OFCCP Week In Review: June 3, 2024

The DE OFCCP Week in Review (WIR) is a simple, fast and direct summary of relevant happenings in the OFCCP regulatory environment, authored by experts John C. Fox, Candee J. Chambers and Cynthia L. Hackerott. In today’s edition, they discuss:

• EEOC’s $22 Million Settlement with the Social Security Administration is a Cautionary Tale for Private Sector Employers & Federal Government Contractors
• ACLU Announced It Filed an FTC Complaint Alleging Tech Vendor Aon’s Claims of “Bias-Free” Hiring Tech Tools Violated FTC Act
• In Brief
• New Publications
• Looking Ahead: Upcoming Date Reminders

Tuesday, May 28, 2024: EEOC’s $22 Million Settlement with the Social Security Administration is a Cautionary Tale for Private Sector Employers & Federal Government Contractors

The U.S. Equal Employment Opportunity Commission confirmed to Newsweek a $22 million settlement with the Social Security Administration (“SSA”) resolving claims by Black employees in the SSA’s Baltimore office that they had suffered unlawful race discrimination in the award of bonuses and the amount of the bonus awards. The SSA employee claims went back 20 years and were based only on statistical disparities showing that Black employees suffered a different result than White employees. PROCEDURAL NOTE: The EEOC intakes and resolves the employment discrimination claims of federal employees (not just private sector applicant and employee claims) filed against their federal government agency employers. 

Of course, Title VII and Executive Order 11246 law will shift the burden of going forward with explanatory evidence to the employer upon only such a bald statistical showing of a differential result based on a Protected Basis (i.e., race, sex, national origin, etc.). Nothing more is needed. Absent credible proof of the “legitimate non-discriminatory reason(s)” to justify the adverse action complained of (whether it be in hiring, promotions, bonus awards, amount of pay, amount of bonuses, etc.), the employer will then be found liable (100 times out of 100) for want of proof to explain why it made the discretionary decisions it made that led to the racially differential results.

Something To Think About

Said another way, the SSA’s settlement points up the need for employers (subject to Title VII) and federal contractors (subject to Executive Order 11246) to create, implement, and retain Disposition Codes not just for hiring (which is quite common for the denials of employment among federal contractor employers), but also for ALL denials of promotion and bonuses and for the reduction of a bonus amount driven by management discretion. Yes, it is burdensome to document every exercise of management discretion. What do you value? What do you fear? Pick your poison. (For a recent, practical guidance on implementing Disposition Codes, see our recap of a presentation on this topic from DEAMcon24.)

Early Warning: Disposition Code documentation of federal contractor denials of promotions, and of any delays in promoting employees which produce differential results based on race, sex, national origin (or any other Protected Basis), will be PARTICULARLY IMPORTANT in coming years as OFCCP now turns its attention (again) to promotions in federal government contractor workforces.

Thursday, May 30, 2024: ACLU Announced It Filed an FTC Complaint Alleging Tech Vendor Aon’s Claims of “Bias-Free” Hiring Tech Tools Violated FTC Act

Corporate Critics Hope For “A New Arrow in Their Sling”

The American Civil Liberties Union (“ACLU”) filed a complaint with the Federal Trade Commission (“FTC”) against hiring technology vendor Aon alleging that Aon is deceptively marketing widely-used online hiring tests as “bias-free” even though, according to the ACLU, the tests discriminate against job seekers based on traits like their race or disability. The ACLU asserts that these “bias-free” claims constitute a “deceptive act or practice” in violation of Section 5 of the FTC Act (15 U.S. Code §45(a). Section 5 of the FTC Act prohibits “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.”

