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OFCCP Hazards Heightened for Providers of Specialized Services

The Office of Federal Contract Compliance Programs (OFCCP) enforces Executive Order (EO) 11246 (Equal Employment Opportunity) and requires contractors, as a condition of having a federal contract, to engage in a self-analysis and discover barriers to equal employment opportunity. A contractor in violation of EO 11246 may have its contracts canceled, terminated, or suspended in whole or in part, and the contractor may be debarred.

The OFCCP doesn’t reserve conciliation and litigation, its major enforcement tools, for bad actors only: the edicts of EO 11246 apply equally to companies that intentionally discriminate and those who unintentionally discriminate. Unintentional discrimination can occur through adverse impact, a concept by which discrimination occurs as a consequence of improperly designed or deployed selection criteria. And companies that provide the government with specialized services are at a marginally greater risk to unwittingly run afoul of the OFCCP.

In the landmark case of Griggs v. Duke Power Co., the Supreme Court first addressed the concept of adverse impact. The Court created a two-part, burden-shifting process, which HR professionals attuned to Title VII enforcement will find uncomfortably familiar. The first review confirms statistical evidence that an otherwise innocent selection practice disqualifies members of a protected class at a meaningfully different rate than members of another group. If this review is satisfied, the burden shifts to the employer to demonstrate that the practice they use to make employment decisions is “job related for the position in question and consistent with business necessity.”

For contractors who provide specialized services, the problem is particularly acute. First, these contractors are more likely to make employment decisions that engender disparate impact. Further, specialized service providers can find themselves hobbled when required to defend their selection criteria.

Specialized labor categories can include a restrictive combination of academic and professional qualifications. Regrettably, eligible candidates are disparately represented across various classes. For example, a report by the Congressional Joint Economic Committee estimates that nationwide only 14% of engineers are woman. By their highly discriminating nature, the hiring practices of technical service providers disqualify some members of the workforce “at a meaningfully different rate than members of other groups.” And the burden then shifts to the contractor to defend their hiring decisions by reference to a process that was thoughtfully designed, carefully deployed, and studiously documented.

During conciliation or litigation, a federal contractor must establish that its process is “necessary to achieve a valid interest.” But this showing is made more difficult given the nature of highly specialized job requirements. Hiring the right software engineer or SIGINT analyst, for example, can require a nuanced and subjective process. Competing candidates may be equally suitable to achieve program goals. The decision between them is more chess than checkers. And your efforts to be intentionally discriminating can appear unintentionally discriminatory.

To minimize this risk, contractors should carefully design a comprehensive affirmative action policy, deploy complimentary procedures and controls, and adopt an Affirmative Action Plan (AAP) designed to meet the requirements of EO 11246. Thereafter, management needs to demonstrate its commitment to the AAP by carefully supervising implementation, training their staff, and incentivizing best practices.

Contractors who provide specialized services are uniquely susceptible to OFCCP conciliation or litigation. The consequences of maintaining non-compliant systems are high, and can be existential; however, by developing robust policies and an EO 11246 compliant AAP, these risks can be effectively managed.