Perez, the Prez, and Preferences

With the enormous powers he would wield to expand racial and gender preferences in a large sector of employment, Tom Perez’s nomination as Secretary of Labor provides an opportunity to shed light on disturbing civil rights-enforcement practices.[i] Given their record, a Secretary Perez and the President would  work together to  increase incompetent bureaucracies’ power over hiring and promotion policies of federal contractors.

As Secretary of Labor, Perez would have full discretion to regulate the hiring practices of virtually all employers who have federal contracts. This means companies as large as Lockheed Martin and as small as a Denver cheese maker (link no longer available)—which are in every congressional district in the country.  Note the prominent businesses among the top 200 contractors of well over 141,000, divvying up over $533 billion in federal contracts.[ii] The struggle over the Perez nomination is not only about how civil rights enforcement is to proceed but about our general attitude toward bureaucratic government. Should the laudable goal of civil rights be enforced by a despotic bureaucracy?

It is becoming distressingly clear that Perez would apply the Chicago-style politics of President Obama to not only the regulatory but the social agenda as well. Perez would achieve these radical aims through the obscure Office of Federal Contract Compliance and Programs (OFCCP), headed by a deputy assistant secretary-level Director who does not require Senate confirmation. [iii] The new Secretary of Labor will shape policy directly, as the OFCCP as of November 2009 now reports directly to his Office.

Unfortunately, we already know what a willful OFCCP can do. In a July 1996 article for the American Spectator, “Here Comes the Goon Squad,” James Bovard provided an appalling picture of how a small federal agency abuses its powers in order to “intimidate and browbeat businesses.” The OFCCP, he declares, “is now symbolic of the corruption and deception at the heart of affirmative action.” Compliance officers’ vices range from incompetence and illiteracy to dishonesty and deception about what the laws require. Their agenda is a socialist or redistributionist of corporate money to pay people for work they never did.

Moreover, recall that the “comparable worth” movement of the 1990s came out of OFCCP. Under this theory, entire professions (e.g., K-12 teaching) were said to be in need of equalization, in order to relieve discrimination against women.   How can then-Secretary of Labor Robert Reich (as have all Secretaries since), preach the need for better trained workers, while “OFCCP is turning high standards for workers into a very expensive liability for government contractors”?   

Bovard’s criticism is rooted in what has, unfortunately, become a staple for civil rights enforcement—disparate impact analysis. An employment practice in hiring, perhaps caused by a qualifications test or requirement, produces an employment profile which for whatever reason does not look right to the OFCCP. Unlike disparate treatment, there may not necessarily be evidence of any intended harm to that group—for example, malicious action by employment personnel, such as discarding applications from certain undesirable zip codes.

What often results from a settlement of a disparate impact-based charge are quotas, backpay, training, and restitution to a group for supposed injuries done to members of that group by an employer who failed to hire or promote members of that group. Merely having applied for a job might result in a windfall for the applicant. Arranged in an often undisclosed agreement, employers often make the economic calculation not to contest OFCCP; hence they might never admit wrongdoing. Securing such an agreement led to “fire-sale” settlements,  while the employer made cosmetic changes to accommodate the cranky agency.  Though “decertifying” an employer from receiving a federal contract is possible, such drastic action is rare. The Agency stumbled along with arbitrary and capricious practices,   having no effect on errant employers.

But in the Bush Administration Director Charles James used his lengthy tenure to train the OFCCP in a new attitude of “compliance assistance” together with focused, legally supportable enforcement, which rebuked the  earlier ethos of confrontation and lawless harassment.[iv] Perez will have the OFCCP replay the horror show Bovard depicts so well.

In Obama’s first term, we are already seeing some appalling changes. For one, working together with the Equal Employment Opportunity Commission, the OFCCP has issued Directive 306, which warns employers that excluding job applicants on the basis of a criminal conviction could be grounds for illegal discrimination—as the exclusion must be job-related.[v] “Hiring policies and practices that exclude workers with criminal records may run afoul of such laws, which prohibit intentional discrimination on the basis of race, national origin, or other protected bases, and policies or practices that have a disparate impact on these protected groups and cannot be justified as job related and consistent with business necessity” (emphasis added). Non-criminality cannot be a general employment requirement!

