Previously, I have written and warned about the Department of Labor’s Office of Federal Contract Compliance (“OFCCP”), which I like to call the most powerful federal agency you have never heard of. The OFCCP purpose is to enforce federal affirmative action regulations applicable to contractors and subcontractors performing work funded, in whole or in part, with federal funds. While OFCCP has been around for years, its level of enforcement activity was low. That changed with the election of President Obama’s and his policy of taking executive action through regulation wherever and whenever possible. Beginning in 2010, OFCCP enforcement activity, primarily in the form of affirmative action “audits,” has exploded. This week the OFCCP issued a notice of proposed rule, which, by its own admission, will cost the federal contractors $50,000,00.
What is the Proposed Rule?
OFCCP is proposing to make changes to 41 CFR § 60-1.7. Currently, that regulation requires federal prime and subcontractors to file an annual EEO-1 report, which requests information related to the race, ethnicity, and gender of employees. The regulation was promulgated under Executive Order 11246. That Order was signed by our last great Regulator – in –Chief, Lyndon Johnson in 1965. It was signed during the Civil Rights Era when institutional racism was a reality. The purpose of the Order was to prohibit discrimination in employment based upon race, creed, color, or national origin (but not sex, which apparently was still ok in 1965). The Order authorized the Department of Labor to issue regulations to promote the goal of ended discrimination in the hiring of individuals by federal contractors.
OFCCP proposed change will extend the reporting requirements intended to snuff racial discrimination in employment, a real problem in 1965, to include the requirements intended to snuff out “wage discrimination,” which a straw man problem is made up by the Administration. The proposed rule would require federal contractors and subcontractors with more than 100 employees and federally funded contracts of greater than $50,000 to annually report to the OFCCP an “Equal Pay Report.” The report would require contractors to disclose to the OFCCP:
(a) The total number of workers by race, ethnicity, and gender;
(b) Total W-2 earnings of all workers broken down by race, ethnicity, and gender; and
(c) The total hours worked in each job category by race, ethnicity, and gender.
According to the OFCCP, the information on the report would be kept “confidential” (just like the tax returns of non-profit tea party organizations) and would not be used as the basis for an enforcement action.
What is Wrong With the Proposed Rule?
First and foremost, an overwhelming majority of employees of federal contractors, especially construction contractors, have wages regulated by the Davis Bacon act. Therefore, there is no disparity in pay based on race, ethnicity, and gender.
Second, the OFCCP does not explain how it expects federal contractors to capture the data necessary to complete the report. W-2 reports do not contain the race, ethnicity, and sex of the employee. Moreover, the federal law prohibits an employer from asking an employee about his or her race, ethnicity, national origin, or gender.
Third, OFCCP goes beyond the power granted to it by Executive Order 11246. OFCCP states that the legal authority for the proposed rules is Executive Order 11246. However, the Executive Order says nothing about regulations concerning wage discrimination.
Wally Zimolong
Wally represents contractors (and subcontractors) and developers. His clients build and develop residential, commercial, and industrial properties nationwide. Wally enjoys working with the owners of the businesses he represents because they tend to be entrepreneurs and all around interesting people.
