October 19, 2020

Volume X, Number 293

October 19, 2020

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ALJ Denies Contractor’s Bid for Summary Judgment But Disapproves OFCCP’s Open-Ended Pay Discrimination Claim

On June 24, 2020, a Department of Labor Administrative Law Judge (ALJ) denied J.P. Morgan Chase & Co.’s motion for summary judgment seeking to dismiss an OFCCP enforcement action.  The ALJ’s decision was preliminary in nature, but contains important guidance on the temporal scope of OFCCP’s compliance reviews and the agency’s ability to prosecute alleged pay discrimination that allegedly occurred years after the two-year compliance review period. 

The enforcement action arose from a 2012 compliance evaluation into J.P. Morgan’s Investment Banking, Technology, and Market Strategies functional affirmative action program (FAAP).  J.P. Morgan provided OFCCP with compensation data based on a 2012 snapshot of the FAAP’s employees, as well as a data file listing compensation changes during the two-year review period preceding the snapshot.  J.P. Morgan refused to provide post-2012 compensation data in response to OFCCP’s request.  J.P. Morgan contended that it disbanded the FAAP at issue in 2012 in a corporate reorganization, with the FAAP’s employees dispersed into 18 different business units and their corresponding FAAPs.  In 2017, without receiving additional post-2012 data, OFCCP issued a Notice of Violation and filed an Administrative Complaint asserting that J.P. Morgan discriminated against female employees in the FAAP from 2012 and that the discrimination “continues to the present.”

J.P. Morgan challenged OFCCP’s post-2012 findings based on the agency’s failure to reasonably investigate the impact of the reorganization or use available mechanisms to obtain the post-2012 data J.P. Morgan had refused to provide.  J.P. Morgan also argued that OFCCP’s regulations limit a contractor’s liability in an OFCCP evaluation to the two-year period preceding the start of the evaluation.  Although the ALJ agreed with prior decisions holding that OFCCP may prosecute violations that begin in the review period and continue unremedied into the future, he expressed concern about the scope of OFCCP’s open-ended discrimination findings.  The ALJ noted that contractors have a due process right to fair notice of OFCCP’s claims against them, and an enforcement action with no established end-date to the violation period infringed due process.   He also explained that J.P. Morgan’s corporate reorganization could impact OFCCP’s ability to pursue alleged violations occurring after the reorganization.  Because OFCCP had not sought discovery about the reorganization and elimination of the FAAP, however, the ALJ declined to issue a firm decision.

This decision continues an ongoing trend of ALJ rulings permitting OFCCP to seek and rely upon alleged evidence of discrimination outside of the review period.  Because OFCCP can take years to complete complex audits, a contractor’s potential post-review period liability can extend longer than its liability for the actual review period.  Although this evidence should only have possible relevance if OFCCP first (and independently) establishes a violation during the period under review, OFCCP frequently seeks to use post-review evidence to bolster its evidence for the review period.  Contractors should carefully consider events like reorganizations or changes to their compensation structures that cut off continuing violation allegations and limit the contractor’s potential liability. 

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume X, Number 183

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About this Author

Conne Bertram Government Contract Lawyer Polsinelli Law Firm
Shareholder

Connie focuses her practice on whistleblower, trade secrets, government contractors and employee mobility counseling and litigation. She frequently conducts confidential internal investigations involving executive-level employees, including alleged fraud, theft or misuse of company data, trade secrets, sexual harassment and code of conduct violations. She routinely counsels, investigates and litigates restrictive covenant and trade secrets disputes between employers and former employees.

Connie has defended complex whistleblower, trade secrets and restrictive...

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Jack Blum Polsinelli Employment Attorney
Associate

Jack Blum is an associate in the firm’s Employment Disputes, Litigation, and Arbitration practice, where he represents employers in connection with a wide range of employment law issues. Jack has extensive experience in defending employers against claims by their employees in federal and state courts, as well as before government agencies like the EEOC, Department of Labor, and state human rights commissions. Jack aggressively defends his client’s personnel practices and decisions while not losing sight of their underlying business goals and objectives. Jack represents clients in all aspects of complex employment litigation and has advised and defended employer clients regarding a wide variety of employee claims, including:

• Employment discrimination, harassment, and retaliation
• Wage and hour
• Employment contract disputes
• Independent contractor/employee misclassification audits 
• Tort claims arising out of the employment relationship

Jack also has extensive experience representing parties in litigation arising from employee mobility, including claims involving non-competition, non-solicitation, and confidentiality agreements as well as the misappropriation of trade secrets. Significantly, Jack has experience in both prosecuting and defending these claims and is, therefore, able to offer clients a well-rounded assessment of their options and courses of action. Jack also has experience redressing employee data breaches under the Computer Fraud and Abuse Act.

Jack also has a background in employment counseling, where he has worked closely with in-house counsel, human resources personnel, and business executives to craft personnel policies that meet the client’s business requirements while complying with applicable laws. Jack has particular experience in assisting clients with issues relating to employee/independent contractor classifications, and regularly advises clients regarding the defensibility of classifications, drafts independent contractor agreements to provide the strongest possible arguments in support of the classification, and defends misclassification claims asserted by employees and government agencies. Jack also walks clients through sensitive personnel actions to reduce the potential for litigation or at least best position the client in the event that litigation is inevitable. Jack draws heavily upon this counseling experience in representing clients in litigation.

During law school, Jack served as a legal intern in the U.S. Securities and Exchange Commission’s Office of the Inspector General where he contributed to several high-profile internal investigations, and also interned with the Maryland Attorney General’s Office.

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