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United States Department of Labor
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UNITED STATES DEPARTMENT OF LABOR * OFFICE OF THE SOLICITOR * CIVIL RIGHTS DIVISION

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INDEX TO ADMINISTRATIVE DECISIONS
UNDER SECTION 503 OF THE
REHABILITATION ACT OF 1973

TOPIC 177: SANCTIONS


NOTICE: THIS INDEX WAS PREPARED BY THE CIVIL RIGHTS DIVISION, OFFICE OF THE SOLICITOR, U.S. DEPARTMENT OF LABOR, FOR INTERNAL USE. IT IS NOT AN OFFICIAL INTERPRETATION OF THE CASES, AND WAS LAST REVISED IN NOVEMBER, 1996.

Return to Table of Topics, 503 Index


SANCTIONS

The remedies of debarment, contract termination and denial of contract payment are viable methods of relief only when defendant has not voluntarily chosen to obey the mandate of the Act. None of these three remedies will advance the employment of handicapped persons. OFCCP v. Yellow Freight Systems, Inc., 82-OFC-2, ALJ Rec. Dec., September 30, 1986, slip op. at 29; remanded on other grounds, Acting Assistant Secretary Decision and Order of Remand, October 6, 1993; Consent Decree, January 31, 1994.

When an act of handicap discrimination is not per se illegal, but must be decided on a case by case basis, the remedies of debarment, contract termination and denial of payment are inappropriate remedies. OFCCP v. American Commercial Barge Line, 84-OFC-13, ALJ Rec. Dec., September 30, 1986, slip op. at 38-39, rev'd on other grounds, Special Assistant to the Assistant Secretary for Employment Standards Final Decision and Order, April 15, 1992.

Debarment is a permissive sanction and should not be imposed when there is no evidence of intent to violate the Act. OFCCP v.Exide Corp., 84-OFC-11, ALJ Rec. Dec., April 28, 1986, slip op. at 12, aff'd, Acting Assistant Secretary for Employment Standards Decision and Final Order, April 30, 1991, vacated on other grounds, Exide Corporation v. Martin, C.A. No. 91-242 (E.D. Ky. 1992).

Sanction of debarment is an appropriate remedy for failure to submit a written affirmative action program. OFCCP v. Bruce Church, Inc., 87-OFC-7, Secretary Final Decision and Order, June 30, 1987, slip op. at 5-6, aff'g, ALJ Rec. Dec., May 18, 1987.

Government contractor is ordered to provide OFCCP with access to its premises for the purpose of conducting compliance reviews. If UNC fails to comply then UNC government contracts will be canceled and UNC will be debarred from future government contracts. OFCCP v. University of North Carolina, 84-OFC-20, Acting Secretary of Labor Dec. and Final Administrative Order, January 23, 1989, aff'd, Secretary of Labor Order Denying Stay, April 25, 1989, aff'd, Board of Governors of the University of North Carolina v. United States Department of Labor, 917 F. 2d 812 (4th Cir. 1990), cert. denied, 500 U.S. 916 (1991).

The regulations authorize contract cancellation and debarment for failure to comply with the provisions of the affirmative action clause. OFCCP v. Louisville Gas & Electric Co., 88-OFC-12, ALJ Rec. Dec. and Order, January 29, 1990, slip op. at 16, aff'd, Special Assistant to the Assistant Secretary for Employment Standards Final Dec. and Administrative Order, January 14, 1992; Consent Decree, May 28, 1992.

The regulations permit reinstatement when the contractor has shown that it has established and will carry out employment policies and practices in compliance with the affirmative action clause. Ibid., aff'd, Special Assistant to the Assistant Secretary for Employment Standards Final Dec. and Administrative Order, January 14, 1992; Consent Decree, May 28, 1992.

Debarment is not appropriate where the contractor rejected complainant because it perceived him to have lumbar lordosis but reinstated him during conciliation once it discovered that the perception was incorrect. Id. at 17, rev'd in part, Special Assistant to the Assistant Secretary for Employment Standards Final Dec. and Administrative Order, January 14, 1992, slip op. at 9; Consent Decree, May 28, 1992.

