Understanding Defenses from the Perspective of the OFCCP

Biddle Consulting offers newsletters on many important EEO topics at our webiste www.biddle.com . We recently provided several articles about the presentations given at the National ILG meeting. Enclosed is a summary of the OFCCP presentation on what forms of excuses and defenses that they will not accept during the audit process.

Presenter: Sandra Scott Ziegler
Attorney
Midwest Region OFCCP

Sandra Scott Ziegler is veteran officer of the OFCCP out of the Midwest Region. Sandra and her team provided one of the most unique and energetic NILG presentations that we have ever seen. Sandra ran a Powerpoint slide show that had music and animation that kept the audience in stitches for well over an hour. The purpose of the presentation was to inform contractors about all of the excuses and shortcomings that they see from Federal contractors that will not be considered acceptable by OFCCP in an audit. This presentation is significant because OFCCP tends to be coy about how they operate behind the scenes so when they come to a conference and provide a list of activities and excuses that they consider red-flags, BCG will make a point to pass the message along to our clients and make sure they pay attention.

The slideshow was broken out by a series of headers that acted as main bullets that fell under the headline of “Don’t Go There.”

Purpose

To identify often used defenses that will not work in OFCCP audits.
OFCCP’s opinion is that clarifying these common excuses will help contractors save time and money as well as enhance voluntary compliance.

The main points:

The Good Faith Defense

· Contractor misconception: “When utilization exceeds availability there is no discrimination” This is totally false. There can be potential discrimination in transactions such as hiring, promotions and terminations even if a job group has an incumbent percentage higher than what is available.

· OFCCP handed out a copy of the TNT case (Tyson Foods) where OFCCP won a case where the Tyson Foods defense team tried, unsuccessfully to show they were not discriminating.
o OFCCP proved discrimination against Hispanics
o The Courts said that a balanced workforce does not provide a get out free card for discrimination
o Courts prefer actual applicant flow rather then workforce statistics because those were the available individuals who had interest in the job. (this serves as a reminder why contractors need to collect proper applicant data)
o Intent does not mean a company is inherently evil. Companies could be deceived by thinking that they already achieved a goal for a certain group so their focus was placed somewhere else resulting in unintentional discrimination

Self Validating Test Defense

· Another contractor misconception: “Collective common sense says a test is valid for a job.”
· OFCCP response: “tests DO NOT self validate”
· Tests must be: Tailored to the job, follow Uniform Guidelines on Employee Selection Procedures (UGESP) and accurate
· Are less discriminatory tests available that would meet the contractor’s needs? (Usually there is in increase in Adverse Impact against a group in tests that have specific requirements for lifting, language, etc.)
· Any test should be validated to test for AI à Uniform Guidelines (UG) says with 80% rule but other regulations say also SD.
· In the TNT case – The contractor only asked Spanish speaking applicants if they spoke good English. This was considered an informal test not uniformly applied.
· Audience question: If creating a question on an application that asks if the applicant can lift 30 lbs (check box), is this a test? Yes, it’s a selection procedure and it needs to be validated

Refusal to Submit the 12 Item Compensation Data

o In the Bank of America case: they refused to submit the 12 item data. They said if the OFCCP is asking for it they must have reasonable suspicion. OFCCP response: No reasonable suspicion is necessary and there are no 4th amendment issues associated with the request.
o The purpose of a desk audit is to determine if there is a problem. See 60-1.43 and 1.4(a) for the regulation citation.
o In the Ledbetter case: Authority to gather information (compensation) was questioned. The OFCCP will gather all factors that influence compensation
§ Time frame occurrence having to do with a statute of limitations
o The purpose of the desk audit is to determine if there is reason to believe there is a violation

“I’m not on the scheduling list”
o Contractors often try to get out of an audit by stating they should not have been selected for an audit.
o Periodic reviews go beyond the FCSS list which is used for regular desk audits. There are also CMCE: corporate management compliance evaluations, FAAP: functional AAP audits, and DAS: directive review as well as other selection criteria not provided by OFCCP.

Contractor misconception: “We don’t have two (2) standard deviations to infer Adverse Impact or discrimination.”

o The courts have held that two or more standard deviations permit an inference of discrimination.
o Two standard deviations is NOT a threshold that must be met in order to continue an investigation
o Examples of reasons OFCCP will dig deeper:
o 0% Female and Minority in an areas you’d expect availability
o Tip to OFCCP about something potentially offensive
o Number of applicants = Number of hires (1:1 ratio)
o Quality check
o Any number of things could lead to further investigation
o There are no standards that says they cannot investigate further if desired

Correcting to have a result that shows less then two (2) standard deviations

o Another contractor misconception: Contractors argue that OFCCP cannot make the contractor eliminate the entire disparity as opposed to getting the result within two standard deviations.
o OFCCP: No, if results are discriminatory then shortfall should eliminate ALL disparity
o Favored group for comparison is not always male and white. OFCCP can go after selection disparities against all races and genders. (BCG note, we have seen OFCCP pursue Adverse Impact against whites and men in recent audits)

Statistics alone are not enough

o A pattern or practice case can be built on statistics alone. An increase in statistical disparity is more compelling to OFCCP
o If a contractor does not rebut a prima facie case of intentional discrimination then the courts can infer discrimination based on statistics
o OFCCP will seek anecdotal evidence where possible. Contractors should provide anecdotal evidence if available
o Comparisons of selected v. non-selected
§ Applied v. Offered

Statistical vs. Practical Significance (PS)

o Contractors argue that Practical Significance can imply that a contractors’ Adverse Impact analysis is not significant if a change in two hires brings the result to less than two standard deviations.
o OFCCP (Q&A #21 in UG): UGESP states that only switching one is allowed and it would have to bring the selection rate within 80%
o OFCCP PS:
§ Change 1-2 from fail to pass
§ Not an 80% violation
§ Not greater then 2 SD

The TNT Case – OFCCP argued that applicant pool was not atypical compared to competitors

o Would have to show the specialized recruitment drew unqualified individuals for the position
o Inflated race/gender
o The OFCCP can use competitor’s applicant pools as a comparison

“The data submitted for the audit is an aberration”

o Contractors attempting to argue to OFCCP that their audit issues should be attributed to: “You picked a bad year.”
o “My data is so bad it’s not worth analyzing” – Inadequate data does not reduce liability (BCG note – in fact we would expect it to dramatically increase the OFCCPs scrutiny of your organization)
o OFCCP can select the time period for review
o The OFCCP becomes suspicious of what has been done after the scheduling letter has been received.

Other defenses that will also receive scrutiny

o Lopsided refinements (look at both sides, i.e. men and women)
o Tolling liability because of case processing
o Mitigate at a higher pay rate
o Inadequate data reduces liability