The Labor Dept. wants to revise a Trump-era policy on handling of discrimination claims against contractors

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Department argues the changes would increase flexibility, efficiency and enforcement, but attorneys for contractors say the revisions would hurt transparency.

The Labor Department is looking to revise a Trump-era rule that it says “undermined” how it handles and resolves claims of discrimination by federal contractors. 

Labor’s Office of Federal Contract Compliance Programs works to ensure federal contractors and subcontractors comply with non-discrimination and affirmative action obligations. Current leadership proposed a 59-page rule that would change a policy that took effect on December 10, 2020, during the tail end of the Trump administration. Comments on the proposal, published in the Federal Register on Tuesday, are due by April 21. 

“The 2020 rule’s standards did not assist workers and delayed the resolution of discrimination findings,” said a press release from the Labor Department on Monday. “Its standards also create differences between the evidentiary requirements governing [the contract compliance office’s] procedures and Title VII and limit the agency’s ability to bring the full scope of cases under its authorities.” Title VII prohibits discrimination in employment based on race, color, religion, sex (including pregnancy), sexual orientation, gender identity and national origin.

Overall, the rule “undermined” the Office of Federal Contract Compliance Programs’ “ability to remedy workplace discrimination,” said Jenny Yang, director of the office, in a blog post. The proposed changes “would restore flexibility to [the office’s] procedures, promote efficiency in resolving cases, strengthen enforcement and promote alignment of the standards governing our procedures with Title VII of the Civil Rights Act.” 

Contracting experts have taken a critical eye to the proposed changes. 

Guy Brenner, partner at the law firm Proskauer Rose LLP who leads the firm’s Washington, D.C. labor and employment practice and heads the government contractor compliance group, and Megan Childs, associate at the firm, wrote on Tuesday that the 2020 rule “was welcomed by the contractor community” because it “established important procedural and substantive requirements before [the contract compliance office] can issue discrimination findings.” 

The proposed rule would get rid of the requirements that the office issue pre-determination notices and notices of violation to contractors; eliminate the mandate that pre-determination notices must be approved by the compliance office director before issuance; allow the office to issue notices of violation for violations not included in pre-determination notices; and decrease by half the amount contractors’ time to respond to pre-determination notices, Brenner and Childs explained. 

“I think what they’ve done is create a strawman, if you will, in terms of what the 2020 rule regs did in terms of hindering [the contract compliance office]. I never thought it was a bad thing,” Larry Lorber, counsel on labor and employment at the law firm Seyfarth Shaw LLP who was director of the office from 1975-1977, told Government Executive on Tuesday

“I think that if they’re saying 2020 went too far and they should have a bit more discretion that’s fine,” he continued. “But what they’re saying is they’re knocking out the 2020 [rule] and they’re taking away any obligations to provide any notice either at the predetermination notice stage or the notice of violation or finally the show cause [notices] and they could change it at any time.” This creates a “‘gotcha’ type of situation,” he said. 

When asked for his thoughts on how the 2020 rule played out, Lorber said he didn’t think there has been enough time to make an assessment since Office of Federal Contract Compliance Programs cases take a while. 

“It’s pretty obvious that the agency was not happy with the guardrails the rule created,” David Goldstein, a shareholder at the law firm Littler Mendelson P.C. who co-chairs the firm's OFCCP practice group and government contractors’ industry group, told Government Executive on Monday. 

“It wasn’t a perfect rule, but it was a huge improvement over what OFCCP has done for many years,” as the agency is known for inconsistencies across cases and having poorly trained compliance officers. A 2016 Government Accountability Office report came to similar conclusions.

In the little over a year the rule was in effect, Goldstein said he observed a few audits in which he thought it worked well. 

“It appeared to me the rule had been prejudged by the agency’s leadership and that they did not want to follow the rule for fear that it would create a record of success that would make it harder” for the agency to rescind the rule, said Goldstein. 

Under the Trump administration, the Office of Federal Contract Compliance Programs closed a lot of audits and recovered a lot of money, but under the Biden administration so far, audits are taking longer and “it seems that they’re so ready to assume that every employer is a bad actor that they don’t want to let go of anything and keeps audits open and keep looking and looking,” said Goldstein. 

The Labor Department under President Trump said in October 2020 that in fiscal 2020 its recoveries totated $35.6 million, which was the second highest year in the contract compliance office’s history (the first being fiscal 2019). 

If the changes from the proposed rule are carried out, “contractors can expect to face more findings of discrimination with less transparency from [the compliance programs office],” wrote Brenner and Childs. “This development, as well as the directive on disclosure of pay equity analyses announced last week, is a clear signal to contractors that OFCCP will be far more aggressive in compliance evaluations moving forward.” 

Laura Mitchell, principal at the law firm Jackson Lewis P.C. who is a member of the firm’s affirmative action and OFCCP defense practice group and is on the leadership team for the firm’s government contractor industry group, told Government Executive on Wednesday mid-morning that her firm was still going through the proposal, but her initial thought was that she anticipates the contract compliance office will receive many responses during the public comment period, which “the agency is only providing 30 days for.” 

Additionally, “the 2020 rule was a welcomed step in furtherance of the agency’s commitment to transparency and working with the contractor community,” said Mitchell. “The undoing of the rule feels like we are taking a step back.

Government Executive asked the Labor Department for comment on some of the pushback from the contractor experts. 

The “ rulemaking proposal reflects our commitment to facilitating regular and transparent communication with contractors,” said a statement from Yang. “The 2020 rule imposed different proof requirements for OFCCP enforcement that depart from Title VII caselaw and limit the full scope of the agency’s enforcement discretion, undermining its ability to protect workers from discrimination.”

The new proposed rule “would allow the agency to more effectively redress unlawful discrimination while continuing to use the predetermination notice to provide federal contractors with early notice about discrimination concerns or other potential violations,” she continued. “OFCCP remains committed to open communication with contractors so that all parties understand each other’s perspective and can work towards a prompt and mutually agreeable resolution.”

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