Voluntary compliance through negotiated conciliation agreements is the most common and most preferred way to resolve violations under the laws enforced by OFCCP. When identified violations cannot be resolved through conciliation, the next step in the enforcement process is a referral to the Department of Labor's Office of the Solicitor (SOL) with a recommendation for enforcement. This article explains how that process works and what happens as a result of such a referral.
The relationship between OFCCP and SOL is not like the usual lawyer client relationship. OFCCP and SOL are both separate offices in the Department of Labor and operate independently of each other. SOL both serves as OFCCP's lawyer and in somewhat of an oversight capacity on behalf of the Secretary of Labor as the lawyer for the Department. OFCCP does not order the SOL to start an enforcement action, but rather recommends that it start such an action. An enforcement recommendation package is prepared by the Regional Office of OFCCP and referred to the Regional Office of SOL. Included in this package are the investigative file, documentation of all communication between the contractor and OFCCP, details of the negotiation process, remedy calculations and the data underlying these calculations, spreadsheets identifying all members of the affected class, and usually regression analyses prepared by the statisticians either in the National Office or their staff in the field. The National Office of OFCCP has gone back and forth on whether recommendations for enforcement have to be cleared in advance by the National Office or whether they can be submitted simultaneously to the National Office and the Regional SOL. When the referral is sent to the National Office of OFCCP, it does not usually include the actual investigative file. The outcome of the referral does not seem to be significantly impacted one way or the other by the timing of sending enforcement referrals to the National Office.
From this information, the Regional SOL prepares a litigation memorandum analyzing the strengths and weaknesses of the case from a legal perspective. As part of this process, OFCCP will often be asked for additional information or for additional calculations. In the past, the SOL may have had very little information about potential enforcement cases prior to their referral to the SOL. Over the years, this pre-referral involvement has significantly increased. The SOL may be involved in some cases from the time potential discrimination indicators are identified. The more statistically significant the initial indicators, the greater the likelihood that there will be significant pre-referral SOL involvement. Pre-referral involvement includes strategizing with OFCCP on the onsite investigation. This gives the SOL an opportunity to review the OFCCP's plans for the onsite investigations and to make suggestions as to the lines of inquiry or specific questions to be asked in interviews or specific documents or types of documents to be collected from the contractor. In my experience, pre-onsite consultations with SOL were not particularly useful since at this point in the investigation, so little is known about the causes of the potential indicator that the SOL recommendations tended toward the generic. The degree of early involvement with SOL differs from Region to Region.
In theory, this early involvement in enforcement is expected to lead to a more streamlined and expeditious post-referral review process. This may or may not be the case since often the SOL has not seen the entire investigative file at this point. Once the SOL sees the specific evidence rather than OFCCP's synopses of the evidence, there may be factors with legal significance that were either not identified by OFCCP staff or whose legal significance was missed since most OFCCP staff are not lawyers and even those who have law degrees are not practicing litigators.
SOL involvement has also been increased in the pre-referral conciliation phase of the investigation. SOL will often review remedy calculations and the arguments supporting the violation findings, but cannot guarantee support for either should the case be referred with a recommendation for enforcement. Again, SOL will likely not have seen the actual case file at this point and may have a significantly different view of the liability and/or the remedy once they see the original documentation and calculations. They simply do not have the financial resources to read all of these documents in every case since most of these cases will resolve before there is an enforcement referral. This is understandable since OFCCP Regional Directors do not, themselves, have time to read every document in every case file.
Once the case is officially referred to SOL with a recommendation for enforcement, it becomes SOL's responsibility to review the entire package including the case file and prepare a memorandum arguing for or against proceeding with litigation. The litigation memorandum, as SOL's analysis is sometimes called, will be sent to the National Office of the SOL for further review. Even where the Regional SOL is supportive of filing an enforcement action, the National SOL may not approve or may insist on additional information prior to approving the filing of an action. If this is the case, the Regional SOL may either provide the additional information after going back to OFCCP to get this information, it may attempt to resolve the case short of litigation, or it may send the recommendation for enforcement back to the OFCCP.
If the National Office of SOL approves the recommendation for enforcement, it has to go back to the National Office of the OFCCP for funding for the enforcement action. While it may seem like approval of this funding would be a sure thing, this is not always the case. OFCCP usually funds its litigation by setting aside money that would go to other purposes. How much money is available for litigation is impacted by other operating expenses and also by how much money is being spent in other OFCCP enforcement actions. OFCCP enforcement is an expensive proposition. The biggest expense is often the cost of testifying experts. OFCCP hires outside experts for litigation such as statisticians, labor economists, and industrial psychologists and these experts are very expensive to hire. OFCCP does not want to expose its in-house experts to the litigation process because it wants to limit areas of inquiry to the specific case in litigation. Because of the use of outside experts, all of the statistical and testing analysis has to be completely redone in many instances so that the testifying expert can speak from his or her own evaluation of the evidence. This means that some cases may have to wait for funds to become available, and some may simply not get funded if the money is not there. Denial of access cases, where a contractor refuses to let OFCCP onsite or where they refuse to provide requested documents do not, generally speaking, require experts so are usually not impacted by funding issues.
When the National Offices of OFCCP and SOL both approve the filing of an enforcement action, the Regional Office of SOL is usually instructed to proceed with the enforcement action through the filing of an administrative complaint. The fact that a complaint is filed does not end the effort to resolve the matter short of a trial. There are a number of differences between negotiations with OFCCP and negotiations with SOL. When an agreement is reached with OFCCP, it usually results in a conciliation agreement. This agreement is enforceable, but is not part of a filing before an administrative law judge (ALJ). When an agreement is reach pre-trial with SOL, the agreement is embodied in a consent decree which is filed with an ALJ. Consent decrees count as litigation actions for SOL. Either type of agreement has to be agreed to and signed by OFCCP.
