Recent OFCCP settlements remind contractors about importance of recordkeeping

Within the past month, the Office of Federal Contract Compliance Programs has announced two settlements and filed one administrative complaint involving alleged discrimination in the hiring process.

  • Southern Glazer’s Wine and Spirits of Louisiana, LLC, has agreed to pay $175,000 to settle allegations that it discriminated against black applicants for warehouse positions.
  • Hormel Foods Corp. will pay $550,000 to resolve the OFCCP’s claim that it discriminated against female applicants for entry-level production jobs at its hog processing facility in Fremont, Nebraska.
  • The OFCCP filed an administrative complaint against JBS USA Lux S.A. and Swift Beef Co. for allegedly discriminating against all non-Asian applicants for general production jobs.

Cara Crotty

These contractors deny the OFCCP’s allegations, and in a statement to Bloomberg BNA, JBS responded with harsh criticism:  “This lawsuit from the OFCCP continues a troubling pattern of legal actions that attempt to cast employers in some of our country’s most economically-challenged rural communities as villains via statistically analysis.”

Regardless of whether the OFCCP’s allegations have merit, no company wants to be identified in one of the agency’s press releases as a potential discriminator.  Typically, these matters with the OFCCP arise not from intentional discrimination, but from a failure to maintain sufficient records relating to the hiring and selection process.

How to avoid becoming a cautionary tale

The best defense to alleged discrimination in the hiring process is complete and accurate applicant records, and a well-defined and implemented selection process. This is easier said than done, I know. But here are a few recommendations:

Don’t lump all entry-level jobs together.  Instead of requiring applicants to identify the specific position in which they are interested, some employers allow candidates to apply for a general "entry-level" opening. The employer then decides which specific position each applicant is best suited for. This practice should be avoided for two reasons. First, it fosters a potential “steering” argument if female applicants, for example, disproportionately happen to end up in lower-paying positions. If applicants must select the position in which they are interested, no allegation of steering can be made. Second, this practice creates larger applicant pools, and a larger pool means an increased likelihood of statistically significant adverse impact. Conversely, smaller applicant pools reduce the potential for adverse impact.

Messy desk.flickrCC.JeffreyBeall
Keep everything!

Maintain records.  I know this seems self-evident, but . . . . Not only should contractors maintain the actual applications, but they should also maintain all records relating to the selection process. This includes interview notes, tests and their results, background checks, drug tests, and, most importantly, the reasons for non-selection. I recommend that contractors use a detailed set of disposition codes so that it is easy to determine exactly why each applicant was not hired, in case it becomes necessary two years later (during an OFCCP compliance review) to justify the hiring decisions. Simply noting that an applicant was “not hired” is usually not sufficient. If an individual does not meet the qualifications for the position, note that, and also note the precise qualifications that were lacking, i.e., educational background, experience in the industry, certifications or licenses, etc.

Take advantage of the Internet Applicant definition. The OFCCP’s regulations define which candidates are “applicants” and must therefore be included in the impact ratio analysis. Contractors should apply their detailed disposition codes and exclude those individuals who were not considered, did not meet the basic qualifications, or who withdrew from consideration. Contractors are not required to submit data on all of their candidates to the OFCCP during a compliance review, nor must they analyze all who applied before “refining” the data to exclude those who do not meet the definition of an Internet Applicant.  Bottom line -- count as “applicants” only those who meet this definition.

Messy Desk.flickrCC.DeniseKrebs
Messy procedures and inconsistent standards can be a problem.

Ensure consistency in application of procedures.  A well-developed hiring process is pointless if hiring managers do not follow or apply it consistently. For example, if your policy provides that applicants for a particular position must have a high school diploma or GED, do not deviate from that unless there are extraordinary circumstances justifying an exception. Otherwise, all those other candidates who were rejected because they did not satisfy this requirement are now potentially “applicants” again.

Train HR and managers involved in hiring. Contractors must ensure that those individuals entrusted with making selection decisions are aware of the procedures to be followed and the significance for failing to do so. Due to internal turnover and frequent regulatory changes, one training session is not enough. Hold periodic refreshers to remind hiring agents of the procedures and requirements and to ensure that individuals new to the organization are also well versed in company practices.

These are just a few approaches to establishing a hiring and selection process that will reduce the chances of an adverse finding in an OFCCP compliance review. Alleged discrimination in hiring continues to be the agency’s foremost avenue of securing monetary liability from contractors, but those contractors that have detailed applicant records are most likely to emerge from an audit unscathed.

Image Credits: From flickr, Creative Commons license. Messy desk by Jeffrey Beale, slightly neater messy desk by Denise Krebs.

Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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