The Trump administration has performed admirably in reducing the regulatory red tape that has strangled American businesses and limited our country’s competitiveness. But for reasons not entirely clear, the Department of Labor has lagged behind other agencies in this regard.
One clear example is the way the department’s Office of Federal Contract Compliance Programs (OFCCP) has continued unnecessary and counterproductive Obama-era litigation against tech companies for alleged discriminatory wage and hiring practices.
To some extent, the Labor Department’s hesitancy to retreat from a series of lawsuits against Google, Oracle, and other tech giants initiated by the prior administration can be explained by President Trump’s first Labor Secretary Alex Acosta’s cozy relationship with the Washington establishment. Thankfully, Acosta’s replacement, Eugene Scalia, son of former Supreme Court Justice Antonin Scalia, who took over the reins at the sprawling bureaucracy at the end of September, is no friend of the nanny state.
OFCCP is the Great Society-era agency established to ensure private companies that contract with Uncle Sam do so without discriminatory hiring, employment or wage practices. Over the decades, this agency has taken steps to reform federal contracting policies in this regard. But its overall record has been mixed, especially in recent years.
In a 2017 study, the U.S. Chamber of Commerce agreed that the OFCCP’s mission to ensure discriminatory-free practices by corporate partners was “worthy.” At the same time, however, the report set forth in extensive detail that the OFCCP in recent years had become enamored of faulty, statistics-based challenges to companies engaged in federal contracts and had repeatedly abused its powerful remedy of threatening to debar companies alleged to engage in statistical discrimination.
A number of lawsuits reflecting this abusive approach to regulatory enforcement were filed against large tech companies in the waning months of the Obama administration. Palantir Technologies was hit with a federal lawsuit in September 2016; alleging it had engaged in unlawful hiring practices. This was followed three months later, in early January 2017, when the Department of Labor sued Google and then, just two days before President Trump was sworn in, Oracle.
In these cases, and others, the Labor Department’s contract compliance arm appears to have relied on raw statistical evidence that the companies discriminated in hiring and wage policies. This is a flawed legal strategy that fails to consider the myriad other relevant and legitimate factors employed by companies — especially those as large as Google or Oracle — in evaluating applicants and employees for jobs and wages.
Additionally, the OFCCP has a habit of hitting targeted companies with unreasonable and hugely expensive document requests, and consistently refusing to engage in good-faith efforts to resolve disagreements short of protracted litigation.
Despite risking regulatory retaliation by the government, one company being challenged by OFCCP — Oracle — has gone on the offense. Just last month, for example, the company sued the Labor Department in federal court; alleging the OFCCP was engaged in long-running abuse of its powers, to such a degree that the company’s constitutional rights had been violated.
That a company would be forced into taking such a drastic and potentially costly measure, demonstrates how far OFCCP and its parent Department have strayed from the declared goal of working with private companies doing business with the federal government to ensure non-discrimination in corporate practices. Its litigation-based strategy illustrates that the Labor Department instead has become — like many federal agencies — a regulatory bully searching for ways to punish companies.
The agency’s new director, Craig Leen, who has ties to former Acosta, has sent the corporate world mixed signals in this regard. In congressional testimony just three months ago, on Sept. 19, Leen indicated in broad terms support for transparent and cooperative enforcement policies. At the same time, however, he praised the use of “statistical analyses” as a legal tool to establish “proof of a pattern or practice of discrimination.”
Hopefully, Leen’s two bosses — Donald Trump and Eugene Scalia — will step in and make sure that the small but powerful agency he heads gets on board the administration’s drive to actually reduce federal regulatory burdens, and ensure compliance with the law and our Constitution in a manner far more fair and productive than has been the case in recent years.