracts, to submit compensation data as part of the RFP process, which may be used for both trend analyses, as well as targeting contractors for post-award compliance reviews;


• Factors related to expanding the Compensation Data Collection Tool to include construction contractors, and;


• Potential impact on small businesses and possible alternatives strategies for implementing the tool.

Public comments on the ANPRM must be submitted by October 11, 2011.

DCI STAFF ATTEND 29TH ILG ANNUAL CONFERENCE HELD IN NEW ORLEANS

by David Cohen, Eric Dunleavy, Joanna Colosimo, Marcelle Clavette, Amanda Shapiro, Jana Moberg, and Eileen Curtayne, DCI Consulting Group

The 29th Annual National Conference for the Industry Liaison Group (ILG) was held July 25 – 29, 2011 in New Orleans, LA. This annual conference brings together members of the federal contracting community to discuss affirmative action and equal employment opportunity (EEO) issues and share information. 2011 proved to be an exciting and informative conference due to a flurry of change from OFCCP, with numerous regulatory items up for public comment and possible revision. DCI Consulting Group staff attended a variety of sessions during the conference. Session summaries and highlights can be found below:



Opening Ceremony: Speech from the Director of OFCCP - Patricia Shiu, OFCCP

You Can’t Un-Ring the Bell - David Fortney and Kathleen Raynsford, Fortney Scott and Jill Smith, WorkPlace HR

A New Day for Pay Discrimination Enforcement - Mickey Silberman, Jackson Lewis, LLP

Getting in Rhythm with OFCCP – Recent Significant Compliance Developments - John Fox, Fox Wang & Morgan

How Significant is Statistical Significance - A Practical Perspective - Alissa Horvitz and Joshua Roffman, Littler Mendelson

Regional Directors Panel - OFCCP Regional Directors: Melissa Speer, Michelle Hodge, Evelyn Teague, and Bill Smitherman

Academic Institutions as Federal Contractors – Exploring the Challenges in Compliance - Panel: Marilynn Schuyler, Schuyler Affirmative Action Practice; Christine Iijima Hall, Maricopa Community College; Judy Ferres, Boston College; and Lynette Chappell-Williams, Cornell University

Affirmative Action for People with Disabilities - George Kettner, Economic Systems, Inc.

Compensation Update - Pamela Coukos, Special Advisor, OFCCP

The Dangers of Social Media – How Employers Can avoid the Pitfalls of Social Networks - Lisa Harpe, Peopleclick Authoria and Christy Kiely, Hunton & Williams

Navigating the Landscape of OFCCP Compliance - Panel: David Cohen, Eric Dunleavy, Dan Biddle, David Fortney, Jon Geier, Joe Lakis, and Mickey Silberman






Opening Ceremony: Speech from the Director of OFCCP
Patricia Shiu, OFCCP

Patricia Shiu, OFCCP Director, opened the conference with a strong message to federal contractors that this administration intends to implement change, citing that the current administration was “No drama, Obama”. Director Shiu highlighted a variety of recent agency achievements, initiatives and goals, including:

OFCCP Achievements

• The addition of 200 new compliance officers and implementation of the first OFCCP national training program in a decade;


• More proactive outreach efforts to educate workers about OFFCP as a worker protection agency (Released a new FAAP Directive. For more information on this directive, see DCI’s Blog article on the new directive.

OFCCP Initiatives and Goals

• A revised compliance manual “on the brink of completion”;


• More thorough and focused compliance reviews related to disability, veteran status, and pay discrimination;


• An increased collaboration with the EEOC, DOJ and other agencies within the DOL;


• Reviewing public comments that were submitted related to VEVRAA and the numerical targets that were proposed for Veterans. Specifically, Shiu stated that the proposed numerical targets were sought after to provide a way of measuring progress that was less ambiguous than the current affirmative action methodologies. For more information, see DCI’s Blog article on proposed changes.


• The publication of a series of proposed revisions to Section 503 of the Rehabilitation Act of 1973 for public comment;


• Revising affirmative action obligations for the construction industry;


• Revising the Sex Discrimination Guidelines.

Emphasis was placed on pay discrimination issues, citing that women still earn 81 cents on the dollar as compared to men. Director Shiu also indicated that the OFCCP was still researching the use of a compensation data collection tool that would aid the agency in compensation enforcement. She also indicated that the agency would be issuing new guidance on compensation, in light of the proposed recession of the compensation guidelines. For more information, see DCI’s Blog article on the proposed compensation recession.

Shiu noteded that “discrimination is still a very real problem in our country,” and that affirmative action can no longer be defined by good faith efforts. Director Shiu ended her opening keynote address with sentiments that the OFCCP is working hard to encourage voluntary compliance efforts so that all workers can achieve the American dream, and encouraged a dialogue between the federal contract community and OFCCP to achieve equal employment opportunities for all workers.

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You Can’t Un-Ring the Bell
David Fortney and Kathleen Raynsford, Fortney Scott and Jill Smith, WorkPlace HR

The Fortney Scott/WorkPlace HR team presented on how to “take the right actions at the right time” during OFCCP compliance reviews and investigations. After highlighting some recent OFCCP enforcement activities, such as the Astra Zeneca compensation settlement (for more information, visit DCI’s Blog article on the ruling), David Fortney and his colleagues Kathleen Raynesford and Jill Smith noted some of the changes related to the OFCCP’s Active Case Enforcement (“ACE”) directive, which replaced the Active Case Management (“ACM”) directive. Specifically, the ACE directive may result in more aggressive compliance reviews for contractors. The presenters also stressed that under ACE OFCCP will:

• Audit compliance with Executive Order 13496 related to worker rights under the National Labor Relations Act;


• Review the contractor’s compliance history for 3 years; and


• No longer audit I-9 compliance.

The presentation also focused on some pitfalls that contractors may fall into during an OFCCP compliance review, as well as some helpful tips to help navigate through the audit process. Some common compliance mishaps noted by the presenters included:

• Not having job descriptions, or maintaining out of date job descriptions. The downside to not having updated or accurate job descriptions is that the contractor may be unable to articulate the basic requirements of a position;


• Not applying the OFFCP’s Internet Applicant Rule to adverse impact analyses;


• Placing the burden of compliance obligations on other individuals or departments in the organization, rather than having a compliance position or department take complete ownership of compliance issues;


• Not validating employee selection practices and procedures;


• Not reviewing hiring decisions for justification;


• Not following policies and procedures that have been established;


• Not knowing what factors affect pay and incorrectly categorizing employees related to compensation (salary grades, job titles, levels, etc.).

