Daily Labor Report®

Contractor Pay Cop Says He’s Still on Beat After Audit Changes

April 11, 2019, 12:40 PM

Federal contractors facing discrimination audits won’t get a free pass, despite changes to give businesses more say in the probes, Labor Department official Craig Leen told Bloomberg Law.

“Our goal is not to tell companies how to pay people,” Leen, who runs the DOL’s Office of Federal Contract Compliance Programs, said in an April 10 interview. “Our goal is to come up with best practices and also to take a fair look at those pay systems, point out where disparities are occurring, and require companies to correct those disparities.”

The OFFCP enforces pay, hiring, promotion, and other discrimination protections for workers employed by federal contractors, largely by auditing company employment data. That gives the Labor Department significant power to police the pay practices of some of the biggest names in tech, finance, and defense, among other industries.

Leen in August issued a directive stating that auditors will allow contractors to determine which workers are “similarly situated” for pay comparison purposes, so long as those groupings are “reasonable.” Critics say that will let companies skirt pay equity requirements by effectively doing their own audits.

“The idea that the company can decide who is similarly situated is essentially giving a free pass for discrimination,” said Adam Pulver, an attorney for Public Citizen. “This is one of several areas across the administration where we are seeing a move allowing regulated entities to self-regulate.”

The OFCCP retains the right to reject a contractor’s proposed pay grouping, Leen said. He also said his predecessors in the Obama administration focused too heavily on pay data for large groups of workers without taking the time to understand the company’s justification for certain differences in pay.

“I don’t think there’s any problem with having large aggregations of employees to see if there are trends,” Leen said. “But we can’t make a finding, in my opinion, based solely on these very large pay analysis groups.”

The Labor Department is locked in ongoing legal disputes with Google, Microsoft Corp., Cisco Systems Inc., and Oracle Corp., over alleged pay disparities. Leen said the OFCCP and attorneys in the Labor solicitor’s office will take the new compensation directive into account while trying to resolve ongoing litigation.

The OFCCP is working on additional pay grouping guidance in the form of “frequently asked questions,” Leen said. It also plans to roll out examples of reasonable pay groupings for a handful of industries.

More Enforcement Expected

The OFCCP this year doubled the number of contractors receiving notices of a possible audit. The list includes Oracle, Bank of America Corp., Lockheed Martin Corp., Ernst & Young LLP, Citigroup Inc., and Viacom Inc.

At the same time Leen is instructing investigators to wrap up those probes quicker than in the past.

Leen aims to limit to 45 days the time it takes to complete initial “desk audits.” He said he’s putting a six-month cap on conciliation negotiations to resolve cases in which the OFCCP finds evidence of discrimination. That’s likely to mean more cases that can’t be resolved in that time frame are referred to the DOL solicitor’s office for enforcement.

“My expectation is that companies will work with us—because we’re being reasonable—and try to reach a resolution,” Leen said. “But, yes, if we’re going to be doing shorter conciliations there will be more referrals to enforcement.”

Some lawyers for contractors have expressed concerns about the conciliation process. Bloomberg Law reported in October that Labor Secretary Alexander Acosta stepped in at the last minute to rescind a near-done deal between the OFCCP and Microsoft, over concerns that the agreement would let the tech company off too easy for alleged pay discrimination.

Leen declined to comment on the Microsoft case. He did, however, make clear that he has the final say on conciliation agreements the OFCCP reaches with contractors before a case is referred to Solicitor Kate O’Scannlain for enforcement.

“If we reach a conciliation agreement and I’m involved in that conciliation agreement, they can stand by that,” Leen said.

To contact the reporter on this story: Chris Opfer in New York at copfer@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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