September 26, 2016

Fair Pay and Safe Workplaces: How Fair Is It?

As most of our blog readers are aware, the final FAR rule and DOL guidance was published in the Federal Register on August 25, 2016 implementing President Obama’s issued Executive Order 13673: Fair Pay and Safe Workplaces (FPSW). Although the goal behind this executive order was to “blacklist” organizations with a history of violating labor and employment laws from obtaining new government contracts, it appears, based on the final rule, that the FPSW was designed more to allow OFCCP to coerce current contractors into signing conciliation agreements than it was to prevent actual discrimination.

Perhaps the best example of this motivation is the difference in how the FPSW classifies conciliation agreements as non-arbitral decisions compared to show cause notices (SCNs) which are arbitral decisions: conciliation agreements do not count against a contractor but SCNs do.  Let’s compare two hypothetical contractors. Contractor A has engaged in intentional discrimination against women at five of its establishments.  Rather than go to court, it enters into five separate conciliation agreements with OFCCP, each for $250,000.

Contractor B is accused by OFCCP of pay discrimination against women at two of its AAP establishments. The company vehemently denies the allegation and provides statistical and anecdotal proof that the group differences in pay at both establishments can be explained by variables such as time-in-job and prior related experience. OFCCP refuses to accept the contractor’s analysis and issues an SCN at each establishment. Two years later, OFCCP and Solicitor of Labor’s office determine that the case is without merit and OFCCP closes the review with a closure letter of compliance. Eighteen months after the conciliation agreements and SCNs, both contractors bid for the same contract.  Contractor A, which entered into five separate conciliation agreements, is considered by the contracting officer to have no reportable violations in its record whereas Contractor B, which denies any wrongdoing and was never found in violation, has two reportable violations on its record.

This policy also appears inconsistent with the criminal history guidelines issued by both EEOC and OFCCP.  That is, an applicant’s arrest record (e.g., a contractor’s SCN) should not be used in a hiring decision, but convictions or confessions (e.g., a contractor’s conciliation agreement) can.  The rationale behind not using an arrest record is that an arrest does not account for due process; in other words, it is not a final determination by a neutral judge or jury of guilt or innocence.  An SCN is almost equivalent to an arrest; it does not necessarily mean the contractor has been granted due process with a final determination of a neutral party.

By David Cohen, President; Mike Aamodt, Principal Consultant; and Joanna Colosimo, Associate Principal Consultant at DCI Consulting Group 

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