The team concluded with some helpful tips for contractors that could be used to aid compliance obligations in a time of heightened OFCCP enforcement. These included:

• Ensuring that the compliance position/department took ownership of all compliance related issues relevant to recruitment, classification, policy development, etc. This may include increased communication efforts and interjecting compliance into other facets of Human Resources and the organization. This also means holding other departments accountable for their AA obligations;


• Ensuring that all policies and procedures are aligned with EEO/AA obligations;


• Educating leadership on EEO/AA compliance issues;


• Staying updated on regulatory and OFCCP changes;


• Self-audit affirmative action data and plans, and take the appropriate corrective actions after identifying problem areas;


• When responding to the OFCCP during compliance reviews, ensure that the response accentuates the positive aspects of the EEO/AA program such as:


• Workforce diversity


• Goal attainment


• areas without statistically significant adverse impact


• Areas where reasonable accommodations have been provided


• Any Veteran or other AA outreach conducted;


• Explain any areas that may be regarded as negative such as challenges in outreach, or layoffs that may have occurred in the workforce.

The Fortney Scott/Workplace HR Team encouraged contractors to take the new regulatory atmosphere of the OFCCP seriously when implementing compliance in organizations. The presentation was helpful to contractors, reiterating that if the appropriate actions were taken ahead of time, contractors would be better prepared during OFCCP audits and investigations.

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A New Day for Pay Discrimination Enforcement
Mickey Silberman, Jackson Lewis, LLP

Mickey Silberman addressed the issue of compensation and the recent changes in OFCCP’s enforcement of pay discrimination. Silberman strongly emphasized that compensation is THE top priority for the agency.The shift in focus for the agency comes on the heels of President Obama’s promise to focus on pay equity enforcement and Secretary of Labor Hilda Solis’s goal of 20-40% of all OFCCP settlements to be focused on compensation. This is a major change from the past few years, where less than 15% of settlements focused on compensation. In 2008 there were no settlements involving alleged compensation discrimination and in 2009 there were only two. In 2010 there was a jump to 10 settlements involving compensation. Some key points from the presentation included:

• In 2011, OFCCP released a Public Notice for the proposed rescission of the 2006 Compensation Standards and Voluntary Guidelines. The agency believes these Standards and Guidelines are too rigid and wants more flexibility during pay investigations.


• Under a desk audit screening directive created under the Bush administration (now rescinded), the majority of contractors were screened out by the tipping point test (i.e., desk audit screen), resulting in a small percentage of contractors receiving an in-depth evaluation by OFCCP. With the proposed rescission and a new directive, much has changed for the evaluation of compensation data. The new directive introduced a new screening process, which is more of a screen-in tool that allows the agency to take a deep dive with each audit. This screen, or the 2 and 2 test, looks to see if there is a 2% or $2,000 difference in any pay grouping. Silberman and colleagues did a study of over 100 clients and found that 100% of them would fail the new screen. It is important to note that this screen will become a moot point if the proposed changes are made to the scheduling letter and the Standards are rescinded.


• Silberman referenced the speech by OFCCP Director Pat Shiu from the morning. She announced that OFCCP has heard the feedback from the contractor community surrounding the proposed rescission of the Standards and Guidelines. She promised that there will be guidance put in their place.


• Years of experience and previous salary are the strongest predictors of starting salary, and starting salary is the greatest predictor of current salary. Silberman noted that it is impossible to do a meaningful analysis without these variables, but most contractors do not have the data available in their HRIS.


• It is important to remember that you are required to pay everyone in a non-discriminatory manner, not necessarily equally.


• Silberman advised contractors that if performance drives pay in their compensation system, they must show performance data, which may be an issue for some HRIS. Data exist in fundamentally different forms than in the past and mining the data has changed.


• Silberman encouraged contractors to not submit by job group and to avoid using broad, generic job titles. Job titles that give the real picture of the job should be used and should not be applied to positions that are similar but different. Grouping jobs with different qualifications, tasks, and demands may lead to group differences in compensation analyses, which are not true differences but a result of incorrect categorization.

Silberman concluded by encouraging contractors to continue to do proactive analyses even though the current climate is uncertain. It important to be as best prepared for the unknown as well as preventing private class action suits. Finally, Silberman emphasized that if you can’t explain it (i.e., differences in pay), then fix it and make sure you do it under attorney-client privilege!

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Getting in Rhythm with OFCCP – Recent Significant Compliance Developments
John Fox, Fox Wang & Morgan

John Fox engaged contractors through his presentation titled “Getting in Rhythm with OFCCP – Recent Significant Compliance Developments.” While Mr. Fox’s overview addressed OFCCP’s recent activity related to compensation discrimination audit procedures reform, proposed regulations for Protected Veterans, and increased litigation, the majority of his presentation focused on some more up-to-date topics: the proposed new scheduling letter and the “hub-bub in Chicago.”

Per the process for obtaining OMB approval of an information collection, OFCCP published an ANPRM to request public comment on their proposed new scheduling letter. This comment period closed on July 11, 2011 with 18 submissions, a third of which were submitted by advocacy groups in favor of the letter as presented, sometimes even suggesting further obligations are required of contractors (e.g., reports of pay secrecy and arbitration polices). The number of comments was disappointing, according to Mr. Fox, especially in light of the 107 comments submitted for the proposed amendments of the Protected Veterans regulation. Mr. Fox urged contractors to take action on the issue by participating in the second, and final, comment period to be opened upon revisions made by OFCCP following any suggestions provided by OMB. He described the comment process as preparing evidence to take into trial; contractors have to take advantage of their right to shape rulemaking by presenting how it will affect their daily work.

In addition to voicing his concerns regarding the dearth of comments on the scheduling letter, Mr. Fox invited former Midwest Regional Director Sandy Zeigler and Deputy Shirley Thomas to speak on their recent retirement and the issue of the recalled scheduling letters sent to contractors on June 3, 2011. Ms. Zeigler expressed the desire to make it clear that the original scheduling letters were authorized for mailing and were not related to her decision to retire. Although there has been some concern by OFCCP that the original mass mailing of scheduling letters may have some implications for 4th Amendment rights.

