David S. Fortney, a management lawyer with Fortney & Scott in Washington, D.C., talks about the pros and cons of commencing litigation against the Office of Federal Contract Compliance Programs because of a compliance review.

Bloomberg BNA spoke with Fortney after one of his sessions at the inaugural compliance symposium of the OFCCP Institute in late April.

He is a co-chair of the institute, which offers training programs for federal contractors on compliance with equal opportunity, nondiscrimination, and affirmative action laws enforced by OFCCP and the Equal Employment Opportunity Commission. The institute is not affiliated with the federal government.

Bloomberg BNA: As a litigator, what factors do you assess to determine if a contractor should proceed with an administrative compliant against OFCCP because of an audit?

Fortney: It is really multifaceted. The question of litigation might come up in an audit that has been going on for years, even if initially the duration issue was a modest problem. A delay can result in the accumulation of potential damages and increase the contractor's exposure to more risk.

Also, the litigation process itself is more drawn out than the typical case filed under Title VII of the Civil Rights Act.

The contractor has to go through an administrative law judge at the Labor Department and potentially the Administrative Review Board, as well, if the case is appealed.  It may take up to three to five years before you have an opportunity for a federal district court to start to consider your case.

The time and effort in terms of transactional costs, delays and attorneys' fees for this type of litigation is very costly, but obviously you contrast that with the cost benefit of a settlement. There is also the negative press that is associated with the litigation to consider.

Bloomberg BNA: Are some compliance issues better situated for litigation than others?

Fortney: From a contractor's perspective, there are several areas that I think are litigation worthy. Specifically, the question of how was I selected for an audit.  If you agree to be audited, then you have potentially waived what otherwise might have been jurisdictional arguments.

If you think that you have been selected unfairly and your constitutional rights have been violated, then you must litigate that or you will waive that right.

I also think that compensation issues will become litigation worthy. If the audits proceed in the manner that the agency is suggesting through its new compensation directive, then huge systemic-type cases can potentially expose contractors to millions of dollars in fines that would also effectively put at risk the company's entire compensation system.

That leaves a contractor with very little choice but to try to litigate to secure the approval of the compensation system that the company has been following.

Bloomberg BNA: Are there compliance issues that are not litigation worthy?

Fortney: Yes, situations in which a contractor has not done a good job with recordkeeping. The absence of records often presents a very difficult issue for contractors to overcome.

Sometimes key witnesses are no longer available because they have left the company or passed on. Recordkeeping is by far the single most common violation among contractors.

Another factor is the magnitude of the case. If it is a local problem and there is a gray area in which an individual did or did not follow a company policy and it is a rather modest issue, then most contractors, in my experience, would likely say 'let's see if we can get this cost-effectively resolved with a non-admission clause and move forward.'

Bloomberg BNA: Are there any federal district court cases involving OFCCP that you are closely monitoring?

Fortney: The most significant case right now is Frito-Lay Inc. v. Solis, which is under review in the U.S. District Court of the Northern District of Texas. The case goes specifically to the time period that the agency can include in its initial desk audit stage.

The question before the court is whether OFCCP has the regulatory authority to require a contractor to produce affirmative action plan data beyond the date of the scheduling letter. If not reversed, OFCCP will have very board authority to conduct expansive audits.

Bloomberg BNA: Any final thoughts?

Fortney: We can anticipate much more robust litigation from the agency. I think the federal contracting community is increasingly recognizing that it is being forced to litigate some of these issues in order to push the agency back.

Frankly, OFCCP itself is much more prepared to litigate. I kind of view it as a gun fight and both parties are pretty well-armed.

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If you are interested in participating in a Q&A on enforcement actions, legal developments and news related to the Equal Employment Opportunity Commission or the Office of Federal Contract Compliance Programs or have a suggestion for a Q&A topic, send an email to lbridgeford@bna.com. You can also follow me on Twitter @LCBridgeford.