In prior articles in this series, published on November 17, 2017 and February 14, 2018, I proposed an evaluation of OFCCP's recent regulatory and enforcement positions through the lenses of the fundamental and perennial question, "What is Law?" This review is timely because the new Administration is building its team and considering the regulatory and enforcement approaches to be implemented on its watch.

In the last article, we examined OFCCP's concept of "Pay Analysis Groups" and found it wanting under the Rule of Law for various reasons related to "a failure to achieve rules at all, so that every issue must be decided on an ad hoc basis." Lon L. Fuller, The Morality of Law, at 39.

Yet another way that OFCCP may have failed to apply the Rule of Law is by "a failure of congruence between the rules as announced and their actual administration." Id. Prior to 1997, OFCCP regulations expressly addressed OFCCP compliance review procedures, providing a degree of clarity and guidance to both OFCCP field officials and contractors. See 41 C.F.R. Part 60-60 (1996) ("Contractor Evaluation Procedures for Contractors for Supplies and Services"). In 1997, OFCCP eliminated these regulations and provided field instructions primarily in the Federal Contract Compliance Manual (FCCM) and in policy directives. See 62 Fed. Reg. at 44,186-87 (Aug. 19, 1997).

Since the rescission of the Part 60 regulations, contractors have expressed concerns about a lack of uniformity and predictability in the way OFCCP field offices conduct compliance reviews and apply OFCCP regulatory requirements. OFCCP has expressly sought to allay contractors' concerns by providing published assurances:
 

• “Contractors should not be concerned that the elimination of the regulatory provision in § 60-60.7 will mean an end to the established schedules for completing evaluations of contractor compliance.  OFCCP’s subregulatory guidance will continue to reference the 60-day time frames . . .”  62 Fed. Reg. at 44,187.

• “OFCCP will issue a Directive which describes the Item 11 request in more detail and outlines standards to govern OFCCP’s analysis of compensation data and follow-up requests to the contractor for additional compensation information.  OFCCP will publish this Directive on its website.”  Supporting Statement, at 18, contained in Ex. A, “public information collection request” and “applicable supporting documentation” OFCCP submitted to OMB, referenced in Notice, Submission for OMB Review: Comment Request, 69 Fed. Reg. 47,179, 47,179 (Aug. 4, 2004).

• “This revised Federal Contract Compliance Manual [FCCM] . . . provides procedural and technical guidance on compliance issues based on current agency procedures and processes, and improves consistency across the agency’s regional and field offices. It may also provide our contractors and subcontractors more transparency and clarity about basic OFCCP procedures and processes. That said, there might be slight differences between regions and offices because some discretion remains with COs and their supervisors as to the best way to manage individual compliance evaluations and investigations within the framework created by the Manual.  Remember, these differences should be minor and should occur infrequently because one of the goals of the Manual is standardization.”  FCCM, at 1.

However, OFCCP's assurances, the FCCM provisions, and policy directives have not in practice addressed contractors' concerns because contractors have routinely experienced that OFCCP field offices ignore the published instructions without any apparent consequences. The examples are myriad and ongoing:
 

• Audits last for years and involve numerous, burdensome requests. There appears to be no timetables for completing a compliance review and limited concern with the burdens imposed by audit requests.
   
  • "Contractor fears of repeated and unending evaluations are unfounded. OFCCP always has been sensitive to contractor concerns about the amount of time, money and personnel resources consumed by compliance reviews." See 62 Fed. Reg. at 44,180 (also referencing 60-day timetable for completing a compliance review).


• Refusal to provide updates to the contractor regarding tentative concerns and the direction of the compliance review.
   
  • The FCCM provides that "upon completion of the necessary onsite review and evaluation of all information obtained, COs will discuss the tentative findings of the compliance evaluation with the contractor at the onsite exit conference." FCCM § 2N. Additionally, the CO "will inform the CEO, or designee, of the next steps in the compliance evaluation process, of any outstanding or additional requests for information, and of the possibility that a PDN or NOV could be issued." Id. § 2N00.


• Refusal to provide manager interview notes for review and comment. Some OFCCP regions claim to have categorically exempted themselves from this requirement.
   
  • The FCCM states that "after a formal interview, the CO must ask each person to read, sign and date the CO's interview notes." FCCM § 2M00(f). It also provides that the "CO will promptly type the handwritten interview notes using MS Word in order to provide the interviewee with a hard copy to sign as soon as possible after the interview." Id.


• Refusal to provide predetermination notices and response opportunities when alleging systemic discrimination.
   
