Florida Hospital of Orlando received good news on Friday when the Administrative Review Board (ARB) found in their favor and concluded OFCCP could not subject the hospital to a compliance review.  While this decision answers the outstanding question of OFCCP jurisdiction for Florida Hospital, it is by no means establishes a blanket exemption for others, keeping many healthcare industry employers in limbo.

 In its highly anticipated decision the ARB concluded Florida Hospital was not subject to OFCCP jurisdiction based on application of the recently passed National Defense Authorization Act for Fiscal Year 2012 (NDAA).  The NDAA expressly exempts from OFCCP jurisdiction medical providers who participate in the Department of Defense TRICARE program, DoD’s health care program for active and retired military personnel.  As the ARB pointed out, the exemption, while applicable, is narrowly tailored to capture only a certain type of TRICARE contract (those that require establishment and management of a network of providers).   

 The ARB acknowledged that OFCCP’s review of jurisdiction for those in the industry remains on a “case by case” basis.  Because of the specific requirement of the TRICARE contract at issue in this case, the ARB concluded Florida Hospital was not subject to OFCCP jurisdiction.  By way of translation, this means “just because Florida Hospital is exempt doesn’t mean you will be exempt too.”

 So what do you do now?

 While the Florida Hospital decision certainly shines some light on the issue of OFCCP jurisdiction for healthcare employers, the waters remain muddy  . . . and likely will continue to be murky for the foreseeable future.

 Thus, it is important for employers in the healthcare industry to evaluate the basis for OFCCP jurisdiction.  You should undertake to identify and review the sources of federal revenue received by your institution to determine whether in light of all of the developments in this area in the past year you are a covered contractor or subcontractor.

Everyone is talking about pay discrimination these days.  Even the Presidential candidates (and their running mates) are focused on the persistent pay gap and their plans for addressing pay in the workplace over the next four years.  Regardless of which party wins the election, it is clear compensation will remain in the spot light.

 It also remains clear that investigating pay discrimination will continue to be a top enforcement objective for OFCCP for the foreseeable future . . . regardless of who’s sitting in the White House.  During compliance reviews, we are seeing OFCCP turn to issues related to compensation faster and with more vigor than ever before. 

 Not only are federal contractors required (under the auspices of Executive Order 11246) to review their compensation systems on an annual basis, but EEOC’s (and private plaintiffs’) current focus on identifying pay discrimination means all employers nationwide should be taking a constructive look at their pay practices. 

 Pay analyses can take on several forms ranging from “eyeball” cohort reviews for small groups to multiple regression analyses for larger groups of employees.  Regardless of the manner in which pay is analyzed, the process should be designed to identify and compare “similarly situated” individuals, or those who are doing comparable work, at a similar level, with similar skills. 

 The law requires fair pay not equal pay.  So, if pay differences are identified, it is critical to investigate whether there are legitimate, business related reasons for the differences in pay.  And importantly, regardless of the form of the review, it should be conducted by, or at the direction of, counsel – to cloak the analyses in privilege.  The goal is to protect your analysis so that a government agency . . . or savvy private plaintiff . . . will be unable to obtain it.

 OFCCP’s methods for investigating pay are ever changing, but the end result remains the same – identifying unexplained differences in pay between similarly situated males and females, minorities and non-minorities. Given this, it is imperative that employers take a look at employee compensation before the government does it for them.

Despite OFCCP’s recent focus on compensation discrimination, pre-employment testing and good faith efforts for veterans and disabled individuals, the agency continues to investigate and enforce standard hiring discrimination cases.   Two recent OFCCP settlement agreements resolving allegations of hiring discrimination, while not the largest of OFCCP settlements, reinforce OFCCP’s continued commitment to investigate applicant-to-hire adverse impact.

 Lund Boat Company recently agreed to pay $295,000 to a class of 185 women and offer jobs to 27 of the class members to resolve OFCCP’s allegations of gender discrimination at the company’s Minnesota manufacturing facility.

 Meyer Tool Inc. also recently agreed to pay $325,000 to a class of 60 African-American applicants and offer jobs to at least 11 of the applicants who were rejected for entry-level machinist positions at the company’s manufacturing plant in Cincinnati.