The real story here is the increasing resort corporate critics are using to attack and seek to stop corporate action by trying to leverage use of the broad and ambiguous Federal Trade Commission’s “unfair competition” regulatory authority. [Note: We reported recently, that on April 23, a majority of the Federal Trade Commission approved, and on May 7 officially published, a Final Rule that generally bans all employers subject to the FTC’s regulatory authority from using non-compete clauses in agreements (“NCAs”) with workers. The Final Rule is scheduled to take legal effect on September 4, 2024, absent any injunction or court ruling either stopping the Rule or extending the date. It prohibits most NCAs as an “unfair method of competition” under Section 5 of the FTC Act. Both the NCA Final Rule and the ACLU’s FTC complaint against Aon cite the provisions of Section 5 of the FTC Act.]

In a corresponding press statement/blog accompanying its Complaint to the FTC,  the ACLU elaborated:

“Two Aon products, a ‘personality’ assessment test and its automated video interviewing tool, which integrate algorithmic or AI-related features, are marketed to employers across industries as cost-effective, efficient, and less discriminatory than traditional methods of assessing workers and applicants. However, these products assess very general personality traits such as positivity, emotional awareness, liveliness, ambition, and drive that are not clearly job related (sic)or necessary for a specific job and can unfairly screen out people based on disabilities. The automated features of these tools exacerbate these fundamental problems, particularly as Aon incorporated artificial intelligence elements in its video interviewing tool that are also likely to discriminate based on disability, race, and other protected characteristics.

Cognitive ability assessments, another staple in hiring, must also be subject to scrutiny, as they have long been shown to disadvantage Black job candidates and other candidates of color and may also unfairly exclude individuals based on disability. These tests, touted to measure aspects of memory, as well as several others it markets, have racial disparities in performance.

For autistic and other neurodivergent job applicants and applicants of color, cognitive ability assessments pose a significant barrier to employment. Not only do they fail to accommodate diverse needs, but they also perpetuate discrimination based on race, disability, and other traits. Employers should not use assessments that carry a high risk of discrimination. Employers risk screening out people who could be successful employees, impacting diversity in the workplace, and could face legal liability, even where the assessments are designed and administered by third-party vendors. Employers have a legal obligation to thoroughly vet any assessments they use for compliance with anti-discrimination laws, and if they decide to use an assessment, they must provide meaningful notice so that disabled workers can make an informed choice whether to seek accommodations or alternative processes.”

Throughout its almost 50-page complaint, including via multiple footnotes, the ACLU cites research supporting the above assertions.

The ACLU also noted in its press statement that the Equal Employment Opportunity Commission’s (“EEOC”) arguments in an amicus (i.e. “friend of the court”) brief on behalf of a rejected jobseeker in the case of Mobley v. Workday, Inc. pending in the U.S. District for the Northern District of California (San Francisco (No. 3:23-cv-00770). The jobseeker asserted, in part, that Workday, Inc., is subject to federal anti-discrimination laws as an “employment agency,” “indirect employer,” or an “agent” of employers. “Workday is a type of intermediary that Congress meant federal anti-discrimination laws to cover,” the EEOC asserted in its brief. (See our story on that amicus brief here). The ACLU further stated that its “FTC complaint should serve as notice to vendors that [the ACLU] will seek to hold them accountable under consumer protection laws as well.”

Moreover, the ACLU reported in its press statement that they and their co-counsel have also filed charges with the EEOC against both Aon and an employer that uses Aon’s assessments on behalf of a biracial (Black/white) autistic job applicant who, the ACLU alleges, was required to take Aon assessments as part of the employer’s hiring process.

Wednesday, May 29, 2024: U.S. EEOC Announced Lawsuits Against 15 Employers for Alleged Failure to File EEO-1 Component 1 Reports

Firing a “warning shot across the bow” of scofflaw employers generally in the United States, the U.S. Equal Employment Opportunity Commission filed suit against 15 employers all on one day, alleging that the companies repeatedly failed to comply with the mandatory EEO-1 Survey Component 1 Data Collection. The Commission strategically spread its 15 Complaints across 10 states to broaden media coverage of this rare form of EEOC lawsuit.

