During the first five months of 2023, the Office of Federal Contract Compliance Programs (OFCCP) announced some interesting financial settlements with federal contractors, although none of the companies admitted liability. Ordinarily, OFCCP settlements occur as the result of randomly scheduled affirmative action audits (compliance reviews) of federal contractors with at least 50 employees and a federal contract or subcontract worth at least $50,000. However, for this time period, half of the settlements were due to individual complaints to the OFCCP, as follows:
- AT&T agreed to pay $19,741.79 to resolve a complaint from a protected veteran employee that the company discriminated against her in administering her application for short-term disability benefits at its facility in Great Falls, Virginia. Although details are unclear, the company apparently used payroll deductions to recover what it believed to be overpayments of the benefits. The company agreed to review its process for administering short-term disability benefits and submit recommended changes to the OFCCP for review (conciliation agreement signed 02/22/23).
- Goodwill of Greater Washington, located in Washington, D.C., agreed to pay $29,735.18 to settle a terminated employee’s complaint that she was unlawfully fired for disclosing a coworker’s compensation. The company agreed to review its policies, update its files to indicate the termination was a voluntary quit, and email all staff to inform them the company doesn’t prohibit employees from sharing information about their own pay or the pay of others unless they learned it as part of their essential job functions. The company also promised to hold employee meetings to discuss the Pay Transparency Nondiscrimination Provision (mandatory language, available here, which federal contractors must include in their employee handbooks and conspicuously post) (conciliation agreement signed 03/14/23).
- MATSYS, Inc., a company that provides expertise and prototypes for the defense, energy, and pharmaceutical industries, agreed to pay $45,015.36 to resolve a former employee’s complaint that he was terminated for asking about and discussing his pay at its facility Sterling, Virginia. The OFCCP alleged that the company harassed and intimidated its machine shop workers when it called a meeting about an anonymous review on Indeed.com discussing the company’s pay. The company promised to change its personnel files to indicate that the employee left voluntarily, to update its employee policies to comply with federal contractor pay transparency requirements, and to communicate these provisions to employees through emails and meetings (conciliation agreement signed 03/06/23).
The settlements resulting from routine compliance reviews were generally more expensive because they involved multiple applicants or employees who were awarded back pay, as follows:
- Designed Metal Connections dba Permaswage, a manufacturer of aircraft components, agreed to pay $122,000.00 and review its compensation system to settle allegations that it underpaid 64 female employees in Finishing jobs at its facility in Gardena, California, compared to similarly situated male employees. The agency also determined that the company failed to comply with numerous affirmative action requirements, including engaging in the interactive process when employees with disabilities requested reasonable accommodations. The company agreed to submit progress reports for the next two years (press release 05/17/23 and conciliation agreement signed 05/05/23).
- El Dorado National agreed to pay $44,000.00 to resolve allegations of race/ethnicity discrimination in hiring for positions in its Administrative job group at its bus manufacturing facility in Riverside, California. While conducting a routine compliance review, the OFCCP determined that the company favored Hispanic applicants over 97 white applicants and 59 Asian applicants for these positions. In addition to the financial settlement, the company agreed to offer jobs to 4 of the white applicants and 2 of the Asian applicants as positions come open, review its hiring process, train its hiring managers, and submit progress reports to the OFCCP for the next two years (press release 01/20/23 and conciliation agreement signed 01/18/23).
- Intelligent Waves LLC, a technology solutions company, agreed to pay $435,368.12 to resolve allegations that it discriminated against 14 Black applicants seeking positions in Arizona and Nevada as test instrumentation technicians. The disparities were uncovered during a routine OFCCP compliance review of the company’s headquarters in Reston, Virginia, which handled the hiring for these positions. The company agreed to offer jobs to 5 of the applicants as positions come open, to analyze and update its hiring process, and to submit a detailed report on its activities (press release 04/21/23 and conciliation agreement signed 04/21/23).
Tips: Two of the individual settlements above illustrate how little control employers have over employees’ discussions and complaints about pay. In general, employees at all levels of an organization have the right to discuss their own pay. In addition, many employees also have the right to discuss coworkers’ pay, subject to limited exceptions for jobs such as payroll and human resources that have access to compensation data as part of their essential job functions. Federal contractors are required to notify employees of these rights in employee handbooks and workplace postings, using specific language mandated by the OFCCP (the Pay Transparency Nondiscrimination Provision, available here).
In addition to OFCCP regulations, there are separate federal and state laws protecting employees’ ability to discuss pay. For example, employees who discuss their wages in the context of alleging potential race or sex discrimination would be protected under Title VII of the Civil Rights Act. Similarly, the National Labor Relations Act (NLRA) allows most nonmanagement employees to band together to discuss wages, hours, and working conditions, which includes comparing and complaining about their pay. If your employee handbook contains any restrictions on pay discussions, ask your Vigilant Law Group employment attorney to review it and provide advice on any specific situations.
Federal contractors are subject to numerous requirements under affirmative action regulations, but the OFCCP has the power to demand a financial remedy only when it can show that discrimination occurred, which means affected individuals are entitled to back pay to make them whole. Therefore, the primary financial risk to federal contractors during routine affirmative action audits is when the OFCCP digs into disparities in compensation and entry-level (high-volume) hiring, as illustrated in the last three settlements in the list above.
