Enterprise Wide Enforcement

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The concept of enterprise-wide enforcement has been around in one form or another for years at OFCCP. In the late nineties it took the form of "global agreements," in the early 2000's the concept emerged in initiatives to "connect the dots" and in the present administration it has surfaced under the term "enterprise-wide" enforcement. In addition to resolutions specifically tagged as part of these initiatives, there have always been multiple facility settlements. The common denominator is the attempt to resolve similar enforcement problems at several of the contractor's facilities using a single negotiation process.



The purpose of this article is to explore the issues that arise in the context of enterprise-wide agreements. Specifically, it will discuss how a contractor is selected for an enterprise-wide enforcement effort, what the agreements are designed to achieve, how these agreements are negotiated and what structures could be put in place to enhance the process.



Selection Process




Currently there is no separate, special selection procedure for identifying targets for enterprise-wide enforcement. The easiest way to become the target for enterprise-wide enforcement is to have a number of facilities, opened in the usual way under the Federal Contractor Selection System, that have indicators of statistically significant disparities in the same job title or job group. For example, in the enterprise-wide FedEx cases, you had a high turnover business with a lot of part-time employees; all of this hiring activity resulted in statistically significant disparities in selection against minorities and/or women at a number of its facilities. FedEx was not able to produce evidence to satisfy the agency that that there were legitimate, non-discriminatory explanations for these disparities. This case and most others like it were not opened as enterprise wide enforcement targets. The volume and timing of the negotiations combined with a renewed emphasis on enterprise-wide enforcement led to these cases being combined for an enterprise-wide resolution.



While this is the most common path to an enterprise-wide enforcement approach, it is not the only possible path. Another path to an enterprise-wide agreement may be the identification of a corporate level practice or policy that is creating the same problem at a number of the contractor's facilities or will eventually. For example, the agency has resolved multiple facility cases that involved the use of a test that had not been properly validated and had sprung statistically significant standard deviations that caused a discriminatory disparate impact. This happens when a particular gender or minority group is disproportionately screened out by the test. In these types of cases, you may get specific commitments to discontinue the tests at the scheduled facility and through an enterprise-wide agreement secure a commitment to stop using the test altogether even at facilities that have not been scheduled. Thus, the elimination of the use of the test is "enterprise-wide."



An enterprise-wide review could be opened if the agency receives credible information of a violation at a number of a Federal contractor's facilities. For example, suppose the agency held town hall meetings around the country and received similar complaints about discriminatory practices at a national corporation. Since OFCCP can initiate audits based on credible information of a violation, it could conceivably target a number of this contractor's facilities for an enterprise-wide enforcement action.



Finally, the agency could seek to expand a single facility review to an enterprise-wide review based on the nature of the evidence found. For example, suppose a scheduled facility had a discriminatory pay practice but the practice originates at the corporate-level; conceivably, the agency could seek to expand its review by scheduling other facilities to examine their pay practices. This approach would appear most vulnerable to challenge and this kind of effort has been abandoned in the past because of concerns that no selection criteria had been established upfront for which contractors would be subjected to an expanded review.



What Enterprise Wide Agreements are Designed to Achieve





The purpose of an enterprise-wide agreement is to improve efficiency in enforcement and compliance. The hallmarks of enterprise-wide enforcement efforts are that they involve multiple facilities of a contractor, they seek modifications to policies and practices at the corporate level which will impact the employment practices of its facilities, they seek relief that would likely not be available under a single facility approach and the financial remedy may be positively impacted by the company's willingness to engage in the enterprise-wide enforcement process.



From the agency's perspective, enterprise-wide settlements provide a number of benefits. They resolve a number of cases all at once. Quite often the cases are aged cases. The agency knows that the older the case gets the less the affected class members will be interested in actually accepting the same kind of job that interested them five or six years ago. It also becomes more difficult to find affected class members to share the monetary relief and litigation becomes much more challenging. On the purely administrative side, the closure of this volume of cases will decrease the average age of OFCCP's inventory, will give it a high count for case closures for the performance year and will put to bed a case that has seemed to go on forever which will free up resources for new projects. From a mission perspective, it provides an efficient closure mechanism that has the potential of making a larger impact on the employment practices of a company as a whole rather than just the practices at the scheduled facility. It allows for more impressive publicity because of this larger impact and it may enhance the likelihood that the violation will not recur.



From the contractor's perspective, enterprise-wide agreements bring closure to multiple open reviews at once without incurring the expense and risk of litigation especially where the age of the case makes the prospect of litigation expensive and daunting. Quite often the contractor will have voluntarily made a number of corrections to the selection process already and is willing to commit to these corrections and process improvements in a formal conciliation agreement. The total monetary relief might be lower in a package deal than in individual negotiations. In addition, the negotiation process does not have to be replicated in various Regions around the country. The conciliation agreements will be more consistent and easier to administer.



How Enterprise-wide Agreements are Negotiated





Enterprise-wise agreements are not usually negotiated at the District Office level. The participants for the agency are usually at the Regional Level and often include staff from the Office of the Solicitor. The National Offices of both OFCCP and the Solicitor are often heavily involved but not directly at the table.



The remedies sought are both injunctive relief and monetary relief. By injunctive relief, the agency means those actions that will be taken to ensure that the violations do not recur. This may include agreeing to new monitoring procedures and/or additional training for staff. It may also involve agreeing to have an outside monitor review several of the contractor's facilities, even those not scheduled, to ensure that the new agreed on procedures are working. An injunctive remedy may also involve the submission of extra compliance reports. It is not uncommon that some of the items included as injunctive relief are measures the contractor has already begun to undertake as part of its proactive response to the identified compliance problem.



