We describe below the substance of the two MOUs and offer employers tips or practice pointers (in italics) to deal with these developments.
The Charge Processing MOU
The following are the new changes regarding charge processing:
1.The MOU authorizes OFCCP to act as EEOC's agent to process and resolve the Title VII component of complaints/charges dual-filed with OFCCP under Executive Order 11246, and Title VII of the Civil Rights Act of 1964.
Previously, OFCCP would retain systemic or class claims and refer to EEOC individual charges alleging discrimination based on race, color, national origin, religion, or sex. Now, OFCCP can retain individual charges and investigate them itself and seek relief.
This development is likely to prove problematic for employers in light of OFCCP's investigative powers. Although OFCCP will act as EEOC's agent to process and resolve individual charges, OFCCP has significantly greater powers than EEOC to compel an employer's production of documents without the need for a subpoena. The issuance of a 30-day notice for a compliance review requires the contractor to submit a significant amount of demographic information on its workforce. The OFCCP's investigative powers during an on-site visit are virtually limitless. 41 C.F.R. Section 60-1.43.
A contractor that receives a 30-day compliance review notice should determine whether there are any discrimination charges pending with either agency. Employers facing on-site visits should clarify whether OFCCP is also currently investigating any individual charges of discrimination before providing data.
2.OFCCP is required to notify EEOC's Director, Office of Field Programs, of OFCCP's receipt of complaints or charges that include systemic or class action allegations. EEOC can request primary jurisdiction of these systemic or class claims. EEOC also may request to retain individual claims filed by employees of government contractors instead of referring them to OFCCP. OFCCP is required to make available to EEOC, upon request, information OFCCP obtained in its investigation and processing of systemic or class claims.
During an OFCCP compliance review, contractors submit their Affirmative Action Plan (AAP) for Women and Minorities. The AAP is intended to be a self-critical analysis of the contractor's employment processes and typically contains admissions against interest. In addition, contractors submit data on the demographic composition of the workforce; adverse impact ratios in the areas of hiring, promotions/transfers, terminations; and compensation data. The scope of information supplied is considerably broader than that available to the EEOC in a typical investigation. Moreover, during any on-site visit, OFCCP interviews managers and employees. Because managers may bind the company with any admissions, a corporate representative may accompany managers during interviews; a representative may not accompany employees to the interviews.
3.Consistent with OFCCP's authority to act as EEOC's agent for the purpose of receiving, investigating, and processing the Title VII component of charges that it retains, OFCCP has ten days following receipt of the charge to notify the employer. Any state deferral period that might have been applicable had the charge been dual filed with EEOC instead of OFCCP will be waived. If OFCCP finds no reasonable cause, it can issue a right-to-sue letter and a Title VII dismissal letter.
4.If OFCCP finds reasonable cause, it will issue a reasonable cause finding under Title VII and attempt to conciliate the case, "consistent with EEOC's standards for remedies."
In addition to obtaining back pay and other make-whole relief, the MOU enables OFCCP to obtain compensatory and punitive damages in the resolution of the charge.
5.If conciliation is successful, the charging party waives the right to pursue the issues under Title VII. If conciliation is not successful, OFCCP can retain jurisdiction and take the case to enforcement, or, alternatively, it can transmit the Title VII charge to EEOC for any action EEOC deems appropriate. If EEOC declines to pursue further action, EEOC will close the Title VII charge and issue a notice of right-to-sue.
6.If an individual who has already filed an OFCCP charge files a Title VII charge with EEOC, EEOC will forward the charge to OFCCP for processing.
The MOU itself contains no reciprocal process if the individual files first with EEOC and then with OFCCP.
7.As to confidentiality, the MOU states that when EEOC provides information to OFCCP, the confidentiality requirements of Sections 706(b) and 709(e) of Title VII apply to that information. "When OFCCP receives the same information from a source independent of EEOC, the preceding sentence does not preclude disclosure of the information received from the independent source." OFCCP agrees to observe any confidentiality requirements imposed on the information by the Trade Secrets Act and the Privacy Act.
Section 706(b) of Title VII prohibits EEOC from making public the fact that charges were even filed. Section 709(e) imposes criminal penalties on any Commission officer or employee who makes public in any manner information obtained by the Commission while the charge is pending with EEOC. The protections against public disclosure found in the referenced sections of Title VII do not apply to information that OFCCP obtains during a compliance review or from another independent source, such as the complainant. Employers that submit information to OFCCP during a compliance review will not enjoy the same protections from public disclosure as they would under EEOC procedure. It is critically important, therefore, that employers review documents before submitting them to OFCCP for a compliance review as well as prepare managers before allowing them to be interviewed by an OFCCP Compliance Officer.
When OFCCP obtains information from its receipt, investigation, and processing of the Title VII component of a dual-filed charge, or when OFCCP creates documents that exclusively concern the Title VII component of a dual-filed charge, OFCCP agrees to observe any confidentiality requirements imposed on the information by the Trade Secrets Act, the Privacy Act, and Sections 706(b) and 709(e) of Title VII.
