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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 30: CARRY OUT THE FEDERAL CONTRACT


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


CARRY OUT THE FEDERAL CONTRACT

Even if a particular contract has no connection with any of the contractor's Federal contracts it is a covered contract (if over $2,500) unless there is a specific waiver. E.E. Black, Ltd., v. Marshall, 497 F. Supp. 1088, 1092 (D. Hi. 1980), reconsideration denied, E. E. Black v. Donovan, 26 FEP Cases 1183 (D. Hi. 1981).

For the purposes of administrative enforcement proceedings, the validity of the waiver provision in former 20 CFR 741.25(a)(5) must be assumed and the agency must honor that regulation. OFCCP v. Western Electric Co., 80-OFCCP-29, Deputy Under Secretary for Employment Standards Remand Dec. and Order, April 24, 1985, slip op. at 13-14, rev'g and remanding, ALJ Rec. Dec., March 4, 1981.

There is a rebuttable presumption that a discriminatee was employed to carry out the Federal contract as long as he was working in a site which was not totally segregated from the Federal contract site. OFCCP v. Southern Pacific Trans- portation Co., 79-OFC-10A, ALJ Rec. Dec. and Order, November 9, 1982, slip op. at 34; remanded, Acting Assistant Secretary for Employment Standards Decision and Order of Remand, February 24, 1994; Consent Order, October 13, 1995.

A contractor with a Government contract of over $2500 at any facility must utilize the waiver provision in 41 CFR 60- 741.3 (a)(5) in order to avoid the Act's affirmative action obligations at any of its other facilities and on all work done by that contractor on contracts of over $2500. OFCCP v. W.S. Hatch Trucking Co., 84-OFCCP-15, ALJ Order Denying Defendant's Motion for Summary Judgment, June 5, 1986, slip op. at 4.

The waiver provision in 41 CFR 60-741.3(a)(5) applies to contracts of over $2500 as well as contracts of over $50,000. Id. at 4-5.

Requiring a contractor to be an affirmative action employer in its Government contract facility, and not in its nongovernment contract facilities, would result in disparate treatment of handicapped persons. Id. at 5.

Deputy Assistant Secretary for Employment Standards is not persuaded that the waiver regulation is inconsistent with the Act or that the legislative history of the Civil Rights Restoration Act of 1987, P.L. No. 100-259, 102 Stat. 28 (1988) reflects Congress' dissatisfaction with the current administrative scheme under Section 503. OFCCP v. PPG Industries, Inc., 86-OFC-9, Deputy Assistant Secretary of Employment Standards Final Dec. and Remand Order on Remedy, January 9, 1989, slip op. at 8-9, dismissed on APA review, PPG v. United States, C.A. No. 89-0757 JGP (D.D.C.); reversed and remanded, 52 F 3d. 362 (D.C. Cir. 1995); Consent Decree, September 24, 1996.

Defendant, a public transportation company, did not apply for a waiver, so its actions are covered with respect to complainant whether or not there was proof that he would have been employed to carry out a Federal contract. OFCCP v. WMATA, 84-OFC-8, Acting Assistant Secretary for Employment Standards Final Dec. and Remand Order, March 30, 1989, slip op. at 8-9, aff'g, ALJ Rec. Dec., June 10, 1988, slip op. at 5, vacated, WMATA v. DeArment, 55 EPD ¶40,507 (D.D.C. 1991).

The record shows that the work of carpenters at WMATA does, at least in part, carry out Federal contracts because the repair work is in all parts of the garage and the bus facilities are not segregated by contract. Id. at 9, aff'g, ALJ Rec. Dec., June 10, 1988, vacated, WMATA v. DeArment, 55 EPD ¶40,507 (D.D.C. 1991).

Regulation 41 CFR 60-741.3(a)(5) provides that a contractor's facilities are covered unless a waiver is requested and granted. As defendant did not request a waiver for its coal car shop, it is a covered facility. OFCCP v. Norfolk and Western Railway Co., 88-OFC-4, ALJ Rec. Dec. and Order, June 28, 1989, slip op. at 17, stipulated dismissal, November 13, 1991.

The Labor Department's regulation at 41 CFR 60-741.3(a)(5), which allows contractors to apply for a waiver of Section 503 coverage for certain facilities not connected with Government contract work is inconsistent with the Section 503 statute itself, which requires that, "in employing persons to carry out" Government contracts, the contractor shall take affirmative action to employ and advance in employment qualified individuals with handicaps. Washington Metropolitan Area Transit Authority v. DeArment, 55 EPD ¶ 40,507, 65,559-60 (D.D.C. 1991).

