Labor Ruling Adds to Burden on Federal Contractors in Audits

by Ballard Spahr LLP
Contact

[authors: Constantinos G. Panagopoulos and Amy L. Bashore]

In a decision likely to add to the burden and length of audits for many federal contractors, the Administrative Review Board of the U.S. Department of Labor (ARB) has ordered Frito-Lay Inc. to produce an additional two years’ of data on its affirmative action plan (AAP) as part of an expanded investigation in an audit that began in 2007.

The ARB’s Final Administrative Order, issued May 8, 2012, requires Frito-Lay to provide the Office of Federal Contract Compliance Programs with two years’ of AAP data post‑dating the Scheduling Letter in the Desk Audit.

In July 2007, the OFCCP issued Frito-Lay a Scheduling Letter for a Desk Audit and requested AAP data for 2006 and 2007. Frito-Lay voluntarily produced the requested data along with data for an additional year, 2005. About one year later, the OFCCP notified Frito-Lay that there was a statistically significant disparity in the data with respect to the hiring of women.

To investigate the disparity, the OFCCP requested data for the years 2008 and 2009. Frito-Lay objected, arguing that the more recent data fell outside the temporal scope of the initial Scheduling Letter. The Administrative Law Judge agreed with Frito-Lay and concluded that the OFCCP’s inquiry was limited to activities occurring during the year prior to the Scheduling Letter and the year the scheduling letter was issued, if received six months or more into that year. The OFCCP filed exceptions to the ALJ’s decision with the ARB.

Now the ARB has reversed the ALJ and concluded that the OFCCP had the authority to request data concerning activity that post-dates the Scheduling Letter.

As a general matter, the ARB concluded that the OFCCP is not per se limited in its investigation to the time period prior to the Scheduling Letter due to (1) the ongoing duty of federal contractors to comply with Executive Order 11246 and other equal opportunity requirements and; (2) the OFCCP’s fundamental mission in ensuring compliance with those federal equal opportunity requirements.

As a practical matter, the decision has broad and far-reaching implications notwithstanding the ARB’s statement that its decision does not address the OFCCP’s ability to obtain post-Scheduling Letter data in all cases. The ARB determined that the request was justified in the Frito-Lay matter because: (1) the purpose of the request was to explore a statistically significant disparity (which the ARB characterized as of “sustained duration”); and (2) the request for two years of data was consistent with a proper disparate impact analysis. That is, the OFCCP’s request was “narrowly drawn and related to an objective deficiency” discovered during the audit.

Many federal contractors have Affirmative Action Plans that contain goals to address statistical disparities in their AAP data related to their employment practices. Because the basis for the ARB’s decision relies almost exclusively on the discovery of a statistically significant disparity, the ARB decision has the potential to affect a large number of federal contractors.

In addition, although the ARB suggests that its decision was based on a history of noncompliance, the OFCCP Desk Audit reviewed data only for two and one-half years—a relatively short period of time. Thus, despite characterizing the disparity as of “sustained duration,” the burden on the OFCCP appears to be minimal. Moreover, as the Frito-Lay matter demonstrates, an audit can continue for some period of time, potentially transforming what is styled as a limited review into what is effectively a long-term, ongoing audit of current practices.

Other recent developments at the OFCCP also heighten concerns that it can and will require contractors to track and provide high volumes of detailed data during the course of an audit. As we reported to you in a February 2011 Alert, the OFCCP has rescinded its abbreviated audit procedures in favor of a more in-depth process for all audits and instituted mandatory on-site reviews for every 25th audit. In addition, as we discussed in a November 2011 Webinar, the proposed OFCCP scheduling letter requires that federal contractors provide much more detailed data on compensation and workforce statistics.

Those developments, coupled with the ARB decision in the Frito-Lay matter, mean that federal contractors can expect exacting scrutiny from the OFCCP, particularly if their Affirmative Action Plans include goals to address acknowledged deficiencies.

Members of Ballard Spahr’s Labor and Employment Group are available to assist in analyzing AAP data, drafting Affirmative Action Plans, instituting programs to address any statistical disparities, and responding to OFCCP Desk Audits. Please contact Constantinos G. Panagopoulos at 202.661.2202 or cgp@ballardspahr.com, Amy L. Bashore at 856.761.3402 or bashorea@ballardspahr.com, or the Labor and Employment attorney with whom you already work.


 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ballard Spahr LLP | Attorney Advertising

Written by:

Ballard Spahr LLP
Contact
more
less

Ballard Spahr LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.