By Marjorie Johnson, J.D.
Although the action advanced for now, an administrative law judge had “significant concerns” about the scope of the OFFCP’s complaint, particularly the agency’s contention that upon information and belief, the alleged discrimination “continues to the present.”
The OFCCP defeated summary judgment in a civil enforcement action accusing JPMorgan Chase & Co. (JPMC) of violating Executive Order 11246 in carrying out its government contracts by discriminating against 96 female employees in one specific business unit for which it had maintained an affirmative action program since 2012. A DOL Administrative Law Judge ruled that triable issues remained, including whether the alleged pay discrimination had continued or had been remedied, and the implications of a 2013 reorganization of the business unit, which could impact the temporal scope of this action. While the court declined to summarily dismiss the case at this point, it warned that litigation would likely be limited after sufficient discovery (OFCCP v. JPMorgan Chase & Co., June 24, 2020, DeMaio, J.).
Affirmative action program. Under the statutes and regulations at issue in this case, a federal contractor must develop and maintain affirmative action programs for each of its establishments if it has fifty or more employees. At issue here was JPMC’s functional affirmative action program (FAAP) that it maintained in 2012 for its Investment Bank, Technology & Markets Strategies (IB-TMS) business unit.
No data after 2012. In July 2012, the OFCCP commenced a compliance evaluation of the FAAP and as part of the review, the JPMC submitted a compensation data file based on a workforce snapshot on May 15, 2012, as well as a data file that included compensation over the prior two years. However, it did not provide any compensation data for periods after 2012.
Notice of violations alleging pay disparities. In February 2014, the OFCCP notified the company that it would be undergoing an onsite review of the FAAP and requested, among other things, all salary changes between May 15, 2012 and January 1, 2014, for the covered employees in seven job titles. After JPMC failed to submit the requested post-2012 data, the OFCCP issued a Notice of Violations (NOV) in March 2015 alleging pay discrimination against 94 female employees in the IB-TMS unit who held one of four job titles.
In January 2016, the parties attended a conciliation meeting where the OFCCP provided a document entitled “Anecdote of Compensation Disparity,” which consisted of a list of employees by identification number, gender, hire date, job code, city, business unit, 2011 performance rating and 2012 base salary for twelve groups of employees. JP Morgan submitted certain materials in response, and stated that it would submit additional responses. OFCCP made no follow-up inquiries and on April 1, 2016, issued a Show Cause Notice. The parties continued to have discussions in an attempt to resolve the matter but were unsuccessful.
Enforcement action. In January 2017, the OFCCP served its administrative complaint alleging that since at least May 15, 2012, JPMC had violated EO 11246 in carrying out its government contracts by discriminating against female employees with regard to compensation. The agency claimed since at least that date, pay-deciding officials had exercised discretion when setting compensation amounts for employees within the IB-TMS unit under the four job titles at issue, resulting in sex-based pay discrimination against at least 93 female employees that “upon information and belief,” continues to “the present.”
Factual basis for post-2012 allegations. In its motion for summary judgment, JPMC primarily attacked the OFCCP’s post-2012 allegations of discrimination. First, invoking Rule 11 of the Federal Rules of Civil Procedure, it asserted that the agency lacked a good faith basis for those allegations and failed to conduct a reasonable inquiry. In particular, it argued that OFCCP could not have alleged pay discrimination for periods in which it had not conducted a statistical analysis of personnel or compensation data. Moreover, the business unit and FAAP at issue no longer existed due to corporate reorganization in 2013. However, the court ultimately held that Rule 11 was an inappropriate basis for summary decision here. “OFCCP conducted its investigation reasonably, and its allegations could have evidentiary support ‘after a reasonable opportunity for further investigation or discovery.’”
Fourth Amendment. The court also rejected JPMC’s contention that the OFCCP’s attempt to gain data through discovery, rather than during the compliance investigation, penalized the company and violated both the Fourth Amendment and due process. Given the purpose of the EO to ensure contractors are not engaging in discrimination against their employees, the agency had the right to seek data beyond the investigative period in order to determine whether the employer had remedied the alleged discriminatory practice. However, the court noted that “this right is not unfettered” and “the scope of litigation will not be unlimited.”
No two-limitation. JPMC also failed to convince the court that the OFCCP’s own regulations limited liability to the two years preceding commencement of the compliance review and, thus that the post-2012 allegations should be stricken. The company cited to the preamble of the applicable regulation, which discusses the requirement of contractors to retain personnel and employment records for two years. But despite this language, the court declined to hold that JP Morgan’s liability was strictly limited to the two years preceding the OFCCP’s scheduling letter.
Caveat on the scope of litigation. Nevertheless, the court had “significant concerns about the scope of the litigation” and was particularly uneasy with the OFFCP’s contention that “upon information and belief,” the alleged discrimination “continues to the present.” Such an “open-ended allegation, ongoing to the present day” does not ensure that a defendant retains the right to be put on notice of all of the charges against it in order to properly prepare its defense.
However, it was too early in the proceedings to make a decision limiting the scope of litigation relating to alleged continuing or ongoing discrimination after 2012, in particular without further discovery related to JP Morgan’s reorganization and elimination of the IB-TMS business unit. However, the parties were put on notice that at an appropriate time during discovery, the court would seek their positions on the scope of litigation and the effect of reorganization of the unit.
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