On November 19, 2015, the U.S. Department of Labor (“DOL”) Office of Federal Contract Compliance Programs (“OFCCP”) announced that it reached a settlement with nine locations of a government contractor “to remedy systemic hiring and pay discrimination violations.”  The contractor in question provides uniform and facility services products to private businesses and the federal government.

The settlement was based upon a number of violations OFCCP identified during compliance evaluations from 2011 through 2015.  In total, OFCCP found that the contractor “discriminated against 444 female employees in laborer positions by disproportionately assigning them to lower paying job duties while filling the higher paying job duties predominantly with men.”  OFCCP found that this practice resulted in “unlawful sex-based pay discrimination” throughout a number of the contractor’s facilities across the country.  OFCCP also determined that this practice resulted in “a lower hiring rate for 2,327 male applicants who were equally or more qualified for general laborer positions,” at several locations.  Further, OFCCP found that the contractor “failed to provide equal opportunity to 456 African American and 111 Caucasian applicants,” at two of its locations.

As part of the settlement, the federal contractor has denied any liability, but has agreed to pay $1,813,555 to members of the affected classes.  The contractor has also agreed to “extend 78 job opportunities to the male, black and white applicants who were not hired, and 58 opportunities for the female employees to move into higher paying positions.”

Patricia Shiu, Director of OFCCP stated that the “settlement demonstrates how the U.S. Labor Department can uncover patterns of workplace discrimination by federal contractors that transcend a single location, which may affect a large number of workers.”  Secretary of Labor Thomas Perez also noted that “[w]hen you accept taxpayer dollars, you are held to the highest employment standards,” and that the Department of Labor “will not tolerate employment discrimination by companies that do business with the federal government.”

This case should serve as a reminder to government contractors that the OFCCP is closely examining the compensation practices and selection and placement practices of federal contractors.  Contractors should examine their practices and conduct internal privileged audits to ensure that its practices are not adversely impacting covered groups.