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Over the past several years, the U.S. Department of Labor's (DOL) Office of Federal Contractor Compliance Programs (OFCCP) has engaged in ongoing efforts to assert jurisdiction over hospitals and the health care industry based on its assertion that these entities are government subcontractors within the meaning of 41 C.F.R. § 60-1.3. 

Pursuant to this regulation, a subcontract constitutes any agreement between a contractor and a third party for either: (1) the purchase, sale or use of personal property or non-personal services, which is necessary for the performance of any one or more contracts (Prong One); or (2) under which any portion of the contractor's obligation under any one or more contracts is performed, undertaken or assumed (Prong Two). 

The OFCCP has argued that hospitals are subcontractors under both of these prongs when they became involved in TRICARE networks or accepted reimbursement payments from TRICARE.  TRICARE is a health care program of the Defense Health Agency under the guidance of the Assistant Secretary of Defense that provides civilian health benefits for military personnel, military retirees and their dependents.  These efforts were temporarily stalled when the DOL's Administrative Review Board (ARB) ruled on November 13, 2012, that the OFCCP did not have jurisdiction over Florida Hospital, as a subcontractor, simply because it provided medical services to TRICARE beneficiaries as part of Humana Military Healthcare Services' (HMHS) integrated health care delivery system based on Section 715 of the NDAA.  OFCCP v. Florida Hospital of Orlando, ALJ Case No. 2009-OFC-0002 (October 18, 2010).  Section 715 of the National Defense Authorization Act (NDAA), in relevant part, provides that "a TRICARE managed care support contract that includes the requirement to establish, manage or maintain a network of providers may not be considered to be a contract for the performance of health care services or supplies on the basis of such requirement." 

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ERMA has prepared two whitepapers highlighting the major changes of the OFCCP's new Final Rules that significantly change Section 503 and VEVRAA regulations.  The new Final Rules will currently become effective on March 24, 2014, and bring about significant changes to AAP data collection and record-keeping requirements for protected veterans and individuals with disability.  Read more about these changes and how they will affect your recruiting outreach, data collection, record-keeping and AAP preparation:

Section 503 Final Rule Whitepaper (Individuals with Disability)

VEVRAA Final Rule Whitepaper (Protected Veterans)


United States: Energy Company Settles OFCCP Racial Bias Allegations

Last Updated: October 7 2013
Article by Connie N. Bertram

As reported by BGE, OFCCP found in a 2009 compliance review that BGE discriminated against African Americans who applied to three utility trainee job categories between December 2007 and November 2008.  BGE attributes these findings to an overreliance on employee referrals in the recruitment process.  Under the conciliation agreement, BGE will pay $350,000 in back wages and interest to 58 class members.  Further, BGE agreed to hire up to six class members for the utility trainee positions.

The BGE conciliation agreement highlights the importance of posting open positions and adopting uniform, nondiscriminatory hiring practices subject to internal control and review.  It is critical that contractors undertake periodic self-audits to identify potential disparities in hiring and barriers to the hiring and promotion of individuals in protected classes.



A United States Department of Labor Administrative Law Judge has ordered Bank of America to pay $2.2 million in back wages to more than 1,100 African Americans who were rejected for jobs. The ruling ends a nearly two-decades old legal dispute.


Judge Linda S. Chapman ordered the Charlotte-based megabank to pay $964,033 to 1,034 applicants who were rejected for jobs in 1993. Bank officials also were ordered to pay approximately $1.3 million to individuals who were rejected for jobs between 2002 and 2008.


Judge Chapman issued her ruling after determining that bank officials applied unfair and inconsistent selection criteria resulting in the rejection of African Americans for jobs as tellers, entry-level clerical and administrative positions.


Bank officials also repeatedly challenged the authority of the Office of Federal Contract Compliance Programs (OFCCP). The Office of the Comptroller of the Currency regulates of BofA, a national bank based in Charlotte, N.C.


Bank of America is a federally insured financial institution that provides a variety of services and products, making it a federal contractor under the purview of OFCCP's regulatory requirements.


The OFCCP began a routine investigation of BofA that revealed indications of systemic hiring discrimination affecting black job applicants at the bank's Charlotte facility.


After conciliation efforts failed, the Solicitor of Labor in 1997 filed an administrative complaint against the bank for violating Executive Order 11246, which prohibits federal contractors from discriminating in employment practices on the basis of race.


"Our investigators and attorneys prevailed despite decades of stalling tactics," said Solicitor of Labor Patricia Smith. "This case demonstrates that the department will not be deterred in our pursuit of justice for job seekers."




The Office of Federal Contract Compliance Programs ("OFCCP") suspended its operations on October 1, 2013 as part of the Federal government shutdown.  Under the Department of Labor's ("DOL") appropriations contingency plan, OFCCP will furlough all of its employees during the shutdown.   Federal contractors and subcontractors will not receive communications or correspondence from OFCCP staff during the shutdown. 

It is unknown how long the shutdown will last. In the interim time period, we recommend contractors and subcontractors respond to audit requests issued prior to the suspension of operations.




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