Not surprisingly, Perez’s record at Justice reveals him to be a fervent supporter of disparate impact analysis which aims in this direction. We can expect aggressive enforcement on behalf of protected groups under its responsibility. As gay rights groups have pressured the President for executive orders to protect their interests, OFCCP might well become the vehicle. After all, the OFCCP was created, not by Congress but by Executive Order 11246, issued by Lyndon Johnson and modified by other executive orders since. President Obama could at any moment issue an executive order adding GLBT’s to the protected groups.  While many employers already have progressive policies regarding hiring, what such an executive order would lead to in enforcement would be excuses to investigate a “hostile atmosphere” which might retard hiring or promotion of gays.

To reiterate, protecting workers from illegal discrimination is a noble cause, but how it is done can sully the whole enterprise, as we see from the OFCCP. We need not shudder at how a second-tier Cabinet officer might well radicalize federal government policy toward unions, OSHA, immigrant workers, unemployment insurance, labor statistics, and Obamacare—all subjects of the Department of Labor. What Perez could do with OFCCP is quite enough.

[i] What the Department of Justice Inspector General concluded about Assistant Attorney General Perez’s politicization of the Civil Rights Division he heads is troubling indeed.

[ii] The number of federal contractors for OFCCP’s purposes constantly grows, as subcontractors to the prime contractor are added. It’s interesting that government agencies disagree on how many federal contracts actually exist—meaning we can’t measure the reach of the federal government by the number of its contracts.

[iii] Entering its 47th year, the OFCCP now has about 750 staff in its DC headquarters and 51 regional, district, and area offices, up from the 560 of 2008. Its 2013 budget is slated to be about $103 million, about a 20% increase from the Bush years. The current Director is Patricia Shiu; her Deputy is Washington civil rights veteran Les Jin. Employment law firms have several websites and blogs that monitor the OFCCP, including this useful one. Also, the Equal Employment Advisory Council is an association of employers who seek “proactive rather than defensive” strategies on equal employment opportunity and affirmative action issues.

[iv] I have first-hand knowledge of the potential for such abuse, having served as a special assistant for the longest-serving Director of the Office of Federal Contract Compliance Programs (OFCCP), Charles James, during the last Bush Administration. He was a political appointee, working under Secretary Elaine Chao, and like her served all eight years of the Bush Administration. Unlike many of his predecessors, who were lawyers and had extensive federal government experience, James had extensive private sector experience as head of human relations at Bell Atlantic, the predecessor to Verizon, in addition to state government experience. James’s strategy, knowing any efforts to dismantle preferences would be vigorously opposed and that the Bush Administration would not support him, was to educate his Agency in demanding higher standards of evidence of discrimination and developing an “Active Case Management” approach to enforcing the law. He had the OFCCP focus on egregious examples of systemic discrimination, typically involving large employers, and went on to achieve record-high settlements.

In doing so, he turned former violators into model employers. At the same time he drastically reduced bureaucratic interference with employers, such as incompetently performed on-site visits of previous administrations. His achievement is certainly comparable to that of his better-known friend, former EEOC Chairman Clarence Thomas. Veteran OFCCP officials praised the benefits of the “compliance assistance” mentality of the new OFCCP over the confrontational tactics of the past. But a December 2, 2010 order ended this James-era Active Case Management policy, claiming it prevented far more aggressive enforcement.

[v] The OFCCP directive warns,

In light of these racial and ethnic disparities, contractors should be mindful of federal antidiscrimination laws if they choose to rely on job applicants’ criminal history records for purposes of employment decisions. Hiring policies and practices that exclude workers with criminal records may run afoul of such laws, which prohibit intentional discrimination on the basis of race, national origin, or other protected bases, and policies or practices that have a disparate impact on these protected groups and cannot be justified as job related and consistent with business necessity. Policies that exclude people from employment based on the mere existence of a criminal history record and that do not take into account the age and nature of an offense, for example, are likely to unjustifiably restrict the employment opportunities of individuals with conviction histories. Due to racial and ethnic disparities in the criminal justice system, such policies are likely to violate federal antidiscrimination law. Accordingly, contractors should carefully consider their legal obligations before adopting such policies.

My own brief experience in teaching in a federal prison convinces me of the need for drastic prison reform. A thoughtful debate about drug legalization might yield a specific exemption for some users, but that would not justify a generalized policy, as the one adopted by EEOC and OFCCP.