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How Significant is Statistical Significance- A Practical Perspective
Alissa Horvitz and Joshua Roffman, Littler Mendelson

This NILG presentation focused on analyses of personnel activity data (e.g., hiring, promotions, terminations, etc.) and some of the consequences of using statistical significance tests (i.e., the “2 standard deviation” Z test, Fisher’s exact test, etc.) as stand-alone evidence of meaningful disparity. The presenters emphasized that in a typical OFCCP audit many statistical significance tests will be conducted, particularly when analyses focus on gender, total minority, and racial/ethnic subgroups. The number of tests may increase substantially when analyses are conducted at both job group and job title levels. This general issue of multiple tests is referred to as the ‘multiple comparisons’ problem in the statistics literature. In these situations some tests of statistical significance will achieve the “2 standard deviation” threshold by chance alone since so many tests are being run, and it is important to consider that when interpreting the results of analyses across an entire affirmative action plan. The presenters also emphasized that:

• Statistical significance tests may also be less informative when there are large applicant pools and selection rates are very high;


• The 4/5th rule or some other measure of magnitude should be used in combination with a statistical significance test;


• The multiple comparisons problem may also be a factor in compensation analyses (where statistical significance tests are conducted in the form of simple t statistics or regression).

Some of the main points from this session parallel recommendations from a 69-member Technical Advisory Committee (TAC) on adverse impact analysis that the Center for Corporate Equality (CCE) organized in 2009-2010. The TAC consisted of a wide variety of EEO experts including industrial-organizational psychologists, labor economists, plaintiff and defense attorneys, consultants, HR practitioners, and former OFCCP and EEOC officials. The TAC report is publically available at: http://www.cceq.org/ts_pub.asp

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Regional Directors Panel
OFCCP Regional Directors: Melissa Speer, Michelle Hodge, Evelyn Teague, and Bill Smitherman

All four of OFCCP’s Regional Directors gathered on stage at NILG this year to share regional updates and discuss common audit trends. Some of the noteworthy updates included:

1. OFCCP offices have been working with other DOL agencies during compliance evaluations (e.g. Wage and Hour).


2. OFCCP has been reaching out to community and faith based organizations (e.g. Tribal Employment Rights Office, Urban League, etc.) in an effort to educate others surrounding their mission as a worker protection agency.


3. OFCCP offices have been taking steps to work better with unions.


4. OFCCP has developed strategies to determine if a hospital is a covered federal contractor.


5. New trends in regional demographics have changed the face of “traditional” discrimination in that now OFCCP is seeing more minority races being favored in some areas.

Perhaps the most informative part of the session for contractors was the reoccurring non-compliance audit trends that each Regional Director noted across his/her region. These trends included:

1. Denying OFCCP access to data/information and/or onsite visits.


2. Record keeping violations (e.g. no applicant flow records or able to obtain from third party).


3. Lack of good faith efforts for outreach and/or recruitment of minorities and/or women.


4. Not posting job vacancies to employment services.


5. Not having an accessible online application system for all perspective applicants.

Academic Institutions as Federal Contractors – Exploring the Challenges in Compliance
Panel: Marilynn Schuyler, Schuyler Affirmative Action Practice; Christine Iijima Hall, Maricopa Community College; Judy Ferres, Boston College; and Lynette Chappell-Williams, Cornell University

If you work in an academic environment than this panel session was a must attend at NILG. The idea for the session originated during an informal discussion at NILG 2010, when discussants agreed that little guidance is provided to address compliance issues that are unique to academic contractors. For example:

1. How do academic institutions obtain qualified candidates while fulfilling posting requirements?


2. How do academic institutions determine whether someone is an “employee” as it pertains to inclusion in the AAP?,

Following the informal discussion, ten employees from academic institutions developed a survey to collect information addressing how academic institutions comply with AAP regulations. The survey was launched in March 2011 and results were presented in this session. Some noteworthy survey results include:

• Over 100 academic institutions responded to the survey.


• Over 80% of institutions with more than 5,000 faculty and staff have been audited.


• 30% of the respondents include temporary full-time staff and 20% include temporary part-time staff in their AAP.


• The vast majority of respondents do not include teaching assistants, research assistants, teaching fellows, research fellows, work-study students and other on-campus student workers in their AAP.


• Less than 60% of respondents include part-time faculty, adjunct faculty and post docs in their AAP.


• 2/3 of respondents post full-time faculty positions and ½ post part-time faculty positions with the local employment service.


• About half of the respondents analyze part-time and full-time employee compensation separately and most analyze temporary and non-temporary faculty compensation separately.

Before the session concluded, questions and comments from the audience were addressed by the panelists. One reoccurring comment from the university community was the strong disagreement with OFCCP’s requirement that universities must conduct a visual check and provide gender and/or ethnicity/race information for those employees that do not volunteer the information. Next steps for the panelists include presenting results to Director Shiu.

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Affirmative Action for People with Disabilities
George Kettner, Economic Systems, Inc.

Dr. Kettner of Economic Systems Inc. and his research team (Bobby Silverstein of Powers, Sutter and Verville, PC and Marc Bendick of Egan Economic Consultants, Inc.) were commissioned by the Department of Labor, Office of Disability Employment Policy (ODEP) to evaluate the feasibility of utilizing quantitative analyses and establishing numerical goals for employing people with disabilities. One of the driving factors behind implementing a quantitative approach is to provide the contractor community with clear objectives, consistency and transparency in enforcing the regulations.

Dr. Kettner recognized that there are many obstacles to observing and recording disability status that affect the ability to generate reliable estimates of disabled persons in the external workforce as well as in the contractors' workplace. For example, operationally defining what a disability is, identifying those disabilities that are transient as opposed to permanent, identifying optimal data sources,and acquiring accurate self-identification data were all identified as challenges.

Dr. Kettner proposed that the federal contractor community adopt a model similar to what is currently being used to estimate racial/ethnic groups and gender in the available workforce and employer organizations. Dr. Kettner stressed the linchpin for establishing goals was to encourage applicants and employees with disabilities to self-identify pre and post offer. Further, to increase confidence in the accuracy of the estimates, Dr. Kettner suggested federal contractors supplement data derived from the census long form with data derived from the American Community Survey (i.e. a short form of the census that is distributed every year and aggregated every five years).

Dr. Kettner’s sentiment that disabled individuals should not be excluded from employment is shared by federal contractors; however, there was disagreement in the audience regarding the feasibility of quantitative standards and the practicality of implementing Dr. Kettner’s approach. In particular, there was significant concern regarding violating the ADA . For example, a pre-offer identification would violate the ADA because it could be concluded that the employment decision was based on disability status and not qualifications; the number of people with disabilities in the organization would be explicitly displayed on the AAP report.

