OFCCP Flexes its Muscle with Threats of Term Debarment

The Office of Federal Contract Compliance Programs (OFCCP) recently announced a significant monetary settlement of a complaint alleging hiring discrimination by a federal contractor. In this complaint, the agency alleged that the contractor favored Asian applicants over African-American, Hispanic, and white candidates. In order to settle the case, the contractor agreed to pay back wages to nearly 3,000 applicants and to offer 350 jobs to members of the victim class, in addition to undertaking self-monitoring of its hiring practices. None of this is particularly earth-shattering or new. However, there are two points worth noting in this case.

First, this settlement resolved claims of hiring discrimination by the contractor at multiple locations, illustrating the agency’s interest in and willingness to consolidate negotiations. Second, when it filed this complaint, the OFCCP also announced that it intended to seek the cancellation of the employer’s existing contracts with the federal government. Many contractors are familiar with the concept of “debarment” in which the agency moves to preclude the employer from bidding on future contracts based upon compliance failures. When it perceives the contractor to be a particularly “bad actor,” the OFCCP now often will also seek to cancel government contracts that have already been awarded to the contractor.

Ogletree Deakins’ Affirmative Action and OFCCP Practice Group has observed similar tactics in other, unreported cases, including situations in which the OFCCP called contracting officers to report its perceptions of the contractor’s employment practices and to suggest that additional government work should not be awarded to the contractor. This effort is entirely consistent with OFCCP Director Patricia A. Shiu’s repeated statement that “[b]eing a federal contractor is a privilege, not a right.” Human resources leaders should alert the responsible parties within a federal contractor’s management team both of the consequences of employment decisions that may suggest unlawful discrimination and of the leverage that OFCCP may try to exert if it concludes that the employer is not in compliance with Executive Order 11246; the Rehabilitation Act of 1973; or the Vietnam Era Veterans’ Readjustment Assistance Act.

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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.

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