Monday, March 7, 2011

Labor Department Administrative Judge Rules for OFCCP in Scheduling Letter Case

On February 29, 2011, Administrative Law Judge (ALJ) Daniel A. Sarno, Jr. issued a recommended decision and order in favor of the Office of Federal Contract Compliance Programs (OFCCP) and against federal contractor United Space Alliance in a case involving the use of Item #11 of the OFCCP Scheduling Letter. United Space Alliance (USA) provides services for the Space Shuttle and has its headquarters in Houston, Texas. USA was informed on August 7, 2009 that its Cape Canaveral facility was scheduled for a compliance review pursuant to Executive Order 11246, Section 503 of the Rehabilitation Act and other laws enforced by the agency. The "Scheduling Letter" sent by the OFCCP contained an item #11 which requested compensation data. USA provided the information requested including the Affirmative Action Program (plan).

The Compliance Officer conducted a desk audit of the information provided, including an analysis of the contractor's compensation data. Her initial test was a "Threshold Indicator" test and revealed no indicators of possible pay disparities between women and men. She conduced a subsequent test called a "pattern analysis." This test contained no thresholds, but did indicate possible pay disparities. The Assistant District Director (ADD) also conducted a test called a "30 and 5" test to establish a more refined means of assessing the data. As a result of this test, he decided to request additional information from USA.

Using the Fourth Amendment's "reasonable suspicion" standard, USA challenged the authority of the agency to seek additional information during the desk audit stage of the investigation or to pursue an on-site compliance review. USA did not submit the requested information, leading to a subsequent letter from the ADD and a notice that an on-site investigation would be conducted to explore further the questions raised in the desk audit. USA was also informed that veterans' (VEVRAA) and disability (Section 503) issues would be reviewed as well while on site. The Department of Labor subsequently filed an administrative complaint seeking access to USA and to enforce the laws within its jurisdiction.

USA argued that since the Threshold test revealed no indicators that OFCCP should have ended the review at that point. It also argued that the Threshold analysis was superior to the other tests that had no thresholds. The court was unpersuaded and agreed that the information requested by the ADD would have enabled him to conduct a regression analysis called the "gold standard" The court also emphasized that the agency had not established a violation but was seeking more information on which to base a decision. The court concluded:

District Directors are tasked with the Agency mission of ensuring that
Federal contractors comply with the regulations dealing with Affirmative Action
Programs and Equal Employment Opportunity as it relates to race, gender,
religion, national origin, disability and veteran‟s status.They are given broad
discretion in carrying out this mission. I think it is quite reasonable for
the District Director to use additional analyses to test the results of the
threshold analysis.

The ALJ's recommended decision is submitted to the Administrative Review Board for a final ruling. To see the ALJ's recommended decision and order, go to:$File/United%20Space.pdf

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