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Recent Bank of America Case Has Lessons for Government Contractors and Subcontractors

by Angela Adams, CEBS, SPHR, Senior HR Specialist

Published March 4, 2010

A U.S. Department of Labor Administrative Law Judge (ALJ) has ruled in favor of the Office of Federal Contract Compliance Programs (OFCCP) against Bank of America, upholding the OFCCP’s contention that Bank of America intentionally discriminated against minority candidates, specifically African-Americans, in hiring for entry-level positions.  The OFCCP enforces affirmative action obligations of government contractors and subcontractors (hereafter “contractors”).  While Bank of America is expected to appeal this decision, there are several lessons which affirmative action employers can take away from this latest judgment.

• This case began in 1993.  Due to protests by the bank about the OFCCP’s ability to audit different locations of Bank of America (Bank of America argued that some locations to be audited had not been selected in accordance with neutral criteria – essentially, it claimed that the OFCCP was targeting it unfairly), it took until 2010 to get an ALJ decision.  The length of time this case has been in play shows the OFCCP’s willingness to let audits go on for years.
• OFCCP’s impact ratio analyses performed on the data for entry-level hiring at Bank of America (comparing who applied for positions vs. who was hired) showed an adverse impact of 6.9 standard deviations against African-Americans in 1993 and 4.0 standard deviations from 2002-2005.  The ALJ indicated that these numbers were high enough to shift the burden of proof to the bank in proving that it did not discriminate against African-Americans.  Generally, the OFCCP examines more closely any standard deviation more than 2.0.  Contractors should look carefully at any standard deviations in their impact ratio analyses, but especially those greater than 2.0.
• Although the bank argued that there were several problems with how the OFCCP conducted its statistical analyses, the ALJ upheld its methods.  Specifically, the bank argued that applicants who did not pass the credit check and were rejected for incompatible hours should be excluded from the analysis.  The ALJ ruled that the bank could not prove that the credit check was a valid selection criterion and could not prove that the incompatible hours criterion had been applied consistently due to lack of written procedures.    When ruling out applicants based on a credit check, contractors should ensure that there is a direct correlation between credit scores and job success through a validation study.  Also, recruiters should be given written advice on which candidates do not count as applicants due to shift preferences.
• In addition, the bank compared its hiring statistics to the actual availability numbers for the geographic areas in which it recruited, and argued that when hiring, it exceeded the African-American candidate availabilities, and therefore the hiring data was irrelevant.  The ALJ rejected this view, indicating that the actual applicant pools were more indicative of discrimination than availability numbers.  This is another element of recruiting that contractors should remember – while a contractor may far exceed availability in hiring, it is the impact ratio analysis that matters.

The Obama Administration has given the OFCCP additional funding for conducting audits.  Contractors need to ensure that they are in compliance with affirmative action requirements.  If you need help with affirmative action, contact The Association’s affirmative action staff at info@hrsource.org or call 630.963.7600.

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