Federal Construction Contractors Beware: OFCCP Wants You!

Even though the Office of Contract Compliance Programs (OFCCP) has not yet promulgated its promised revised construction contractor regulations, the agency sent the construction contracting community a clear enforcement message recently when it announced a settlement with a federal construction contractor. In the press release, OFCCP reported its settlement with a Louisiana construction contractor for claims of hiring discrimination against African-American, Hispanic, Asian, and Native American job applicants. According to OFCCP, the construction contractor’s selection procedures resulted in disparate impact affecting 14 qualified minority laborer and deckhand applicants between 2009 and 2011. 

In addition to paying $70,000 in back wages and interest, the construction contractor must also extend at least six offers of employment (with retroactive seniority) when future positions become available. The conciliation agreement also requires a revision to the company’s selection process and improvements to its recruitment efforts.

This is a significant development in the construction contracting context for a few reasons. OFCCP has not issued a press release involving construction contractors during the Obama administration and it rarely issues press releases when settlement amounts are below six figures.  We have seen an aggressive increase in investigations of hiring and pay discrimination allegations in construction contractor and subcontractor compliance evaluations and this press release is a signal of a renewed effort by the agency to investigate selection and pay practices in addition to enforcing the technical requirements of the Sixteen Steps. 

During the Obama administration, OFCCP has doubled the number of construction contractor compliance evaluations averaging 525 per year. The agency is also increasing its attention to “mega projects,” which are generally worth $25 million or more in contracts. OFCCP Director Patricia Shiu, in a March address to CornellUniversity’s IndustrialLaborRelationsSchool, revealed that the number of violations in compliance reviews has tripled during her tenure. She also reported that the rates of violations for construction contractors continue to be significantly higher than rates in other industries. In 2012, 57% of compliance evaluations in the construction industry involved violations compared to 33% for supply and service reviews.

Scott Kelly is a shareholder in the Birmingham office of Ogletree Deakins and frequently assists federal construction contractors with compliance assistance and compliance evaluation defense.