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Saul C. Glazer, Editor
Axley Brynelson, LLP
Vol. 17, No. 2
February 2008
GOVERNMENT CONTRACTORS
OFCCP addresses national origin discrimination
Jeffrey N. Jensen
Regional officials from the U.S. Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP) recently concluded a successful enforcement action against a Green Bay company for its systemic discrimination against Hispanic
applicants for laborer positions. Last month, OFCCP Chicago Regional Director Sandra Scott Ziegler spoke to a group of Wisconsin employers about her agency's enforcement action against the TNT Crust Corporation. This article reviews that case and the
lessons it offers Wisconsin employers, especially those covered by Executive Order 11246.
OFCCP enforcement of discrimination prohibitions
Executive Order 11246, as amended, requires Wisconsin employers that receive federal contracts to develop written affirmative action plans (AAPs) analyzing the racial, ethnic, and gender makeup of their workforces. The same federal law also prohibits
covered employers from discriminating against applicants and employees based on their race, sex, color, religion, and national origin. Federal contractors and subcontractors that have 50 or more employees as well as a government contract or
subcontract for supplies or services totaling $50,000 or more are covered by Executive Order 11246.
The DOL is the federal agency responsible for enforcing Executive Order 11246's affirmative action and nondiscrimination requirements. The OFCCP is the subagency within the DOL that conducts compliance audits of employers' AAPs. It also files
enforcement actions against employers that violate the law's discrimination prohibitions. In 2007, OFCCP enforcement efforts resulted in more than $51 million in financial remedies (back pay, salary, and fringe benefit awards) for 22,251 individuals
who had been subjected to unlawful employment discrimination.
Case background
In September 2004, the OFCCP filed an administrative complaint against TNT Crust, a wholly owned subsidiary of Tyson Foods, Inc., with offices in Green Bay. The complaint alleged that the company had violated Executive Order 11246 by discriminating
against Hispanic applicants for entry-level positions on the basis of their national origin.
TNT Crust manufactures pizza crusts at two plants in Green Bay. The company employs three eight-hour shifts per day. During the relevant time period, it employed 314 workers, nearly half of whom were entry-level laborers. Hispanics represented
approximately 37 percent of the company's laborer workforce at that time.
During the relevant time period, TNT Crust applied seven criteria in considering applicants for the laborer positions:
- completed job application;
- previous work experience;
- length of service at previous employers;
- rate of pay at previous job;
- shift selection (with most openings occurring during the second and third shifts);
- ability
to be trained and promoted into semiskilled and skilled positions; and
- basic English skills.
The final criterion, a candidate's proficiency in English, was the primary issue under review and dispute in this case.
Holly Webster, a receptionist at TNT Crust, was the person responsible for receiving applications for entry-level laborer jobs. During the period at issue, two applications were available to applicants, one in English and one in Spanish. Although
native Hmong, Russian, and Polish speakers also were known to apply at TNT Crust, the only non-English application used by the company was the Spanish version. The applicants chose which version to complete and were required to fill out their
application on the premises. Applicants weren't told that English proficiency was a job requirement.
The company's chief HR officer instructed Webster to note on the Spanish-language forms whether the applicants "spoke English." She received no special instructions or training on how to determine whether an individual spoke English. She simply asked
the applicants filling out the Spanish-version applications, "Do you speak English?" and noted their response directly on their application form. On rare occasions, she asked applicants who completed the English-version application about their
English-speaking abilities, but only if they appeared to be Hispanic. Of the 265 individuals whose applications included the comment on English proficiency, all but three used the Spanish version of the application. Once an entry-level job
application was completed, Webster passed it on to one of the company's HR officials for screening.
The express intent of the company's English proficiency requirement was for laborers to possess minimal English skills sufficient to carry on a conversation. The ability to speak and understand English wasn't necessary to perform the position's
duties, however. The company never performed studies on how the lack of basic English affected productivity at the pizza crust plants, nor did it consult with language or vocational experts before instituting the language requirement. In fact,
non-English speakers held laborer positions with the company and weren't fired for their lack of English proficiency.
The company's Executive Order 11246 AAP for the relevant year identified a problem with the hiring of minorities for laborer positions. Specifically, the company noted that it hired minority laborers at a disproportionately lower rate than
nonminorities. Based on the adverse impact uncovered during its desk audit, the OFCCP proceeded to perform a three-day on-site review of TNT Crust's application materials and related records.
OFCCP officials concluded that there was disparate treatment and disparate impact against minorities, specifically Hispanic applicants. Further, when English- speaking Hispanic applicants were separated from non-English-speaking Hispanics, no adverse
impact was found against the English-speaking Hispanic applicants while an adverse impact against non-English-speaking Hispanic applicants was revealed. At the completion of its review, the OFCCP sent TNT Crust a notice of findings and violations.
After the parties were unable to reach a conciliation agreement, the agency filed an enforcement action against the company.