The statute states that Section 503 covers persons employed to carry Government contacts; the Department of Labor's interpretation of that language sweeps all employees of the contractor in and, thus, is too broad. Id. at 65,560.

The Department of Labor's waiver regulation (41 CFR 60-741.3(a)(f)) assumes that all of a contractor's employees are covered by the statute unless the contractor shows that some employees are totally unconnected to the contract and have nothing to do with performance of the contract even for a minute a year. Ibid.

Congress could not have intended the broad interpretation of the carry out the contract language adopted by the Labor Department in it waiver regulation (41 CFR 60-741.3(a)(f)). Ibid.

Where the employer's only Federal contract involved provision of a shuttle bus service to the Federal Government, and the employer also operated a city subway system and bus service, the drivers of the shuttle buses were employed to carry out the contract. While coverage may extend to more than the bus drivers, it does not extend to all people who work for the entire bus fleet, much less all of the contractor's employees. Ibid.

Court declines to set standard for determining the type of work which constitutes "work on the contract." Ibid.

The Supreme Court's decision in Grove City College v. Bell, 465 U.S. 555 (1984), supports the conclusion that Department of Labor's waiver regulation is inconsistent with the language of Section 503. Ibid.

Because contractor stipulated before ALJ that, under the existing case-law at that time, it was covered under Section 503 and the regulations, OFCCP was justified in not developing the record on issue of whether complainants would have carried out Federal contracts. Judicial economy suggests not burdening the record with proof on every issue where there is a possibility a statutory or regulatory interpretation may be reversed. OFCCP v. Rowan Companies, Inc., 89-OFC-41, Special Assistant to the Assistant Secretary for Employment Standards Dec. and Order of Remand, May 28, 1992, slip op. at 6, ALJ Rec. Dec. and Order on Remand, January 4, 1993; 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.

It would not be unfair to require contractor to expend additional resources necessary to respond to discovery regarding work-on-the-contract issue after considerable expense of defending litigation because even if case were dismissed now for lack of jurisdiction, OFCCP could renew investigation to resolve the issue and, under 41 CFR 60-1.43, could require contractor to make available its records on Government contracts and subcontracts. Id. at 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.

If OFCCP can establish coverage under new legal theory set forth in WMATA v. DeArment, 55 EPD ¶ 40,507 (D.D.C. 1991), Assistant Secretary has an obligation under Section 503 to determine whether complainants have been subjected to discrimination and are entitled to relief. Thus, case should be remanded to ALJ for determination whether coverage exists for each individual complainant. Ibid. ; 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.

The court's decision in WMATA v. DeArment, 55 EPD ¶ 40,507 (D.D.C. 1991), holding that the waiver regulation (41 CFR 60-741.3(a)(f)) is inconsistent with the statutory language of Section 503, was a new legal interpretation and change in existing law. OFCCP v. Yellow Freight Systems, Inc., 79-OFCCP-7, Special Assistant to the Assistant Secretary for Employment Standards Dec. and Order of Remand, August 24, 1992, slip op. at 3; Consent Decree, February 2, 1993.

The ALJ's reliance on the waiver regulation (41 CFR 60-741.3(a)(f)) to find coverage or jurisdiction over the complainants is inconsistent with the decision in WMATA v. DeArment, 55 EPD ¶ 40,507 (D.C.D.C. 1991). Id. at 4.

Contractor's mere acknowledgment that it is a Government contractor under Section 503 cannot be construed as an admission that it had Government contracts which complainants would have performed. Id. at 5-6.

It is arguable that the work-on-the-contract issue is jurisdictional in nature, i.e., subject matter jurisdiction and, thus, not subject to waiver or stipulation. Id. at 6.

Regardless whether the working-on-the-contract issue is a matter of jurisdiction not subject to waiver or stipulation, or in the nature of a defense subject to waiver, OFCCP failed to demonstrate in the proceeding before the ALJ that complainants would have worked on defendant's Federal contracts. Id. at 7-8.

Remand to ALJ is appropriate because considerations of economy suggest that the record on coverage be fully developed under currently applicable legal principles so that Assistant Secretary can determine whether it is necessary to review the lengthy record and consider the complex merits issues raised by this case. Id. at 8.

Where OFCCP failed to demonstrate in the proceeding before the ALJ that complainants would have carried out defendant's Federal contracts, case should be remanded to the ALJ in light of the change in law arising from the decision in WMATA v. DeArment, 55 EPD ¶ 40,507 (D.D.C. 1991), so that OFCCP may have the opportunity to pursue discovery and introduce evidence on this issue. Ibid.

