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OFCCP Allowed To Collect Data For Time Period After Scheduling Letter

Published by on May 24, 2012

In a May 8, 2012, ruling in OFCCP v. Frito-Lay, the Administrative Review Board (ARB) found that the OFCCP has the authority to request AAP data collected after the contractor received the scheduling letter if the request for additional information is motivated by a deficiency, i.e. statistically significant disparity.  More after the break. In July 2007, […]

In a May 8, 2012, ruling in OFCCP v. Frito-Lay, the Administrative Review Board (ARB) found that the OFCCP has the authority to request AAP data collected after the contractor received the scheduling letter if the request for additional information is motivated by a deficiency, i.e. statistically significant disparity.  More after the break.

In July 2007, the OFCCP issued Frito-Lay a Scheduling Letter for a Desk Audit and requested data for 2006 and 2007.  Frito-Lay voluntarily produced the requested data along with data for an additional year, 2005.  One year later, during the same compliance review, the OFCCP alleged that there was a statistically significant disparity in the data with respect to the hiring of women.  As a result of that statistical disparity, the OFCCP requested that Frito-Lay provide data from 2008 and 2009 so that it could run a similar analysis to determine if the adverse impact was ongoing.  Frito-Lay objected, arguing that the more recent data fell outside the temporal scope of the initial Scheduling Letter that asked for 2006 and 2007 data.

The OFFCP filed a complaint with the Administrative Law Judge.  The ALJ agreed with Frito-Lay and concluded that the OFCCP’s inquiry was limited to activities occurring during the year prior to the Scheduling Letter and the year the scheduling letter was issued, if received six months or more into that year.   The ALJ granted a Summary Decision to Frito-Lay stating several reasons why Frito-Lay was not required to provide the additional data, including the fact that the agency’s Federal Contract Compliance Manual (FCCM) did not authorize such a request.

The OFCCP filed exceptions to the ALJ’s decision with the Administrative Review Board (ARB).  On May 8, 2012, the ARB reversed the ALJ’s Recommended Decision and Order. In sum, citing to Executive Order 11246 and cases, the final ruling stated that “to enable OFCCP in its mission, the regulations empower it with discretion to conduct various types of compliance reviews.”  Furthermore, the ARB opined that requesting the two additional years of statistical data is a common and reasonable practice in determining whether disparate impact has occurred.  When it finds deficiencies, OFCCP may make reasonable efforts to secure compliance through conciliation and persuasion.

The May 8, 2012, ARB Order states in part:

“We conclude that OFCCP has regulatory authority to request the 2008 and 2009 AAP data in furtherance of its 2007 desk audit.  First, OFCCP was pursuing a concern about a statistically significant disparity in hiring women, specifically finding ‘a disparity in the hiring rates of females as compared to males that was statistically significant at 3.26 standard deviations….’ A statistical showing of two standard deviations has long been accepted as significant in adverse impact analysis….  A request for two subsequent years is consistent with a proper disparate impact analysis. Consequently, OFCCP’s impetus in making further inquiries and the reason for its requesting two additional years’ AAP data is reasonable and consistent with OFCCP’s duty to ensure Frito-Lay’s compliance with EO 11246.”

Further, “[c]ontrary to the focus of the ALJ and Frito-Lay, this is not a case where OFCCP simply extended a desk audit; it is a case where a deficiency motivated the request for more information.”  The ARB stated that its focus was “narrow” and did not address whether OFCCP “has the ability to ask for post-Scheduling Letter data in all desk audits or where OFCCP has not objectively identified a concern about compliance.”

No matter how “narrow” the focus of the request supposedly was, this decision will have far reaching consequences for government contractors.  The accurate tracking of employment data, and completion of the annual AAP in a timely manner, along with documented good faith action items will be imperative, with the scope of the data requests now potentially growing even larger.

Conversely, if contractors ultimately decide to comply with the expanded temporal scope of the requests it may serve as an additional defense to any alleged disparate impact.  For instance, should the additional data requested show that the concerns at-issue or disparities were resolved and discontinued, shouldn’t the OFCCP close the audit without assigning conciliation or sanctions?  Doubtful, but contractors have a fair argument should this scenario play out. 

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