Capital Conversations: Craig Leen, Director of Office of Federal Contract Compliance Programs (OFCCP), U.S. Department of Labor

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Dean Reuter:  Welcome to The Federalist Society’s practice group Teleforum conference call as today, January 11, 2021, we host a Capital Conversations edition of Teleforum with Craig Leen, Director of the OFCCP in Department of Labor. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society.

 

As always, please note that all expressions of opinion are those of the expert on today’s call. Also, this call is being recorded for use as a podcast in the future and will likely be transcribed.

 

We’re very pleased to welcome a return guest, Craig E. Leen. He is, as I mentioned, the Director of OFCCP. That’s the Office of Federal Contract Compliance Programs at the U.S. Department of Labor. That’s the office that enforces laws that make it illegal for contractors or subcontractors that are doing business with the federal government to discriminate in employment based on race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran, a pretty long list. And that’s just part of what his office does.

 

I want to thank him for joining us. We’re going to have opening remarks from him from about 10 to 15 minutes. And then, as always, we’ll be looking to the audience for questions, so have those in mind for when we get to that portion of the program. But I don’t want to begin without thanking a friend of The Federalist Society, Bob Gaglione. He was very helpful in putting this Teleforum conference call together. He’s working with Craig Leen at the Office. So I want to acknowledge him and give him some special thanks as well. With that, Craig Leen, the floor is yours.

 

Craig Leen:  Thank you, Dean. It’s a true pleasure to be here with everyone today for my second time with The Federalist Society, as Dean mentioned. And it’s just a pleasure to be able to talk to all of you about OFCCP and a federal agency that I love and I’ve enjoyed greatly being the director of for the past two years. And I’ve been at the Agency for the past three years. And I also would like to thank Bob Gaglione, who not only is friend of The Federalist Society and my Deputy Director but just a really good, decent human being and an excellent lawyer and someone that I’ve really enjoyed working with.

 

So just to give you a little background on myself, before I was OFCCP director I came from local government. I was the city attorney of Coral Gables, Florida. And I was very active among local government attorneys. And so when I came into this job, what I took from local government that I wanted to bring here to OFCCP were to following principles.

 

First, good government -- I thought it was very important that, when you have a mission as critical as OFCCP’s is -- which is to ensure equal employment opportunity for all of America’s workers -- something that’s central to the American dream and the ability -- the reason why people come to this country and look to this country, the ability to fully participate in its economy -- it’s very important that that be done with good government. And because our agency is largely an auditing agency, because we audit federal contractors to make sure that they are not committing a pay or hiring discrimination and we also look at other equal employment opportunity obligations as well, it’s very important that job be done, in my opinion, apolitically and nonpartisan. And that’s what I’ve tried to do while I’ve been here.

 

I am a Republican. I am a moderate conservative. I work in this administration. I was appointed by the Secretary of Labor to this post, and I’m proud to have done this position in the administration. But I come from it -- I come to this position in an apolitical way. In my view, when you’re doing auditing, there really shouldn’t be politics to auditing. Auditing needs to be done consistent with the best standards possible.

 

Second, I brought in the idea of transparency. When I was a local government attorney, I knew that our constituents in Coral Gables, which is a very customer service-oriented city, wanted to know what was happening. They wanted to always be aware. They wanted access to public records. They wanted to know what their elected officials were thinking. They wanted to know what their city attorney was thinking. So I brought that sort of approach to this job as well.

 

Likewise responsiveness, when I was city attorney, I had an open-door policy. I would meet with anyone who wanted to meet with me. I would meet with all stakeholders, whether they be civil rights groups or whether they be contractor groups. I would try to meet with everyone and be as responsive as possible because, to me, that is the quintessential component of good government -- responsiveness. The thing that people like least with government is, when they send a message and they put their heart into a message and they send some request to the government, and it’s ignored or no one responds.

 

So I brought that as well and, with that, the idea of clear guidelines. When I was a city attorney, it was very important that people knew what the law was and that they were able to comply with it. And at the city level, you’re dealing with people’s property rights. You’re dealing with their liberty. You’re dealing with a lot of issues that are very important, as important as the issues we deal with at the federal level. So it was very important to me to have clear guidelines. And I achieved that by issuing over 400 city attorney opinions when I was city attorney.

 

And then lastly, and most importantly, avoiding arbitrary and capricious conduct or any sort of abuse of power. It’s very important when you’re in a position of public trust or power that you live up to that public trust or power and that you do not abuse it. And so that’s what I brought to OFCCP, and I became senior advisor in 2017 in November. And then I became the director -- the acting director in the middle of 2018 and the full director at the end of 2018.

 

And here’s what I saw when I came to OFCCP. First, I saw an agency that had a very critical mission and one which had been successful in many ways in the past. So one of the first things I needed to do was build on that. But I also saw -- and this was a big thing, and this is something I talked about a year and a half ago when I spoke to The Federalist Society. I saw a lack of clear norms in our regulations.

 

And what do I mean by that? And not only clear norms, a lack of administrative process. If you look at our regulations before the recent rulemaking that we did establishing procedures for determining nondiscrimination obligations— also what I call the preliminary determination notice rule —before that rule was adopted, if you looked at OFCCP’s regulations for how we conduct an audit, you would find that there were not -- there was not much there. Most of what the Agency did was by custom.

