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July 3 — Raw compensation data provided by Bank of America during a Labor Department desk audit justified an on-site review of a North Carolina bank location by the DOL's Office of Federal Contract Compliance Programs, a federal judge in the District of Columbia held July 2.
The ruling is the latest in a string of recent decisions generally in favor of the OFCCP in so-called “access” cases in which contractors have challenged the agency's authority to request and receive certain employment data during compliance evaluations or to conduct on-site reviews.
Granting summary judgment to the DOL, Judge Emmet G. Sullivan of the U.S. District Court for the District of Columbia found that statistical pay disparities based on race and sex—as identified by an administrative law judge from the bank's raw data—were sufficient to provide the OFCCP with a reasonable suspicion of a violation of Executive Order 11,246.
The agency thus satisfied the Fourth Amendment's probable cause requirement for an administrative search, Sullivan said. The judge added that he reached that conclusion even though the OFCCP didn't rely on that raw data to justify the on-site review and instead had relied on a flawed regression analysis of that data.
In addition, Sullivan rejected the bank's Fourth Amendment challenge to the OFCCP's initial selection of its North Carolina facility for review, finding that the bank voluntarily consented to the desk audit by submitting its affirmative action plan and other supporting documents to the agency.
Over the past few years, the OFCCP has prevailed in several cases involving federal contractors that have refused to either provide the agency with requested data and documentation, or to allow its compliance officers to conduct on-site reviews.
For example, in United Space Alliance LLC v. Solis, the U.S. District Court for the District of Columbia upheld an administrative ruling that a National Aeronautics and Space Administration contractor had to produce pay data requested by the OFCCP (D.D.C., No. 11-00746, 11/14/11).
Meanwhile, in OFCCP v. Frito Lay Inc., the DOL's Administrative Review Board held that the snack maker had to provide 2008 and 2009 AAP data requested by the OFCCP in furtherance of a 2007 desk audit that revealed alleged statistically significant disparities involving the hiring of women (DOL ARB, No. 10-132, 5/8/12).
Frito-Lay appealed that ruling to the U.S. District Court for the Northern District of Texas.
In February, a magistrate judge had recommended a voluntary remand of the ARB's ruling, which apparently relied on an erroneous analysis of Frito-Lay hiring data cited in the OFCCP's administrative complaint.
A DOL spokeswoman told Bloomberg BNA July 3 that Sullivan's July 2 ruling in Bank of America “underscores the importance” of contractor cooperation for the OFCCP's enforcement efforts.
“OFCCP takes seriously its mission to protect federal contractors' workers and job seekers from discrimination, and we rely on the cooperation of those contractors in providing access to do so,” she said.
Attorneys representing Bank of America didn't immediately respond to Bloomberg BNA's July 3 request for comment.
According to the district court and previous administrative rulings, the OFCCP in February 2004 scheduled a compliance review of Bank of America's North College Street establishment in Charlotte, N.C.
Bank of America isn't “a ‘novice' when it comes to challenging the OFCCP's efforts to complete compliance reviews,” the judge wrote, rejecting the bank's “contention that its consent was anything but voluntary.”
After asking the agency for information about the compliance review selection process, the company provided data and documentation requested by the OFCCP.
After completing a desk audit, the OFCCP found that the average salaries of males in certain job groups were 9 percent to 23 percent higher than those of females, and that the average salaries of non-minorities were 5 percent to 23 percent higher than those of minorities. The OFCCP requested more detailed compensation information, which the bank provided.
The agency completed a regression analysis on the additional data, but was “unable to create groups of similarly situated employees.” It then requested to interview bank employees and examine documents during an on-site review.
Bank of America denied the OFCCP access to the North College Street facility, prompting the agency in August 2006 to file an administrative complaint against the bank under EO 11,246.
An administrative law judge in May 2007 issued a recommended order requiring the bank to allow the OFCCP on-site.
Although the ALJ observed that the OFCCP's initial selection of the North College Street facility didn't satisfy the requirements of the Fourth Amendment because the agency didn't apply a neutral administrative plan, he nevertheless found that the OFCCP's desk audit was valid because the bank voluntarily consented to it.
