On March 30, 2013, the U.S. District Court for the District of Columbia held that the Office of Federal Contract Compliance Programs (“OFCCP”) has jurisdiction over three University of Pittsburgh Medical Center hospitals (“UPMC”). UPMC Braddock v. Harris, No. 09-1210 (D.D.C. Mar. 30, 2013). As we previously reported, the Administrative Review Board (“ARB”) found that OFCCP did not have jurisdiction over UPMC based solely on its participation in TRICARE. Despite the ARB’s decision, OFCCP appealed the decision to the U.S. District Court for the District of Columbia.
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On November 13, 2012, the Office of Federal Contract Compliance Programs (“OFCCP”) filed a motion before the Department of Labor’s Administrative Review Board (“ARB”) asking it to reconsider its decision in OFCCP v. Florida Hospital of Orlando. As we previously reported, on October 19, 2012, the ARB found that the OFCCP did not have jurisdiction over a federal contractor based solely on its participation in TRICARE, but the ARB left open whether certain TRICARE arrangements could be covered by OFCCP’s jurisdiction under the first prong of the subcontractor definition.
In its motion for reconsideration, the OFCCP argued that the ARB left unanswered the “critical issue” of whether the National Defense Administration Act (“NDAA”) precluded OFCCP from asserting jurisdiction over TRICARE subcontractors on the basis of the first prong of the subcontractor definition (i.e., whether the TRICARE subcontractor’s services were “necessary” to the performance of the contract). The OFCCP announced in its briefing its intent to continue to serve audit notices on TRICARE subcontractors until ARB rules on this issue. The OFCCP specifically stated that “the only way OFCCP can obtain a ruling on the [open] issue[s] is to continue to notice TRICARE network providers for compliance reviews where” the first prong of the definition of subcontractor is at issue. It also indicated that it would be “forced to bring another enforcement action against one or more TRICARE” contractors in order to have this issue answered.
In short, if the ARB denies OFCCP’s motion, OFCCP will aggressively seek a test case that requires ARB directly to address whether TRICARE subcontractors are covered by OFCCP’s jurisdiction if their services are necessary for the performance of the prime contract. TRICARE contractors should prepare for pending OFCCP audits of their establishments, which had been placed on hold until the resolution of the Florida Hospital case, to be reopened in the near future.
Administrative Review Board Finds That Participation in TRICARE Did Not Subject Florida Hospital to OFCCP’s Jurisdiction
On October 19, 2012, the Department of Labor’s Administrative Review Board (“ARB”) found in OFCCP v. Florida Hospital of Orlando that the OFCCP did not have jurisdiction over a federal contractor based solely on its participation in TRICARE. The ARB, however, left open whether other healthcare contractors participating in TRICARE would be subject to OFCCP’s jurisdiction.
TRICARE is a program sponsored by the Department of Defense (“DoD”) that pays for medical benefits for active and retired military personnel and their families. There are three prime contractors that administer the TRICARE program. These three contractors enter into subcontracts with hospitals and medical providers to provide medical care and supplies to TRICARE participants. Florida Hospital held a subcontract with one of the TRICARE prime contractors.
In August 2007, OFCCP scheduled Florida Hospital’s Orlando establishment for a compliance review. Florida Hospital refused to submit to OFCCP’s compliance review, asserting that it was not subject to OFCCP’s jurisdiction. OFCCP initiated enforcement proceedings arguing that Florida Hospital’s participation in TRICARE subjected it to OFCCP jurisdiction.
On October 18, 2010, an Administrative Law Judge (“ALJ”) found that Florida Hospital was a federal subcontractor because it assumed the performance of the TRICARE prime contractor’s obligation to the federal government. The ALJ also rejected Florida Hospital’s argument that TRICARE payments did not subject it to OFCCP’s jurisdiction because it was federal financial assistance. Florida Hospital appealed the decision to the ARB.
While the decision was pending appeal, on December 31, 2011, the National Defense Authorization Action for Fiscal Year 2012 (“NDAA”) was signed into law. The NDAA expressly stated that medical providers who participated in TRICARE were exempt from OFCCP’s jurisdiction.
The ARB reviewed the NDAA exemption and held that OFCCP lacked jurisdiction over Florida Hospital because it met the specific language in the NDAA exemption. The ARB, however, found that the exemption was narrow and would only exempt TRICARE contractors that require establishment and management of a network of providers. The ARB indicated that it would review OFCCP’s jurisdiction over other TRICARE subcontractors on a “case by case” basis.
Because the ARB has left open the possibility that some TRICARE subcontractors may be covered by OFCCP’s jurisdiction, healthcare contractors must closely scrutinize their participation in TRICARE to see if they are subject to OFCCP’s jurisdiction.