 

We customarily would do a desk audit. We customarily would then go onsite. We would go onsite not in every review, in some reviews. Those reviews could last a very long time. They were governed by directive, and they could sometimes last several years.

 

In addition to that, there was -- the Agency could if it wished issue a preliminary determination notice indicating that there’s been discrimination and give the company an opportunity to respond before making a finding or a notice of violation. But that was not in our rules. That was something that was done as a matter of discretion and frankly was not always done. It depended on the region.

 

Likewise, the notice of violation -- there were no specifications for what had to be included in that notice of violation or what information had to be provided to the contractor so that they could respond to a preliminary determination notice or notice of violation. There really was a lack, in my opinion, of regulation in this area. And it led to extensive discretion in the Agency for how it would handle any particular case.

 

And in my view coming from local government, I felt it was too much discretion. I felt like -- and I felt that having too much discretion was problematic in two ways. One, the Agency was missing an opportunity through regulation to provide guidance to companies as to how we would look at discrimination and how we would identify it and how we would remedy it. And that was something that I thought would be very helpful to provide companies that information because then they could come into compliance in advance. So that was one thing.

 

And then two, of course, because it led to reviews that took a very, very long time. Indeed, when I started, there were over -- there were over 100 cases that OFCCP was working on -- administrative cases. They had not gone to court yet -- administrative cases that were over four years old -- an audit with the federal government that was over four years old, over 100 of them.

 

By the way, that doesn’t mean that all 100 of those involved a violation. So some of those could very well involve companies that were not in violation, and yet they still were over four years. In addition, when I started in 2017, we settled at that time a case that had been in existence for over two decades at both the administrative level and the litigation level. It was a case that actually started -- the audit started when I was a senior in high school, I believe, in 1993 -- sometime around then. And it ended by settlement in 2017. So approximately a 24-year-old case.

 

Now, that is never, never a good thing to have a case that goes that long. Not only does that mean there’s a significant use of public and private resources that have been wasted in a 24-year case. But also, when you finally achieve a remedy, who exactly are you helping at that point? It was 24 years ago. Many of those employees -- probably almost all of them have left the company. Many of them will be difficult to find. Plus, to the extent there is a discrimination finding, that means they’ve had to live with that discrimination for 24 years.

 

So as you can see, when I saw things like that, I thought that significant reforms needed to be done to the Agency. And let me tell you. It wasn’t significant reforms to our workforce. OFCCP career staff is wonderful. It has been such a pleasure being the head of OFCCP. We have done so much since I’ve been here. And the way I’ve done that is through delegation to my -- I set the vision and the goals. And I work along with Bob and the other noncareer officials. And then we work with our career officials to achieve those.

 

But in my opinion, the Agency needed substantial reform in terms of our regulations and our process. And it was something I wanted to do because I wanted to hand off the Agency to my successor stronger than when I got it, just like my predecessors did as well. So something I wanted to build on.

 

Another thing that we focused on when I was here was something called focused reviews. We focused on focused reviews. For a long time, OFCCP would do only one form of review of a company. It was a full compliance review, and sometimes it could take a very long time. And also, those reviews largely focused on race and sex discrimination, both compensation and hiring. And of course, that is a key and important area to focus on. And we’ve continued to do that in this administration.

 

But I also -- as Dean mentioned at the beginning, there were actually ten different protections that OFCCP enforces, which are from three different legal authorities, two statutes and an Executive Order. And I thought it was very important that OFCCP use all of its jurisdiction and not just a portion of it. So the focused review program -- the goal of that program was to ensure that the Agency was looking into areas that it hadn’t looked into as much in the past.

 

And we have five focused review programs at the Agency. One is on disability inclusion, Section 503 of the Rehabilitation Act. One is VEVRAA, which is a veteran’s civil rights protection statute and ensures that we are making sure protected veterans are not discriminated against in employment. One was on promotions, to make sure that the glass ceiling could be shattered -- could be eliminated.

 

We talked about that for a couple of decades, but as I’ll probably talk about later in this conversation, there’s still a lack of representation of women and minorities, women of color, people with disabilities in executive positions at financial institutions, law firms, universities, tenured faculty. You tend to see about 80 percent men and 20 percent women in those positions. And you also tend to see underrepresentation of minorities. And so that is something that I wanted to bring attention to through the promotions focused reviews and, likewise, accommodations-focused reviews.

 

I wanted to make sure that we were looking at religious accommodations and disability accommodations. And in fact, I encourage everyone on the phone to look at OFCCP’s website under opinion letters — this is another program that we started while I was director —and look -- and we just issued on Friday an opinion letter on religious accommodations that seeks to ensure that religious practicing individuals, whether you practice religion or you don’t, whether you’re a religious minority or whether you’re not, whether you’re part of a -- no matter who you are or what religion you practice, the idea that you will be accommodated in employment. So take a look at our religious accommodations opinion letter. We’re very proud of it. And I believe that that’s going to be strong protection for workers.

 

So all of this, though, came about through the focused review program. And it’s something that I’m proud of. And then, finally, before I conclude, I also came to the Agency with four pillars I call them that I wanted to ensure that all the Agency’s initiatives, all the Agency’s actions would be consistent with. And those four pillars are certainty, efficiency, recognition, and transparency. And as I answer questions, I’m sure I’ll touch on all four of these.

