ARB Overturns Favorable Decision for Contractors

On May 8, 2012, the Administrative Review Board for the Department of Labor (“ARB”) reversed a very favorable ruling for contractors, holding that the Office of Federal Contract Compliance Programs (“OFCCP”) could request data from contractors during desk audits concerning hiring, terminations and promotions after the period covered by OFCCP’s initial Scheduling Letter. 

On July 23, 2010, an Administrative Law Judge (“ALJ”) held that OFCCP was not entitled to seek data from Frito-Lay, Inc. (“Frito-Lay”) concerning employment decisions after the period covered by the Scheduling Letter.  On July 13, 2007, Frito-Lay received a Scheduling Letter from OFCCP notifying it that it had been selected for a compliance evaluation and attaching OFCCP’s standard 14-part data request.  Because Frito-Lay was six months or more into its plan year, it sent data for its current plan year (June 2006 through May 2007) and for the first six months of the current plan year (June 2007 through December 2007). 

During the desk audit phase of the compliance review, OFCCP identified a statistically significant disparity between the hiring rates of females and males in the applicant flow data Frito-Lay had submitted in response to the initial Scheduling Letter.  OFCCP then requested that Frito-Lay submit applicant data for the period from January 1, 2008 to October 31, 2009, which was after the period covered by of the initial Scheduling Letter.  When Frito-Lay refused to supply the additional data, OFCCP initiated enforcement proceedings.  In reaching this conclusion, the ALJ relied on OFCCP’s regulations and guidance, including the Federal Contract Compliance Manual (“FCCM”), finding that OFCCP was only authorized to seek data for the period two years prior to the date on the initial Scheduling Letter. 

In the May 8, 2012 decision reviewing the ALJ’s decision, the ARB held that OFCCP could seek data after the date on the Scheduling Letter because (1) it had found indicators of discrimination in the data Frito-Lay submitted, and (2) the request by OFCCP was narrowly tailored to investigate those indicators.  The ARB found that, because OFCCP’s review of the data Frito-Lay initially submitted to OFCCP revealed that there was a statistically significant disparity in hiring rates, OFCCP had the authority to request data after the date of the Scheduling Letter in order to ensure Frito-Lay was complying with OFCCP’s laws and regualtions.  The ARB also found that OFCCP’s request was appropriate because it was narrowly tailored to focus “only on AAP plans and data for two years.”

The ARB rejected Frito-Lay’s argument that the FCCM limits desk audits to the period two years prior to the date that a contractor receives an initial Scheduling Letter.  The ARB concluded that the FCCM was merely a non-binding internal guidance document issued by the OFCCP.  The ARB also pointed to the elimination of the 60-day limitation on desk audits in OFCCP’s 1997 regulatory amendments as evidence that there was no temporal limit on desk audits.  The ARB was also persuaded by the fact that OFCCP could have scheduled Frito-Lay for a second compliance review in 2009, which would have resulted in Frito-Lay producing the “exact same data” it withheld.

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Filed under Affirmative Action Plan (AAP), Department of Labor, Discrimination, EEO, OFCCP

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