Ruling impacts federal government contractors and subcontractors
Does No Federal Contract Mean, In 2009, the U.S. Department of Labor’s Administrative Review Board upheld an administrative law judge’s finding that three hospitals were federal government subcontractors for purposes of the Office of Federal Contract Compliance Programs (“OFCCP”) regulations and thus were obligated to comply with Executive Order 11246 by establishing and maintaining an affirmative action program.
On March 30, 2013, the United States District Court for the District of Columbia upheld this ruling in UPMC Braddock v. Harris, No. 09-1210 (D.C. D.C. Mar. 30, 2013). Three hospitals, UPMC Braddock, UPMC Southside, and UPMC McKeesport all had contracts with UPMC Health Plan to provide medical services to individuals insured by the Health Plan. None of the hospitals had a direct federal contract, but UPMC Health Plan had a contract with the Federal Office of Personnel Management (“OPM”) to provide health services to federal employees.
The hospitals argued that they were not subject to the OFCCP’s affirmative action requirements because:
The District Court for the District of Columbia rejected all of these arguments. The court found that:
The Court essentially rejected each argument the hospitals maintained and granted the Motion for Summary Judgment brought by the Secretary of Labor.
Significance: Going forward, it is more likely that the OFCCP will assert jurisdiction over companies that it finds to be subcontractors under its regulations. It is critical that employers in the health care industry (as well as others) very carefully review all agreements and contracts that may result in a situation where the OFCCP can assert jurisdiction which would then subject the company to the requirements associated with being a federal government subcontractor to include development and maintenance of an affirmative action program and oversight, monitoring and periodic audits by the OFCCP.
Please contact Karen Milner for more information.
This E-Alert is intended as an informal summary of certain recent legislation, cases, rulings and other developments. This E-Alert does not constitute legal advice or a legal opinion and is not an adequate substitute for advice of counsel. This E-Alert is not intended to nor does it create an attorney-client relationship. The choice of a lawyer is an important decision and should not be based solely upon advertisements. If this E-Alert is deemed to be an advertisement please disregard this solicitation if you have already engaged a lawyer in connection with the legal matter referred to in this solicitation. You may wish to consult your lawyer or another lawyer instead of us. The exact nature of your legal situation will depend on many facts not k nown to us at this time. You should understand that the advice and information in this solicitation is general and that your own situation may vary. This statement is required by rule of the Supreme Court of Missouri.