If OFCCP can establish coverage under new legal theory set forth in WMATA v. DeArment, 55 EPD ¶ 40,507 (D.D.C. 1991), Assistant Secretary has an obligation under Section 503 to determine whether complainants have been subjected to discrimination and are entitled to relief. Thus, case should be remanded to ALJ for determination whether coverage exists for each individual complainant. Ibid.

A defendant's failure to produce evidence on an issue of jurisdiction such as coverage may be held to constitute an admission that jurisdiction lies. OFCCP v. Rowan Companies, Inc., 89-OFC-41, ALJ Rec. Dec. and Order on Remand, January 4, 1993, slip op. 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 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.

In light of WMATA v. DeArment, 55 EPD ¶40,507 (D.D.C. l99l), the parties are directed to file additional briefs with the Assistant Secretary addressing whether the WMATA decision "bears on the Department's jurisdiction to proceed with review of the case." OFCCP v. Yellow Freight Systems, Inc., 82-OFC-2, Acting Assistant Secretary for Employment Standards Order, August 20, 1993, slip op. at l-2; remanded, Acting Assistant Secretary Decision and Order of Remand, October 6, 1993; Consent Decree, January 31, 1994.

Employee/applicant of a trucking company was employed to carry out a contract where the specific terminal handles government freight and the particular class of workers which include the complainant specifically worked on jobs pursuant to bills of lading as assigned on a random basis. As a result, the probability that complainant would have worked on a government job is no less than any other driver. OFCCP v. Yellow Freight System, Inc. , 89-OFC-40, ALJ Recommended Decision and Order, May 17, 1994, at 18; Consent Decree, February 29, 1996.

The issue of coverage is one of subject matter jurisdiction. OFCCP v. Yellow Freight System, Inc. , Acting Assistant Secretary Reconsideration of Final Decision and Order, December 22, 1993, at 7-10; Order Approving Settlement and Dismissal, April 20, 1994.

Work-on-the-Contract is a matter of subject matter jurisdiction. OFCCP v. Texas Utilities Generating Co., 85-OFC-13, Assistant Secretary for Employment Standards Decision and Order of Remand, August 25, 1994 at 4-6; Consent Decree, April 15, 1996.

Although neither party raised the work on the contract issue before the ALJ or the Assistant Secretary, the Assistant Secretary is required to address it before the case can proceed. Id. at 6; Consent Decree, April 15, 1996.

The issue of "working on the Contract" is one of subject matter jurisdiction, which cannot be presumed. OFCCP v. Texas Industries, Inc., 80-OFCCP-28,Assistant Secretary for Employment Standards Decision and Order of Remand, January 27, 1995, at 1-3; Consent Decree, June 21, 1996.

Although neither party raised the carry out the contract issue before the ALJ or the Assistant Secretary, the Assistant Secretary is required to address the issue before the case can proceed. Id. at 3; Consent Decree, June 21, 1996.

The working-on-the-contract issue is jurisdictional and must be specifically addressed by the ALJ prior to proceeding to the merits. OFCCP v. Norfolk Southern Corporation, 89-OFC-31, Assistant Secretary for Employment Standards Decision and Order of Remand, October 3, 1995,at 5.

Since the WMATA decision represents an intervening change of law, considerations of fairness and economy require that the case be remanded to accord OFCCP the opportunity to deal with this issue. OFCCP v. Mt. Bell Telephone Co., 87-OFC-25, Assistant Secretary for Employment Standards, Order Denying Motion to Strike; Decision and Order of Remand, August 25, 1994, at 8; Consent Decree, February 9, 1995.

The ALJ found that absent evidence that Defendant attempted to carry out a contract or subcontract, by the operation of its land rigs individuals who would have been assigned to perform work on those rigs are not covered "persons" under the Act. OFCCP v. Rowan Companies, Inc., Marine Division, 89-OFC-41, ALJ Second Recommended Decision and Order on Remand, March 11, 1996, at 3; exceptions pending, Administrative Review Board.

Any per se or automatic negation of coverage merely because the applicant was never hired, and thus the fact of work assignment destination can never be determined, would excuse all employers who discriminately fail to hire in violation of the Act, a result which could not have been intended. Id. at 4; exceptions pending, Administrative Review Board.

The ALJ found that individuals who would have been assigned to offshore rigs were covered persons under the Act, where the record showed that Defendant's drilling services were necessary to the prime contractor's exercise of its right to drill for oil and gas on government owned land. Id. at 4; exceptions pending, Administrative Review Board.

To establish coverage of the individual complainant, OFCCP must prove by a preponderance of the evidence that the individual was working or would have worked on a government contract absent the discriminatory act. OFCCP v. Keebler Company, 87-OFC-20, Administrative Review Board, Final Decision and Order, September 4, 1996, at 3; Motion for Reconsideration pending, Administrative Review Board.