 

For each of them, we have a host of policy initiatives that we did under each of these, including each of them has a directive that’s in their own name. That’s another thing I learned from being city attorney. If you want to have a transparency directive, call it a transparency directive and make sure that the Agency’s being transparent. If you want to have a certainty directive making sure that regulations are clear and easily followed, have a certainty directive. If you want to increase efficiency and decrease the amount of Agency cases, have an efficiency directive. If you want to recognize the many contractors that are in compliance and going above and beyond the requirements of law, have a recognition directive.

 

And we have all four of those and many others. We have about 20 directives I’ve issued as OFCCP Director. I believe it’s more than all prior directives -- prior directors combined, the amount of directives I’ve issued. And it’s not that I just like to issue directives, but I care deeply about the idea of transparency and making sure that, when I give a directive to my staff, that it’s known to the stakeholder community so that they can see what I am doing and they can hold me to account because it’s very important to hold public officials to account and have them answer in public to what they do.

 

So to conclude -- and I have a lot more to tell you, and I’m looking forward to answering Dean’s questions and all of your questions. But I did want to, if I could, brag about something a little bit, just a little bit. And, of course, it’s not me. It’s my Agency and my, like I said, phenomenal career staff that achieved this.

 

But during this administration, we essentially doubled recoveries. We essentially doubled recoveries. And in fiscal year 2019, we had a record year for civil rights recoveries of $40.6 million in recoveries, which far exceeded any prior year in terms of those recoveries. And in addition, if you looked at -- if you measure that by the total value of those settlements, it far exceeds $40 million.

 

In fact, by our estimates, it's over $100 million in impact for equal employment opportunity. So very proud of that, and in fiscal year 2020, even during a pandemic and during extraordinarily challenging circumstances, the Agency had its second most successful year in history in terms of recoveries at $35.6 million. We’re very proud of that at OFCCP.

 

Also, one other thing that I’ve been known for and that I want to be remembered for and I want to conclude these remarks with is a major focus on disability inclusion. I built on the work of one of one of my predecessors as director, Director Pat Shiu from the Obama administration. They promulgated regulations for Section 503 of the Rehabilitation Act that set a 7 percent utilization/hiring goal for people with disabilities for federal contractors. And what I wanted to do was build on that and create a comprehensive compliance and enforcement program for people with disabilities in employment.

 

I was very concerned when I came to the Agency that, yes, it’s good to try to make sure that 7 percent of the federal contractor workforce are people with disabilities. But we also have to remember that people with disabilities make up between 20 and 25 percent of our population in the United States, and it’s a heavily underutilized part of our labor force. In fact, the labor force participation rate for people with disabilities is only about one in five, 20 percent, compared to 63 percent for the general population.

 

There’s a wage gap of over 30 cents – between 30 and 40 cents on the dollar for people with disabilities. And in addition to that, the unemployment rate for people with disabilities is typically double the general unemployment rate. And I’m a parent of two children who as young children were found to be on the autism spectrum. And my daughter has very profound autism and an intellectual disability that’s affected her in all aspects of her life. And I learned from being -- from that experience, I became very involved in the disability community in Coral Gables, and I brought that experience up here.

 

And it was very important to me as OFCCP Director to bring more focus to disability inclusion. And I feel that we’ve done that in spades, that we have truly achieved that at OFCCP. We have two focused review programs that focus on people with disabilities. We are going to be having an annual report that will be issued on Thursday that will talk about best practices, that will talk about what we saw in the 500 focused reviews we did on Section 503, that will have reflections on how to continue to make advancement to ensure the full inclusion of people with disabilities in all aspects of employment. And it’s something that I care deeply, deeply about. And I hope that that will be a significant part of my legacy at OFCCP.

 

So anyhow, that’s a very general overview. I highly encourage all of you to go to our website. Just type in OFCCP. It’ll come up. You can see the many programs that we are doing in this administration. And I’m proud. I’m proud of the work that I’ve done.

 

And I believe I am handing off the Agency to my successor, whoever that will end up being, in the next administration -- in the Biden-Harris administration. And it’s my goal that they do well. I want them to do well with the Agency and build on what I’ve done. And I feel that when you take an apolitical nonpartisan approach that that is very possible. And I’m proud of the work I’ve done. So Dean, I’m open for questions.

 

Dean Reuter:  Terrific. Thank you so much. I have some questions of my own, but while I ask those, let me open the floor to questions so people can begin queuing up. I was hoping, Craig, you could share with us maybe a couple of the concrete changes made in OFCCP to enforce civil rights and EEO laws and how you’d characterize the success of those changes. Are there things that have worked better than other things, and how do you account for those differences?

 

Craig Leen:  Certainly. One policy that I think has probably had the most impact is our early resolution procedures program, which I mentioned when I started that the Agency had over 100 aged cases that were over four years old. And we had a number that were even older than that. And to be an aged case for OFCCP, you have to be over two years old. We had many, many aged cases.

 

So one of my goals was through engagement with the stakeholder community to begin with. We reached out to the National Industry Liaison Group. We reached out to the AAAED, which is a very well known and well-respected organization that -- civil rights organizaiton that works with contractors, the Institute for Workplace Equality, the CWC, a number of these entities. We engaged with them right at the beginning. And I let them know, look, I know that in most of our audits —at the time it was about 98 percent of our audits­—we do not find discrimination. We’re going to try to increase that number by focusing on more likely violators, which we’ve been successful doing.