The Department of Labor has not updated the Disability regulations and has not publically endorsed Dr. Kettner’s position.

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Compensation Update
Pamela Coukos, Special Advisor, OFCCP

This presentation focused on changes to OFCCPs’ policies related to compensation discrimination enforcement. This talk was of particular interest to many NILG attendees because Secretary of Labor Hilda Solis has promised that OFCCP will settle substantially more compensation cases in the next few years (20%-40% of all settlements), and OFCCP is planning to rescind their compensation standards and voluntary guidelines, which describe the types of employee groupings, statistical analyses, and anecdotal evidence necessary to identify compensation discrimination. Pamela Coukos is new to the agency and has been working with senior OFCCP staff and the Solicitor’s office (SOL) to develop new policies related to compensation. Some key points from this presentation and audience feedback included the following:

• Coukos began by noting that she and the agency are listening to everyone’s feedback regarding compensation, and are trying to make a difference by strengthening enforcement, improving policy, educating workers, and forming partnerships.


• The agency is not currently using a standardized trigger test to narrow in on potential discrimination and request employee level data for more rigorous analysis. Coukos noted that this issue would be moot if the proposed revisions to the scheduling letter are approved, which would require employee level compensation data at the start of an audit.


• Coukos noted that no single test or tool fits every case because it depends on what variables are important to the compensation system for the particular contractor, as well as what they have available in their HRIS.


• Great emphasis was placed on open dialogue. Coukos stated that full disclosure from contractors on what variables are important, existing issues, and other relevant items is important during the review process and will help to expedite the audit.


• OFCCP is still in the process of designing a new compensation data collection tool, and the federal contractor community should be on the lookout for an announcement of proposed rulemaking on this issue.


• Federal contractors in the audience reiterated that they have recently seen substantial inconsistencies in what constitutes potential evidence of discrimination both within and across OFCCP regions and districts. Other audience members suggested that some agency guidance on how to identify potential discrimination is better than no guidance when organizations want to do the right thing and conduct useful proactive analyses.


• “Title VII standards” for compensation discrimination vary from court to court, but most case law has endorsed some reasonable employee grouping mechanism and some form of multiple regression analysis when sample sizes are large enough. Both of these themes were captured in the existing OFCCP standards.


• Experts will disagree on which legitimate explanatory factors should be included in a regression analysis modeled to explain differences in compensation, and there is no ‘one size fits all’ model. The regression model should not include “tainted” variables that could themselves be influenced by discrimination.

Coukos made the format very interactive, and took about 30 minutes of questions from the audience. She ended the session by reiterating that OFCCP’s new stance on compensation enforcement is a work in progress, and that the agency will continue to communicate new guidance as it becomes available, although what form that guidance will take is still unknown.

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The Dangers of Social Media – How Employers Can avoid the Pitfalls of Social Networks
Lisa Harpe, Peopleclick Authoria and Christy Kiely, Hunton & Williams

Millions of people are actively engaging in social media. A survey conducted by Jobvite suggested that nearly 83% of Recruiters and Human Resource professionals surveyed were planning to use social media for recruiting job seekers in 2011. Dr. Lisa Harpe -- an Industrial Psychologist and Principal Consultant at Peoplefluent -- and Ms. Christy Kiely -- an attorney at Hunton & Williams – discussed the legal implications of using social media in employment decisions at the 2011 NILG conference.
Dr. Harpe indicated that many Recruiters and Human Resource professionals are turning to social networks (e.g. Facebook) and microblogs (e.g. Twitter) in making hiring, promotion, and termination decisions. However, Dr. Harpe cautioned that the apparent ease of searching for and reviewing the personal details of applicants’ or employees’ through social media can quickly give way to unwanted legal ramifications for an organization.

Dr. Harpe provided several examples of how Recruiters and HR professionals’ actions may violate equal employment law. These include:

Disparate treatment:

• Only looking at the social media of some candidates and using that information to evaluate the suitability of the candidate for the position. For example, you decide to conduct a search of social media only for the female candidates who have applied to a position and decide to exclude females from the interview process who are of child bearing age or who already have children.


• Evaluating social network information differently based on protected class status. For example, two equally qualified candidates have posted pictures of their social activities on Facebook; it appears as though one candidate attends Church on a regular basis and the other does not. You decide to hire the apparently non-religious individual because of a belief that religious people are not a “good fit” with the organization.

Disparate impact:

• Only considering applicants who have a social media profile. Though seemingly harmless, this approach may be problematic because the demographic variables of the users of social media can vary by the type of social media (i.e. Facebook has more users that are under 40 than over 40).


• Only considering applicants with certain information on their site. For example, if you only consider applicants who appear to be active in Ivy League networks you may inadvertently be limiting your pool of applicants. Some minority groups are underrepresented in certain Ivy League institutions.

It is important to note that any information that is used to screen job seeker’s must be job related or consistent with business necessity. Additionally, once recruiters and HR Professionals begin evaluating an individual’s qualifications via social media they are responsible for accurately dispositioning the applicant according to the Internet Applicant regulation and record keeping requirements.

Dr. Harpe indicated that using social media in hiring may make federal contractors more vulnerable to record keeping violations. For example, if social media is used to evaluate applicants, the web link that was the source of the applicant’s information would have to be saved in a manual log. A manual log is generally more difficult to maintain and web links do not have a permanent shelf life. Hence, during an audit the federal contractor could find that their database has not been properly populated and/or that the web link that was stored as a source of the candidate information is no longer viable. In either of these circumstances, the federal contractor could be penalized by an enforcement agency for not maintaining accurate records.

The negative impact of social media on the employment setting is not limited to identifying suitable candidates for employment. Ms. Keily discussed how employer’s and employees’ actions on social media may result in undesirable outcomes for the organization (i.e. negative publicity for the organization, the publication of confidential information, retaliation, etc.) and, in some circumstances, legal proceedings.

Ms. Keily also reminded the federal contractor community that employers are not entitled to look at applicant/employee information merely because it has been posted on the Internet. In addition, certain forms of speech and individual actions are protected under the law (i.e. commenting on work conditions, organizing other employees to change the conditions of the workplace, etc.).

Both Dr. Harpe and Ms. Keily recommended that federal contractors develop and implement social media policies to assist in guiding employee behavior and to protect the organization from legal vulnerability. Recent estimates suggest that 45% of organizations do not have a social media policy (HCCA/SSCE 2011 survey). In addition, Ms. Keily recommended that employers maintain current and objective job descriptions that highlight the employer’s expectation of the employee. Job descriptions that are current and based on objective standards can be helpful in defending an organization against an employee if the organization can make a connection between the employee’s behavior on a social medial site and the expectations established in the job description.