Assistant Secretary grants OFCCP's Motion to Amend Final Order to contain a requirement that contractor's failure to comply with the order shall result in contract cancellation and/or debarment. OFCCP v. Texas Industries, Inc., 80-OFCCP-28, Assistant Secretary for Employment Standards Order of Remand and Stay of Enforcement, September 27, 1990, slip op. at 10, ALJ Dec. and Order on Remand, March 11, 1991, remanded on other grounds, Assistant Secretary for Employment Standards Decision and Order of Remand, January 27, 1995, Consent Decree, June 21, 1996.

Where Assistant Secretary finds that contractor violated Section 503, it is appropriate to provide for debarment in the event the contractor fails to comply with the final order in the case within 60 days. Ibid. ; ALJ Dec. and Order on Remand, March 11, 1991, remanded on other grounds, Assistant Secretary for Employment Standards Decision and Order of Remand, January 27, 1995, Consent Decree, June 21, 1996.

Because Exide has been found in violation of the Act, it is appropriate to provide for debarment if it fails to comply with the Assistant Secretary's Order. OFCCP v. Exide Corporation, 84-OFC-11, Acting Assistant Secretary for Employment Standards Dec. and Final Order, April 30, 1991, slip op. at 27, vacated on other grounds, Exide Corporation v. Martin, Civil Action No. 91-242, (E.D. Ky. 1992).

OFCCP's request for sanctions -- debarment of contractor until it is compliance with Section 503 -- is unduly broad. An administrative order should not prohibit contractor from violating the law in general. Rather, the order should be reasonably related to the violations demonstrated in the administrative proceeding. Thus, ALJ orders debarment and contract cancellation until OFCCP is satisfied that the contractor is in compliance with the terms of this order and the regulations found to have been violated in this case. OFCCP v. Norfolk and Western Railway Co., 90-OFC-1, ALJ Rec. Dec. and Order, June 26, 1991, slip op. at 39; Consent Decree, November 22, 1991.

Once a final administrative decision has been issued, the threat of debarment, should contractor fail to comply with the final order, is the established means for obtaining enforcement under Section 503. OFCCP v. Louisville Gas & Electric Co., 88-OFC-12, Special Assistant to the Assistant Secretary for Employment Standards Final Dec. and Administrative Order, January 14, 1992, slip op. at 9; Consent Decree, May 28, 1992.

Although debarment is considered a severe or significant sanction, it is an appropriate remedy when a contractor fails to comply with its affirmative duties under the statute and the regulations. OFCCP v. Cissell Manufacturing Co., 87-OFC-26, ALJ Rec. Dec. and Order, May 22, 1992, slip op. at 17, affirmed, Acting Assistant Secretary for Employment Standards Final Decision and Order, February 14, 1994; final decision vacated sub. nom., Cissell Manufacturing Co., v. U.S. Department of Labor, No. 94-0184 (W.D. Ky. May 24, 1994), appeal pending.

Although a complete and immediate debarment of contractor seems unjustified where contractor violated Section 503 by failing to accommodate complainant's handicap and discharging him, debarment is warranted if contractor refuses to comply with order requiring reinstatement of complaint with full retroactive seniority and benefits, payment of full back pay and interest, and requiring contractor to cease applying its "no light duty" policy to complainant and other qualified handicapped individuals. Ibid.; affirmed on other grounds, Acting Assistant Secretary for Employment Standards Final Decision and Order, February 14, 1994, at 14; final decision vacated sub. nom., Cissell Manufacturing Co., v. U.S. Department of Labor, No. 94-0184 (W.D. Ky. May 24, 1994), appeal pending.

Contractor's failure to comply with the terms of a conciliation agreement, in which contractor agreed to correct AAP violations under the Executive Order, Section 503 and VEVRA, was not merely a failure to comply with "paperwork" rules, nor merely a failure to file routine reports on time, but rather a deliberative, complete violation of that agreement and of substantive equal employment opportunity law. OFCCP v. Disposable Safety Wear, Inc. (Executive Order, Section 503 and VEVRA), 92-OFC-11, ALJ Recommended Dec. and Order, August 20, 1992, slip op. at 13, rev'd on other grounds, Secretary of Labor Dec. and Final Administrative Order, September 29, 1992.

Contractor's violation of a conciliation agreement would warrant debarment and contract cancellation but for the following special factors: 1) contractor's persuasive promises that it will comply with its affirmative action obligations in the future; and 2) the plant manager's "concern" for loss of jobs by employees at the plant should sanctions be imposed. Id. at 13-14, rev'd, Secretary of Labor Dec. and Final Administrative Order, September 29, 1992.