 

Our finding rate has gone up to about 5 percent, and our finding rate as to technical violations continues to be between 20 and 25 percent as I recall. So we’re continuing -- we’re focusing on more likely violators. But I also indicated to them I’m well aware that most companies are in compliance. And that’s a good thing. That’s what we want. We want companies to be in compliance. We want to publish guidance. I published a compensation directive that gave guidance to the contractor community how to comply.

 

But I also told them that if you find you’re in violation, if we find you’re in violation, why don’t you try to work it out with us right away. Instead of going through a multiyear audit and then maybe a lawsuit that could take many years, as I mentioned, why not even before we make a preliminary determination just based on our initial findings when we do our regression analysis at the desk audit phase -- before we even get onsite, if we find disparities based on race or sex or another protected class in pay or in hiring, why not sit down with us and try to work it out? I mean, one of the benefits of an audit is that you get this information, and you can correct your employment practices.

 

So if a company really wants to comply and is acting in good faith, I thought that this -- and of course, they might disagree with our findings, and they have a right to disagree. And then they can go through the whole due process that’s provided. But let’s say they agree with our findings. Or even if they don’t agree, they feel that there’s a problem area that they need to address. The thought was, well, why don’t we settle with you right away?

 

And not only why don’t we settle it for one establishment -- because OFCCP does audits be establishments. So if you’re a company that has 100 stores and ten factories and two office buildings, each one of those may end up being its own establishment. So instead of -- and some companies can have hundreds of establishments. So if we spend a lot of time working with you and we find a problem area and we believe it’s the type of problem area you may have at every establishment or in many establishments, why don’t we work to settle with you corporate-wide and fix it corporate-wide?

 

That’s what became an early resolution conciliation agreement program, the early resolution procedures program. We call it both. And it’s been extraordinarily successful. I believe we have at this point almost 30 of these corporate-wide agreements or close to corporate-wide agreements with companies that are impacting, I believe, over 600,000 employees in the United States in a positive way and that have probably made up -- the bulk of the recoveries that I talked about earlier come from these sort of ERCAs. So that was a huge reform for the Agency that has been very successful in increasing our reach and how many people we can touch and how many companies we can impact. So that’s one.

 

And then the second one I would draw attention to -- and let me tell you, Dean. There’s probably been over 100 reforms and initiatives we’ve done at the Agency. So it's hard to just pick a few, but the other one that I think was really significant in impacting the relationship between the Agency and the stakeholder community was the transparency directive.

 

It wasn’t just a general statement of transparency. We put many specific statements in there as to what the Agency would commit to making transparent. So for example, if the Agency is going to send supplemental information requests during an audit to a company, the Agency will transparently tell the company why we’re seeking that information, which will help them in responding to us.

 

Likewise, if the Agency’s going to issue a scheduling list that may impact 2- or 3,000 companies in the United States, we will publish the methodology for how those companies were chosen to demonstrate that companies are not being targeted and there’s no arbitrary and capricious conduct occurring. We are actually doing this based on established norms, and we are publishing it so companies can see that. And transparency has also led us to publishing -- there’s really not -- there’s not much internal at the Agency that isn’t external. And in fact, we’ve been obviously going through the transition to the next administration.

 

And one thing I’ve been told by career officials is it’s a real pleasure being able to represent OFCCP in transition discussions because we have so much public information to provide because my goal is to publish everything on the web. And sometimes, people don’t like to do that because they worry that it’ll subject it to scrutiny. I want the scrutiny. It makes it better. And I think that that’s the model for government. So those are two. I mean, there’s a lot of them, but I want to answer more questions.

 

Dean Reuter:  Yeah. That gives us some flavor, and we do have a couple of questions from audience members in the queue. I just have a couple -- if you don’t mind, a couple other questions. One, how do you determine what triggers an audit? If I heard you correctly, historically, or at least recently, 98 percent of the audits don’t result in findings. But you’ve got that up, I guess, to 95 or down to 95 and up to 5, which means the audits are more productive and more useful.

 

How do you determine in the first instance who’s going to be subjected to one of those audits? And on the disparate impact analysis that’s used, how do you define what a unit is or in what sort of store, size, or area or headquarters you have to be in compliance as opposed to a region or something like that?

 

Craig Leen:  Certainly. I can answer both those. Yes, just as background, the finding rate is now about 5 percent. Historically, it’s been 2 percent. That’s across administrations. In terms of technical violations, like violations of your affirmative action program or violations of not keeping records that are not discrimination findings, it’s closer historically to 20 to 25 percent.

 

But we had a government accountability office report done saying that the Agency needs to get better at identifying likely violators so that we spend more time with violators, less time with non-violators, which we did through our efficiency directive, which is another one I did where we sought to significantly lower the length of time of the desk audit from something like 120 days to under 45 days and to use triage to basically look at companies quickly and have our experts involved so that we can determine if there’s a potential finding here and, if not, essentially close that case and move on to the next one with the goal of trying to do more reviews quicker and then spend more time, of course, once you find a violation. But even there, trying to resolve that early if possible because every time we can resolve a case, we can get on to another one.

