Franken Amendment, Responsible Federal Contracting, OFCCP Enforcement Findings

Date: 3/30/10
Title: Franken Amendment, Responsible Federal Contracting, OFCCP Enforcement Findings

Franken Amendment Bars the Use of Mandatory Arbitration Agreements by Defense Contractors.

Background: Senator Al Franken introduced the amendment in response to Halliburton/KBR's treatment of one of its employees, Jamie Leigh Jones. Jones began working for a Halliburton subsidiary when she was 19 yeras old and was required to sign employment paperwork that she did not understand. One of the papers required her to use arbitration, instead of a court or jury trial, for any claims arising from her employment. While working in Baghdad, one of her co-workers drugged and raped her. Halliburton confirned her in a storage container without food or water until a guard allowed her to borrow a cell phone to call her father. Her father in turn called the State Department to get her released. The company stalled Jones' lawsuit for rape, sexual harassment, wrongful imprisonment and other claims by using its pre-employment mandatory arbitration agreement.

Impact on Prime Contractor: The Defense Appropriations Act, enacted on December 19, 2009, contains the Franken Amendment which prohibits the use of appropriated funds for any convered contract or subcontract in excess of $1 million awarded after February 17, 2010, unless the contractor agrees not to:

Enter into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration any claim under Title VII of the CRA of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotion distress, false imprisonment, or negligent hiring, supervision, or retention; or
Take any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates that the employee or independent contractor resolve through arbitration any claim under Title VII of the CRA of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotion distress, false imprisonment, or negligent hiring, supervision, or retention.

This does not apply with respect to employment contracts that may not be enforced in the U.S.

The Amendment further states that any contract award, modified, or under which performance will continue beyond June 17, 2010 thereby using FY 2010 funds, the contractor must certify that all covered subcontractors (wia subcontract exceeding $1 million), agree not to enter into, or take action to enforce such arbitration agreements.

Contractor Preparation: If you are a defense contractor, we suggest that you:

Determine if you are a receipient of DoD FY 2010 funds in excess of $1 million as a prime or subcontractor;
Identify whether your organization requires employees to agree to arbitration of employment claims; and if so, review yor employment agreements to ensure that they are modified to comply with the new law; and
Alert the appropriate departments to the prohibition against enforcing exisitng mandatory arbitration clauses.

Ever Heard of "Responsible Federal Contracting"?

Arising out of a report released on February 26, 2010 by the Task Force on the Middle Class chaired by Vice President Joe Biden, came "Responsible Federal Contracting". According to the report, "there are inadequate controls on the records of the firms who get these contracts and on the quality of the jobs these contracts create. For these reasons, the Task Force has participated in a review process to identify ways to reform the procurement process to increase the quality of both the service procured and the jobs created under Federal contracts."

Essentially, it is thought that contractors who pay workers living wages and provide decent benefits would get preference when competing for federal procurement dollars. Also, only responsible companies that respect tax, labor, health and safety and consumer protection laws would qualifty as federal contractors.

Obama gave his budget director, Peter Orszag, until the end of September to issue new federal guidelines governing the public procurement and contracting practices. Only tim will tell how the Administration will implement these changes, but Dan Yager, Chief Policy Officer and General Counsel for the HR Policy Associatin suspects that the Department of Labor would create a grading system for contractors, based on factors including compensation, benefits, and compliance. Even though OFCCP currently regulates some of these areas, the Obama Administration believes that the department has been too lax.

The Center for Corporate Equality Releases Report on OFCCP Enforcement

According to the report released by the CCEQ on February 16, 2010 evaluating the OFCCP Enforcement Statistics for FY 2008:

The typical length of time from the start of the compliance evaluation to the signing of a concilation agreement or consent decress was about 2.5 years.
Number of settlements increased by 12 from 61 in 2007 to 73 in 2008.
There were no "Glass Ceiling" Corporate Management reviews.
Most of the settlements involved alleged systemic discrimination against applicants for lower level laborer and operative jobs in food service and manufacturing industries.
About 25% of settlements focused on a "total minority" aggregate as the covered group.
Statistical significance testing was used as a stand-alone evidence of disparities in over 93% of settlements and 4/5ths rule was used in two settlements.
In evaluating consistency among OFCCP offices, enforcement strategies (length of time to conciliation, how data was analyzed, how financial settlements were calculated) varied acorss the six regional offices.

The foregoing has been prepared for the general information of clients and friends of Workplace Dynamics LLC. IT is not meant to provide legal advice with respect of any specific matter and should not be acted upon without professional counsel.