Company Pays $175 Thousand to Settle Discrimination Allegations

A conciliation agreement is the result of a third party helping parties resolve a dispute. The process is similar to mediation in that a conciliator assists parties to reach an agreed resolution. However, a conciliator also expresses opinions about the merits of the dispute but does not decide the conflicts for the parties. It is useful if one side has unworkable beliefs about the fight; a pro-active approach to the advantages may help resolve the disagreement. The approach is advantageous if both sides want resolution by objective opinions concerning appropriate decision-making, rather than just mediation and settlement (online source).

The Labor Department's Office of Federal Contract Compliance Programs (OFCCP) and Conduent Commercial Solutions have entered into a conciliation agreement by which Conduent, a Federal contractor, has agreed to pay $175 thousand in back wages to resolve claims of systemic hiring discrimination at its Portland, Oregon facility.

During a routine compliance evaluation (note the word 'routine'), the OFCCP alleged (note the word 'alleged') that in 2012, Conduent discriminated against 1,121 female, African American and Asian applicants for its customer care assistant position. That's a huge number of applicants. OFCCP determined, based on its evaluation, that the company's hiring practices violated Federal prohibitions against discriminating in employment based on, among many other things, race.

This case has been going on for seven years and it sounds to us like Conduent was ready to throw some money at the situation and get the matter behind them. Actually, Conduent did not own the company back it 2012. It was part of Xerox. In its own statement on the settlement, Conduent stated that it entered into the agreement in order to "... put these legacy issues behind us." Under the terms of the conciliation agreement, Conduent agreed to pay $175 thousand in back wages and make 138 job offers to original applicants as positions become available. Also, Conduent committed to ensuring that its personnel and hiring practices comply with EEO laws and regulations.

The Labor Department press release did not detail the exact nature of Conduent's activities that gave rise to its allegations. Many of these cases involve insufficient documentation as to why an applicant was not considered for a position.

The full Labor Department press release can be accessed here.

Contractor Debarred Over $5 Thousand Dispute

The Department of Labor's Wage and Hour Division (WHD) performs routine (usually random) audits of Government contractor compliance with the Davis-Bacon and Service Contracting Acts and performs investigations when warranted such as those from whistleblowers. We've discussed the results of a few of those audits/investigations on these pages. Usually, when violations are discovered, contractors pay employees the shortages and life goes on. Companies that have been found to be in non-compliance however, are placed in a higher risk category where their chances of being audited more frequently, increase.

One recent WHD investigation found that a contractor filed to pay a total of $4,715 in back wages to eleven employees. As a result, the Labor Department "debarred' the contractor which means no further Government contracts for three years. That, to us, seemed a bit extreme - getting debarred over less than five thousand dollar noncompliance. There must be more to this story we surmised.

There was. The contractor, Pro-Fit Development Inc., was a repeat offender. The company had been found to be in violation of prevailing wage obligations back in 2017. A follow-up "visit" by the WHD found that the company had continued to short-pay its employees. Not only that, but Pro-Fit also failed to notify its subcontractors of their prevailing wage responsibilities, causing its subcontractors to pay their employees at rates lower than those that corresponded to the work they actually performed.

After Pro-Fit refused to pay back the $5 thousand to affected employees, WHD requested the contracting authority to Withhold funds due to the contractor under the contract. Those withheld funds will instead, be transferred to the employees who are owed back wages.

The Importance of Flowing Down Required Contract Clauses to Subcontractors

Tishman Interiors was the prime contractor on a renovation project at the Federal Reserve Bank in New York. It subcontracted electrical and cable installation work to three different subcontractors. In came the auditors - auditors from the Labor Department's Wage and Hour Division (WHD). You know this story isn't going to go well for the contractor. We don't know what instigated WHD's investigation. It could have been random or it could have been based on a call to WHD's hotline. WHD's press release did not say.

WHD found that the Federal Reserve Bank did not include DBRA (Davis-Bacon and Related Acts) in its contract with Tishman. Tishman, in turn, did not include DBRA provisions in its subcontracts. This omission led to Tishman and the three subcontractors to pay its employees at hourly rates lower than the prevailing wages for the work they performed (a DBRA violaion). WHD also found that the prime and subs violated CHWSSA (Contract Work Hours and Safety Standards Act) when they failed to pay required prevailing wages for overtime. The groups failure to prepare and maintain certified payroll records and sign compliance statements in the payrolls resulted in violations of the Copeland Act.

