Merger of EEOC and OFCCP Unlikely |
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Merger of EEOC and OFCCP Unlikely

The Trump Administration is planning to merge the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP) into the Equal Employment Opportunity Commission (EEOC).  The Office of Management and Budget (OMB) has floated the proposal and is seeking public comments by June 12, 2017.  The Trump Administration budget for 2018 includes the proposed merger of OFCCP into the Equal Employment Opportunity Commission (EEOC), creating one agency to combat employment discrimination. Because of widespread opposition, and little support within the agencies, this merger is not likely to happen.

The proposal is based on a letter that the Heritage Foundation sent to the Trump Administration calling for the merger of the OFCCP with the EEOC. The Heritage Foundation is a conservative research think tank in Washington, D.C. that previously called for the outright elimination of the Department of Labor’s Office of Federal Contract Compliance Programs, arguing that the agency is “redundant” given the existence of the Equal Employment Opportunity Commission.

Merging the agencies would be consistent with an executive order signed by President Trump on March 13, 2017 on the reorganization of the executive branch.  The executive order is intended to improve the efficiency, effectiveness and accountability of the executive branch and eliminate or consolidate unnecessary agencies. President Donald Trump signed this executive order for a government-wide review to determine where federal programs can be eliminated or modified to save costs.  Within 180 days of the order, or by September 9, 2017, the head of every agency must submit a proposed plan to reorganize to the OMB, with preliminary reports due in June.

Labor Secretary Alexander Acosta, who was sworn in late April, is under a tight deadline to submit his recommendations to the Office of Management and Budget.  Because EEOC’s mandate is much broader than the OFCCP’s, if a merger were to occur, it is likely that the Commission would absorb the functions of the Labor Department’s Office of Contract Compliance.

The Opposition:

The Institute for Workplace Equality has submitted its opposition to the Secretary of Labor and the Office of Management and Budget.  Civil rights groups, such as the American Association for Access, Equity, and Diversity (AAAED), have also opposed the merger.  The AAAED is led by Shirley Wilcher, a former OFCCP director under the Clinton administration.  The U.S. Chamber of Commerce has “very serious concerns” about such a move, Randy Johnson, senior vice president for labor, immigration and employee benefits, told Politico.com. “OFCCP and EEOC have different primary missions,” Johnson explained. OFCCP’s job is “to advocate affirmative action and diversity,” while the EEOC is focused on non-discrimination. Emily Martin, general counsel for the non-profit National Women’s Law Center, also opposes the merger. “EEOC is primarily complaint-driven,” she said, and “OFCCP works with federal contractors on the front end to ensure that they meet higher standards for workplace fairness and opportunity.”

The Consolidation Could Result in Higher Employer Penalties:

The EEOC usually seeks statutory remedies such as compensatory and punitive damages, while the OFCCP seeks only contract remedies.  There are no punitive damages in contract law.   If the agencies are merged, the EEOC could convert every claim of breach of contract into a Title VII [of the Civil Rights Act of 1964] violation in order to demand a larger monetary remedy.

Here’s a hypothetical example: The newly reorganized OFCCP division of the EEOC audits a federal contractor and orders the contractor to pay $10 million in back pay. The contractor disagrees. The OFCCP representative then consults with EEOC commissioners, who then decide to file a Title VII commission charge or Equal Pay Act-directed investigation.  This charge could lead to an award of punitive damages.

While that can happen now under a memorandum of understanding between the OFCCP and the EEOC, it rarely occurs.  It will happen much more often if the merger takes place.  In addition, the OFCCP’s ultimate authority is debarment, or preventing contractors from being able to pursue future contracts. If that authority was moved to the EEOC, it would give the commission a lot more power. Further, the OFCCP does not have subpoena authority but the EEOC does.  This merger is likely to put government contractors in more jeopardy.

On the other hand, the OFCCP has broad authority to get access to information related to compliance.   The business community has not been happy with the OFCCP during the Obama administration, but this dislike should not be confused with wanting the OFCCP to be closed and its functions transferred to the EEOC. Instead, the business community wants the OFCCP to change the way it conducts business.  This will likely happen under Secretary Acosta’s Labor Department.

Agencies’ reluctancy for consolidation:  

As a long-time Washington, D.C. resident and former government employee, I know that government agencies do not like to give up their power base. They will do it only if forced to do so.  The EEOC already has significant responsibilities, including dealing with federal-sector discrimination claims, and the OFCCP has a long history within the cabinet-level Labor Department.  The EEOC has an extensive backlog of approximately 74,000 pending charges. It is unlikely that adding federal contracting enforcement obligations on a currently overextended agency makes sense.   The Labor Department won’t easily give up its jurisdiction and the EEOC is not interested in overburdening its already packed agenda.

Request for Public Comments:

The OMB invited the public to suggest improvements to the organization and functioning of the executive branch by submitting comments by June 12, 2017 on the White House website, https://www.whitehouse.gov/reorganizing-the-executive-branch.  You can also submit your comments by snail mail to the OMB and the Labor Secretary:

The Honorable Mick Mulvaney

Director

The Office of Management and Budget

725 17th Street, NW

Washington, D.C. 20503

 

The Honorable R. Alexander Acosta

Secretary of Labor

U.S. Department of Labor

S-2521

200 Constitution Avenue, NW

Washington D.C.  20210

 

The Merger Outlook:

The opposition from labor and business groups is strong, so it is not likely that the proposed merger will actually take place.   These two agencies make up such a small part of the federal budget that a merger will not save the government significant dollars.  The odds makers are betting that this merger will not happen.

For more information, contact Ahmed Younies at 714-884-4610 or ayounies@hrunlimitedinc.com.

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