 The Take-Away

These recent settlements reinforce the importance of:

  • Properly defined applicant pools
  • Accurate applicant flow data that tracks each applicant through the hiring process
  • Consistently applied hiring policies and/or basic qualifications

Without these, it is difficult for an employer to satisfy its burden of demonstrating it made hiring decisions based on legitimate, non-discriminatory factors – which could lead to OFCCP to conclude the company’s hiring practices were discriminatory. 

It is also critical to understand that use of a third-party staffing agency does not alleviate an employer’s applicant tracking obligations.  Companies utilizing staffing agencies should review their contracts to ensure the staffing agency understands expectations surrounding race and gender data collection, record retention, good faith efforts and listing positions with state employment services.

In the recent Tenth Circuit Court of Appeals case, Apsley v. Boeing Co., the Court rejected statistical evidence offered by a class of approximately 700 older workers because the evidence inappropriately lumped together thousands of hiring decisions. 

 Plaintiffs’ statistical evidence analyzed the multi-facility workforce together as a whole and concluded there were five standard deviations (extremely high in the world of statistics) between the number of older workers who should have been recommended by Boeing for rehire and those actually rehired. The Tenth Circuit, however, disagreed with the plaintiffs’ aggregated approach. 

 Unfortunately, most courts (like many attorneys) freeze up when presented by Plaintiffs with big numbers and arrive at a conclusion without fully understanding the implications of the concept that “Big Numbers Are Bad Numbers.”

 Statistically, when large numbers of selections (e.g., hiring, promotions or terminations) are grouped together, even small differences in selection rates tend to show statistically significant adverse impact, which the Plaintiffs in this case tried to rely on to establish an inference of systemic discrimination.  The Court, however, understanding the implications of this concept, concluded Plaintiffs statistics were “inaccurate or insignificant” and did not support a finding of discrimination.

 It remains to be seen whether judges in other jurisdictions will follow suit and likewise consider the implications of data aggregation in employment cases, but this decision is a good sign that – in this new age of robust HRIS and applicant tracking systems and the resulting massive amounts of data that can be analyzed – at least some courts will not easily accept plaintiffs’ aggregated statistics.

As an update to our post earlier this month regarding the deadline for filing VETS-100 and/or VETS-100A reports, the U.S. Department of Labor Veterans’ Employment and Training Service (VETS) announced today the deadline for VETS-100/100A report(s) in the 2012 cycle has been extended from September 30, 2012 to October 31, 2012.   All paper reports and electronic files received by VETS on or before October 31st will be included as part of the 2012 filing cycle and will not be considered late.

Last year, as you may recall, VETS encountered technical difficulties with the online filing portal resulting in a lengthy extension of the filing deadline.   VETS moved to a different filing system this year.  The Department has not announced the reason for the extension this year or given any indication of further extension.   

This extension applies only to VETS reporting obligations.  The filing deadline for the 2012 EEO-1 Reports remains September 30, 2012.

On September 4, 2012, EEOC released its draft four-year Strategic Enforcement Plan.

 EEOC’s four-year strategic enforcement plan provides a window into the emerging priorities for the Commission.  The Agency’s announced its number one enforcement priority is identifying and remedying systemic hiring discrimination.  This is a game changer.  Instead of limiting investigations of single-charging party “garden variety” charges to the facts in the charge itself, the EEOC will seek to expand such charges into company-wide systemic investigations – greatly increasing exposure for employers. This initiative will focus on all aspects of employers’ pre-employment selection processes including:

  •  Pre-employment tests/on-line assessments
  •  Credit checks
  •  Criminal background checks
  •  Drug screens

 And it’s employers’ electronic data systems that are making these investigations easier than ever.  Increasingly robust HRIS and applicant tracking systems make it easy for EEOC to obtain wide-ranging data and conduct company-wide trend analyses to uncover possible “hidden barriers” in the hiring process.

 Paul Patten, an attorney with Jackson Lewis, summed it up best when interviewed by Law360 (a legal news publication):

 If [employers] are using background checks or are using personality tests to try to match the talents of applicants with a particular job, employers should be looking at the potential disparate impact of those policies before there is a charge, or they may be in for a very long and expensive investigation by the EEOC.

The Commission believes that now is an “opportune moment to aim for bold and transformative change.”  For employers, EEOC’s plan provides a roadmap of pitfalls to avoid and items employers need to start looking at proactively.  Examine your pre-employment processes to uncover potential discrimination before the EEOC does.

It’s that time of year again: the deadline to file Employer Information Report EEO-1s (EEO-1) and VETS-100/100A reports is September 30, 2012.