Was this Tishman's fault? After all, the Federal Reserve Bank did not include these provisions in its solicitation or the resulting contract. How was Tishman to otherwise know that the contract was subject to DBRA provisions?  According to the Labor Department, Tishman was at least partly at fault. The Labor Department stated that "Contractors also bear a responsibility to exercise due diligence when bidding and working on federal contracts." Presumably this means that Tishman should have known that it was bidding on a Federal contract subject to DBRA.

As a result of the WHD investigation, Tishman was required to pay $420 thousand in back wages to its own employees and subcontractor employees. Wonder whether Tishman plans to submit an equitable adjustment proposal to the Federal Reserve Bank.

Labor Department Announces New Voluntary Compliance Program

The Labor Department's Office of Federal Contract Compliance Programs (OFCCP) announced yesterday a new voluntary enterprise-wide compliance program for high-performing Government contractors. Acceptance into the program means your company won't be audited for compliance with laws prohibiting discrimination on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, disability or status as a protected veteran for at least five years.

OFCCP conducts compliance evaluations and has recently expanded the number of reviews performed. However, the number of evaluations conducted annually covers a fraction of the total number of contractors that fall within OFCCP's jurisdiction. This new voluntary compliance program for high-performing contractors is intended to free up limited OFCCP resources for compliance effort at contractors who do not meet the high-performing criteria. Contractors that meet the top-performing criteria will be removed from the pool of contractors scheduled for compliance evaluations.

Here's some key elements of the program:

• It's voluntary
• It will recognized two tiers of contractors - a top tier and a tier that needs more assistance in becoming a top tier.
• Contractors must apply to the program.
• During the application process, OFCCP will perform a compliance evaluation.
• To participate, contractors will demonstrate that they meet established criteria that verifies not only basic compliance with OFCCP's requirements, but a demonstrated commitment to and application of successful programs on a corporate-wide basis.
• To remain in the program, contractors are expected to maintain a workforce free of discrimination or other material violations, and provide periodic reports and information to OFCCP through which OFCCP can confirm these efforts.

Decisions, decisions. Will contractors want to enter the voluntary compliance program with the guarantee of a compliance evaluation at the beginning and on-going reporting requirements or take their chances that they may be one of the unlucky ones selected for a periodic compliance review. 

Read the Labor Department Directive creating the voluntary compliance program here.

Labor Department Announces Settlement in Davis-Bacon Violations

The Labor Department's Wage and Hour Division (WHD) recently announced a settlement in a case involving violations of several labor laws.

An electrical contractor performing work for the Army Corps of Engineers has agreed to pay $83 thousand in back wages and fringe benefits to seventeen employees after a Labor Department investigation found that the employer had violated requirements of the Davis-Bacon and Related Acts (DBRA), the Contract Work Hours and Safety Standards Act (CWHSSA) and the Fair Labor Standards Act (FLSA).

Investigators found that the contractor had failed to pay some employees required prevailing wage and overtime rates on a project subject to DBRA requirements by inaccurately classifying those employees as laborers instead of electrician apprentices and subsequently failed to pay them the correct wages.

The investigation further disclosed that the contractor violated the DBRA fringe benefits requirements by claiming that it had made contributions to a 401(k) plan for the benefit of employees when it had not. Additionally, the contractor claimed credit for vacation benefits but failed to meet the criteria required for such credit. Finally, the investigation disclosed that the contractor had falsified "certified payroll" records by claiming contributions to the 401(k) plan that were never made.

This case was classified as an investigation rather than the result of a routine audit which most likely means that the Labor Department was tipped off on possible DBRA violations. You can read the full Labor Department press release here.

Has the Labor Department Stepped Up Its Investigations?

Is it just us or has the Labor Department been stepping up its compliance activities regarding labor laws and regulations?

The Labor Department has two offices established to ensure compliance with various laws and regulations related to labor. There is the Office of Federal Contract Compliance Programs (OFCCP) with responsibility for ensuring that contractors comply with laws and regulations requiring nondiscrimination in all of its many forms. There is also the Wage and Hour Division (WHD) who enforces Federal minimum wage, overtime pay, record-keeping, FLSA, Davis-Bacon, and SCA (Service Contracting Act), among many others. Additionally, the Labor Department Office of Inspector General (OIG) also dabbles in compliance matters.

Last week we reported on the case of a contractor in Minnesota who had to pay $400 thousand to female employees for systemic pay discrimination violations. (See Routine Labor Department Audits - What Could Go Wrong?)

A couple of months ago, we reported on a case where as a result of an investigation by WHD, a contractor was found to have misclassified worker skill levels thereby shortchanging them in violation of the Davis-Bacon Act (see Contractor Agrees to Pony Up for Shortchanging its Workers).

