DOL Defends Legality of In-House Judges for Contractor Oversight

Attorneys for the US Labor Department are urging a federal judge to shut down a challenge to the in-house judge system at its federal contractor oversight arm, one of the agency’s first responses to lawsuits looking to limit its power.

The DOL said in a Oct. 1 brief that the constitutional claims brought by ABM Industry Groups LLC, a janitorial and cleaning services contractor, don’t apply to the proceedings before the Office of Federal Contract Compliance Programs because they focus on equitable remedies and not “common law” disputes.

ABM’s lawsuit filed earlier this month argued that because the OFCCP is engaging in an enforcement action that is seeking money damages and is essentially a “common law” breach of contract claim, the company is entitled to a jury trial under US Supreme Court’s ruling this year in SEC v. Jarkesy .

“Contrary to ABM’s construal of the proceeding as the sort of rote breach-of-contract action that is historically tried in courts of law, the agency is in fact seeking to enforce compliance with nondiscrimination provisions contained in Executive Order 11246 (‘EO 11246') and its regulations,” attorneys for the DOL wrote in their Oct. 1 brief. “Thus, the administrative proceeding here is not analogous to the ‘suits at common law’ to which a jury right attaches nor exclusively within the prerogative of the judiciary under Article III.”

The lawsuit comes in the wake of the Supreme Court’s June ruling in SEC v. Jarkesy, which said defendants have a constitutional right to make their case before a federal court when the Securities Exchange Commission is seeking financial penalties for violations that are akin to common law disputes.

Since that decision, companies have filed multiple suits challenging the DOL’s use of in house ALJs, attempting to draw parallels between their case and Jarkesy. The agency’s response in this case provides a window into the agency’s potential legal defense in those cases as well.

ABM’s suit also argued that OFCCP ALJ’s are unconstitutional because they are “insufficiently accountable to the head of the executive branch” because they are only “removable for cause” as determined by the Merit Systems Protection Board.

But DOL attorneys counter that because the Labor Secretary “who lacks removal protection and serves at the pleasure of the President” has the authority to directly review decisions by the ARB, “the President retains sufficient control.”

Attorneys for the DOL also argue that ABM agreed to waive its right for a jury trial when it entered into a contract with the federal government, which gives the government broad power to determine who will resolve administrative enforcement proceedings.

Under the executive order that established the OFCCP, federal agencies are required to include language in government contracts that obligate the contractor to avoid unlawful discrimination against applicants and employees. The OFCCP enforces those requirements and can file an administrative complaint against federal contractors that fail to comply.

“Having voluntarily chosen to accept these requirements, ABM now challenges a proceeding that it agreed to. For this reason alone, ABM’s challenge fails,” DOL attorneys wrote.

The case is: ABM Industry Groups, LLC v. DOL, S.D. Tex., No. 24-03353.