Friday, July 1, 2022: USDOL Secretary Used Prior Secretary Scalia’s Order 01-2020 To Issue A Final Ruling Ordering Convergys to Comply With OFCCP Document Demands
In an extraordinary move, Secretary of Labor Martin Walsh exercised the authority -granted to him through an order issued by Trump Secretary of Labor Eugene Scalia – to intervene in the long-running OFCCP v. Convergys Customer Management Group, Inc administrative actions (ARB No. 2022-0020, ALJ Nos. 2015-OFC-00002 through – 00008) and ordered the contractor to comply with the agency’s document demands. The Secretary’s decision is dated July 1, but it was not posted on the DOL’s Office of Administrative Law Judges (OALJ) website until after the extended July 4th holiday weekend.
On February 15, 2022, Secretary Walsh filed a notice with the OALJ that he intended to intervene in the OFCCP v. Convergys administrative actions (ARB No. 2022-0020, ALJ Nos. 2015-OFC-00002 through -00008) after the ARB eleven days earlier vacated an ALJ’s Recommended Decision and Order granting OFCCP’s request for summary judgment. The ARB remanded the matter for a determination on whether OFCCP’s selections of Convergys’ facilities for compliance evaluations starting back in 2013 were based on a neutral administrative plan.
ARB decision found ALJ applied an incorrect legal standard in Fourth Amendment analysis
Convergys, a customer relationship management company headquartered in Cincinnati, Ohio, refused to provide the OFCCP copies of its affirmative action programs and several other supporting documents during a compliance review desk audit for several of its facilities. The contractor asserted that OFCCP lacked constitutionally sufficient cause for the audits and sought an order finding that OFCCP violated its Fourth Amendment right against unreasonable searches and seizures. In December 2014, OFCCP filed the first of multiple administrative actions against the employer to compel compliance with its demands. Following a series of actions in the administrative adjudication process, ALJ Theodore W. Annos, following the ARB’s order to reconsider an earlier decision issued by Chief Administrative Law Judge Stephen R. Henley, ruled in favor of the agency. In a December 2021 decision, ALJ Annos agreed with ALJ Henley’s earlier decision, ruling that the standard set forth in the U.S. Supreme Court’s 1984 decision in Donovan v. Lone Steer, Inc. was appropriate and satisfied as a matter of law. In Donovan, the High Court stated that “when an administrative agency subpoenas corporate books or records, the Fourth Amendment requires that the subpoena be sufficiently limited in scope, relevant in purpose, and specific in directive so that compliance will not be unreasonably burdensome.”
However, the ARB had concluded that ALJ Annos applied the incorrect legal standard to compliance reviews. It explained that “[a]n OFCCP desk audit is ‘practically identical’ to an administrative subpoena. An OFCCP on-site review, however, triggers the standard for a warrant or its equivalent.” Still, although the Fourth Amendment’s protections from administrative warrants and administrative subpoenas are different, “there is . . . overlap in the reasonableness requirements under both,” the ARB acknowledged. Reasoning that “[a] central tenant of administrative law is that the agency is bound by its own regulations,” the ARB found that “[f]or a search, including a desk audit, to be reasonable, the agency must, among other things, follow its own procedures.”
The ARB stated that “OFCCP must apply neutral criteria when selecting a federal contractor’s facility . . . to undergo a compliance review including a desk audit,” and that “[w]hether a compliance review was based on an administrative plan containing specific neutral criteria is a ‘factual determination.’” Accordingly, the Board vacated the ALJ’s Recommended Decision and Order and remanded the matter for a determination of “whether OFCCP applied specific, neutral criteria in selecting Defendant’s facilities for a compliance review.”
Intervening, Walsh reinstated the ALJ’s decision and ordered the contractor to comply
In a “Final Agency Decision and Order,” Secretary Walsh reversed the ARB’s February 4 order and adopted the ALJ’s December 30, 2021 order. He said that even though the ARB had remanded the case back to the ALJ, he was intervening “in the interest of judicial economy and a desire to ensure compliance” to “ensure the proper legal standard is applied.” He found that the Board applied the incorrect Fourth Amendment standard and the ALJ applied the correct one. Agreeing with ALJ Annos that the applicable standard was met here, the Secretary then ordered the contractor to comply with the agency’s document demands.
According to Walsh, the ARB’s interpretation of the applicable Fourth Amendment standard was inconsistent with the standard that federal courts apply to the type of document requests at issue. “While it’s correct that the Fourth Amendment applies to both the desk audit and on-site portions of a compliance review, the Board ignored the distinction between the specific Fourth Amendment standards that apply at different stages of a compliance review,” he wrote. The Board’s attempt to restrict Lone Star’s application to the “subject matter of the desk audit” was not properly grounded in the U.S. District Court for the District of Columbia’s November 2011 decision in United Space Alliance, LLC v. Solis, the Secretary concluded.
With this action, Walsh exercised a controversial grant of authority under an order from previous DOL Secretary Scalia
Secretary Walsh’s intervention appears to be the first exercise of this power in an OFCCP case under Secretary of Labor Order 01-2020, issued by Trump Secretary of Labor Eugene Scalia and which among other things gives the Secretary of Labor authority to intervene in ARB decisions. We discussed this order in the WIR in March 2020: Update to February 21, 2020 Story: New Boss in Town, Same as the Old Boss: Secretary of Labor Scalia’s Order 01-2020 Allows Secretary of Labor to be Final Arbiter of the Department of Labor’s Decisions and A Procedurally Odd Finale to the Secretary of Labor’s ‘Direct Final Rule’ on The Secretary’s Review of ARB Decisions.