 

Now, in terms of choosing companies, there’s about 25,000 federal contractors in the United States based on our estimates, and they comprise about a quarter of the American workforce. So about 25 percent of the American workforce works for federal contractors. We also have jurisdiction over federal subcontractors. But we don’t have as good an estimate as to how many of those there are -- presumably a lot more. So there’s a lot of companies that are subject to OFCCP’s jurisdiction.

 

In terms of how do we choose among those 25,000 -- and remember, it’s 25,000 companies, but they each have several establishments. By our estimates, there’s about 120,000 establishments in the United States. Any one of our scheduling lists may only have 2,000 establishments. So as you can see, we can only touch a small percentage of all the establishments that could be touched, which is another reason why I’ve been focusing more on corporate-wide resolutions so that we can touch more establishments.

 

But the way we choose them is you can look on our web. We publish -- we’ve been publishing the methodologies in this administration. And you can see typically we look at, if a particular establishment has the higher FTE, it’s more likely they’ll be chosen. Likewise, if a specific establishment has a history of violations, we included that in our recent list.

 

In the last two lists, different types of -- I think the list two times ago was if they had a prior -- we looked at prior OFCCP violations in specific industries. And we focused on industries that had a higher rate of OFCCP violations. This time, we focused on companies that had multiple OSHA or wage an hour violations under the idea that their compliance program, if they have multiple violations, may not be as strong. And that may be a way to identify likely violators.

 

Every time, though, we publish a list of factors for how we pick companies. And we try to change it each time to try to touch more companies. So it’s done through a pre-determined methodology that is then applied by our operations division to pick the specific establishments that comprise the list. And also, we have various different types of reviews. Those, likewise, are done based on methodology and an algorithm.

 

The one thing I want to emphasis to everyone is me as OFCCP Director, I don’t say, “Hey, pick five establishments from company X and give them three compliance reviews and two compliance checks.” That doesn’t happen. That can’t happen under our approach. And that’s important because there was a time -- and I think if you talk to stakeholders, they’ll tell you this where company -- like representatives of companies -- I might go to a convention—and sometimes it still happens—and they’ll have a name tag, and they’ll turn the name because they don’t want you to know what company they’re from. Or they’ll tell you they’re concerned about reaching out to our help desk because they’re concerned that that will lead to them being prioritized for audit.

 

So I published something that -- that never happened. I just want to be clear. But I published something that prohibited that, and I created a whole process -- a handbook, an internal process for how we pick companies to ensure that there can be no targeting of a particular company.

 

Dean Reuter:  That’s terrific. And then we do have two questions pending, but I’m not sure you answered the question about how you define what is an establishment. And a company could be in compliance, I suppose, overall, but here they’re not. And in this region, they’re not or that particular suboffice or something like that.

 

Craig Leen:  Yeah. An establishment is generally determined geographically. So if you have an office, a factory, a store where it’s typically confined -- there’s an established store with an address, that typically will be viewed as its own establishment. Now, sometimes, you can have a couple that are very close to each other in a geographic area that may be run by one person. And so you may include them both in your affirmative program, and that might be for functional purposes one establishment. But typically, it’s every geographical place where you have employees is an establishment.

 

And then we also have the -- and that’s a very general statement. So if you’re not sure how many establishments you have, reach out to OFCCP. We’ll work with you to make sure that you know.

 

And then in addition to that, we have something called the functional affirmative action program, which allows companies -- and a lot of very large companies use this, where instead of doing it by every single spot they have employees, they do it functionally by line of business. So everyone within a line of business will be in an affirmative action program based on that function. And actually, I think that that’s the future for OFCCP because I think that one thing I think we’ve seen particularly during the pandemic is that geographical locations where employees go to the office and sit at an office space, that really is not the way a lot of companies do business now.

 

So I think you’ll find that it's better to look at how people are being paid or hired based on their function across the company and doing more corporate-wide type reviews.

 

Dean Reuter:  And one quick factual question before we go to the audience, are you comparing then -- if it’s done geographically, are you comparing results to local workforces or to national statistics? What’s the standard?

 

Craig Leen:  So in terms of affirmative action programs, such as your representation goals for women and minorities, we look to the local labor market to see what should be the desired, I guess, representation. But I want to be very clear. Companies are not allowed to achieve that through preferences or quotas. It’s through good faith action, good faith outreach and recruitment and elimination of barriers. But for those, you look at the local market.

 

In terms of hiring and compensation discrimination, what we do is we look at the employees that have similar jobs at that particular company. We group them together. We control for different factors that are used to set pay or used to determine who you’re going to hire that the company informs us of and keeps records of. We control for those, and we do a regression analysis. And if we see that a particular race or sex are being discriminated against -- and we’re typically looking for a deviation that’s more than two standard deviations.

 

And if we have that, that triggers a sort of -- it’s an indicator. And then we look behind that, and that’s typically when we go onsite or interview people or look at additional information to see is that disparity caused by disparate treatment, by intentional discrimination, or potentially disparate impact. Is it caused by a policy or practice that is -- an identified policy or practice that does not -- is not consistent with business necessity that’s causing this sort of disparity? And if so, then they’re required to fix them. If the company doesn’t, we do eventually sue them. Although, I have to say that we typically, 99 percent of the time, are able to conciliate and resolve the matter.