The Secretary has authority to order debarment and cancellation of contracts under the Executive Order, Section 503 and VEVRA. OFCCP v. Disposable Safety Wear, Inc. (Executive Order, Section 503 and VEVRA), 92-OFC-11, Secretary of Labor Dec. and Final Administrative Order, September 29, 1992, slip op. at 4.

Although the Secretary's usual practice is to give a contractor a reasonable period of time in which to come into compliance before imposing sanctions, the Secretary has imposed immediate sanctions where the facts are not in dispute and the law is settled. Id. at 5.

Debarment of contractor for violation of a conciliation agreement is appropriate because, by entering into the conciliation agreement, the contractor had the opportunity to demonstrate compliance for almost four years and failed to do so. Id. at 6-7.

It is appropriate to impose sanctions where a clear violation of the Executive Order has occurred and impairment of the Government's monitoring and enforcement of the Order has resulted. Id. at 6-7.

The Secretary rejected contractor's argument that she should not impose debarment sanction due to possible impact on contractor's business and the jobs of current employees. Id. at 7-10.

In determining which sanctions are appropriate, cases arising under the Service Contract Act are not analogous to the Executive Order, Section 503 and VEVRA because of significant differences in those laws regarding the scope of the Secretary's discretion to impose sanctions after a violation has been found. Id. at 7-8, n.3.

In determining which sanctions are appropriate, FLSA cases are analogous to the Executive Order, Section 503 and VEVRA, and hold that financial hardship caused by an administrative order is not a valid basis on which to deny employees their remedy or to allow a wrong against the public to go uncorrected. Id. at 8-10.

Contractor should bear the burden of showing that sanctions would so adversely affect their business as to threaten their existence. Id. at 11.

Purpose of debarment is to encourage compliance and immediate imposition of sanctions can be an appropriate step in achieving that purpose. Id. at 11.

Effective enforcement of the Executive Order, Section 503 and VEVRA depends on voluntary compliance and meaningful sanctions when voluntary compliance is repeatedly not forthcoming. Id. at 12.

The Secretary orders debarment of contractor for a period of 90 days for contractor's repeated violations of a conciliation agreement in which contractor agreed to correct AAP violations under the Executive Order, Section 503 and VEVRA. After 90 days, contractor may petition for reinstatement in accordance with 41 CFR 60-1.31. Id. at 13-14.

Because regulations governing administrative proceedings under Section 503 are silent as to whether sanctions are appropriate for failure to comply with discovery orders, the Federal rules of Civil Procedure apply. OFCCP v. Rowan Companies, Inc., 89-OFC-41, ALJ Rec. Dec. and Order on Remand, January 4, 1993, slip op. at 5, n.7; remanded on other grounds, Assistant Secretary for Employment Standards Order of Partial Remand, April 11, 1995; Second ALJ Decision and Order on Remand, March 11, 1996; pending, Administrative Review Board.

A judgment by default as a sanction for failure to comply with a discovery order is a drastic remedy and should be applied only in extreme cases. However, where only the coverage issue was remanded and a disposition on the merits has already been recommended in favor of the contractor, a judgment by default on the issue of coverage is appropriate where contractor fails to comply with ALJ discovery order. Id. at 6; remanded on other grounds, Assistant Secretary for Employment Standards Order of Partial Remand, April 11, 1995; Second ALJ Decision and Order on Remand, March 11, 1996; pending, Administrative Review Board.

Because contractor failed to comply with ALJ discovery order requiring contractor to respond "fully" to OFCCP's interrogatories regarding coverage, ALJ imposes sanction resembling judgment by default under FRCP 37(b)(2)(c): i.e., ALJ holds that, under the principles set forth in WMATA, each complainant would have performed work on defendant's Government contracts, subcontracts, or oil leases. Id. at 6-7; remanded, Assistant Secretary for Employment Standards Order of Partial Remand, April 11, 1995; Second ALJ Decision and Order on Remand, March 11, 1996; pending, Administrative Review Board.

Section 503 rules of procedure at 41 CFR Part 60-30 contain no provision pertaining to sanctions for counsel's failure to appear at a scheduled deposition. Therefore, the Federal Rules of Civil Procedure apply. OFCCP v. Mississippi Power Co., 92-OFC-8, ALJ Order Partially Granting Motion for Sanctions, July 16, 1993, slip op. at 2; reversed, Assistant Secretary for Employment Standards Order, July 19, 1995.