Since SOL will be conducting the litigation, it may weigh factors differently in deciding on settlement than would OFCCP staff. This is not always a better measurement than OFCCP, just somewhat different. In my experience, SOL settlements were, at best, equal to or sometimes lower than the settlement amount sought by OFCCP. This has the unfortunate effect of sometimes pushing cases to SOL that could have been resolved earlier by OFCCP. The extra time it takes to resolve the case can be a significant, but more hidden, cost of delay.
Once a case has been accepted for litigation, OFCCP's work is not over. Especially in cases with large affected classes (alleged victims of the discrimination violation), OFCCP may spend significant hours and resources providing SOL with litigation support. This can include running and re-running remedy calculations as affected class members are added to or subtracted from the list, recalculations based on changing remedy timeframes, and going back to the file or the contractor for additional information. For a long time, this effort was not accounted for from a performance perspective at OFCCP, but I believe this situation has been addressed at least to some extent.
Eventually, if there is still no resolution, the case will go to trial. At trial, OFCCP's role is to provide testimony concerning its investigation. The Compliance Officer and possibly his or her manager will be called to testify concerning their investigation. This is basically the story of how the problem was identified and how the evidence was collected. The most important testimony, in terms of the outcome of the case, is usually the expert testimony which argues in support of OFCCP's interpretation of the significance of numerical evidence in proving discrimination. This is where the expert witness earns his or her money. Let's be clear though, the earned money comes out of OFCCP's budget, not out of the remedy money secured at trial. All of the remedy money goes to the affected class members, who hopefully can still be found.
The timeframe from filing of the administrative action to resolution of the case, especially in discrimination cases on the merits (as opposed to access cases), can be very long. The enforcement process is usually a multi-year effort. It often follows an administrative investigation process that was itself a multi-year effort. The prospect of this extended process with OFCCP and SOL is often a factor in producing conciliation agreements to short circuit some of this time.
Just because the process is long and arduous does not mean that it should never be used. Decisions on the merits of these cases help to shape the law and the enforcement effort for the future. It helps both the contractor and the agency know what is and is not acceptable in terms of both employer actions and agency investigations. By having some cases go the distance, many other cases may never develop because, hopefully, other contractors will heed the lessons learned through the decisions rendered, and OFCCP will improve its processes and make better decisions about what practices to enforce against in light of the litigation outcome.
Nevertheless, it is no fun being the company who provides all of these valuable lessons. Resolving outstanding compliance problems short of litigation is best for both the contractor and the agency in most instances. To avoid or minimize the prospect of litigation, the first factor to review is jurisdiction. It is not always easy to find contracts that subject the specific facility under review to OFCCP jurisdiction. With prime contractors, this is usually fairly easy to find, but, with subcontractors, it can be trickier to trace the contracting relationship to the specific facility. For example, the government may not be able to prove that any of the parts produced by a particular facility ever found their way into products ordered by the government even where it is clear that there is some kind of relationship between the parent company and a prime government contractor. As part of the review of jurisdiction, be sure to review the entire liability period as there have been circumstances where several months in the middle of the period lacked contract coverage and this can significantly impact the remedy and possibly the theory on liability.
The contractor should make sure that both OFCCP and SOL have taken into consideration all relevant evidence. Even if evidence surfaces after the administrative investigation concludes and the matter is referred for enforcement, the Department is duty-bound to review all relevant evidence at whatever stage of the process it comes to light. Sometimes additional applications are found, or additional documentation surfaces that explains observed disparities. These should always be brought to the attention of the agency.
The contractor should always check the mathematics. Make sure you get a clear understanding of how the agency did its calculations. You may not be able to secure its spreadsheets, but you should be given a sufficiently clear explanation of the methodology used in its calculations so that you and your expert can replicate OFCCP's findings. It would also be helpful to find out if SOL is still committed to those calculations, or whether it has recalculated the findings either itself or with outside assistance. You should find out why recalculations were done if you find that they have been done. This may give you a better chance of confirming whether the calculations make sense to you and your expert.
Remember that you usually do not have to agree with the finding in order to resolve the outstanding enforcement matter. In most cases, provided you are willing to institute the remedy, OFCCP and SOL will not require that you admit wrongdoing in order to reach a settlement. This situation is handled through a non-admission clause in the Conciliation Agreement with OFCCP or non-admission language in the Consent Decree. Most Conciliation Agreements and Consent Decrees also include release language to protect the company from further litigation by affected class members arising out of the same facts. The agency and SOL limit releases to laws enforced by OFCCP that are relevant to the violation.
Both Conciliation Agreements and Consent Decrees will obligate the company to file progress reports during the period covered by the closure documents. These submissions should be carefully reviewed as they sometimes reveal further violations, sometimes in unrelated areas.
Often the decision of whether or not to settle comes down to the cost of litigation versus the cost of settlement and the perceived likelihood of success on the merits. A further consideration should be the importance of the principle at stake in acquiescing to the remedy. Settlement may make sense in a well settled area of the law where you really cannot explain the disparities and you will not be breaking any new ground by fighting to the finish. However, there may be situations where a novel approach or extension of authority is being argued by the government that will impact not just a given facility, but the landscape of contract compliance. These may be the cases where the costs simply have to be borne in order to determine, long term, what the state of the law ought to be.
In summary, litigation is an unfortunate, but necessary, part of the compliance picture. Hopefully, for those less familiar with the process, you will only have to read about it here and not experience it first hand.