 

Dean Reuter:  Interesting. It’ll be fascinating, as you suggest, to see how these standards change and evolve as the workforce evolves. I read something recently, just the headline frankly, that employers are now thinking about having differential payment for remote workers. If you’re in a San Francisco or Washington or New York company with high cost of living but you’re living in Toledo and working remotely, you might be getting less money than your colleague who’s actually living in New York. But in any event --

 

Craig Leen:  Dean, that’s a big issue. And I’ll tell you we learn in law school in the American system you can typically hire a person for any reason or no reason, as long as it’s not an illegal reason. But what I think you find -- what I’ve learned through OFCCP is when you hire or pay someone and you’re going to base it on some sort of a factor, such as their experience, their tenure, their education, whatever it may be, it’s extraordinarily important to keep records of that --

 

Dean Reuter:  Yeah. Good advice.

 

Craig Leen:  -- to show that. Otherwise, in any individual case, most people on the phone are probably familiar with individual Title VII cases where you’re comparing one employee to another.

 

But in systemic cases, typically, when you’re dealing with large numbers of employees, if you control for the major factors and you see a disparity based on race or sex, typically that disparity is because of an illegitimate factor, whatever it may be, because the company’s already told you all the legitimate factors, and you’ve controlled for them. And assuming you’ve done that, then any remaining factor is likely to be discrimination or some other similar factor. And a Title VII case law allows us to draw an inference of discrimination in those circumstances.

 

But I’ll tell you one thing that the Agency has also been focused on is actually not relying solely on the inference of discrimination but also identifying what’s causing the discrimination here. Where is it? Who is it? Why -- so that the company can correct it, too, which I think is very important for what OFCCP does. It’s not just remedying it. It’s fixing it going forward as well.

 

Dean Reuter:  Right. We’ve got two questions pending, so let’s go to area code 347. Go ahead, caller.

 

Chris Equity(sp):  This is Chris Equity with the San Diego chapter. And I’m very interested in where you think things will go with the new administration in terms of both communications you’re getting from the transition and just your sense of the objectives of the new administration.

 

Craig Leen:  Well, I’ve read what the new administration has talked about in regards to OFCCP, and I think that they will continue to be very focused on pay equity. I think that’s going to be a huge issue in the incoming administration. I want to be clear we’ve made it a big issue, too. But I know that that will be a focus of theirs.

 

I think in addition to that I think that -- I don’t want to speculate too much because I also don’t want to -- I don’t want to overstep as to what I can say or not say. But I do think that OFCCP will be a very significant focus in the next administration. One of the primary focuses of the next administration, particularly at the Department of Labor, will be on this.

 

There’s always been concern in Democratic administrations and here as well by me—I just want to be clear by me also­—of the wage gap and addressing the wage gap and trying to address that, same with the glass ceiling and the fact that there’s such a low representation of women and minorities in high level executive positions. I would guess that that will continue to be a significant focus. And my sense is that some of the -- and I really hope this. This is something I hope that will be built on that I did -- a focus on disability discrimination and not solely on the utilization rate but also on hiring and compensation discrimination against people with disabilities. I hope that that is a focus.

 

Dean Reuter:  You’re sort of unique in the sense that you’re looking at particularly federal contractors. I’m wondering if you guys coordinate much and how that works with other civil rights offices in other agencies or even the EEOC or the MSPB. Do you have much interaction and overlap with them?

 

Craig Leen:  Yeah. That’s an extremely astute point, Dean, because we do have relationships with the federal civil rights agencies, with the Department of Justice Civil Rights Division and also with the EEOC and sometimes even with state and local. That’s done more at the field level. But yes, we have relationships with a lot of civil rights government agencies.

 

One difference between OFCCP and, I think, probably any of the other civil rights agencies is that about half of what OFCCP does is compliance assistance because if you become a federal contractor, you essential sign up -- you agree to these enhanced compliance obligations. The nondiscrimination obligations already apply under Title VII even if you’re not a federal contractor. But if you become one, you sign up for all the affirmative action obligations, the recordkeeping and all of that. And you also sign up for these audits.

 

The EEOC does not audit companies. They receive complaints or commissioner charges, same with DOJ. We audit companies, and our goal, of course, is that more and more companies will comply. So it’s always interesting because you want companies to be in compliance. In fact, that’s why we’re here. That’s our mission is to get companies to comply.

 

That’s one reason why I’ve been so engaged with the contractor community and have published so much stuff so that they can do their own self-audits and things like that to come into compliance because I think that soft power of the government ends up having a much bigger impact overtime than the hard power of an enforcement action, which you may or may not win ultimately. I think it’s the soft power of guidance, of engagement and dialogue because what I’ve seen is most companies have leaders who want to be in compliance with EEO laws. They have entire compliance division dedicated to that. So the more that you publish and the more engaged you are, it should lead to more general compliance. So that has been a very significant focus of mine.

 

Dean Reuter:  We still have two questions pending, so let’s check in with another caller.

 

Caller 2:  Hi. So thank you so much for hosting this to The Federalist Society and thanks to Mr. Leen for talking with us today. I know that the recent rule you guys published on religious discrimination has proven to be controversial. And I was wondering what response you might have for people who say the rule might facilitate discrimination against LGBTQ individuals.

 

Craig Leen:  Thank you for asking.

 

Caller 2:  Yeah.