Agency decision
At a hearing before an administrative law judge (ALJ), the OFCCP argued that TNT Crust's selection and hiring policies and practices discriminated against Hispanic applicants. The agency retained a labor economist to use applicant data to analyze
national origin differences in the company's hiring practices. The government's statistical expert found that Hispanic applicants were hired at approximately half the rate at which non-Hispanic applicants were hired, a large and statistically
significant difference. Like the government's expert, the company's expert also found a statistically significant adverse impact against Hispanic applicants.
The OFCCP also presented evidence that none of the 265 individuals whose job applications included any written comment about their ability to speak English received a job offer from TNT Crust. In fact, when those applicants were removed from the
analysis, the results showed no statistically significant difference in hiring rates for Hispanic and non-Hispanic applicants among those who remained. According to the OFCCP's statistical expert, that meant that "having one's English proficiency
assessed was a perfect predictor" of whether a Hispanic applicant would be hired.
Many other facts in this case didn't support the company's position. For example, on the company's applicant log, in which reasons for not hiring applicants were included, lack of English proficiency wasn't listed as a reason for rejecting
applicants. In addition, the company asked only Spanish-speaking Hispanics about their English skills, not Hmong, Russian, or Polish speakers. Finally, the company's AAP mentioned promotability as a reason for a basic English-skills requirement but
said nothing about the requirement's importance to new hires.
According to the ALJ, the company failed to prove that a minimal English proficiency requirement had a verifiable relationship to successful performance as a laborer. Notably, there were successful employees at TNT Crust who barely spoke English.
Moreover, a number of nonnative English speakers were able to work their way to higher positions with the company in spite of their lack of English proficiency.
In its defense, the company argued that any statistical showing of a disparity in its rate of hiring Hispanics was insignificant because the percentage of Hispanics in the company's workforce exceeded their availability in the labor market. The
company relied on 1990 census data to support its position that Hispanics weren't underrepresented in its workforce. The ALJ found that reasoning to be "confused," asserting that a balanced workforce doesn't excuse discrimination. Citing the U.S.
Supreme Court, the ALJ noted that the obligation imposed by Title VII of the Civil Rights Act of 1964 is to provide an equal opportunity for each applicant, regardless of whether members of the applicant's race are already proportionally represented
in the workforce. Accordingly, the relevant inquiry is whether TNT Crust's selection rate for Hispanic applicants was significantly lower compared to other applicants in the applicant pool.
The ALJ found that the OFCCP had proven that TNT Crust's minimal English proficiency requirement was pretextual because the company failed to establish that the requirement was related to legitimate business necessities. Therefore, the judge
concluded that the company had discriminated against Hispanic applicants in hiring for entry-level laborer positions on the basis of their national origin. In the Matter of OFCCP v. TNT Crust, U.S. Department of Labor Case No. 2004- OFC-3 (September
10, 2007).
Bottom line
To underscore the significance of her agency's ongoing enforcement activities, OFCCP Regional Director Ziegler spoke to a group of Wisconsin employers at an Industry Liaison Group meeting in Milwaukee on January 11, 2008. She reviewed aspects of the
TNT Crust decision and highlighted a number of important lessons it offers Wisconsin employers.
First, a minimum job requirement must be applied consistently to all applicants in a selection process. In this case, TNT Crust asked only Spanish-speaking and Hispanic-looking applicants about their English skills. No other applicants, including
other known nonnative English speakers, were asked about their English skills. Moreover, the company didn't tell the rejected Hispanic applicants that English proficiency was a requirement for the job.
Second, a minimal English proficiency requirement must be job-related and supported by business necessity. Employers that require minimally English-proficient employees should adopt and validate a test for English proficiency that is standard,
measurable, and applicable to all applicants.
Third, an employer's balanced workforce won't insulate it from a finding of a discriminatory hiring practice. As the ALJ stated, "The fact that TNT had a higher percentage of Hispanic employees than the census indicates were available does not give
TNT a get-out-of-liability-free card for discriminating against later Hispanic applicants." You must treat all applicants fairly and consistently, without regard to their national origin or any other legally protected basis, no matter how racially
and ethnically diverse your incumbent workforce is.
Finally, federal contractors covered by Executive Order 11246 need to be aware that the OFCCP has begun to rank and prioritize establishments for closer review and scrutiny based on the probability that systemic discrimination will be uncovered
during a full-scale audit by the agency. In a nutshell, that means the enforcement agency is focusing its limited resources on the establishments it believes are the worst actors.
For Wisconsin employers that face potentially unfavorable findings of discrimination, it could be prudent to seek a conciliation agreement with the OFCCP by offering procedural modifications and additional settlement considerations earlier rather
than later. That way, you can avoid an adverse finding of liability at the conclusion of a more drawn-out enforcement action, which can result in significantly greater financial as well as public relations costs.
Copyright 2008 M. Lee Smith Publishers LLC
WISCONSIN EMPLOYMENT LAW LETTER provides information about current employment law issues under Wisconsin and federal law. It is designed to alert you to legal issues and does not constitute legal advice. Questions about your company's problems and
issues should be presented to the employment law attorney of your choice.
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