News and Events

https://www.law360.com/articles/1148742/ofccp-warns-law-firms-to-get-house-in-order-on-diversity

By Vin Gurrieri

Law360, New York (April 10, 2019, 9:43 PM EDT) — Law firms need to “get their house in order” when it comes to their diversity and inclusion practices, the top official at the Office of Federal Contract Compliance Programs told industry stakeholders Wednesday, both to serve as a model for other businesses and to fulfill their responsibilities as federal contractors.

OFCCP Director Craig Leen’s comments came at a legal industry compliance event the agency held in Manhattan. There, he cautioned that law may be among the industry sectors that will soon face increased scrutiny by the agency of their equal employment opportunity practices — particularly when it comes to promotions — since women, minorities and disabled individuals are vastly underrepresented in top-level equity partner positions.

“Law firms need to get their house in order,” Leen told industry stakeholders. “You need to take a look at what’s happening because you are the example to the world of compliance with law. … It’s important that you never be in a position where it be viewed as you are being hypocritical or not following the legal advice that you give to others.”

The OFCCP is a department within the U.S. Department of Labor that enforces nondiscrimination and affirmative-action requirements for federal contractors and subcontractors, which can include law firms that perform work for government agencies.

During his remarks, Leen cited a recent study by the National Association for Law Placement that said women and women of color are vastly underrepresented at the equity partner level when compared with the percentage of women who graduate law school and those that make up firms’ associate ranks. He also cited a statistic that less than a half-percent of equity partners are individuals with disabilities.

“These numbers are glaring, they are concerning, they are troubling, they are problematic, and they are systemic,” Leen said. “They’re something that law firms need to take a look at, and it’s something it’s going to be a focus of OFCCP.”

While he mostly avoided discussing the root causes of firms’ long-standing problems with diversity and inclusion in high-level positions or possible solutions, Leen made a point to mention that inadequate policies regarding paid leave for new parents can be an obstacle to diversity at the top or, if a good policy is in place, a way to combat any lack of diversity that exists.

As best practices, Leen said that law firms could consider prorating billable hour requirements for any parent that takes leave and making sure that they aren’t penalized for taking leave. He also suggested that firms conduct self-assessments every year at whether men are taking leave when they have kids, figuring out ways to encourage them to do so and studying how both men and women fare upon their return to work.

Moreover, the OFCCP’s top official said the agency plans to issue guidance regarding how far the agency’s reach extends when it comes to policing problematic practices involving lawyers who are equity partners, an issue that Leen acknowledged has been up for debate. But the OFCCP director also said he believes the agency can currently look at issues surrounding promotions to equity partner positions.

“The promotion of associates or nonequity partners to partner is something I think we would have jurisdiction over because we have jurisdiction over the employees who are being promoted to partner or not promoted,” Leen said. “Someone who’s not promoted to partner is still an employee. So, they’ve been harmed would be the argument if they’ve been discriminated against, particularly if that affects their compensation or their opportunities at the firm.

“Generally, I do think we have a hook here, which is the promotion hook, and we are going to be pursuing that when we look at firms,” Leen added.

While not many firms were scheduled for audits this year based on the “neutral criteria” that the agency used to make its selections, Leen said the issue over promotions will be a focus of the agency as soon as the next fiscal year for for law firms and contractors in other sectors like finance and academia where women and minorities are statistically underrepresented in top positions.

Wednesday’s event was the second held by the OFCCP in two days, coming on the heels of an event Tuesday for financial industry stakeholders. The events were held with the dual-pronged objective of informing industry stakeholders about the agency’s initiatives and goals, but also to obtain feedback about areas where the agency can improve.

On the former front, Leen on Wednesday laid out a general set of principles that the agency will focus on under his watch: increasing transparency, creating certainty, improving efficiency and publicly recognizing the best performing contractors.  

As to the first of those planks, Leen acknowledged that the agency “has been known in the past to not be very transparent,” and said he wants contractors to have a clear idea of both what it is doing and how it is doing it.

“Transparency is key to the success of this agency and making sure that it has a bigger impact across the United States,” Leen said.

As to improving the efficiency of the matters it handles, Leen said that the long periods of time that it takes to resolve some cases “is a huge threat and problem for the agency” in part because many companies often won’t move to fix a problematic compensation system until a case is resolved.

Leen noted that the agency has over 100 administrative matters pending that are more than four years old, a number he said “makes no sense” and that isn’t helpful for businesses, workers or the agency itself. The agency will be increasing the number of random audits it conducts in the future but streamlining them so they are completed far quicker and place a priority on resolving the oldest cases currently in the system, he said.

“My general view of the contractors in this country is that the vast majority of them don’t intend to discriminate,” Leen said, noting that bias is only found in about 2% of the agency’s audits. “Nevertheless, a good company, when we show them a disparity and there’s no explanation for that disparity, should want to fix it and they should work with us to do so.”

–Editing by Aaron Pelc.