OFCCP Requires DC Construction Contractor To Pay $875,000 To Settle Discrimination Case

November 2013Alerts Labor & Employment Alert

Last month, the U.S. Department of Labor’s Office of Federal Contractor Compliance Program (OFCCP) issued a press release trumpeting that it had settled its claims of discrimination against a construction contractor based in the Washington, DC, Metropolitan area for $875,000. The contractor was subject to the OFCCP’s jurisdiction because it has held more than $600 million in contracts with federal agencies since 2006 and was therefore considered a federal contractor. OFCCP’s jurisdictional threshold for construction contractors is only $10,000.

After conducting a compliance audit, the OFCCP cited the contractor for engaging in discriminatory hiring practices under Executive Order 11246, which prohibits federal contractors and subcontractors from discriminating in employment practices on the basis of race, color and national origin. The OFCCP determined that the contractor had violated Executive Order 11246 because it used selection procedures, including invalid tests that unfairly prevented qualified African-American, Hispanic and Asian-Americans from obtaining jobs as apprentices and electricians. The OFCCP was particularly troubled that the contractor had used employment tests that had not been validated under the Uniform Guidelines for Employee Selection Procedures (UGESP) and used hiring procedures that resulted in a statistically significant difference in the hiring rates for minorities versus non-minorities.

To resolve the OFCCP’s citations, the contractor agreed to: (1) pay $875,000 in back wages and interest, (2) extend 39 job offers to the class members as opportunities become available and (3) undertake extensive self-monitoring measures and personnel training to ensure that all of its employment practices fully comply with Executive Order 11246.

This case is a harsh reminder to all construction contractors that if they are doing business with the federal government or are acting as subcontractors on federal projects, they must vigilantly follow the laws enforced by the OFCCP, including Executive Order 11246, Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. This should include ensuring that they have covered the 16 items required in a construction affirmative action plan file as outlined by 41 C.F.R. 60-4.3(a)(7), which includes, but is not limited to:

  1. Reviewing job descriptions and qualification standards annually to ensure that they: (a) do not discourage female and minority applicants from applying, (b) accurately reflect position functions and (c) are based on bona fide job requirements;
  2. Conducting annual meetings with appropriate management officials to stress the importance of recruiting qualified female and minority applicants;
  3. Reviewing personnel actions, policies and procedures to ensure compliance with the company’s affirmative action obligations;
  4. Reviewing outreach and hiring practices to ensure that they do not inadvertently screen out qualified female and minority applicants;
  5. Maintaining good records as to the basis for hiring decisions; and
  6. Using employment tests only if they have been validated under the UGESP.

By taking these preventative steps, construction contractors that are audited by the OFCCP should be able to defend their employment hiring practices and affirmative action plans, thereby avoiding costly back pay awards and additional intrusive government oversight. Where construction contractors have questions as to whether they are subject to the OFCCP’s jurisdiction and/or how to comply with affirmative action requirements, they should contact experienced legal counsel to avoid this Washington, DC, construction contractor’s fate.

For more information about this alert or if you have any questions or concerns, please contact Kenneth A. Rosenberg at 973.994.7510 or [email protected] or any member of Fox Rothschild’s Labor & Employment Department.