Back in June, we reported on another case, brought by a whistleblower, where the OIG found a contractor was underpaying its employees and had submitted false certified payroll reports for work it performed on several construction projects (see Davis-Bacon Act Violations Cost Company $625 Thousand).

Just yesterday, the Labor Department announced another settlement where a contractor was found to have shortchanged its workers by failing to correctly calculate and pay the proper health and welfare fringe benefits to employee accounts. That resulted from a WHD investigation that ultimately cost the contractor $2.8 million (see Labor Department Recovers $2.8 Million for 443 Employees).

But wait, there's more. Two days ago, the OFCCP announced another settlement involving a contractor who agreed to pay $410 thousand in back wages to settle allegations of systemic hiring discrimination. The company was alleged to have discriminated against women for security guard services (see Federal Contractor Agrees to Pay $409,947 in Back Wages to Settle Hiring Discrimination Allegations).

Government contractors should periodically self-assess their level of compliance with the various labor laws that apply. There are many and a good place to learn about them is with Labor Department on-line resources (See Wage and Hour Laws - Compliance "Toolkit").

Wage and Hour Laws - Compliance "Toolkit"

Running a business brings many responsibilities, including the responsibility for complying with various federal labor and employment laws. The Wage and Hour Division (WHD) within the Labor Department administers and enforces these laws. Business owners have the responsibility to pay employees properly, maintain certain records, provide eligible workers with unpaid family or  medical leave and to notify employees of their rights in the workplace. WHD has more than 200 offices across the U.S. with personnel available to assist companies (and workers) wade through the complexities of the many laws and regulations. For the "do-it-yourselfers", the Labor Department has may on-line resources as well.

One such useful online resource is the "Compliance Assistance Toolkits" page. These toolkits are designed to help employers understand their rights and responsibilities and provide a series of interactive step-by-step tools to walk employers through a variety of scenarios, in-depth guides to help employers navigate the requirements of the FMLA (Family and Medical Leave Act), and fact sheets that detail how the FLSA (Fair Labor Standards Act_ applies to many specific types of employments.

Currently, the WHD has six toolkits, four of which will be of interest to Government contractors:

1. Basic Compliance Assistance Toolkit
2. FLSA Toolkit
3. FMLA Toolkit, and 
4. Government Contracts Toolkit

The Government Contracts Toolkit covers topics that are specific to Government contractors. These include such things as:

• Davis-Bacon Act (DBA)
• Service Contract Act (SCA)
• Displace employee rights
• Paid sick leave for federal contractors

These toolkits also contain the required notices that need to be place in a prominent area of the company.

The WHD performs compliance reviews on how well companies (especially Government contractors) adhere to these rules and regulations. Many companies have been the recipient of these compliance reviews. Some compliance reviews are regularly scheduled reviews. Others are initiated based on employee complaints. It is not uncommon to find instances where employees are better versed in labor laws than the employer/company.

For more information on the various toolkits, click here.

Labor Department Scheduling Hundreds of Compliance Audits for Nondiscrimination

The Office of Federal Contract Compliance Programs (OFCCP) is part of the Labor Department and is responsible for ensuring that employers doing business with the Federal Government comply with the laws and regulations requiring nondiscrimination.

Late last month, the OFCCP announced two directives focused on providing more transparency in its activities as tools for promoting compliance.

1. Transparency in compliance activities. Over the last several months, OFCCP has taken several steps to improve transparency, cooperation, and communication with federal contractors. A new directive further extends OFCCP's transparency initiative to every stage of a compliance evaluation to facilitate consistency, improve efficiency and collaborative resolution, and also supports contractors' ability to conduct meaningful self-audits to proactively identify and address issues with their employment practices. You can read the full directive here.
2. Ombuds Service. The GAO (Government Accountability Office) found in a 2016 report that contractors were not using OFCCP compliance assistance because doing so would call attention to them and possibly make them a target for future OFCCP enforcement actions (do  you think?). OFCCP believes this perception can erode confidence and trust in OFCCP to effectively carry out its mission. A new initiative establishes a mechanism through which contractors can share their concerns about a particular open matter or provide general feedback or recommendations to improve the administration of the agency. You can read the full directive here.

Also, as part of OFCCP's initiative toward more transparency was the release of the names of contractors it intends to audit in the upcoming year. Actually there are two lists, one group of contractors selected last January and the other group selected last September. These lists are purportedly posted on OFCCP's official website but we were unable to locate them. The lists are available elsewhere on the Internet and easily found by searching. There are hundreds of names on these lists - contractors appearing on these lists have already been notified by OFCCP of the impending compliance audit..