Rule 37(d) of the Federal Rules of Civil Procedure grants court authority to impose sanctions for defense counsel's failure to appear at a scheduled deposition. Id. at 2; reversed, Assistant Secretary for Employment Standards Order, July 19, 1995.

In determining whether sanctions are appropriate for defense counsel's failure to appear at a scheduled deposition, ALJ must analyze 1) the nature and consequences of the misconduct; 2) the purpose to be served by the sanction; and 3) must choose the least severe penalty consonant with the purpose to be achieved. Id. at 2; reversed, Assistant Secretary for Employment Standards Order, July 19, 1995.

Although defense counsel should be sanctioned for failure to appear for a scheduled deposition, the defendant contractor should not be sanctioned because the deponent (a company official) did appear for the deposition. Id. at 2; reversed, Assistant Secretary for Employment Standards Order, July 19, 1995.

Defense counsel's failure to appear for a scheduled deposition constitutes a failure to comply with an obligation under rules of procedure. Id. at 2; reversed, Assistant Secretary for Employment Standards Order, July 19, 1995.

The imposition of sanctions against defense counsel for her failure to appear for a scheduled deposition was not dependent on a finding of willful misconduct but upon the mere fact of noncompliance. Id. at 2-3; reversed, Assistant Secretary for Employment Standards Order, July 19, 1995.

ALJ concludes that sanctions against defense counsel for her failure to appear at a scheduled deposition are warranted, despite extenuating circumstances which precluded counsel's attendance; defense counsel's failure to appear was to the detriment of plaintiff's schedule and caused unwarranted expenses. Id. at 3; reversed, Assistant Secretary for Employment Standards Order, July 19, 1995.

ALJ imposes sanctions against defense counsel for her failure to appear at a scheduled deposition. Counsel must reimburse plaintiff for court reporter and transcript costs; must pay reasonable attorney's fees to plaintiff associated with services performed on the day defense counsel failed to appear; and must make the deponent available at defense counsel's expense in Washington D.C., or if deposition has been completed, must reimburse plaintiff for reasonable costs associated therewith. Id. at 3; reversed, Assistant Secretary for Employment Standards Order, July 19, 1995.

There is no provision in Department of Labor regulations governing administrative proceedings under Section 503, [for] an appeal of an ALJ order imposing or denying sanctions for alleged misconduct of an attorney. The only provision for review of ALJ orders in Section 503 cases permits any party to file exceptions to an ALJ recommended decision after the hearing. OFCCP v. Mississippi Power Co., 92-OFC-8, Assistant Secretary for Employment Standards Order, July 19, 1995; at 2.

Neither an ALJ nor the Secretary has the authority, absent an explicit grant by statute, to impose the personal sanctions provided for in the Federal Rules of Civil Procedure, e.g., requiring payment of attorneys' fees and costs or holding an individual in contempt for failure to comply with a subpoena. Ibid.

The ALJ had no authority to issue the sanctions order, rather, his authority to regulate discovery and the conduct of parties and their representative is limited to that provided in the regulations. Id. at 3.

The Assistant Secretary does have the authority to review an ALJ's order imposing sanctions for failure to comply with the regulations where it is material to the issues decided in a recommended decision. Id. at 3, n.1.

The Assistant Secretary may review the propriety of the sanction or take other action provided for in the regulations. The Assistant Secretary may debar a contractor for refusal to comply with the discovery regulations. Ibid.

Contract cancellation and debarment are not necessarily imposed automatically. OFCCP v. Yellow Freight System Inc., 89-OFC-40, Administrative Law Judge Recommended Decision and Order, May 17, 1994, at 33; Consent Decree, February 29, 1996.

Cancellation and debarment was recommended as an appropriate sanction where the defendant's use of x-ray data had previously been held to violate Section 503, yet the defendant persisted in such use; and where the defendant's persistence reflected a general corporate policy contrary to the purposes of the Rehabilitation Act and antithetical to the duties imposed on government contractors under the Act. Id. at 33-34.

Cancellation and debarment pending the contractor's full compliance is appropriate where the defendant's past conduct suggests a likelihood of a continued noncompliance with directives issued by the Department of Labor in the future. Id. at 34.

