A May, 2012 decision by the federal Administrative Review Board (ARB) spells bad news for contractors subject to compliance review data collection by the Office of Federal Contract Compliance Programs (OFCCP). The question before the ARB was whether the period for which OFCCP can request data is limited by federal regulation (41 CFR Sec. 60-1.20(a)(1)), and the Federal Contract Compliance Manual (FCCM), the “rules book” for OFCCP’s compliance officers.

Frito facts

In the Frito-Lay case, OFCCP requested that the company provide workforce data for 2 years after the initial compliance review period, after OFCCP identified adverse impact. The company refused, citing the OFCCP Scheduling Letter, which only requests data for the previous AAP year and current AAP year (if more than 6 months into the current plan). In addition, Frito-Lay cited OFCCP’s regulations and the FCCM, which establish the time period for potential discrimination cases as only back 2 years from the date of the scheduling letter.

OFCCP disagreed, stating that the regulations grant them authority to request data as they did, and that contractors should not be permitted to use the FCCM, an internal agency document, to object to data requests.

In rejecting OFCCP’s arguments, the administrative law judge (ALJ) who first heard the case held that contractors are not required to preserve and provide data outside of the compliance review period, that OFCCP’s reliance on the FCCM makes it reasonable for the contractor to rely on FCCM provisions for compliance purposes, and, finally, that the FCCM’s 60-day window for compliance review completion makes a 2-year data request unreasonable.

The ARB’s decision

Unfortunately for contractors, OFCCP appealed the ALJ’s decision to the ARB, which reversed, holding that that federal contractors have an ongoing duty to comply with Executive Order 11246. The ARB ruled that OFCCP was empowered to pursue “a concern about statistically significant disparity in hiring women.” The ARB did note, however, that Frito-Lay had “objectively good faith reasons for” refusing to comply with OFCCP's request.

In spite of this, the ARB ultimately found that the request for 2008 and 2009 data was “narrow and motivated by the objective deficiency discovered during the 2007 desk audit,” and that as a result, the “request for 2 subsequent years [of data] is consistent with a proper disparate impact analysis.” Bad news for contractors.

The good news? The ARB did concede that its holding in this case was a narrow one, saying “[w]e do not address whether OFCCP has the ability to ask for post-Scheduling Letter data in all desk audits or where OFCCP has not objectively identified a concern about compliance." So, for contractors looking to limit the scope of a data request, the OFCCP may be required to objectively identify a specific "concern" before requiring a contractor to submit data past the date of the scheduling letter. Even better news—the ARB decision can be appealed to the federal courts.

BLR will be following any appeal of the ARB’s decision and report on story developments in future issues of this newsletter.