Developments in the OFCCP’s investigation of compensation disparities at United Space Alliance, LLC are worthy of consideration. During a 2009 desk audit, OFCCP conducted a standard threshold test of United Space Alliance’s compensation data.  Although this audit uncovered no indicators of pay discrimination, OFCCP conducted additional tests of the data, commonly known as the “pattern analysis” and the “30 and 5 Refinement” tests. These tests revealed potential pay bias, and OFCCP requested more extensive compensation data to examine the question more closely. The case begins when United Space Alliance refused to comply with OFCCP’s request.

OFCCP eventually filed an administrative complaint to force production of the additional compensation data. The DOL administrative law judge confirmed OFCCP’s right to the additional data in a decision dated February 28, 2011.  The decision required United Space Alliance to turn over the additional data by May 11, 2011 or face cancellation of its contracts and potential debarment.

Rather than complying with the ALJ’s order and turning over the additional data, United Space Alliance sued the Department of Labor. The Complaint raises numerous legal objections to the ALJ’s order (including violations of the Fourth Amendment, the Administrative Procedure Act, and the Paperwork Reduction Act).  It seeks to prevent OFCCP’s access to the additional compensation data addressed in the ALJ’s order.

Although the district court denied United Space Alliance’s initial request for preliminary injunction on procedural grounds, OFCCP agreed not to seek enforcement of the ALJ’s order until October 11, 2011. A copy of the stipulation reflecting OFCCP’s agreement [pdf] was filed in court on May 9, 2011.

It will be important to watch the United Space Alliance litigation to see how the court will approach the OFCCP’s demand for information. Even before the decision is issued, there are a few lessons to learn from the case:

  • First, know what story your data tell. Too often, contractors turn over data without understanding the tests that OFCCP might conduct and without having an explanation of any potentially problematic data.
  • Second, when confronted with a seemingly excessive and overreaching request for information, turning it over may not be the only option. There are legal strategies available to protect contractors from overreaching enforcement initiatives.
  • Third, contractors should contact counsel as soon as possible to ensure a comprehensive and strategic response to an OFCCP audit.