 The EEO-1 report is an annual reporting of summary employee race and gender information filed with the Equal Employment Opportunity Commission (EEOC).  The reports are filed electronically via the EEOC’s online filing portal.  The EEOC’s website also offers guidance on EEO-1 filing and requesting login information.   

 And it’s also time for annual VETS-100/100A reporting.  The VETS-100/100A report is an annual reporting of an employer’s efforts in employing (hiring and retention) of particular groups of veterans.  Information and instructions on filing a VETS-100 or 100A report can be found on the Department of Labor’s Filing Assistance website. 

 As we wrote about previously, the Office of Federal Contract Compliance Programs (OFCCP) is seeking to ramp up its enforcement of contractor obligations with respect to veterans.  Even before OFCCP’s proposed revisions to the veteran’s affirmative action regulations are finalized we are seeing the Agency take a stronger enforcement stance on veteran obligations, including the obligation to file annual VETS-100/100A reports. 

 OFCCP’s Pacific Region has recently issued notices of violations during compliance reviews for failing to file a VETS-100A report, requiring employers to enter into conciliation agreements to address the violation.  So it’s important covered federal contractors file the appropriate VETS-100/100A form. 

 The filing of EEO-1 and VETS-100 forms for locations with less than 50 employees can be confusing.  If you have questions or would like guidance on how to get your filing right, please let us know.

Yesterday in a live, remote broadcast from Washington, D.C., Tom Dowd, OFCCP Director of Program Operations, informed the attendees at the National ILG conference that OFCCP will continue to issue corporate scheduling announcement letter notifications (CSALs).  That’s good news.  But he didn’t stop there.   

In a significant change, Director Dowd announced the CSALs will no longer be delivered by mail.  Instead, the Agency will provide CSAL notifications via the Agency’s website.  That notification will identify company locations slated for audit during that fiscal year. 

In a related, important development, Director Dowd explained the CSAL information about each contractor on OFCCP’s website will be accessible by the public. He explained this is part of OFCCP’s effort to provide greater transparency.

OFCCP Director Pat Shiu opened the day today with a remote, hi-definition broadcast from Washington DC.  As you may know, OFCCP opted not to attend the Hawaii conference in person.   But it likely saved tax payers lots of money.  Of particular note, we learned from OFCCP that none of the Agency’s proposed regulations – separate proposals covering employer affirmative action for Individuals with a Disability and affirmative action for covered military Veterans –   will be published too soon.  Traditionally, OFCCP has used the National ILG conference to announce the final publication of proposed regulations.  While OFCCP had hopes of publishing both sets of proposed regulations earlier this year, or in time for this week’s conference, that was not to be.  That may be attributable to the concerns raised by many within the contractor community about the burdens the proposed regulations would impose. 

OFCCP said it hopes to see both sets of regulations published by end of the federal government’s fiscal year – September 30th – but made no commitment that publication would happen by then.  The opinion of many private sector attorneys, consultants and in-house professionals at the conference is that the proposed regulations may not be published at all — or only if significant revisions are made to reduce the burden on employers.  Stay tuned for more on this in the coming weeks and months.

That’s all for now from Hawaii.  Look for the next post tomorrow.  Mahalo!

Welcome to the Affirmative Action & OFCCP Law Advisor Blog

Where you can:

  • Stay up to date on the latest developments in affirmative action and the Office of Federal Contract Compliance Programs (OFCCP)
  • Receive analysis and commentary from Jackson Lewis attorneys on all things related to affirmative action and federal contractors

The Kick-off

We’re kicking-off the blog at the 30th Annual Industry Liaison Group, Inc. (ILG) Conference & Exposition being held in Waikoloa, Hawaii from August 27, 2012 to August 31, 2012.  The Jackson Lewis Affirmative Action and OFCCP Planning and Counseling group will present at (and blog from) the conference.

Get the Inside Scoop – Even if You Can’t Attend in Person

Jackson Lewis will live-blog from the conference so those who were unable to make the trip don’t miss out on the action in Hawaii.  Check back throughout the week for additional posts or subscribe to this blog by visiting  https://www.affirmativeactionlawadvisor.com/subscribe/ or stopping by the Jackson Lewis booth at the exhibition.

Beyond coverage of the ILG conference, look for upcoming posts on government reporting, an analysis of the proposed Section 503 regulations and a discussion of OFCCP’s use of CSALs.