The judge also held that the OFCCP's regression analysis was “too flawed to provide meaningful evidence of … discrimination,” and thus couldn't be used to establish administrative probable cause for an on-site review.
However, he said the compensation data provided by the bank during the desk audit phase established the necessary probable cause because it created “reasonable suspicion” of sex and race discrimination in pay.
On appeal, the ARB upheld the ALJ's recommended order.
The board found that the bank consented to the desk audit portion of the compliance review by knowingly and voluntarily turning over its AAP and supporting documents to the OFCCP. It didn't address whether the facility's initial selection met the necessary Fourth Amendment standards.
In addition, the board agreed that the desk audit data provided the OFCCP with a reasonable suspicion of an EO 11,246 violation. Bank of America then sought review in federal district court. A magistrate judge in December 2011 issued a report and recommendation in the OFCCP's favor.
Mostly adopting the magistrate findings, Sullivan ruled that substantial evidence supported a finding that Bank of America voluntarily consented to the initial desk audit.
The judge acknowledged that an administrative search under EO 11,246 is valid only where there is probable cause for the search. However, a search conducted without probable cause “is nonetheless valid if conducted pursuant to voluntary, contemporaneous consent,” he said.
Given the bank's voluntary consent in the present case, he said he didn't need to address whether the OFCCP's initial selection of the North College Street facility for review complied with the Fourth Amendment.
Sullivan said the bank willingly provided the documents requested by the OFCCP after it received information about the agency's audit selection process. He added that the bank provided no evidence the agency's compliance evaluation scheduling letter or other responses were coercive.
He further pointed out that Bank of America is a “sophisticated financial institution that is not new to the compliance review process.”
Indeed, an ALJ last September recommended that the bank—in a separate, long-running OFCCP case—pay approximately $2.2 million to a class of more than 1,100 black applicants who were unlawfully denied jobs in the early 1990s and the mid-2000s in violation of EO 11,246.
Sullivan added that Bank of America isn't “a ‘novice' when it comes to challenging the OFCCP's efforts to complete compliance reviews.”
“These facts belie Bank of America's contention that its consent was anything but voluntary,” the judge said.
Meanwhile, Sullivan didn't adopt the magistrate's conclusion that an OFCCP desk audit is equivalent to an administrative subpoena, which has “considerably lower” Fourth Amendment requirements in comparison to an administrative search.
The judge also didn't adopt the magistrate's determination that the OFCCP didn't apply a neutral administrative plan when initially selecting the North College Street facility for review. That finding was outside the scope of the magistrate judge's review because the ARB didn't consider that issue, the judge said.
Additionally, Sullivan agreed that the raw pay data provided by the bank during the desk audit justified the OFCCP's later request for an on-site review.
One method of establishing probable cause for an administrative search requires an agency to show it had a “reasonable suspicion of a violation,” the judge said.
Here, the bank argued that the OFCCP lacked a reasonable basis for an on-site review because the agency had relied exclusively on a flawed regression analysis of the compensation data.
Rejecting that contention, Sullivan said the OFCCP isn't required to base its on-site review decisions on a regression analysis.
“Nor does it follow from the fact that the regression analysis was found to lack probative value that the OFCCP lacked a reasonable basis to request an on-site review,” the judge said.
That reasonable basis came from the raw data indicating pay disparities between men and women, and minorities and non-minorities, he held.
“Regardless of whether the OFCCP relied on that data or on a flawed regression analysis, the Court finds that the pay disparities identified in the raw data were sufficient to provide the OFCCP with a reasonable suspicion of a violation,” Sullivan said.
Amy Miller, Elena D. Marcuss and Bruce M. Steen of McGuireWoods in Washington, Baltimore and Charlotte, N.C., represented Bank of America. Labor Department attorney Raphael O. Gomez in Washington represented the OFCCP.
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Text of the opinion is available at http://www.bloomberglaw.com/public/document/BANK_OF_AMERICA_NA_v_SOLIS_et_al_Docket_No_109cv02009_DDC_Oct_26_.
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