In summary, regardless of how your organization plans to use social media in the employment arena there are a few guiding principles that may reduce your organizations legal exposure and assist your organization with EEO regulatory compliance:

• Create a detailed social media policy for employees to guide their general behavior with regard to the organization and set expectations regarding disciplinary action for violating the policy.


• Create a detailed social media policy to provide clear guidance on how social media should be reviewed for prospective or current employees; particularly, if the organization has chosen to evaluate individuals’ social media as part of the employment screening process.


• Apply all social media policies consistently and fairly for all individuals associated with employment at your organization.


• Put procedures in place to ensure that decision makers are screening individuals’ social media sites for information that is job related and a function of business necessity.


• Keep accurate records of the information that was used to screen individuals in your searches.


• Be aware of state and federal laws governing the information organizations can access and evaluate about individuals when making employment decisions.

Dr. Harpe suggested that the best approach to avoiding legal conflicts that are the result of social media… is to avoid using social media when evaluating current and prospective employees. However, if your organization is committed to using social media in the employment context, one guaranteed “best practice” is to make sure your organization is complying with equal employment principles outlined in federal and state laws.

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Navigating the Landscape of OFCCP Compliance
Panel: David Cohen, Eric Dunleavy, Dan Biddle, David Fortney, Jon Geier, Joe Lakis, and Mickey Silberman

A panel discussion titled “Navigating the Landscape of OFCCP Compliance” was moderated by Eric Dunleavy of DCI Consulting Group. The panel was comprised of Dan Biddle from Biddle Consulting Group, David Cohen from DCI Consulting Group, David Fortney from Fortney and Scott, Jon Geier from Paul Hastings, Joe Lakis from EEAC, and Mickey Silberman from Jackson Lewis. In an effort to ensure equal participation and provide creative, impactful, and brief presentations, each of the panelists had 5 minutes to present 10 slides and each slide auto-progressed every thirty seconds with or without the panelist. Index cards were distributed to collect audience questions while the panelists presented their slides. After the presentations, Dr. Dunleavy asked some initial follow-up questions and then asked audience questions for the panel to answer. The following section briefly summarizes each panelist’s presentation.

Proposed Changes to the OFCCP Scheduling Letter - Jon Geier

Jon Geier presented on the proposed changes to the current scheduling letter, which included a “Top Ten” list of changes to be aware of. They were as follows:

1. “Leave your leave policies with the OFCCP.” This change relates to a proposed request by OFCCP to collect contractor’s leave policies through the scheduling letter. This request may have little utility and create unjustified burdens for contractors.


2. “The CBA won’t be enough.” This change relates to OFCCP’s proposed request for “any other documents you prepared, such as policy statements, employee notices or handbooks, etc. that implement, explain, or elaborate on the provisions of the collective bargaining agreement” in addition to the collective bargaining agreement (CBA).


3. “One word will make a big difference.” This change relates to the fact that OFCCP may require that contractors submit their employment data by both job group AND job title, rather than the current request for job group OR job title dependent on the particular contractor’s employment decision-making process.


4. “Say your farewells to ‘minority all.’” This change relates to OFCCP’s proposal for data to be submitted by five race/ethnicity categories, which (oddly) is not consistent with current EEO-1 reporting requirements and a 2008 OFCCP directive on race/ethnicity categories.


5. “Pools for terminations and promotions.” This change relates to the OFCCP request for pools of employees considered for terminations and promotions, which may not accurately represent the selection procedures utilized by contractors to make termination and promotion decisions.


6. “Applicant data must include those for whom race/ethnicity is unknown.”
   This change relates to the proposed request by OFCCP for the number of applicants that do not self-identify race/ethnicity. There is question regarding the utility of this request when weighed against additional contractor burdens, and how these data would be used.


7. “Individual employee data.” This change relates to OFCCP’s push for data at the individual level for analyses of compensation discrimination. Contractors currently submit aggregate data, and are required to submit individual level data if there is a red flag in the aggregate.


8. “Bonuses, and commissions, and incentive comp! Oh my!” This change relates to the proposed request from OFCCP for contractors to include supplemental compensation information like bonuses and stock options, which are different in nature from base salary/wage rate. This request has created concern for how such information will be reported and analyzed.


9. “February: It’s not just for Valentine’s anymore.” This change relates to OFCCP’s proposal to collect all contractor compensation data as of February 1st of the review year, which does not coincide with data collection or potentially with proper compensation analysis.


10. “Dust of your Sections 503/4212 plans.” This change relates to OFCCP’s proposed request for copies of accommodation policies and records of accommodations. This request is troubling in regard to privacy rights and contractor burdens.

VEVRAA Regs: The Proposed Changes – Mickey Silberman

Mickey Silberman presented on the proposed changes to the VEVRAA Regulations – with an emphasis on how these would “change the world” for the contracting community. Mr. Silberman commented on the political context of the VEVRAA proposed changes, stating that this initiative appears to be a result of priorities in the White House. The most significant changes for contractors, according to Mr. Silberman, will be seen in the types and levels of burdens placed on them by the proposed amendments to VEVRAA. He reported employers have been expressing the following notions:

• OFCCP is substantially underestimating the contractor burden involved with the regulations


• The proposed “benchmarks” are unclear in calculation and are based on inconsistent, unreliable data


• There is no precedent for the 5 year record keeping obligation

Regardless of these concerns, OFCCP has announced that it will NOT rescind the proposed amendments to VEVRAA.

OFCCP and Compensation - David Cohen

David Cohen presented on compensation, focusing on a variety of recent OFCCP activities related to compensation analysis. These included:

• Implications of the OFCCP proposed rescission of the Interpretive Standards and Voluntary Guidelines. Officially, these documents have not be rescinded and replaced, and OFCCP is still asking for similarly situated employee groups (SSEGs) and conducting regression analyses.


• OFCCP’s reach for secondary data in the United Space Alliance case. Mr. Cohen stated this case may not be of great interest in the future should OFCCP get approval for the new scheduling letter, as this would provide OFCCP with this data on the front end of analysis.


• OFCCP’s switch from using the 5:30:3 trigger test to the 2 or 2 test. This trigger test is not a test of pay discrimination, nor does it seem to be a true screening tool as it appears to identify nearly all contractors as needing further analysis. In response, Mr. Cohen suggests that contractors should expect the secondary data requests.


