Politicians have long enjoyed promising to deliver equality to the American people. In a January speech, President Clinton announced that he is seeking a budget increase to hire more federal agents to penalize more companies for alleged inequalities in their wage and salary structures. Clinton declared, “We have an opportunity now, and an obligation, to make sure every American fairly benefits from this moment of prosperity.” However, as usual, Clinton’s idea of “fairness” consists merely of politicians and bureaucrats tightening their grip over everyone else.
Clinton is asking for a $14 million increase in enforcement budgets for the Equal Employment Opportunity Commission and the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP). While these are small amounts, the feds are certain to use the money to extort far greater sums from private companies.
The OFCCP has jurisdiction over the jobs of 25 million people who work for companies, universities, and other entities with federal contracts. The agency has already announced plans to almost double the number of companies it investigates this year.
OFCCP Director Shirley Wilcher declared in 1995, “Enforcement of equality in the work place includes penalties to deter violations and to get results as quickly and efficiently as the law permits.” Not equality of opportunity—not equal chances for equal talent—but equality, plain and simple. The passion for quick results far exceeds OFCCP’s devotion to the law. In some parts of the south in the early 1900s, any company hiring a black for certain positions was presumed guilty of breaking a law. Nowadays, thanks to the OFCCP, any federal contractor who does not hire or promote a black, Hispanic, or woman can routinely be presumed guilty of breaking the law.
The OFCCP is legendary for the pretexts it concocts to accuse private companies of violating its regulations. One manager at a Washington, D.C.-area company summarized the attitude of the OFCCP official who descended upon her firm: “We don’t need no stinking statistical significance!” As long as there are disparities between male and female salaries, or between the salaries of different races, the company can be proclaimed guilty.
The OFCCP routinely comes in, looks at the median pay rate for a certain job grade, and then fines the company if women or minorities make less than that amount. But this essentially ignores workers’ experience, productivity, and a dozen other factors. As American Enterprise Institute economist Diana Furchtgott-Roth told the Los Angeles Times, “Measuring so-called discrimination by comparing women’s wages to the median wage is like saying there’s something wrong with oranges because they are smaller than grapefruits.”
The Equal Employment Advisory Committee, an organization of large government contractors, reports that OFCCP auditors considered compensation decisions based on “performance ratings history” and “promotion, demotion, or downgrades” might be unacceptable to the OFCCP “because these may be seen as ‘subjective’ factors over which the employer has some control.” Further, “The federal pay system with which compliance officers are most familiar is a very rigid one consisting of 15 grades and 10 steps within each grade. Over time, everyone progresses through the same series of within-grade step increases and/or promotion-related grade increases.” The fact that a private company does not treat its employees like government workers—that is, paying them largely according to how long they have loitered around the office—can be interpreted by some compliance officers as foul play.
Because the rules that the OFCCP uses are vague and convoluted, compliance officers exercise arbitrary power over those whom they investigate. Expert after expert whom I interviewed stated that officers routinely grossly abuse their power. (Few people I spoke to were willing to allow their names to be used, since there is pervasive fear of agency retaliation.) One Midwest human-resources director complained of officers “just coming on site and scaring everyone to death and costing them thousands of dollars in time and effort.” She observed that the OFCCP official who monitored her company for ten months “felt that he was on a crusade—and therefore the ends justified the means.” Another human-resources professional noted that OFCCP agents “wield a lot of power and they know it and they very often don’t act in compliance with the law and they attempt to coerce and intimidate employers into doing what they think what they should do.” A female lawyer with over a quarter century’s experience with OFCCP efforts said that browbeating, intimidation, and lying about the law happens “all the time.” In many cases, the OFCCP arm-twists companies into paying “compensation” to people who were never hired and never did a day’s work for them.
One district director in a large western state has achieved notoriety for his heavy-handed methods. According to one lawyer, the director shows up at site visits and warns the contractor: “If you get a lawyer, I will make it more difficult for you.” The director has proclaimed to harrowed employees during audits: “You won’t have a job around here much longer unless you cooperate with us because you are in deep trouble.” Contractor employees have been left in tears at the OFCCP district director’s bullying. This director’s methods have been so successful at racking up settlement numbers that he has reportedly been invited to other OFCCP districts to lecture about his “enforcement model.”