The Assistant Secretary held that, if Commonwealth fails to comply with any provision of his order within the specified periods, Defendant, its officers, subsidiaries, and successors shall be ineligible for the award of any government contracts or subcontracts, and shall be ineligible for extensions or other modifications of any existing government contracts or subcontracts, until Defendant has satisfied him that it is in compliance with the provisions of Section 503 and the regulations which have been found to have been violated in this case. OFCCP v. Commonwealth Aluminum Corp., 82-OFC-6, Assistant Secretary for Employment Standards Final Decision and Order, February 10, 1994, at 28-29; remanded sub. nom., Commonwealth Aluminum Corp., v. United States Department of Labor, No. 94-0071-0(c)(W.D. Ky. September 6, 1996).

Sanctions are imposed under each of the contract compliance programs administered by OFCCP only after a finding that a contractor has violated the relevant law and has been given an opportunity to remedy its noncompliance. OFCCP v. American Airlines, Inc., 94-OFC-9, Assistant Secretary For Employment Standards Decision and Remand Order, April 26, 1996 at 18.

Given the absence of authority permitting a contractor found in violation of Section 503 an indefinite period to come into compliance, Cissell has the burden to demonstrate its compliance as ordered within a time certain or suffer appropriate sanctions. "Nothing so focusses the mind and stirs the will to act as an immediate threat to one's livelihood." OFCCP v. Cissell Manufacturing Co., 87-OFC-26, Acting Assistant Secretary for Employment Standards Final Decision and Order, February 14, 1994, at 20-21; final decision vacated sub. nom., Cissell Manufacturing Co., v. U.S. Department of Labor, No. 94-0184 (W.D. Ky. May 24, 1994), appeal pending.

The ALJ reserved ruling on plaintiff's request for an award of expenses and attorneys fees for the time spent in the preparation of the response to defendant's motion for order of protection until "after the opportunity for hearing" on such matter on a date certain in accordance with Rule 37(a)(4) of the Fed. R. Civ. P. And 41 CFR § 60-30.1. The ALJ ordered plaintiff's counsel to prepare by said scheduled hearing an affidavit setting forth the expenses incurred by the plaintiff with respect to its previous motion to compel and its subsequent response to defendant's motion for protective order. OFCCP v. United Airlines, 94-OFC-1, August 7, 1995, ALJ Order at 4-5.

In light of defendant counsel's contention that plaintiff's counsel was aware that her client was not the proper party to file a motion to quash subpoenas on a third party witness, the ALJ reserved ruling on defendant's request for expenses and attorney's fees for the time spent in the preparation of its response to the plaintiff's motion to quash until after the plaintiff's opportunity for hearing on such matter on [a date certain] in accordance with Rule 37(a)(4) of Fed. R. Civ. P. and 41 CFR § 60-30.1. The ALJ also ordered defendant's counsel to provide an affidavit setting forth the expenses incurred by the defendant with respect to its response to plaintiff's motion to quash the subpoenas in question at the scheduled hearing. OFCCP v. United Airlines, 94-OFC-1, August 21, 1995, ALJ Order at 1-2.

Neither party has demonstrated that it has suffered prejudice because of an opposing party's failure to totally comply with discovery requests. Consequently, the ALJ denied plaintiff's request for sanctions against defendant because of what the plaintiff's counsel perceives to be sanctionable conduct on behalf of defendant by hindering discovery and violating the ALJ's orders. OFCCP v. United Airlines, 94-OFC-1, August 30, 1995, ALJ Order at 3.

Even if Rowan is correct that subject matter jurisdiction may not be deemed established as a discovery sanction, all the usual sanctions provided for in the regulations at 41 CFR 60-741.28, including debarment and termination of contracts, are available as sanctions, under [circumstances in which an ALJ has found that a contractor has not complied with his order compelling discovery and had failed to timely resist OFCCP's motion to compel]. OFCCP v. Rowan Companies, Inc., Marine Division, 89-OFC-41, Assistant Secretary for Employment Standards, Order, April 11, 1995,at 4-6; ALJ Second Recommended Decision and Order on Remand, March 11, 1996; exceptions pending, Administrative Review Board.

The ALJ held, that absent a violation of a court order compelling responses to OFCCP's discovery requests and given that American's opposition to the requests is substantially justified, OFCCP's request to award expenses and attorney's fees incurred by OFCCP in seeking this order is denied. OFCCP v. American Airlines, Inc., 94-OFC-9, ALJ Order on Plaintiff's Motion to Compel Responses and for Admissions, January 19, 1995, at 11.

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