• The advent of the Division of statistics and Technology (DST). This division will be given the detailed compensation data submitted by contractors in order to run analyses. There is still question regarding how these analyses will be conducted and what procedure will be used when a regression analysis flags potential discrimination.


• OFCCP’s move toward conducting compensation analyses by racial/ethnic sub-groups rather than by total minority analyses. Mr. Cohen asked in response whether UGESP applies to compensation; would analyses be based on the highest paid group as the favored group?


• The use of certain variables in regression analysis. Although the National Office has said they do not use age as a proxy for experience, the ALJ ruling in OFCCP vs. AstraZeneca required this proxy variable in regression analyses. Similarly, the National Office has not been clear on the appropriateness of using squared variables in regressions, yet they were endorsed in the AstraZeneca case.


• The use of a cohort analysis. Mr. Cohen specified that this is an individual disparate treatment analysis, thus requiring OFCCP to identify a particular discriminatory compensation decision.

In closing, Mr. Cohen recommended that contractors continue to conduct proactive analyses using multiple regression analysis and where statistically significant differences are found, contractors should conduct additional analysis, research the causes of the differences, and make salary adjustments when justified.


Testing and Adverse Impact – Dan Biddle

Dan Biddle presented on the topics of test enforcement and litigation and adverse impact, as well as best practices for both. Dr. Biddle provided some background information about testing, adverse impact, and what the law says about both. He also reviewed the OFCCP “testing directive” from 2004 and the investigation process, which requires a compliance officer to conduct an adverse impact analysis and obtain a validity study when impact exists. Some highlights included:

• A recent court case involving testing is Ricci v. DeStefano (U.S., No. 07-1428, cert. granted 1/9/09). However, this was not an adverse impact case and Dr. Biddle noted that the OFCCP FAQs address this case and state that their ruling will not change contractor’s obligations related to validity.


• Local validation allows for test specifications to be tailored to job specifications, which often increases test validity. Local validation also communicates to employees and the community that the contractor is concerned about fairness and avoiding discrimination.


• A test should never be “one-size fits all” and contractors should always ask test vendors for a manual and validation research. Contractors should be careful to avoid the common mistakes of using one test for all jobs without validity evidence or continuing to use a test just because it’s always been done. Contractors shouldn’t rely too heavily on the test publisher’s validity evidence or outdated job analysis results.


• Some best practice suggestions for testing include: (1) validate to select qualified employees, (2) prepare a 15C report for audits and litigation, and (3) consider “alternate selection procedures” (e.g., banding, personality tests, etc.).


• Emphasis was placed on the fact that contractors must act on any findings of adverse impact. Some best practice suggestions for adverse impact include: (1) validate practices, procedures, or tests that start showing AI, (2)proactively aggregate and analyze data (before someone else does!), and (3) when audited or in litigation be sure an issue actually exists. It is also important to not forget that an interview is a test!

An Overview of OFCCP Trends- Joe Lakis

Joe Lakis provided an overview of OFCCP trends, focusing on changes over the last 15 years for OFCCP staffing, audits, complaint investigations, financial settlements, and conciliations agreements. Enforcement trends and a look at upcoming items were also included. Trends included:

• Funding has steadily increased from 1995 to 2009, with large increases in 2010 and 2011. Fiscal year 2011 saw the highest budget in OFCCP history.


• Staffing saw a large decline from 2006 through 2009, with a large spike in 2010.


• OFCCP compliance reviews have remained relatively stable over the years, with a spike in 2003 and 2004.


• Resolved complaint investigations approached 600 in 1995 and then steadily decreased, with 2009 and 2010 seeing approximately 100 or less complaints resolved.


• Financial settlements have varied over the years, but OFCCP had a sizable increase in 2008 and then drastic decrease in 2009, which remained stable in 2010.


• From 2004 to 2011, the percentage of audits closed steadily increased, with s sharp increase from 12% in 2010 to 18% in 2011.

Mr. Lakis called the current enforcement plan full-scale and aggressive. He also stressed that compliance reviews are no longer contingent on findings during the desk audit phase. This is due in large to the recent Active Case Enforcement (ACE) directive that replaced the Active Case Management (ACM) from 2003. There is an increased emphasis on traditional affirmative action compliance (i.e., AA for protected veterans and persons with disabilities) and focus on internal auditing obligations. Mr. Lakis noted there has been attention placed on individual, as well as systemic discrimination. We have seen a closer inspections of personnel files, increased number of interviews (as a result of increase in full-scale audits), and requests for explanation for small differences in compensation for few employees.

Additionally, as emphasized during this panel discussion and the rest of the conference, Mr. Lakis closed his presentation there is a lot of activity currently happening and approaching in the coming year. He reminded everyone of the regulatory items that are coming available over the next year:

• FAAP Directive (June 2011)


• Compensation Data Collection Tool ANPRM (“imminent”)


• Section 503 NPRM (August 2011)


• Construction Industry NPRM (November 2011)


• FCCM Revisions (Fall 2011)


• Sex Discrimination Guideline NPRM (February 2012)


• VEVRAA Final Rule (Spring 2012)


• Section 503 Final Rule (Summer 2012)

Recent ALJ Decisions, Complaints, CDs, and CAs – David Fortney

David Fortney presented on recent Administrative Law Judge (ALJ) rulings, consent decrees, complaints, and conciliation agreements, all a part of the “hierarchy” of OFCCP claims and resolutions.

• The most important, recent ALJ ruling came from the United Space case (OFCCP v. United Space Alliance LLC, DOL, OALJ, No. 2011-OFC-00002, 2/28/11), where the primary issue involved the scope of the review expanding beyond the desk audit phase. Findings from the case gave OFCCP broad latitude in determining which criteria to apply in assessing compliance (compensation data in this case). However, the judge did rule that OFCCP was unable to expand the audit to encompass Section 503 and VEVRAA issues. USA is currently challenging the ALJ’s decision. As a side note, this could be a moot point for compensation if the scheduling letter is changed.


• Significant consent decrees included claims of discrimination in compensation and hiring. A notable, recent consent decree was for AstraZeneca (June 2011), a compensation claim of discrimination against females for sales specialist positions. Mr. Fortney noted that the AstraZeneca consent decree applied factors included in the Standards and Guidelines that are up for rescission. Also noteworthy are the variables included in the regression analyses related to this case (e.g., age as a proxy for experience, market reference point).


• Some common factors in the other consent decrees for hiring cases were gaps in or missing required records and concentration on entry-level/lower-tier jobs. Monetary settlements ranged from $167,000 to $495,000 and class sizes ranged from 95 to 1,106 affected members.


