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Published on Tuesday, December 17, 2019

Will Oracle Sink OFCCP Enforcement Authority?

Author: Anthony Kaylin

Flag in front of court houseIn a long running battle with the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), Oracle filed a complaint in the DC District Court that alleges “[t]he OFCCP has subjected Oracle to administrative proceedings that are unauthorized and impermissible, in violation of the law, and separation of powers.” Further, the complaint alleges that the Labor Department’s creation of “an administrative trial system wherein agency officials prosecute and adjudicate discrimination claims against government contractors and then award broad injunctive and compensatory relief if the agency finds violations” is unconstitutional violating separation of powers.

This case stemmed from an OFCCP audit of the headquarters of Oracle which started under the Obama administration.  OFCCP alleges that Oracle discriminates against female, African American, and Asian employees in compensation, recruiting, and hiring. OFCCP has alleged that the bias cost women and minority workers $400 to $800 million in lost wages. “Oracle’s suppression of pay for its non-white, non-male employees is so extreme that it persists and gets worse over long careers,” OFCCP alleged. “Female, black, and Asian employees with years of experience are paid as much as 25% less than their peers.”

It should be noted that in the last two years Oracle has closed at least 14 other OFCCP audits per the OFCCP website.

The complaint hits OFCCP in two ways.  First, there is a question as to what it means to approve an AAP as compliant with the law.  The second is how the DOL can be investigator, judge, and jury, where there may be an inherent bias to support the agency. 

With respect to approving an AAP as compliant, OFCCP makes assumptions based on two different laws: The Federal Property and Administrative Service Act of 1949 and Titles VI and VII of the Civil Rights Act of 1964 that Executive Order 11246.  Both authorize the agency to investigate discrimination cases when indicators arise in the course of an audit.  Resolving these issues is core to having a compliant AAP under the Executive Order. 

Oracle challenges this long held assumption by OFCCP by stating in its complaint that OFCCP’s authority is limited to terminate a contract or debar a contractor engaged in prohibited discriminatory conduct. It is required to refer these cases either to Department of Justice if there is a breach of contract case or the EEOC if a discrimination case.  OFCCP, interestingly enough, has held since 1977 that it does not enforce Title VII but follows the principles espoused in the law and has the power to identify and settle alleged discrimination. Throughout the years OFCCP has, especially in the previous administration, stated it basically follows Title VII requirements yet espouses and enforces theories of law under Title ViI case law. 

Although it failed to decide this issue, the Supreme Court discussed the issue of OFCCP’s authority to investigate discrimination and could not identify the authority for OFCCP to regulate contractors as a Supra EEOC type agency (Chrysler Corp. v. Brown, 441 U.S. 281 (1979)).   Congress failed to pass any law giving such broad powers to OFCCP beyond the scope of currently allowable law.

Second, Oracle alleges that there is an inherent unfairness and subjective bias to support an agency that has its own enforcement mechanism. The internal DOL courts have already ruled that OFCCP has no statute of limitations on its cases, unlike that imposed on the EEOC.   Moreover, Oracle argues that OFCCP has established an enforcement mechanism that is more complex and intrusive than any of the laws OFCCP relies on envisioned.  Therefore, Oracle believes that these types of cases should be brought before an Article III of the U.S. Constitution court, i.e. the federal court system.  Oracle alleges that an agency-originated and agency-based enforcement and adjudicative regime is by its nature biased and thus unconstitutional and unlawful.

Oracle has a long road ahead.  OFCCP has obviously tried for a settlement that forced Oracle’s hand and makes it reasonable for the costs of this lawsuit.  However, Oracle will have to distinguish the 14 previous settlements in the past two years as well as any discrimination settlements it may have agreed to in the past as to why now it won’t accept OFCCP jurisdiction.  As for the Article III court allegations, Oracle will also have to explain the number of cases OFCCP has lost within the agency court system to win the bias issue.  There have been a number of them.  Although the most recent Google case would support Oracle’s belief of bias, when the complaint was not dismissed given all the bad acts and overreaching by OFCCP.   If Oracle wins, OFCCP enforcement will have bark but no bite, and in the meantime, Oracle should request an injunction on all OFCCP audit until this case has wound its way through the courts. 

Don’t be surprised if OFCCP tries to circumvent the case by coming to a deal on the underlying case before the agency.   OFCCP v. Oracle America, Inc., Case No. 2017-OFC-00006 has been pending since January 17, 2017.  Most recently, in a surprising turn, Administrative Law Judge Richard M. Clark dismissed all of OFCCP’s “Disparate Impact” claims, other than one, for a complete failure of proof in OFCCP’s Complaint.  This ruling was based on a Motion for Summary Judgment Oracle filed seeking dismissal of OFCCP’s case in its entirety, including both its disparate treatment and disparate impact claims. The focus of the remaining allegation will be the impact, if proven true, of Oracle’s use of previous salary to set starting salary.  The case is being heard currently, and OFCCP presented an expert witness who presented nothing of weight that would support the final claim. 

If the ALJ dismisses the case, it may be appealed internally.  But if not, this complaint could become mute or withdrawn by Oracle.  More to come.

 

Source: Law.com 11/27/19, DirectEmployers 12/9/19

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