  • The FCCM indicates that field offices should use a predetermination notice in cases where they are alleging a "pattern or practice" of discrimination, defined in the FCCM as: "Also known as "systemic discrimination," this type of discrimination involves statistical and/or other evidence that demonstrates that discrimination is standard operating procedure – the regular rather than the unusual practice. The proof of the pattern or practice supports an inference that any particular employment decision, during the period in which the discriminatory policy was in force, was made in pursuit of that policy or practice." See FCCM, at ¶ 8E.

Some of the more prominent examples of OFCCP's failure to honor its own published rules occurred in the context of Agency enforcement actions related to requests for additional information during audits:
 

• During the Administration of President George W. Bush, OFCCP informed contractors on its website of a "threshold test" for evaluating initial pay data submitted during an audit, and OFCCP Director Charles E. James, Sr. issued an internal directive intended to require field officials to use the threshold test as the basis for making requests for additional pay data. Following the change in Administrations but without publishing any notice of a change in these policies, OFCCP Director Patricia Shiu then pursued enforcement of a data request where the contractor's data passed the published test. In that case, OFCCP sought enforcement based on a previously unpublished, subjective analysis developed and applied by the local office. See United Space Alliance LLC v. Solis, 824 F. Supp. 2d 68 (D.D.C. 2011).


• OFCCP sought applicant and hire data after the compliance review period and argued to DOL adjudicators that the request was justified by certain adverse impact analyses. Only through discovery in federal district court was it determined that the alleged basis for the request was erroneous. See Frito-Lay, Inc. v. U.S. Dep't of Labor, 20 F. Supp. 3d 548, 552 (N.D. Tex. 2014) ("It appears that Defendants have reviewed the analysis cited in the Administrative Complaint and discovered potential errors in their analysis.").

Finally, other examples of the dissonance between stated policy and the reality facing contractors during actual OFCCP audits are more serious and involve substantial conflicts with Title VII. The Supreme Court has ruled that sex-based or race-based remedial actions are lawful under Title VII if there is a "strong basis in evidence" that the challenged employment practices are unlawful under Title VII. See Ricci v. DeStefano, 557 U.S. 557, 585 (2009). Title VII recognizes no exemptions for OFCCP settlements. See Maitland v. Univ. of Minn., 155 F.3d 1013, 1018 (8th Cir. 1998). However, contractors often find that OFCCP field offices refuse to provide the legal and factual basis for allegations of systemic discrimination contained in an Notice of Violation (NOV) or Predetermination Notice (PDN). This practice occurs despite the FCCM instructions to the contrary. The FCCM instructs that the PDN (or NOV, if no PDN is issued), "describes the discrimination, identifies the affected class, identifies the employment action giving rise to the finding of a violation and identifies the basis for the liability determination (e.g., disparate treatment in the selection of minority technicians). The PDN should also include facts and the results of analyses that support the alleged violation and recommended remedies."). FCCM, at § 8E01. Similarly, the NOV must "[r]estate the problem, with any modification from the contractor's response (to the PDN), include specific facts, and where applicable, the results of the analyses that support the violations." FCCM, at § 8F.

When field offices fail to provide the information required of the FCCM, contractors are left with the untenable option of facing OFCCP threats of enforcement litigation or of settling allegations without understanding their basis in law or evidence. The risk entailed by the latter choice is that OFCCP's statistical analyses, especially those in support of pay discrimination allegations, are often improper and likely to be insufficient to justify the Agency's demands for race- or gender-based remedial actions. See, e.g., Rudenbusch v. Hughes, 313 F.3d 506, 515–16 (9th Cir. 2002) (regression analysis was not technically sufficient to justify gender-based pay adjustments); Maitland, 155 F.3d at 1016–18 (same); Smith v. Virginia Commonwealth Univ., 84 F.3d 672, 676–77 (4th Cir. 1996) (criticizing regression for "an illogical comparison involving an inflated pool" and for failing to account for factors such as actual prior experience).

As noted, these are important considerations for the incoming leaders of OFCCP and DOL who are intent on adhering to the Rule of Law. OFCCP Director Ondray Harris has just issued Directive 2018-01, which addresses one of the areas of concerns noted above: the refusal of field offices to afford contractors an opportunity to understand and attempt to rebut OFCCP’s allegations through the use of a Predetermination Notice (PDN). Directive 2018-01 provides that “OFCCP will issue PDNs for preliminary individual and systemic discrimination findings identified during the course of a compliance review.” It further makes clear that “Regional discretion is no longer permitted.” Directive 2018-01 indicates that it is also intended to ensure that contractors have “transparency about preliminary findings” and that the PDN must identify specifically the “sufficient evidence . . . of discrimination” that OFCCP believes exists in the particular matter. To ensure that this intent is fulfilled by the field offices, the Directive requires that PDNs be reviewed by both the regional Office of the Solicitor and OFCCP’s National Office.
 
Director Harris’s new directive is a welcome development on the path toward restoring OFCCP to the Rule of the Law.