• There are two recent, significant complaints (note, a complaint is filed before an ALJ if an audit is not conciliated). Both complaints focus on hiring discrimination claims, one a race claim and the other gender discrimination.


• Recent conciliation agreements have focused on entry-level hiring, for race or gender discrimination. Monetary settlements ranged from $288,000 to $1.65 million, and class sizes ranged from 151 to 970 affected members.

Q&A session

Eric Dunleavy, the moderator of the session addressed the panel with a series of pre-determined questions and then opened up for questions from the audience. Questions from the moderator touched on issues addresses by the panelists, including: the scheduling letter, VEVRAA, compensation, testing, audits, and recent court cases. Questions from the audience tended to focus on compensation, individuals with disabilities, protected veterans, and general items. The majority of audience and panel questions focused on the many changes coming out of the agency. Audience members expressed concern about what the next five years might bring and how to best prepare and manage risk, as well as anxiety about what to do to in the interim before changes become official. The panel emphasized that the contractor community should continue to be proactive during the interim, continue developing plans, analyzing personnel activities and compensation, and to be sure to focus on recruitment efforts and outreach to individuals with a disability and veterans.

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UNIFORM GUIDELINES EXTENDED WITHOUT CHANGES

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

The EEOC announced on July 28 that it gave notice of its intention to submit to the Office of Management and Budget (OMB) its intent to submit the recordkeeping requirement in the Uniform Guidelines on Employee Selection Procedures (UGESP) for a three-year extension without change under the Paperwork Reduction under the Paperwork Reduction Act of 1995 (PRA). The EEOC invites comments that will enable the agency to:

1. evaluate whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;


2. evaluate the accuracy of the agency’s estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;


3. enhance the quality, utility, and clarity of the information to be collected; and


4. minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

Written comments on this notice must be submitted on or before 60 days after publication in the Federal Register in one of the following three ways (but no more than one):

• By mail to Stephen Llewellyn, Executive Officer, Executive Secretariat, Equal Employment Opportunity Commission, 131 M Street, N.E., Washington, D.C. 20507.


• By facsimile (“FAX”) machine to (202) 663-4114. (There is no toll free FAX number.) Only comments of six or fewer pages will be accepted via FAX transmittal, in order to assure access to the equipment. Receipt of FAX transmittals will not be acknowledged, except that the sender may request confirmation of receipt by calling the Executive Secretariat staff at (202) 663-4070 (voice) or (202) 663-4074 (TTD). (These are not toll free numbers).


• By the Federal eRulemaking Portal: http://www.regulations.gov. After accessing this web site, follow its instructions for submitting comments.

All comments received will be posted without change to http://www.regulations.gov.

ALCOA MILL PRODUCTS TO PAY MORE THAN $540,000 IN SETTLEMENT WITH OFCCP

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

The agreement relates to a charge of discrimination in hiring against Hispanic, African American and females for the position of material handler. Alcoa Mills will make $484,656.19 in back pay to 37 Hispanics and African-Americans and $35,516.88 to two women who all were rejected for jobs at the company's plant in Lancaster, Pa. (see http://www.dol.gov/opa/media/press/ofccp/OFCCP20111168.htm). The allegations were made by the OFCCP following a scheduled compliance review of the Lancaster manufacturing plant from 2009 and 2010. OFCCP Director Shiu noted that "No worker should be denied a job because of factors that have absolutely nothing to do with his or her ability to accomplish the work" and that she is “glad we reached a fair settlement with Alcoa Mill Products, one that not only provides financial remedies for the affected victims, but also creates opportunities for good jobs." In addition to the $540+ thousand monetary settlement, the company agreed to spend at least $20,000 on equal employment opportunity, anti-harassment and sensitivity training for its workforce, including all managers and human resources personnel involved in hiring. The company will also revise its selection process for material handlers.

DOD APPROPRIATIONS BILL MAY EXEMPT TRICARE COVERAGE FROM EO 11246

OFCCP has had a long standing position (although never tested) that TRICARE reimbursement (medical services and supplies to active duty and retired military personnel) established coverage as a supply and service contract under Executive Order 11246, VEVRAA and Section 503. This issue was tested in the OFCCP v. Florida Hospital of Orlando, ALJ Case No. 2009-OFC-0002 (October, 18, 2010), where an ALJ ruled in favor of OFCCP and concluded that Orlando Hospital is a federal “subcontractor” subject to OFCCP audit and enforcement actions.

This ruling had major implications for all hospitals and other health care providers that (1) met the $50,000 and 50 employee minimum requirements for contractor status and (2) accepted TRICARE reimbursement, because these hospitals and health care providers were now subject to compliance audits by OFCCP. Apparently, the health care industry was not happy with this ruling and sought assistance from Congress to exempt TRICARE from coverage. In response, Congress put a rider on a Department of Defense (DOD) appropriations bill exempting TRICARE from coverage.

More specifically, the National Defense Authorization Act for Fiscal Year 2012 (S. 1253) was introduced in the Senate on June 22, 2011, and has been placed on the Senate Legislative Calendar under General Orders Calendar No. 80. The text of the proposed bill can be found at: http://www.gpo.gov/fdsys/pkg/BILLS-112s1253rs/pdf/BILLS-112s1253rs.pdf. Section 702 of the bill entitled “Maintenance of the Adequacy of Provider Networks under the TRICARE Program” (page 221) specifies “Section 1097b(a) [§ 1097a. TRICARE Prime: automatic enrollment; enrollment fee; payment options] of title 10, United States Code, is amended by adding at the end the following new paragraph: ‘In establishing rates and procedures for reimbursement of providers and other administrative requirements, including those contained in provider network agreements, the Secretary shall to the extent practicable maintain adequate networks of providers, including institutional, professional, and pharmacy. Network providers under such provider network agreements are not considered subcontractors for the purposes of the Federal Acquisition Regulation or any other law.’” (italics supplied)

The same provision was included in the bill passed by the House of Representatives. This provision, if enacted, will significantly affect OFCCP’s expanded enforcement. My understanding is that senior Department of Labor officials have been deployed to the Hill seeking to have this provision dropped from the proposed bill.

Although the intent is clear, the drafting may allow OFCCP to still argue for coverage of TRICARE providers because the Executive Order is not a law; however the regulations that result in contractual obligations are imposed by the Federal Acquisition Regulation (FAR), so perhaps this linkage will be sufficient to deny coverage.

