Thursday, October 25, 2018

Routine Labor Department Audits - What Could Go Wrong?

The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) conducts routine compliance evaluations at Government contractors. The scope of these evaluations include contractor compliance with:

  • Executive Order 11246 (President Johnson) - prohibits federal contractors from discriminating in employment decisions on the basis of race, color, religion, sex, or national origin.
  • Rehabilitation Act
  • Vietnam Era Veterans' Readjustment Act

Refer to Federal Contracts Compliance Advisor for more details.

A company in Minnesota found out about OFCCP's power the hard way. A'viands Food & Service Management recently agreed to a settlement with the Labor Department requiring it to pay nearly $400 thousand in back pay and interest to 98 female employees to resolve pay discrimination violations.

The OFCCP determined that going back to at least 2011, the company paid female employees working in food service positions less than similarly situated male employees. Reaching back seven years should give you some idea of the statute of limitations on labor violations.

As part of the settlement, A'viands also agreed to review employee compensation practices to determine whether those policies have a disproportionately negative effect on compensation for females, and agreed to make adjustments to those policies as necessary. Other non-monetary forms of relief contained in the settlement agreement include compensation monitoring and equal employment opportunity training.

The settlement agreement comes from a Labor Department press release so we haven't heard the contractor's side of the story. There was no admission by the contractor of guilt in failing to follow laws and regulations. Sometimes these settlements are made for expediency purposes.

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