Trump DOL Could Scrutinize Tech, Finance Contractors for Bias

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By Jay-Anne B. Casuga and Jasmine Ye Han

Financial service and information technology companies with government contracts could face closer scrutiny of their employment data for potential discrimination, as the Trump administration Labor Department seeks to carry out the plans of its predecessor.

Google Inc., JPMorgan Chase & Co., and Oracle America Inc. all were sued near the end of the Obama administration for alleged workplace bias or other noncompliance, by the DOL’s Office of Federal Contract Compliance Programs. The office audits federal contractors for affirmative action and nondiscrimination compliance. KPMG LLP, Qualcomm Inc., Palantir Technologies Inc., and Ameriprise Financial Inc. also recently settled agency allegations of hiring or pay discrimination.

The Obama administration indicated in its closing year that the OFCCP would seek to focus on contractors in the finance and technology sectors. That proposal followed a four-year rise in the percentage of closed audits for employers in those industries, according to a Bloomberg BNA analysis of publicly available government enforcement data.

And the Trump administration said it plans to continue focusing on those industries, according to its fiscal year 2018 budget proposal, even as it seeks to lower the OFCCP’s budget by about $17 million and merge it with the Equal Employment Opportunity Commission. A main component of the industry focus will involve the creation of two skilled regional centers that will conduct audits of those sectors.

Michael Eastman, vice president for public policy at the Equal Employment Advisory Council in Washington, told Bloomberg BNA that he was surprised to see plans continue for the skilled centers given the funding cuts the administration is proposing.

It’s “difficult to project” what impact the proposal might have on finance and IT contractors, Eastman said.

But it might not necessarily mean that finance and technology contractors will have targets on their backs, other employer representatives said. The proposal could be beneficial for contractor compliance, they said.

Percentage Uptick in Finance, Technology Audits

The OFCCP closed more than 12,200 supply and service contractor audits between FY 2013 and FY 2016, according to a Bloomberg BNA analysis of government data.

The number of closed audits decreased during that period as the agency sought to conduct more thorough audits that included deep-dive analyses of contractors’ employment data. For example, it closed 1,696 audits in FY 2016, down from 4,100 in FY 2013.

As the total number of closed audits fell, the percentage of finance and technology audits crept up.

In FY 2013, audits of contractors in the finance and technology sectors accounted for 1.6 percent and 10.7 percent of total closed audits, respectively. Those numbers rose to 2.7 percent and 12.3 percent by FY 2016.

Skilled Regional Centers in New York, San Francisco

This uptick occurred before the OFCCP officially proposed in its FY 2017 budget to establish two “skilled regional centers,” one in San Francisco and one in New York.

The centers would be staffed with specialized compliance officers who would handle complex audits of contractors in specific industries, such as financial services or IT.

Trump’s budget proposal continues those plans.

“Compliance evaluations conducted by highly skilled compliance officers greatly increase evaluation quality and timeliness as well as the more efficient use of limited resources,” the agency said in its FY 2018 budget documents. “It also reduces the need for a network of field area and district offices.”

Audits Scheduled Neutrally, DOL Says

The agency wasn’t focusing specifically on the financial services or IT industries before the skilled centers were proposed, despite the percentage increase, a DOL spokesman told Bloomberg BNA.

The audits were all scheduled through a neutral administrative plan, he said.

But some management-side representatives said they believe the OFCCP has been devoting more attention to those sectors.

Officials have previously gone on the record to say the agency can focus on specific industries as long as the audit selection process within those industries is administratively neutral, David Cohen, president of DCI Consulting and a co-chairman of the Institute for Workplace Equality in Washington, told Bloomberg BNA.

Cohen said he believes there’s “no question” that the OFCCP over the past couple of years has focused more on finance and technology contractors, pointing to the number of administrative complaints involving such companies within the past year.

To put things in perspective, the agency has filed only 37 administrative actions against companies since FY 2013, despite its numerous audits.

Efforts to Seek Out Pay Bias a Driving Force?

The agency’s efforts to target compensation discrimination may be one reason for the scrutiny, Cohen said.

Gender pay gaps, for example, have been highlighted as an issue in the finance and technology industries.

The OFCCP made uncovering and combating systemic pay discrimination a top enforcement priority over the past eight years. Allegations of pay bias are at the heart of the agency’s recent complaints against Oracle and JPMorgan, as well as its settlements with Qualcomm and Ameriprise, all of which stemmed from audits conducted during the Obama administration. The agency’s current action against Google also touches on issues related to pay data.

The Trump administration also plans to “continue a steady course of identifying and remedying systemic discrimination and prioritizing those evaluations with evidence of systemic pay issues,” according to budget documents.

Targets on Their Backs? Maybe Not

The plans to create the skilled centers may give finance and technology contractors the impression they have targets on their backs, but that might not necessarily be the case, practitioners said.

“When you read the proposal, there’s one word missing, which is enforcement,” Christopher Wilkinson, a former DOL associate solicitor for labor-management, told Bloomberg BNA.

The centers could focus more on compliance assistance and not necessarily discrimination enforcement, said Wilkinson, now a partner with Orrick, Herrington & Sutcliffe in Washington.

Cohen agreed that if the goal of the centers is to target finance or technology contractors for enforcement, then their creation “is probably not exciting for those industries.”

But in theory, centers staffed with auditors who have specialized knowledge of a particular industry and the nuances of its employment practices could help contractors with compliance and during agency audits, he said.

To contact the reporters on this story: Jay-Anne B. Casuga in Washington at jcasuga@bna.com; Jasmine Ye Han in Washington at yhan@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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