OFCCP's contention that the determination of who is employed to carry out a contract should be based upon job categories would improperly place the burden of proof on the contractor. Id. at 3; Motion for Reconsideration pending, Administrative Review Board.

OFCCP has the burden of demonstrating that Ms. DeAngelis was an individual employed by Keebler to carry out government contracts during the period of her employment from January 7 to May 20, 1985, which was the time of the allegedly illegal termination. It is not the [d]efendant's burden to demonstrate that certain employees are unconnected to the Government contracts under consideration. OFCCP v. Keebler Company, 87-OFC-20, Administrative Law Judge, Recommended Decision and Order, July 20, 1995, at 5-6; affirmed, Administrative Review Board, Final

Decision and Order, September 4, 1996; Motion for Reconsideration pending, Administrative Review Board.

OFCCP failed to satisfy its burden of proving that complainant was employed to carry-out-a contract where she worked at one of two plants producing Tato Skins and the evidence establishes, at best, that she had as equal chance with all other production attendants at both facilities to have produced the Tato Skins sold pursuant to the Government contracts. Id. at 5-6; affirmed, Administrative Review Board, Final Decision and Order, September 4, 1996, at 3; Motion for Reconsideration pending, Administrative Review Board.

Although the "working-on-the-contract" jurisdictional issue was not raised or addressed below or in the pleadings filed subsequent to the Recommended Decision and Order, the Assistant Secretary for Employment Standards held that the issue must be addressed before the case could proceed and remanded it to the ALJ for appropriate findings on the "working-on-the-contract issue." OFCCP v. Keebler Company, 87-OFC-20, Assistant Secretary for Employment Standards, Decision and Order of Remand, December 21, 1994, at 3-4; Administrative Law Judge, Recommended Decision and Order, July 20, 1995; Administrative Review Board, FinalDecision and Order, September 4, 1996; Motion for Reconsideration pending, Administrative Review Board.

The Assistant Secretary considered the issue of jurisdiction or coverage raised by Yellow Freight's Motion for Reconsideration pivotal in determining whether Section 503 was violated vis-a-vis Mr. Quick. "Obviously, if he was not covered by Section 503, Yellow Freight could not have violated Section 503 towards him. . . . Accordingly, on remand it is only proper that the ALJ also be directed, . . . , to rule upon the jurisdictional defense that the Plaintiff has failed to prove jurisdiction under the Washington Transit case." OFCCP v. Yellow Freight System, Inc., 84-OFC-17, Acting Assistant Secretary for Employment Standards, Reconsideration of Final Decision and Order of Remand, December 22, 1993, at 3 n.2; Order Approving Settlement and Dismissal, April 20, 1994.

Noting that the ALJ's Recommended Decision and Order made no specific findings on the jurisdictional or coverage issue of working-on-the-federal-contract as applied to Mr. Quick's employment, the Assistant Secretary held that he was not precluded from ruling on the jurisdictional or coverage issue here, and would be remiss in avoiding this issue. Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 546 (1986). Id. at 6-8.

The Assistant Secretary expanded and modified his July 27, 1993, Final Decision and Order of Remand to require that the ALJ hearing and the resulting recommended decision . . . first and clearly specifically address the working-on-the-contract jurisdictional or coverage issue as applied to Mr. Quick. Id. at 8.

In remanding the case to the ALJ for further proceedings to determine whether coverage existed during the relevant periods for the individuals for whom OFCCP continues to seeks relief, the Acting Assistant Secretary held, that "[s]ince the ALJ's coverage holding was based upon a provision of a regulation which has since been declared inconsistent with the language of Section 503 at the times of the alleged violations, the question of jurisdiction must be remanded to the ALJ to give OFCCP an opportunity to introduce further evidence, if necessary, to satisfy the new legal standard in WMATA. . . . If OFCCP can establish coverage, I have an obligation under the statute to ultimately decide the entire action." OFCCP v. Southern Pacific Transportation Company, 79-OFC-10A, et.al., Acting Assistant Secretary for Employment Standards, Decision and Order of Remand, February 24, 1994, at 7-8; Consent Order, October 13, 1995.

The Assistant Secretary remanded the case to the ALJ for appropriate findings on the "working-on-the-contract" issue, and held that, "[a]lthough the "working-on-the-contract" jurisdictional issue was not raised or addressed below or in the pleadings filed subsequent to the [ALJ] Recommended Decision and Order, I am required to address this matter before the case can proceed." FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31 (1990). OFCCP v. United Airlines, Inc., 86-OFC-12, Assistant Secretary for Employment Standards, Decision and Order of Remand, December 22, 1994, at 4-5.

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