Federal contractor compliance investigations
Federal contractor compliance investigations are administrative procedures conducted primarily by the Office of Federal Contract Compliance Programs (OFCCP), a division of the U.S. Department of Labor (DOL). These investigations ensure that companies doing business with the federal government comply with equal employment opportunity (EEO) and affirmative action requirements, particularly under:
Executive Order 11246 (nondiscrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin),
Section 503 of the Rehabilitation Act of 1973 (nondiscrimination against individuals with disabilities),
The Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA).
These laws obligate federal contractors and subcontractors to not only avoid discrimination but also to take proactive steps in ensuring workplace equality.
I. Overview of Compliance Investigations
OFCCP conducts compliance evaluations through:
Compliance Reviews (audits): A thorough investigation of the contractor’s personnel practices.
Complaint Investigations: Triggered by a complaint from an employee or job applicant.
Focused Reviews: Reviews of a specific employment practice or protected group.
Off-site Analysis of Records
Compliance Checks
If violations are found, contractors may face conciliation agreements, show cause notices, or ultimately debarment (being barred from future federal contracts).
II. Key Case Law in Federal Contractor Compliance
1. United States v. Mississippi Power & Light Co., 638 F.2d 899 (5th Cir. 1981)
Facts: This case involved a federal contractor accused of systemic discrimination against Black employees in job assignments and promotions.
Holding: The court upheld the enforcement powers of the federal government under Executive Order 11246, affirming that the OFCCP had authority to investigate and enforce nondiscrimination requirements in federal contracts.
Importance: Confirmed that Executive Orders have the power of law in the context of federal contracting and that companies must comply with EEO mandates as a condition of receiving federal funds.
2. United States v. New York State Electric & Gas Corp., 631 F. Supp. 1203 (N.D.N.Y. 1986)
Facts: OFCCP investigated the company’s hiring and promotion practices, alleging discriminatory practices against minorities and women.
Holding: The court found that the contractor failed to take adequate affirmative action and allowed the OFCCP to enforce corrective measures, including penalties and changes in hiring procedures.
Importance: Reaffirmed that the OFCCP can require companies to take not just remedial, but proactive affirmative action steps. The decision illustrated how statistical evidence can be used to establish a prima facie case of discrimination.
3. United States v. Westinghouse Electric Corp., 648 F.2d 642 (9th Cir. 1981)
Facts: Westinghouse failed to cooperate fully with an OFCCP investigation, arguing that its records were confidential and not subject to disclosure.
Holding: The court ruled that federal contractors must provide access to employment records during an OFCCP investigation, even if the information is sensitive.
Importance: Cemented the principle that participation in federal contracts waives some privacy in employment data in exchange for government funds. The decision also validated OFCCP’s authority to compel access to relevant documentation.
4. OFCCP v. Bank of America, ALJ Decision (2010)
Facts: A routine compliance review revealed statistical disparities in hiring African-American applicants for entry-level positions in 1993 at Bank of America in Charlotte, NC.
Holding: The Administrative Law Judge (ALJ) found that Bank of America engaged in discriminatory hiring and ordered the company to pay back wages to affected applicants.
Importance: One of the largest financial remedies in OFCCP history, this case highlighted OFCCP’s ability to enforce civil penalties for systemic hiring discrimination based on statistical evidence, even many years after the alleged discrimination occurred.
5. United Space Alliance LLC v. Solis, 824 F. Supp. 2d 68 (D.D.C. 2011)
Facts: United Space Alliance (USA), a NASA contractor, resisted providing employee compensation data requested by OFCCP during a compliance audit, arguing that the request exceeded OFCCP’s authority.
Holding: The court held in favor of OFCCP, affirming that the agency had broad authority to request relevant data even before any specific violation was found.
Importance: This case clarified that the OFCCP can request information preemptively during compliance reviews, underscoring that contractors must cooperate fully with audits even if no complaint has been filed.
6. FMC Corp. v. Marshall, 572 F.2d 902 (2nd Cir. 1978)
Facts: FMC refused to provide certain documents requested during an OFCCP compliance review.
Holding: The court held that contractors are obligated to comply with all reasonable requests for documents and data, even absent a formal complaint.
Importance: Reinforced the investigatory powers of the OFCCP and showed that failure to cooperate can lead to legal enforcement actions and jeopardize federal contracts.
III. Compliance Requirements for Federal Contractors
Federal contractors subject to OFCCP regulations must:
Maintain and implement written Affirmative Action Programs (AAPs).
Submit to periodic audits by OFCCP.
Keep detailed records on hiring, promotion, termination, compensation, etc.
Avoid and remedy discriminatory practices in employment.
Provide reasonable accommodation to individuals with disabilities.
Ensure veterans' employment rights under VEVRAA.
Post appropriate EEO notices and train managers and employees.
IV. Remedies and Penalties
When violations are found, OFCCP may seek:
Back pay and interest for affected individuals
Hiring or promotion of affected applicants/employees
Mandatory training and policy revisions
Monetary penalties (in conciliation or litigation)
Debarment (in extreme or repeated violations)
V. Summary of Legal Standards from Case Law
| Case | Key Principle | Outcome |
|---|---|---|
| Mississippi Power | OFCCP authority under EO 11246 upheld | Investigations allowed |
| NYSEG Corp. | Affirmative action is enforceable | Penalties imposed |
| Westinghouse | Privacy rights vs. audit obligations | Contractor must disclose |
| Bank of America | Statistical disparities = discrimination | $2 million+ in remedies |
| United Space Alliance | OFCCP can demand preemptive data | Contractor compelled to comply |
| FMC Corp. | Document compliance is mandatory | Access required |
Conclusion
Federal contractor compliance investigations are not mere technicalities; they are robust tools used by the OFCCP to ensure nondiscrimination and equal opportunity in workplaces funded by taxpayer dollars. Through a combination of audits, legal authority, and case law precedents, the government ensures that federal contractors actively foster diverse, fair, and equitable work environments.
Contractors must treat OFCCP compliance not just as a legal obligation but as a continuous process of maintaining transparent, fair, and inclusive employment practices—or risk penalties, litigation, and loss of business.
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