As noted above, only OFCCP's receipt of information during its investigation of the Title VII component of a dual-filed charge is protected to the same degree as it would be had it been submitted to EEOC. OFCCP's receipt of other information during the investigation of systemic or class claims or during a compliance review is subject only to the confidentiality provisions found at 41 C.F.R. Section 60-1.20(g) and 41 C.F.R. Part 60-40. Under these provisions, OFCCP's disclosure of information obtained from a contractor is evaluated pursuant to the public inspection and copying provisions of the Freedom of Information Act, 5 U.S.C. Section 552 and DOL's implementing regulations at 29 C.F.R. Part 70. Contractors submitting information to OFCCP should ensure that such information is protected in accordance with 29 C.F.R. Section 70.26 and 41 C.F.R. Section 60-40.3.
The Compensation MOU
The compensation MOU is designed to foster more coordination and greater cooperation in enforcement efforts regarding compensation discrimination among EEOC, DOL-ESA's Wage and Hour Division, and OFCCP.1/
The memorandum obligates EEOC and ESA to develop and provide training to Wage and Hour enforcement staff to recognize potential compensation discrimination issues. It also enables the agencies to share information relating to compensation discrimination during the course of their own compliance efforts. During the course of a Wage and Hour investigation, therefore, a Wage and Hour investigator who learns of a potential issue of compensation discrimination may, "to the extent provided by law," provide such information to OFCCP to determine whether the employer is a government contractor. If OFCCP determines that the employer is not a government contractor, but may be covered by the Equal Pay Act or Title VII, OFCCP may, "to the extent authorized by law," provide the compensation information to the EEOC. In other words, regardless of which investigating agency is first on the scene, it may share compensation information with the others "to the extent provided by law" if the information relates to a potential issue of compensation discrimination. Exchanges of information include any supporting documentation gathered during contact with employers, potential complainants, or other sources of information.
Although it appears from the text of the MOU that Wage and Hour Investigators are not going to be investigating discrimination charges, and EEOC investigators are not going to be investigating job classifications as exempt or nonexempt, employers need to be sensitive to the scope of information provided to any one agency during the course of an investigation.
Regarding confidentiality, the agency receiving the information has the responsibility to ensure that any disclosures conform with all provisions of law that apply to the employees of the originating agency. The agency receiving the information is also bound to take all appropriate steps to assure that the information is protected from unauthorized disclosure or use.
Although the OFCCP will continue to pursue its median-pay compensation analysis, where that does not bear fruit, it may refer the information to the EEOC to evaluate the data under a "substantially similar" or equal pay standard.
In-house compensation professionals should be trained to understand the agencies' enforcement theories and methodologies. In addition, employers should audit existing compensation documentation -- with assistance from and under the direction of counsel for privilege reasons -- to see whether such documentation raises any compliance issues or could be used adversely during an investigative review or in litigation.
New Legislative Initiatives
The agencies' compensation memorandum is part of the Clinton Administration's $14 million Equal Pay Initiative. There are several bills pending in Congress on the subject of pay equity, including the Paycheck Fairness Act (S. 74; H.R. 541) and the Fair Pay Act (S. 702; H.R. 1271). The Paycheck Fairness Act (PFA) would improve enforcement of wage discrimination law and make compensatory and punitive damages available under the EPA. It will make it easier to proceed with class action lawsuits by eliminating the requirement that absent class members must affirmatively opt in to the lawsuit. The new law would create an opt-out procedure. The PFA also expands the EPA's retaliation provision by making it illegal to discharge or discriminate against an employee who has "inquired about, discussed, or otherwise disclosed the wages of the employee to another employee." This provision would make illegal employer policies prohibiting employees from discussing their compensation. By so doing, employees are more likely to become aware of wage disparities that could form the basis to institute litigation.
The PFA also would mandate that the Secretary of Labor develop guidelines to enable employers to evaluate job categories based on objective criteria such as educational requirements, skill requirements, independence, working conditions and responsibility. The guidelines purportedly are designed to enable employers to compare wages paid for different jobs.
The Fair Pay Act would prohibit wage disparities in "comparable jobs." Specifically, the bill's primary provision would make it illegal to pay women less than men for jobs that require "comparable skills, effort, responsibility and working conditions." In short, it proposes to overturn the vast judicial authority rejecting the comparable worth theory.
If you have any questions about the Memoranda of Understanding or the issues raised in this White Paper, please call any of the following attorneys:
Washington D.C. Robert J. Smith (202) 467-7065 Alissa A. Horvitz (202) 467-7357 Philadelphia PA Mark S. Dichter (215) 963-5291 Richard G. Rosenblatt (215) 963-5511 New York, NY Christopher P. Reynolds (212) 309-6807 Pittsburgh PA Jane Howard-Martin (412) 560-3340
1/Employers with 50 or more employees and a contract with the federal government in excess of $50,000 are covered by Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans Readjustment Assistance Act of 1974, as amended by the Veterans Employment Opportunities Act of 1998. OFCCP enforces these laws.
2/The Employment Standards Administration (ESA) is a department within the Department of Labor. Both OFCCP and the Wage and Hour Division are offices within ESA. The Wage and Hour Division enforces the Fair Labor Standards Act, the Family and Medical Leave Act, and other laws establishing minimum wage and labor standards. OFCCP enforces Executive Order 11246 and other contract-based equal employment opportunity laws. EEOC enforces Title VII of the Civil Rights Act of 1964 and the Equal Pay Act (EPA) of 1963.
This White Paper is published to inform clients and friends of Morgan Lewis and should not be construed as providing legal advice on any specific matter.
This article is published to inform clients and friends of Morgan Lewis and should not be construed as providing advice on any specific matter.