On July 30, 2012, the United States Department of Labor (“DOL”) issued a guidance to federal government contractors advising them how to comply with the Worker Adjustment and Retraining Act (“WARN”) when they undertake mass layoffs due to cuts in government spending.
Contractor Seeks to Overturn ARB Debarment Ruling for Its Repeated Violations of the Service Contract Act
On July 23, 2012, Tri-County Contractors, Inc. (“Tri-County”) filed a complaint in a federal district court in Mississippi, Case No. 3:12-cv-522, challenging the decision of the U.S. Department of Labor’s Administrative Review Board (“ARB”) to debar it from receiving government contracts for three years due to its alleged failure to comply with the Service Contract Act and fulfill its contract to provide trailers to victims of Hurricane Katrina.
On July 19, 2012, the Office of Federal Contract Compliance Programs (“OFCCP”) issued a press release announcing it entered a consent decree with Leprino Foods, Inc. (“Leprino”) relating to use of a pre-employment test that it determined had an adverse impact on minority job-applicants at the company’s Lemoore West facility. The positions for which Leprino was using the test were entry-level, on-call labor positions called WorkKeys. The OFCCP found that the test, which examined applicants’ abilities in mathematics and in locating information, was not job-related because these skills were not critical to the applicants’ job duties, which included inspecting products, monitoring equipment and maintaining sanitation at the facility. In the press release, Director Patricia Shiu warned that contractors “cannot create artificial barriers to employment that unfairly block any individual from competing for good jobs.”
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.
The Office of Federal Contract Compliance Programs (“OFCCP”) recently posted a new FAQ on their website to provide guidance to contractors on their obligation under the Internet Applicant Rule to retain resumes received for jobseekers at career fairs. Many contractors have wondered whether they would be responsible for retaining such resumes even if they have a policy requiring candidates to apply online. The OFCCP answered this question by stating that:
The contractor needs to retain resumes only if it considers resumes received at the job fair for a particular position. The contractor need not retain any resumes if its consistently applied practice is not to consider paper resumes received at a career or job fair. For example, the contractor would not need to retain paper resumes offered at a job fair if it does not consider them and instructs all job seekers to post their resumes on the contractor’s web site and/or apply for particular positions on the web site. The contractor should take care to apply such a protocol in a uniform and consistent fashion. It is the contractor’s actual practice that determines whether the contractor has considered a resume. For example, if a contractor’s policy is to accept resumes only through its website, but its actual practice is to consider resumes received at a career or job fair as well, the contractor will be expected to retain both the resumes collected at job fairs as well as those submitted through the contractor’s website.
As a result, contractors who have a policy of requiring candidates to apply online should ensure that they consistently steer all jobseekers at career fairs to apply online and do not accept any resumes from candidates in person. This will avoid the situation where a jobseeker’s credentials are considered by the contractor at the career fair, triggering the Internet Applicant data collection and recordkeeping requirement.
Employment of veterans has significantly improved over the past year, according to new data from the Bureau of Labor Statistics (BLS). The BLS’s report shows that from February 2011 to February 2012, the unemployment rate for veterans 18 and older decreased from 9.2% to 7.0% – lower than the unemployment rate for nonveterans.
These strong statistics coincide with new government efforts to boost job prospects for returning members of the armed forces. On April 26, 2011, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published proposed regulations that would impose additional affirmative action obligations on federal government contractors under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). Once finalized, the regulations would require contractors, among other things, to (1) take certain mandatory actions in recruitment, recordkeeping and dissemination of affirmative action policies relating to protecting veterans; (2) establish annual hiring benchmarks to track the effectiveness of their affirmative action programs; (3) request disclosure information from applicants; and (4) collect data concerning job referrals.
In addition, the Department of Labor (DOL) proposed new regulations this past February implementing amendments to the military leave provisions of the FMLA. These proposed regulations, once finalized, would (1) extend the availability of FMLA leave to family members of members of the Regular Armed Forces for qualifying exigencies arising out of the servicemember’s deployment; (2) extend FMLA military caregiver leave to family members of certain veterans with serious injuries or illnesses; and (3) allow eligible employees to take 15 days off when a service member comes home for rest and recuperation rather than the five days currently allowed.
OFCCP Rejects Requests to Extend the Comment Period for its Proposed Rule That Would Drastically Expand Contractor’s Obligations for Individuals with Disabilities
On January 27, 2012, the Office of Federal Contract Compliance Programs (“OFCCP”) rejected requests from the contractor community to provide additional time for comments on its proposed regulations under Section 503 of the Rehabilitation Act of 1973 (“Rehabilitation Act”) that would impose fundamental changes in federal contractors’ obligations involving persons with disabilities. On December 9, 2011, the OFCCP issued a proposed rule that would amend the Rehabilitation Act. A summary of the proposed rule is provided below.