OFCCP Compliance Checklist to be Audit-Ready
Part One of this article focused on the claim of gender pay disparity made by Robin Wright, the fictional President on the Netflix drama “House of Cards.” Robin Wright may play a powerful fictional character, but the real-world remedy for an actress in her situation is limited. Unfortunately for her, she is not an employee of a federal contractor who is under the jurisdiction of Federal Contract Compliance (OFCCP). Even still, there is a reason they call it a house of cards – laws and their application over time are subject to interpretation. As in any great drama, there is always a plot twist and this past Friday an Administrative Law Judge (ALJ) threw one into the equal pay plot in a long-awaited ruling in the case of OFCCP v. Google.
ALJ Steven Berlin ruled in favor of Google and against the OFCCP in their attempt to force federal contractor Google to hand over extensive employment records in the investigation read decision. Is this a plot twist? A win for federal contractors? A loss for employees? A game-changer for best practices? This remains to be seen. First, let us take a quick review and then analyze what it all means and how it changes the game, if at all.
Just the facts
Google is a federal contractor subject to audit by the OFCCP to ensure compliance with equal employment laws, primarily the EO 11246. The OFCCP is concentrating their examination on compensation discrimination – gender pay disparity by Google. Google initially complied with the OFCCP’s document demand to analyze pay practices and provided the requested “snapshot” documentation – as specified in Item 19 of the Scheduling Letter. However, the OFCCP expanded their document demand to include records going back to 1998 as well as employee contact information for 25,000 employees based on the argument that the snapshot revealed “systemic compensation disparities against women pretty much across the entire workforce” (Janette Wipper – OFCCP Pacific Region Director – testimony). Google rejected this demand and argued it was broad, violated privacy and was over-burdensome. Litigation ensued and the ALJ set out to review and rule on enforcement of the OFCCP’s administrative subpoena.
The Ruling
Judge Berliner ruled that the OFCCP’s subpoena for additional records and information was “over-broad, intrusive on employee privacy, unduly burdensome, and insufficiently focused on obtaining the relevant information.” Reaching back in time to 1998 exceeds what is reasonable to expose discrimination; subjecting confidential employee data of 25,000 employees was unreasonable when the contact information of 5,000 should suffice the investigation; and finally, Google’s size and profitability is not determinative to how burdensome the OFCCP’s request is to the contractor.
Notwithstanding the apparent victory for Google, the Judge did rule that Google must still comply with parts of the OFCCP’s subpoena, subject to certain limitations placed by the Court. In addition, nothing in the ruling prevents the OFCCP from requesting additional data, if and when they can sufficiently prove the need as the investigation continues.
What does this mean for other federal contractors?
It is too soon to know if Judge Berlin’s ruling is a plot twist in this investigative drama – broadly impacting the OFCCP and their audits of other federal contractors – or simply just one of what might be several turns in the case against Google. Federal contractors should not immediately read too much into this ruling or consider it a game-changer – not yet and certainly not without the advice of legal counsel.
The Google case is limited. This ruling is a narrow judicial review of an administrative subpoena. This is not a ruling on the merits and the judge left several doors open for the OFCCP. It remains to be seen if the ruling represents a challenge for the OFCCP to enforce pay equity. Certainly, if they believe that is the case, expect an appeal of this ruling.
Barring an appeal, the OFCCP investigation will continue and one can assume it will lead to where the facts lead them. This was a discovery dispute and as such it is instructive to other federal contractors. It clearly demonstrates how broad the OFCCP may seek to go in an audit. Google was successful on this set of facts. Another contractor, however, could alternatively be compelled to comply with what they feel is a broad or burdensome demand.
Did the OFCCP make a tactical error?
Judge Berlin states on page 26 of his ruling: “OFCCP is not an advocate representing Google’s employees against their employer. It is conducting an objective audit of a government contractor against which there have been no allegations raised with OFCCP. OFCCP might conclude its investigation with a finding that, though there is a pay disparity correlated to sex, the cause is job-related, consistent with business necessity, and thus lawful.” Nonetheless, pay disparity seems to be the discriminatory act under review not only by the Court but by the OFCCP as well.
As all contractors are aware, and as Judge Berlin notes in his opinion, audits are usually not complaint driven. Audits are conducted by the OFCCP to ensure contractors are meeting their affirmative action obligations. The audit of Google was not based on any complaint by any of its 25,000 employees, but given its nature, it became one of the largest for the OFCCP. It should be noted, as Judge Berlin keyed in on (and this may have driven the ruling), that the OFCCP appears to have narrowed its audit of Google to gender pay disparity. By limiting the focus, the Judge may have felt more inclined or empowered to constrain the scope of the OFCCP subpoena. Had the audit remained a broad audit of compliance with hiring practices and other affirmative action requirements, the Judge could have ruled to enforce the full scope of the OFCCP subpoena.
Widening the lens on the drama
Coming full circle to Robin Wright and the “House of Cards” of it all, the OFCCP will continue to enforce pay equity as the issue garners more and more public attention, especially from high-profile people. The issue clearly has the attention of the OFCCP. During the Obama administration, it was a priority matter. The investigations typically last on average two years and were costly and disruptive to contractors undergoing audits. Some may see Judge Berlin’s ruling and a pro-business agenda of the new Trump administration as an indicator that these audits might lose momentum. A federal contractor who proceeds with that mindset does so at their own peril at this early date.
The better course of action is to maintain the best practices outlined in Part One. Pay determination is a complex area of investigation with many variables such as experience, years of service, performance, responsibilities, and other job-related criteria. As such, it is evident why the OFCCP made such a broad demand of Google’s records. All federal contractors, large and small, are subject to such an audit and time and money can be saved by complying with the law and maintaining records. Google will not be the first or last case of its kind – someday it could be your business.
For more information, contact Ahmed Younies at 714-884-4610 or [email protected].