Monetary relief is, of course, the money that will be paid out to affected class members. This calculation is usually done in the same manner as individual facility remedy calculations. However, where more than one Region is involved and the methodology for remedy calculation is not identical across Regions, the Regions will have to work together to come up with a remedy calculation that is acceptable to all Regions. In the FedEx matter, we discovered that although our methodologies were somewhat different from Region to Region, the actual figures we arrived at were essentially the same.



The Regional calculation of monetary relief may not be the only calculation that needs to be factored in. For example, in the FedEx cases, the Regional calculation was arrived at much earlier than the settlement and was very close to the figure at which the cases ultimately settled. However, at the behest of the Solicitor's Office, the agency paid to have an outside consultant look at the figures and calculate the remedy. The expert used very different assumptions than the agency and arrived at a much higher figure which threw a bit of a wrench in negotiations that were otherwise going along rather smoothly. The chief difference was that the agency included a mitigation figure whereas the expert did not since the jobs were part time. The National Office was very involved in the calculation of the remedy. Every proposal required several hours of conferring with the National leadership which was not the norm for either the Regional Directors or the Regional Solicitors. Since I retired before the negotiations concluded, I cannot explain how the negotiations returned to the figures OFCCP had originally calculated but apparently they did and the case was ultimately resolved.



Enterprise-wide negotiations are higher profile within the agency and thus, may have a lot more players than are seated at the table. This will impact the negotiation of both the injunctive and monetary relief. As a participant in the FedEx negotiations, I felt that the National Office became much more aggressive on the negotiation of monetary relief because of the ease with which we concluded the negotiation of the injunctive relief. The agency had represented to FedEx that its cooperation with the injunctive relief would positively impact the monetary negotiations but it seemed to have the opposite effect.



Enhancing the Enterprise-wide Approach





Establish and Publish Selection Procedures

The legitimacy of the selection procedure has not been a problem where the usual selection process happened to lead to a number of open reviews at several facilities of the same company and only the resolution is enterprise-wide. This is because there are established procedures for selecting contractors and these procedures satisfy the requirement that selection not be arbitrary and capricious. Using the current regular procedures may not allow the agency to maximize its use of an enterprise-wide enforcement model because it would be limited to just those companies that happen to have a lot of open reviews that happen to raise the same compliance problems for the same jobs.



The legitimacy of the scheduling is more vulnerable where concerns about an enterprise-wide discriminatory practice is used to justify the opening of a series of reviews or the expansion of the number of facilities to be reviewed beyond the facility or facilities that appeared on the scheduling list. How much evidence is sufficient to support the opening of reviews based on employee or worker's rights groups complaints? Are there objective procedures for determining which contractors with corporate level practices that produce facility level disparities will be targeted for expanded enforcement?



The enterprise-wide approach may be more viable if the agency established and published selection procedures specifically for enterprise-wide enforcement. These procedures should be established with input from all stakeholders and with clearly stated criteria and objectives. There should also be a process to ensure that contractors selected for enterprise-wide enforcement are not simultaneously overwhelmed with facility reviews under the usual scheduling procedures.



Establish and Publish Investigation Procedures

In cases where the reviews had already been scheduled, investigated and where only the remedy phase was enterprise-wide, it was not necessary to establish specific enterprise-wide investigation procedures. However, if the agency establishes a selection procedure such that several facility reviews are initiated as enterprise-wide reviews, additional guidance will be necessary or these reviews could easily morph into multi-year fishing expeditions. The specific jobs targeted by the review should be identified and should shape the parameters of the investigation. This way both the agency and the contractor could focus on a particular area that appears to be amenable to a corporate-wide review and corporate-level management of compliance. In essence, the enterprise-wide review could be, by definition, a focused review.



Negotiation

Enterprise-wide negotiation procedures could also be established. This could help clarify who is involved in the negotiation, who will take the lead in the negotiation and who has final approval. Assuming enterprise-wide enforcement is a tool the agency intends to continue to use, Federal contractors should know what to expect in the negotiation process. For example, will a single conciliation agreement be used or will, as is usually the case, multiple conciliation agreements with similar language be used? Are there provisions that the agency expects to always include in these agreements? For example, standard language for release agreements (promises not to bring a legal action involving the same issues resolved by the conciliation agreement), when and whether agency monitored conciliation agreements will be used and when and whether court monitored consent decrees will be used, what will be done with any excess, unclaimed monetary relief, and the like.



Reviews and Reporting

The agency should periodically review the enterprise-wide enforcement process to see if it is achieving the desired outcomes. In the interest of Federal government transparency, the reports of these reviews should be made public. Elements may include the types of injunctive relief agreed on that would not have been otherwise available in regular facility based enforcement, the number of employees affected by the resolution, the monetary remedies collected, the number of jobs accepted by the affected class members, the disposition of any excess funds and the like.



Summary




Enterprise-wide enforcement has some positive potential for the agency, workers and Federal contractors. To date, the process has not been effectively formalized which leaves Federal contractors in the dark as to how and when the process will be used. By formalizing the process, the agency can ensure that the process achieves the desired objectives and that it does so in a manner that is fair and consistent. If this process has not already begun, hopefully, this article will stimulate some discussion about the best way to institutionalize the enterprise-wide approach so that it becomes a fair, predictable and effective enforcement tool.