Human Resource & Labor News
www.agc.orgJune 14, 2018 / Issue No. 06-18
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On the Inside
Federal Contracting
Court Finds OFCCP Construction Audit Program Violates Contractor’s Fourth Amendment Rights
Compensation
Construction Staff Wages Projected to Rise by 3.4% This Year
HR Professional Development
ICE Workplace Inspections on the Rise; Is Your Company Prepared?
Registration Opens for 2018 Construction HR and Training Professionals Conference
Workforce Development
Union Sector Reports Small but Prevalent Craft Worker Shortages, and Expects Growth
AGC Call for Workforce Development Success Stories
Dispute Resolution
Supreme Court Allows Employers to Require Arbitration of Class Actions
Independent Contractors
California’s High Court Adopts Tough New Independent Contractor Test
Federal Contracting
Court Finds OFCCP Construction Audit Program Violates Contractor’s Fourth Amendment Rights
 

A federal district court has ruled that the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) violated the Fourth Amendment’s prohibition of unreasonable searches and seizures in an attempted audit of construction contractor Baker DC.

This is an important decision for the construction industry and OFCCP because it finds fault with a discretionary OFCCP construction industry audit protocol that the agency developed during the Obama Administration and was applying nationwide.  Further, it:

  1. Confirms that OFCCP must get a warrant or its federal civil agency equivalent (i.e., evidence of a violation of an OFCCP rule or OFCCP-enforced statute, which was not alleged in this case) or have a “neutral administrative plan” to select contractors for audit before starting a construction audit (given OFCCP’s current and historic audit procedure to start construction audits with an on-site investigation); and
  1. Holds that OFCCP’s nationwide audit practice of taking contractors and subcontractors out of audit order upon receiving “credible” oral and/or written complaints of alleged unlawful discrimination violates the Fourth Amendment’s prohibition on unreasonable searches and seizures because it renders selection for audit decision no longer “neutral.”  

Again, without a warrant or evidence of a violation of one of the three statutes that OFCCP enforces, OFCCP must have a “neutral” administrative plan to select a construction contractor for audit.  This is particularly important given the Office of Management and Budget’s restriction on OFCCP forbidding the agency from asking construction contractors questions and from seeking documents or information before commencing on-site investigations of construction contractors.  (There is no “Desk Audit” preceding OFCCP’s on-site investigation of construction contractors.)  So, OFCCP may not gather information or documents from construction contractors before an on-site investigation and may not undertake an on-site investigation without a warrant or its equivalent.

This case also signals an important limit on OFCCP’s Expedited Hearing Procedures (EXP), which limit discovery (i.e., depositions and written interrogatories) when OFCCP designates the case for EXP.  Depositions are vital, however, to discover evidence that OFCCP’s implementation of its asserted “administrative neutral plan” was actually not neutral at all.

AGC has watched this case closely. The industry will now be watching to see what new audit protocols emerge from OFCCP for construction contractors.  In fact, top leadership at OFCCP has already invited AGC to discuss the development of such protocols, and preparations are underway.

Editor’s Note:  This article is based on an article previously published by Direct Employers and reprinted with permission.  Author John C. Fox, president and partner at Fox, Wang & Morgan P.C., represented Baker DC in the litigation.
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