 

Craig Leen:  First, I just want you to know as OFCCP Director my -- first of all, I’m strongly against discrimination based on LGBTQ+ status, and the Agency is strongly against discrimination based on LGBTQ+ status. And we have a vigorous enforcement program in that area, and I always try to mention that in speeches. And it’s something that I think is extraordinarily important. So I just wanted to say that at the beginning.

 

Second, the goal of the religious exemption directive was to more fully include religious organizations in federal contracting. We have received feedback that a lot of religious organizations were not getting involved in contracting because they felt like they would be discriminated against by the Agency based on their religious affiliation and that there was vagueness -- they were concerned they would not be treated with respect and that the religious exemption was too vague for them really to rely on. So the goal and purpose of the religious exemption was to provide guidance to religious organizations that it’s a real exemption, that it doesn’t just apply to co-religionists, which is what was the position of the prior administration.

 

It applies beyond co-religionists. It applies to your workforce but that— and this is my position as the Agency head­—it still doesn’t authorize discrimination against a protected class. There’s a lot of religious tenets that can be enforced by religion that doesn’t touch on protected status. When it touches on protected status, such as something that could be viewed as discriminatory against women, maybe, or discriminatory against men -- it’s not always -- we see with gender norms and gender stereotypes sometimes discrimination against both based on certain views of traditional roles of men and women, which the Agency -- we’re not here to question a religious organization’s views. We’re here to make sure that they don’t discriminate against men or women in employment.

 

So if it touches on sexual orientation or gender identity, if it touches on disability status, if it touches on veteran status, any of those, we’re going to be very concerned about that and looking at it closely. And what we said in the rule was that we were very clear that as to -- and this came about because I got a question from Representative Bobby Scott when I was testifying about the rule before Congress. He asked me, “Well, will this allow an organization that could be considered a hate group that allows discrimination based on race to be a federal contractor?” And I said, “Absolutely not.”

 

And we put that in the rule. We made that very clear that this rule will not allow a company like that to be a federal contractor. In addition to that, we said that for other protective statuses, it’s something that we would always turn over to our solicitor’s office. And what I told my Agency is, if the rule -- our job as the Agency, our mission is to ensure nondiscrimination based on all protected classes.

 

And that’s the way -- so if they get a request for a religious exemption from a religious organization, they should treat it with respect. They should turn it over to the solicitor’s office. And then what we basically said is the solicitors will do a RIFRA analysis, which is required by law. And if that analysis indicates that we by law have to recognize an exemption in a given case we will but only by law, not by policy.

 

The policy of the Agency is that LGBTQ+ discrimination is unlawful. It’s in our Executive Order. Also, of course, there’s the Bostock decision. Did that answer your question?

 

Caller 2:  Yeah. That makes sense. Thank you so much for being willing to chat about it. I appreciate it.

 

Craig Leen:  And let me tell you I understand it’s controversial, and I respect the different opinions on the rule. I just want to emphasis that my goal was to do a balanced rule that respected religious organizations and prevented discrimination against them based on their religious status so they could fully participate but also continued to enforce OFCCP’s protections based on protected status. That was my goal, and I’ll leave it to everyone to determine how well we achieved that. I feel we achieved that goal.

 

Dean Reuter:  We’re headed nearby, area code 703. Go right ahead, caller.

 

Richard Samp:  Thank you. This is Richard Samp with the New Civil Liberties Alliance here in Washington. I have a question about the recent resounding defeat that OFCCP suffered in the Oracle case. As I read the opinion of the ALJ in that case, he pretty much handed the staff its hat in telling it that it was going about it totally wrong in deciding what evidence would constitute evidence of sex discrimination in employment. And it was, in my mind, a very well-reasoned 300-page opinion.

 

And I think the result of that was that OFCCP has pretty much dropped its case against Oracle. And I’m wondering if that has caused any soul searching among the staff at OFCCP to consider, perhaps, changing its ways in terms of perhaps being overly quick to find evidence of sex discrimination.

 

Craig Leen:  Thank you for your question. Yes, the Oracle decision -- the Oracle case predated me at OFCCP. It was filed at the end of the former administration -- the last administration. And we prosecuted that case in good faith. I want to be clear about that. And ultimately, the administrative law judge determined that, based on credibility findings and findings of lack of intent -- determined that we had not demonstrated essentially disparate treatment discrimination. There was a disparate impact component as well, and the court found that we had not satisfied that either.

 

But the main thrust of the case was disparate treatment, and the court found that there was -- I think the court said something like there was no good evidence of intent or action by the leadership at Oracle. So we took a look at that case and the decision, and I published a statement when we decided not to appeal it. And without getting into it too much -- because I still feel -- even though the case is over, I still want to show respect for the litigators and for my team. A lot of time and effort went into that case.

 

And I would note that the ALJ did indicate that there was concern about those disparities at Oracle. So he didn’t find that we met all the elements. But we looked at it, and what I said in my statement, which I’ll summarize, was that because we felt we had a low likelihood of success on the merits if we appealed and because we no longer review compensation in the way that the ALJ rejected, we decided not to appeal.

 

We also settled. There was a case that was filed against the Agency essentially against the Executive Order 11246 and the Agency’s administrative process challenging its legality, its constitutionality. I just want to be clear I stand behind the legality and constitutionality of EO 11246 and OFCCP. But we decided that it was prudent to settle that. And so we settled both. So they were both settled.

