Labor Department Emerges as New Venue for Corporate DEI Attacks

A conservative legal group’s attack on Sanofi’s diversity policies through the US Labor Department’s federal contractor watchdog will prove a difficult avenue to successfully show bias in these programs.

Ex-Trump advisor Stephen Miller’s group America First Legal sent letters Jan. 2 to the Office of Federal Contract Compliance Programs and the US Equal Employment Opportunity Commission alleging the pharmaceutical company and a subsidiary’s hiring goals are discriminatory, and asking the agencies to investigate. AFL also submitted a formal complaint under its own name to OFCCP containing the claim.

Though AFL has publicly gone after numerous diversity and inclusion programs, the OFCCP tactic is a new strategy for the group. The agency charged with certifying affirmative action compliance and stamping out discrimination at federal contractors has, on rare occasion, made inquiries into DEI policies, but attorneys who work with the agency say it’s highly unlikely OFCCP will act on challenges to these programs.

“Admittedly, the scope of OFCCP’s lawful authority is unclear, so we would expect that there will be court challenges down the road,” said Reed Rubinstein, AFL’s senior counselor and director of Oversight and Investigations. “Nevertheless, in appropriate cases, AFL plans to continue asking OFCCP to act when federal contractors admit discriminating based on race, color, national origin, religion, or sex.”

Sanofi Complaint

In its complaint and attached letter to the OFCCP over Sanofi Pasteur Inc., AFL—a 501(c)(3) nonprofit organization—claimed that the federal contractor “is knowingly, intentionally, and systematically violating its equal opportunity covenants and assurances” through its plans for promoting diversity in hiring.

The organization also took issue with Sanofi’s “Diverse Slate Policy” where the organization outlines that it plans to have 50% of its global senior leadership represented by women and 37% represented by people of color.

However, employment attorneys said chances are high that the agency will dismiss the complaint due to standing issues, or pass it on to the EEOC.

According to OFCCP rules for filing a complaint, which were updated in November, it must identify an individual who has allegedly been discriminated against unless it’s naming “class-type violations,” in which case the complainant is still required to include the individual’s contact information as well as details of the discriminatory acts.

The problem with AFL’s filing, said Leigh Nason, co-chair of Ogletree, Deakins, Nash, Smoak & Stewart P.C.'s OFCCP compliance group, is that while a third party like AFL can file a complaint, the group “needs to be a representative of an individual that’s been harmed.”

“It can’t be generalized harm,” said Nason. “It has to be particularized harm.”

In its complaint, AFL left the section seeking complainant information blank and didn’t mention a specific individual that was harmed by Sanofi’s diversity policies.

In response to the standing question, Rubinstein pointed to Executive Order 11246, which establishes anti-discrimination requirements for government contractors, as well as rules to implement the executive order that allow the OFCCP to carry out audits.

“This, in turn, restates long-standing Supreme Court precedent providing that federal agencies have investigative powers that are more in the nature of a Grand Jury, which does not depend on a case or controversy for power to get evidence but can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not,” he said.

The most likely next step the OFCCP would take if it chooses not to dismiss the complaint, is to pass it to the EEOC, according to employment attorneys.

Nason noted that the OFCCP’s memorandum of understanding agreement with the EEOC says that OFCCP complaints like those filed by AFL are considered to be dually filed with the civil rights agency, and on issues pertaining to race and gender, the federal contracting watchdog typically defers to the commission.

“From the OFCCP standpoint, it seems to me there’s a number of problems” with AFL’s tactic, she said. “Not the least that they’re supposed to defer these kinds of things, if there’s a legit complaint, to the EEOC.”

As per the MOU, the OFCCP acts as the EEOC’s agent for complaints against federal contractors filed on the basis of discrimination related to Title VII of the 1964 Civil Rights Act. If they meet the circumstances listed in the memorandum, such complaints are transferred to the EEOC.

“This is a request for an investigation of a federal contractor’s alleged systematic violations of non-discrimination provisions, a task plainly assigned only to the Department of Labor,” Rubinstein said of the Sanofi letter and complaint.

Agency’s Approach to DEI

In addition to accepting complaints mostly regarding bias against women and minorities, the OFCCP conducts random audits of groups of federal contractors every year to ensure they’re abiding by their affirmative action program obligations and aren’t discriminating in hiring, promotion, or pay practices.

Through its compliance evaluations and complaint investigations, the OFCCP has also gotten back pay for over 24,000 male and/or White workers from Fiscal Years 2019 to 2023.

In October 2023, the agency entered a conciliation agreement with Boeing Distribution Services Inc. for $402,000 in back wages for Black and White job applicants who were affected by hiring discrimination due to a preference for Hispanic applicants. That same month, the agency entered a conciliation agreement with global shipping company Pitney Bowes for nearly $1.6 million over discrimination against Black, Hispanic, and White applicants.

“The OFCCP is an enforcer of non-discrimination in employment, and OFCCP’s regulations are clear that Whites and males are federally protected classes,” said David Cohen, president of DCI Consulting Group, Inc. “If a contractor is engaging in intentional discrimination in hiring, promotion, what have you, against White males, absolutely they would pursue that and the record is clear that they have.”

However, Cohen said that under the Biden administration the agency hasn’t shown an interest in addressing DEI programs as a potentially discriminatory hiring practice.

“This, to my knowledge, is unprecedented,” said Mickey Silberman, founder of Silberman Law PC, who has represented employers in issues relating to DEI and OFCCP compliance. “I have never seen an organization or an individual employee file an OFCCP complaint demanding an investigation of a company’s voluntary DEI program.”

The OFCCP didn’t respond to a request for comment.

In September 2020, then President Donald Trump issued an executive order that effectively prohibited federal contractors from carrying out certain diversity trainings and programs. Under this order, the OFCCP diverged from normal Labor Department practices, and undertook investigations into Microsoft Corp. and Wells Fargo & Co.'s diversity and inclusion programs.

The executive order was blocked by a federal judge in December 2020, pausing its enforcement. President Joe Biden rescinded the order in January 2021, and the OFCCP closed its inquiries soon after.

Silberman said that through the Sanofi complaint’s legal strategy is unique, there could be other similar attempts coming, especially with a presidential election on the horizon.

“This is the new year’s first shot across the bow of corporate America’s DEI programs, but we’re likely to see many more during 2024.”