(Thank you to David Fortney of Fortney & Scott for providing information on the bill and content for this article)

OMB COMPLETES REVIEW OF OFCCP'S ADVANCED NOTICE FOR NEW COMPENSATION DATA COLLECTION TOOL

by Fred Satterwhite, Principal Consultant, DCI Consulting Group

*** UPDATE: The ANPRM was published in the Federal Register on August 10, 2011. Public comments are due by October 11, 2011.

On August 3, 2011, the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) completed its review of OFCCP's advanced notice regarding a new compensation data collection tool that purports to identify contractors that are likely to violate Executive Order 11246.

The Advanced Notice of Proposed Rulemaking (ANPRM), titled "Non Discrimination in Compensation: Compensation Data Collection Tool," was received by the OIRA on February 18, 2011. The ANPRM will be published in the Federal Register sometime in the next few weeks, with a public comment period to follow.

According to the Spring 2011 Unified Agenda and Regulatory Plan, this ANPRM "will seek input from stakeholders on issues relating to the scope, content, and format of the tool to ensure that it is an effective and efficient data collection instrument." In addition to helping the agency identify contractors who may be violating the Executive Order with regard to compensation practices, OFCCP states that "the data collection tool may be used to conduct establishment-specific, contractor-wide, and industry-wide analyses" of compensation data.

The Spring 2011 agenda showed a target publication date of June, 2011 for the ANPRM, with publication of the subsequent Notice of Proposed Rulemaking (NPRM) expected in June, 2012.

Details about the compensation data collection tool have been eagerly awaited by the contractor community since last year. OFCCP gave a possible preview of the content of the ANPRM in the agency's FY 2012 Congressional Budget Justification:

OFCCP plans to develop and implement a web-based compensation data collection tool that would enable the agency to identify indicators of pay disparity among federal contractors. As stated above, the agency is issuing an ANPRM to solicit information on how to collect and use such data. The tool would collect compensation data from 70,000 to 110,000 contractors (depending on threshold set for completing the survey). These data would be likely arrayed by job group. The scope of the data has yet to be fully determined. Current possibilities include salary, gender, race and ethnicity data for each employee or average compensation and variances for each group by gender, race and ethnic category. Also not yet determined is the type of personnel activity data that will be required (terminations, promotions, etc. by group and demographic category) and whether data on veteran status and disability will be included in the application.

DUKES V. WAL-MART TAKE 2?

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

According to several sources, Wal-Mart has no objection to extending the deadline for 90 days so as to reestablish a presumably smaller portion of the class that was decertified by the Supreme Court in its June 20, 2011 ruling in Wal-Mart v. Dukes [2011 U.S. LEXIS 4567] (see for example http://www.bloomberg.com/news/2011-07-22/wal-mart-agrees-to-give-women-extra-time-to-file-lawsuits.html). In a case conference (Dukes v. Wal-Mart Stores Inc., N.D. Cal., No. 3:01-cv-02252, case management conference 7/22/11), U.S. District Judge Charles Breyer said he would rule within a day or two about whether to give potential plaintiffs until Oct. 20, the date originally favored by Wal-Mart, or Jan. 16, the date favored by lawyers representing current and former workers, to file new cases. According to Bloomberg News, Wal-Mart’s attorney (Theodore Boutrous) told the judge that Wal-Mart is not opposed to “start the clock fresh.” He stated further that Wal-Mart’s position “has always been that people should get their day in court.” Brad Seligman, one of the plaintiffs’ attorney said that he has been contacted by thousands of women in the past 10 years. Stay tuned.

VETERANS EMPLOYMENT PROMOTION ACT INTRODUCED IN HOUSE OF REPRESENTATIVES

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

The Bill (H.R. 2243) passed the Oversight and Investigations Subcommittee of the House Committee on Veterans' Affairs July 28 and was introduced by Representative Jerry McNerney (Dem, California) the following day. The Act would require contractors to post data on the hiring of veterans to its website. Current law requires reports by the Secretary of Labor on this data, but according to Congressman McNerney, this information is not easily accessible to the public. According to McNerney, “The Veterans Employment Promotion Act will ensure that information on the number of veterans employed by federal contractors is widely available and transparent to the public.” The bill is now in front of the full House Committee on Veterans’ Affairs, and as of yet, has no sponsors. According to McNerney, the Act is consistent with the recommendations in 2009 by the House Veterans' Affairs Committee's Subcommittee on Economic Opportunity to promote stronger enforcement and oversight of federal contractors' compliance with veterans' employment laws (93 DLR A-2, 5/18/09). The full text of the proposed Act, which is short, may be viewed at http://www.opencongress.org/bill/112-h2243/text.

DOL POSTPONES 2011 VETS-100/VETS-100A FILING DUE TO "TECHNICAL PROBLEMS" WITH WEB SITE

By Fred Satterwhite, Principal Consultant, DCI Consulting Group

The U.S. Department of Labor (DOL) has announced that the online filing system for VETS-100 and VETS-100A Federal contract reporting will be unavailable until October 1, 2011, due to technical problems. While the electronic filing system is offline, Federal contractors will not be able to register or file VETS-100 or VETS-100A submissions for the 2011 cycle, which typically ends on September 30 each year. DOL had previously planned to begin accepting 2011 submissions on August 1, 2011.

According to the announcement, DOL will not initiate enforcement actions against contractors who submit the VETS-100/VETS-100A from October 1, 2011 through November 30, 2011. Unless further updates are provided in the meantime, DOL may initiate enforcement actions against contractors who do not submit reports by November 30, 2011.

The announcement states that:

Because the VETS 100 system is not currently available, it is not possible to register or file at all for the 2011 cycle. You will only be able to complete your registration and file once the application is available in October.

If you have been directed to file immediately by a Federal Contracting Officer so that funds to a contract may be obligated to a contract, you may file for the 2010 cycle via the instructions below. Please note, this does not constitute a registration or filing for the 2011 cycle. Registering and Filing for the 2011 cycle is unavailable at this time…

Soft or hard copies of previously submitted reports are not available at this time. The ability to make edits or amendments to submitted reports is not available.

Ironically, this announcement comes just after a bill called the Veterans Employment Promotion Act (H.R. 2243), which would require the Secretary of Labor to establish a web site making information about the number of veterans employed by Federal contractors easily available to the public, passed the Oversight and Investigations Subcommittee of the House Committee on Veterans' Affairs July 28. The bill is now before the full House Committee on Veterans' Affairs for consideration.