At issue are the EEO-1 Component 1 data for reporting years 2021 and 2022 including workforce information by job category and sex, race, or ethnicity. Section 709 of Title VII of the Civil Rights Act of 1964, as amended, and Section 1602.7 – 1602.14, Chapter XIV, Title 29 of the Code of Federal Regulations require private sector employers with 100 or more employees to submit these data, the agency explained in a press release.

“Not only did Congress authorize the EEOC to collect this (sic) data, Congress also authorized the agency to go to court to obtain compliance when employers ignore their obligation to provide the required information,” said EEOC General Counsel Karla Gilbride. EEOC Chair Charlotte A. Burrows pointed out that this requirement has been in effect for “nearly six decades.”

EDITOR’s NOTE: Despite being a requirement for nearly 60 years, typically about 10% of employers thought to be required to file EEO-1 reports do not do so. While there is no financial penalty or fee for failing to file when the EEOC’s Rule requires an employer to do so, the EEOC does have legal authority, as the Commission notes, to seek an injunction in federal District Court to compel compliance. Prior EEOC General Counsels have been loathe to file suit seeking rather to “jawbone” scofflaw employers to comply with their legal duty. One reason for that is that in any reporting year, about 100,000 employers reportedly typically file EEO-1 Reports. If 10% of employers do not file their required EEO-1 Reports, the legal staffing necessary to file and prosecute approximately 10,000 injunction lawsuits would overwhelm the Commission’s General Counsel staff. What General Counsel Gilbride has done is to file a related series of “demonstration” lawsuits amid great publicity in the hopes of galvanizing the MANY scofflaw employers to get with the program.

The deadline for covered employers to file their reports for the 2023 (current) reporting year is June 4, 2024. The EEOC opened reporting for the 2023 data collection on April 30, 2024.

Monday, June 3, 2024: US GSA Published Request for Public Comments on FSRS Registration Requirements for Prime Grant Awardees

Separate ICR Covers Requirement for Prime Grant Awardees to Actually Report Its Own & Subgrantee Information

Colleges, universities, and federally financed construction contractors take notice. Related to, but separate from, the topic of our Bonus Blog last week, the General Services Administration (“GSA”) published a 30-Day Notice of its request for public comments regarding an extension to the existing OMB clearance allowing an information collection requirement (“ICR”) for the Federal Subaward Reporting System (“FSRS”) Registration Requirements for Prime Federal Grant Awardees. This ICR falls under OMB Control Number 3090-0291. Previously, on February 29, 2024, GSA posted a 60-day Notice on this same ICR.

The June 3rd 30-Day Notice clarifies that “[t]his information collection is specific to the burden of reporting entities registering to report in FSRS, not the actual subaward reporting” (emphasis added). (“Subaward” reporting is government-speak meaning the Prime Grantee’s reporting of subcontractors on the grants of the Prime). In our story last week, we explained that the actual subaward reporting requirement for Prime Grant Awardees is housed under OMB Control Number 3090-0292. On May 24, 2024, GSA published a different 30-Day Notice seeking public comments on the reporting requirements under OMB Control Number 3090-0292 for federal Prime Grant Awardees to report information, including executive compensation information, about both itself and information about its sub-grantees, if any exist.

Our Bonus Blog last week, “FAR Council Seeks to Require Federal Contractors to Report First-Tier Subcontractor Information, Including Potentially Executive Compensation Data” focused on another ICR from the FAR Council (not GSA) under OMB Control Number 9000-0177. If OMB approves that ICR, the FAR Council will reinstate that long-dormant ICR (under OMB Control Number 9000-0177) to require Prime federal contractors to report to a publicly available federal contracting database information about (a) the contracts with their first-tier subcontractors, AND (b) potentially the compensation their first-tier subcontractors pay their top five executives.

All three of the above ICRs are required pursuant to the Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282), as amended by Section 6202 of the Government Funding Transparency Act of 2008 (Pub. L. 110-252). 

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.