EEOC Barring Federal Contracts? That's a Concern if Agencies Merge

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By Jay-Anne B. Casuga

Could the administrative process for banning a company from federal contracts become politicized at the EEOC?

That’s just one concern among many raised in response to the Trump administration’s proposal to merge the Equal Employment Opportunity Commission with the Labor Department’s Office of Federal Contract Compliance Programs. Business groups, civil rights advocates, and some lawmakers have already voiced opposition to the proposed merger of the agencies, which they say have different missions and goals.

The process that can lead to an order canceling an employer’s government contracts or barring the employer from obtaining future contracts showcases some of the differences between the two agencies. An employer could be barred if it’s found to have discriminated against workers or is otherwise noncompliant with the law. The distinctions in agency enforcement, administrative procedure, and expertise will have to be considered and reconciled if a merger proceeds, but that won’t be an easy task.

“That’s a very important point,” Patricia Shiu, the OFCCP’s director during the Obama administration, told Bloomberg BNA. “It’s a huge undertaking and one that is ill-advised,” she said of the proposed merger.

The EEOC currently lacks the authority to cancel an employer’s government contracts or bar an employer from obtaining future contracts if it’s found to have discriminated against workers. But the OFCCP, which proactively audits federal contractors for affirmative action and nondiscrimination compliance, has the power to initiate administrative actions that could result in contractor “debarment,” though that occurs rarely.

The Trump administration in its budget proposal directed the OFCCP to develop a plan to support the merger process. Over at the EEOC, an internal working group has been established to consider issues raised by the proposed merger, EEOC Acting Chair Victoria Lipnic told Bloomberg BNA.

Cynthia Pierre, the EEOC’s chief operating officer, leads the agency working group and has developed a schedule for consulting with the OFCCP about the matter, Lipnic said.

Open Questions

Some merger questions involving debarment that stakeholders said would need to be “thoughtfully resolved” include:

  •  Who at the EEOC will have the authority to issue an administrative complaint against a government contractor: the five-member commission with its shifting political majority or its general counsel?
  •  Should debarment power, which stems from the federal government’s contracting authority, be placed with an independent commission instead of a Cabinet-level agency?
  •  What settlement standards will the EEOC apply before an administrative complaint is filed?
  •  What entities at the commission will consider those complaints or subsequent appeals?
“There are many questions without corresponding answers thus far,” Tammy Daub, a former senior attorney with the DOL’s Office of the Solicitor, told Bloomberg BNA.

Legislative and regulatory changes would need to occur to determine many of the answers, and making those changes would involve a fairly significant amount of time and resources, said Daub, now of counsel in the Employment Law Department of Paul Hastings in Washington.

For example, one question is whether and to what extent the EEOC would adopt OFCCP’s regulations. “What rules would be modified and what rules would be jettisoned?” she asked.

Who Would Decide to File Complaint?

To bring an administrative action that could lead to debarment, the OFCCP must go through the DOL’s Office of the Solicitor, which ultimately decides if a complaint will be filed.

Who at the EEOC will assume the role of the solicitor’s office if a merger proceeds?

The bipartisan five-member commission, whose political majority can change depending on who’s in the White House, is one possibility. The Trump administration will eventually have the opportunity to install a Republican majority at the agency, subject to Senate confirmation.

But the commissioners don’t often vote on litigation, Michael Eastman, vice president for public policy at the Equal Employment Advisory Council in Washington, told Bloomberg BNA.

Another possibility is the EEOC’s general counsel, who has litigation authority delegated from the commissioners. However, the general counsel has come under fire in recent years for what some management-side stakeholders view as its overly aggressive enforcement and litigation strategy.

“Could those concerns bleed over if the OFCCP is transferred to the EEOC? Sure,” Eastman said.

Of course, a new general counsel will also eventually be nominated by the Trump administration.

Should Independent Commission Have Power to Debar?

A related concern raised by some employer groups revolves around the potential impact of transferring government contracting oversight and enforcement requirements from the OFCCP, which is part of a Cabinet-level agency, to the EEOC, an independent commission that may not be as accountable to the White House.

If the EEOC enforces the OFCCP’s executive order and laws, will it “properly account for the interest of the federal government”? asked Eastman. His organization recently submitted a comment letter regarding the merger to the Office of Management and Budget.

Imagine if the EEOC decided to debar a contractor that makes a certain military weapon, he told Bloomberg BNA. If the Defense Department stepped in to say debarment isn’t in the country’s best interests, would that influence the EEOC or not?

If the EEOC doesn’t “properly account for the government’s interest in making a procurement decision, would the executive branch have any recourse,” the EEAC posed in its letter. This issue was among was among the reasons why Congress rejected a proposal to merge an OFCCP predecessor agency with the EEOC in 1972, the group said.

Expertise Not Necessarily Interchangeable

Another merger hurdle could involve the different expertise of the DOL and EEOC attorneys.

The labor solicitor’s office is “extremely well-versed in all aspects of the OFCCP,” including historic protocols, policies, and procedures dealing with the handling of administrative complaints and debarment, Shiu said.

Although EEOC attorneys also deal with discrimination enforcement, that doesn’t mean they can assume the labor solicitor’s expertise and responsibilities easily, Shiu said.

The same could be said about the DOL’s administrative tribunals, Eastman said.

Christopher Wilkinson, a former DOL associate solicitor for labor-management, agreed.

For government contractors that are used to dealing with the solicitor’s office, navigating OFCCP issues with EEOC attorneys who may not have the same experience and knowledge “would be a challenge,” said Wilkinson, now a partner with Orrick, Herrington & Sutcliffe in Washington.

Different Conciliation Standards

The OFCCP must first try to settle, or conciliate, compliance issues that crop up during a contractor audit before an administrative complaint is filed.

The agency has to use “reasonable efforts” to conciliate, Wilkinson said.

By contrast, the EEOC arguably applies a lower standard, he said.

Under a 2015 U.S. Supreme Court ruling, courts typically must defer to the commission’s pre-lawsuit conciliation efforts if the agency notified an employer of the claims against it and provided it with a chance to negotiate a resolution, and the parties failed to reach a settlement acceptable to the agency.

“A court really would have to look at that issue,” Wilkinson said. “I think there are different standards at play.”

Eastman said one concern is whether a merged entity would adhere to the same standards that each agency has been using.

“If there are changes, that could be concerning,” Eastman told Bloomberg BNA. “But that’s part of the confusion: this unknown area of where are they going to try to harmonize standards and where are they going to stay separate,”

Administrative Tribunals or Federal Courts

The DOL solicitor’s office currently files administrative complaints on the OFCCP’s behalf with the DOL’s administrative law judges.

If an ALJ rules against the contractor, the company can appeal to the DOL’s Administrative Review Board.

If the contractor loses before the board, it can seek review at the federal district court level and obtain an injunction to stop the debarment while the case proceeds. Theoretically, further appeals could go to a federal appeals court and even the U.S. Supreme Court.

Whether a similar process would apply at the EEOC is another aspect that will need to be considered.

—Kevin McGowan contributed to this article

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at jcasuga@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Chris Opfer at copfer@bna.com

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