Jennifer Taylor, personnel director of City Utilities of Springfield, Missouri, testified to Congress in 1996 of the nightmare OFCCP audit her company experienced. An OFCCP compliance officer visited the company and spent almost an entire year going through files and documentation. After he examined the company’s 250-page affirmative action plan and found no violations, he ordered the utility to completely recalculate its analyses, hoping that the revised version would produce some numbers with which he could condemn its hiring and promotion policies. The official demanded “documentation and reasons why virtually every minority and female considered for promotion and new hire was not selected for nearly every opening,” Taylor testified. Though the company had roughly the same proportion of minorities on payroll as in the local labor market, the OFCCP demanded that the company in the future recruit from the Kansas City area—170 miles away. Taylor observed, “We must ignore a readily obtainable source of local labor, which is more motivated to remain with us because of our geographical preference, simply because of their race.” Though the OFCCP inspector could not even gin up enough evidence to file a notice of violation, the inspection cost the company over $26,000 and tied up key personnel throughout 1995.
Despite the absurdities in OFCCP compensation analyses, many companies settle the charges by paying the money the agency demands. This is because the agency has the power to debar companies from getting any federal contracts—a power described as a “nuclear bomb” by Assistant Secretary of Labor Bernard Anderson. Company officials routinely complain that there was no justice in the OFCCP charges but that the company cannot afford to fight the federal government and lose all its government contracts.
Clinton justified the new crackdowns last January as part of his plan “to prepare our nation for the 21st century.” But if Labor Department bureaucrats are in charge of leading us into the new millennium, Americans should get ready for some thin gruel in the future.
Many OFCCP officials are both lazy and incompetent. One private lawyer who has dealt with the agency for over 25 years complained that OFCCP investigators “show up to do an onsite review at 10 in the morning and leave at 2 in the afternoon to pick up their grandkids from school. There is absolutely no control or monitoring of the kinds of hours that people are allegedly working. You can go months without catching up with someone” at the agency.
Many private lawyers and personnel experts who deal with the OFCCP complain of the extremely poor training of some of the compliance officers. The OFCCP has apparently been careful not to commit the same crime it accuses private companies of committing: requiring excessive literacy or intelligence in the people hired. One lawyer complained, “We have had OFCCP investigators who had disabilities who can’t read. We had one case several years ago in which the investigator ruled that the company violated OFCCP policy because an individual was not paid the same amount as someone else working for the company—but the person who allegedly was underpaid never worked for the company. It took forever to straighten out that mess.”
Legal Redress Impeded
Unfortunately, it is very difficult to fight the OFCCP in court. Because of the doctrine of “exhaustion of administrative remedies,” the Labor Department can hold hostage any complaints or accusations against the OFCCP for years. Companies cannot gain access to a federal court until it has run the gauntlet of pseudo-remedies within the agency itself. Even if a company wins before a Labor Department administrative-law judge, a political appointee can simply write a memo and overturn the judge’s decision—thus thrusting the company back in legal purgatory.
Lawyers estimate that legal fees in OFCCP cases can easily exceed half a million dollars before companies reach a federal court. Because of the high costs of reaching a federal judge, there have been few court rulings limiting the agency’s power. As a result, OFCCP officials have free rein to twist the law to suit their purposes.
The issue of OFCCP’s power cuts to the heart of the coerciveness of the welfare state. The essence of the OFCCP’s concept of social justice is compelling companies to pay people for work they never did—based on secret rules the agency continually changes.
This nation does not need a cadre of employment commissars running around inflicting political correctness on American businesses. The methods of the OFCCP should be repulsive to anyone who respects legal rights and due process. As Justice Clarence Thomas wrote in a 1995 Supreme Court opinion, “Government-sponsored racial discrimination based on benign prejudice is just as noxious as discrimination inspired by malicious prejudice. In each instance, it is racial discrimination, plain and simple. Racial paternalism and its unintended consequences can be as poisonous and pernicious as any other form of discrimination.”