 

And I stand by that decision. I think it was the right decision. The point that you asked was do we continue to -- are we thinking about it? Are we learning from it? I did say in my statement that we would learn from the decision, and we have.

 

I also want to indicate, though, that the part where I said that we don’t analyze pay in the same way anymore is true. We issued a new compensation directive in this administration. The administrative case that Oracle was based on was brought under a prior compensation directive that looked a compensation a little differently. And in addition to that, this case proceeded the rulemaking we recently did on the nondiscrimination obligations of federal contractors that established a very comprehensive administrative review process and also set standards.

 

Because remember, I told you before there was a lot of discretion in the Agency. That was one of the concerns I had. It wasn’t so predictable whether -- in my opinion. I’m just speaking for myself. When I came in here, if you wanted to hire an expert to tell you, well, are we in violation of OFCCP regulations and they ran a regression and they came back to you and told you no -- or let’s say they came back to you and told you yes and you’ve got to make these changes, it’s very possible that another expert would come up with a different decision. And the Agency might come up with a different decision.

 

That’s problematic because the lack of certainty there makes it hard for companies to commit to compliance in advance. And because we retain so much discretion for how we were going to analyze pay in every case, I felt that was too much discretion and really ended up harming our ability to effectively find pay discrimination. So we did issue a new compensation directive, and I did issue this PDN rule which says that the Agency will -- when determining whether there’s been pay discrimination, will consider all the material factors that a company uses to set pay and will control for those and sets other -- and also requires us to in most cases, unless there’s an exceptional reason -- most cases we have to find anecdotal evidence of intent to support that under the regulation in order to proceed with the case.

 

So I feel that -- and there were a number of other reforms in that rule. And I highly recommend everyone read it. I think it’s the gold standard, honestly, in analyzing discrimination. A lot of people worked on that. And I tried to take from the varying case law across the country. I’m very proud of it. Take a look at it.

 

But in my view, that is our answer to the Oracle case. And if the Agency adheres to those regulations that we put in that rulemaking, I believe the Agency -- and companies now know what we’re going to do. They know what we’re going to do because it’s in the regulations. And my view is if we’re able to satisfy those regulations, that’s a case that should be brought. And that’s a case that should be won. And if we can’t satisfy those regulations, then that’s not a case that should be brought.

 

Dean Reuter:  Maybe I could ask just a quick follow up question that might or might not be related. I’m not sure. But it goes to your statements about too much discretion within the Agency. My question’s about the Agency structure and how much authority or discretion exists at the -- I assume you have regional offices or different offices outside of Washington. Can you, in wrapping up, just talk about the structure of the OFCCP just a little bit as it relates to discretion?

 

Craig Leen:  Yes. The Agency has 48 district offices -- district and field offices, six regional offices, and one national office, so 55 offices -- 55 directors, essentially. And one of the criticisms of the Agency when I came was that the different regions were not uniform enough in their approach. Now, I think that that criticism may have been too strong, based on my personal experience here. But I did seek to address it.

 

So now every preliminary determination, every notice of violation, show cause notice, referral, all those go through both the region and the national office. I still delegate a lot of authority to the regions to do the day-to-day case. And we have really outstanding regional directors and district directors at the Agency.

 

And the regional directors I work with very closely, and they update me -- we have monthly updates. They come to weekly meetings. I’m very engaged, and I would expect my successor in this office to be very engaged with the regions. And we established enforcement policies which we published—that’s the key. We published them—as to how we’re going to look at discrimination, how we’re going to look at compensation, what’s going to be in a focus review.

 

We have a compliance manual that we updated for the first time, I think, in ten years with a lot of helpful information about how to comply with the regulations. And that is leading to great -- what I have found is if you published something -- like in transparency, we published that directive. And so then when a particular review didn’t follow that -- if a compliance officer didn’t follow that, the person could tell the compliance officer, “Hey, look at the directive to you. It says this.” And that would allow them to comply.

 

Or they could always bring it up to me, and I actually created an Ombud’s service as well to help facilitate the transparency directive and these other directives so, when there was a complaint, I would have to get too involved myself. Instead, I could set the policies for how to resolve disputes and what sort of principles to apply and then have an Ombud do that and work with the regional directors. So if you look at our regulations now, it does require national office involvement in these sort of decisions, which will help assure greater regularity and uniformity of decisions. That was a big reform that I think was very helpful and has been well-received by the regions and districts.

 

So that’s a synopsis of it. So I know it’s 4:00. I just want to -- in concluding, Dean, not only do I want to thank you and The Federalist Society and Bob Gaglione. I just want to thank everyone for attending. The conversation doesn’t have to end here. If you have any questions, you can send them to me. My email address is [email protected]. Now, there is some time sensitivity because I’ll be -- my last day is on January 20. But please send that information, and I wish the Agency well going forward. It has been the honor of a lifetime to be the OFCCP Director. I love the Agency and its mission, and I wish my successor the best.

 

Dean Reuter:  Well, this is Dean. Thanks so much Craig Leen for joining us. Thanks as well to Bob Gaglione for setting this up. I want to join you as well in thanking the audience for dialing in and for your thoughtful questions. A reminder for our audience, check your emails and the website for upcoming Teleforum conference calls. But until the next call, we are adjourned. Thank you very much, everyone.

 

[Music]

 

Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.