There are basically two kinds of termination situations that come before the agency. These are voluntary terminations where the employee initiates the separation and involuntary terminations where the contractor initiates the separation. OFCCP discrimination findings rarely involve voluntary terminations. The agency will generally confirm that the separation was indeed voluntary by reviewing separation documents or contacting the separated employees. The agency may also look at the demographics of the voluntary separations to determine if any patterns emerge that warrant further review. In almost all cases, the review of voluntary terminations ends at this point.
To the extent OFCCP finds discrimination in terminations, it usually is in the context of involuntary terminations. There are two categories of involuntary terminations. The first are terminations for cause such as misconduct or poor performance. The second are termination for economic or business reasons such as layoffs or reductions-in-force.
The contractor's policies and practices provide the most important source of information for determining who is similarly situated in both "for cause" and "economic" termination situations.
Terminations for Cause
In a termination for misconduct case, the first place to look for the similarly situated is among others who engaged in the same conduct whether or not they were terminated. Suppose, for example, a contractor had a policy of not allowing employees to conduct private business on company time or using company equipment. In examining whether or not terminations based on this policy were discriminatory, the first cut of the potentially similarly situated would be all employees terminated or not who violated this policy. The agency would be looking at whether the policy was equally enforced regardless of whether the employee violating the policy belong to a protected group.
However, the inquiry should not stop there. There may be other factors that should be considered that would draw further distinctions even as among violators of the no private business policy. For example, it may be important to look at any company policies relevant to the misconduct to determine whether and how those policies were communicated. For example, a person who was advised of the policy regarding the conduct and nevertheless engaged in the conduct may not be similarly situated to a person who was unaware of the policy.
Whether this is a meaningful distinction will often turn on how the company structures its disciplinary procedures. If distinctions based on awareness of the policy or progressive discipline based on number of violation incidents is built into the disciplinary process, this may provide a legitimate non-discriminatory reason for differences in discipline between violations based on ignorance of the policy and repeated willful violations of the policy. However, if these kinds of distinctions are not included in the contractor's disciplinary procedures and if the contractor is not consistent in taking such extenuating circumstances into account, the OFCCP may not make these distinctions in constructing its similarly situated employee groups for analysis.
A review of the terms of the policy may also have a bearing on who is similarly situated. For example, suppose the policy provides for termination of anyone with three misconduct infractions in a calendar year. The policy does not provide for combining infractions from more than one calendar year as a basis for discipline. Under this policy, a person with three misconduct infractions in a calendar year would not be similarly situated to a person with two infractions in the previous calendar year and only one infraction in the current calendar year even though both committed the same three infractions. This is because under the policy they would not be expected to receive the same discipline for the infractions.
The consequences of the misconduct may also bear on whether two individuals are similarly situated. For example, if the misconduct by the potential affected class member cost the company $500,000 and the same misconduct by the potential favored class member cost the company only $50, they may not be similarly situated with respect to the discipline they would be expected to receive. Even in this scenario, it would be helpful for the contractor to have included some language in its disciplinary procedures that indicated that the impact on the business may be a factor in determining appropriate discipline. The more specific the threshold of impact on the business the more support the contractor would have for treating offenses that exceed the threshold differently from those that do not.
The amount of discretion allowed by the company in imposing discipline may also bear on who is similarly situated. If individual supervisors are given a significant amount of discretion, employees with different supervisors may not be similarly situated with respect to expected discipline for the same infraction. On the other hand, if the disciplinary policy is company-wide and zero-tolerance, everyone in the company who commits the same infraction will likely be viewed as similarly situated.
Contractors set the standard for similarly situated with respect to performance when they establish their performance standards and procedures. Often the contractor's procedures will establish the benchmarks that equate to unacceptable performance as well as the process by which terminations for unacceptable performance are to be carried out. The similarly situated are those with comparable performance deficiencies whether or not they have been terminated.
As with conduct the amount of discretion allocated to the rating official and/or deciding official may impact the question of who is similarly situated. If individual managers have wide discretion, employees working under different managers may not be similarly situated since one manager may have higher standards than another. However, if the standards are uniform across the business, all employees under those same standards may be similarly situated. In other words it may be appropriate to compare how favored and disfavored groups fare under those standards across the business.
Terminations Not for Cause
Terminations for economic reasons include layoffs, reductions in force, plant closings and the like. In these situations the similarly situated are those who would be expected to have the same likelihood of termination.
The identification of the similarly situated in these cases often begins with an examination of the company's procedures for determining which jobs will be impacted. Companies might use seniority, performance or other criteria to determine who stays and who goes. Contractors should run their own statistical analysis to confirm that the terminations actually reflect the termination policies. This is important to the determination of who is similarly situated. For example, the company policy might state that highest performance ratings over the last three years are a determining factor in who stays and who goes. If this is actually the case, someone with a satisfactory performance evaluation would not be similarly situated to someone with an outstanding performance rating. On the other hand, if seniority rather than performance is the deciding factor, someone with twenty years of seniority would be similarly situated to others with similar seniority regardless of performance rating.
If the contractor is unaware that its stated criteria do not match its practice it may be leading the agency to compare the wrong people in its discrimination analysis. Suppose a non-minority with 20 years tenure and a satisfactory performance rating over the last three years is retained and an African American with 10 years tenure and an outstanding performance rating over the same period. If the agency is told that performance over the last three years determines retention, the termination of the African American will appear potentially discriminatory. However, if seniority were given as the determining factor in retention, the termination of the African American would appear consistent with the contractor's policy and not suggestive of discrimination. If the contractor did not self-audit its proposed terminations, it may not have detected the fact that its practice (terminations based on seniority) was not reflective of its stated policy (terminations based on performance) and in effect, invited the agency to find a violation.
Internal v. External
Internal candidates for promotion will not usually be considered similarly situated to external candidates for the position in question. The agency is more likely to consider the selection of an internal candidate to a higher position to be a promotion and to view the selection of an external candidate as a hiring case rather than a promotion case.
Applicants v. Non-applicants
If promotion opportunities are posted and competitive, those who apply are not similarly situated to those who do not apply, unless the contractor selects someone to receive the promotion who did not apply. In that case, all employees who might have been tapped for the promotion outside of the application process would be considered similarly situated to the selectee.
Qualified v. Unqualified
The more formal the competitive promotion process, the easier it is to separate the similarly situated out for analysis. The setting of standards for evaluating candidates for promotion gives the contractor an opportunity to determine who it will consider equally eligible for selection before it is presented with any demographic information about an actual applicant pool. By setting these standards in advance, the contractor minimizes the likelihood that discrimination will be found in the establishment of the standards assuming that the standards do not create a disparate impact (in other words, the standards themselves do not disproportionately screen out protected groups in a way unrelated to the needs of the business).
If qualifications for the position are posted, individuals who meet the qualifications for the promotion are not similarly situated with those who do not. The qualified are similarly situated to one another. The unqualified are also similarly situated to one another.
Non-competitive v. Competitive
Those who get non-competitive career ladder promotions are not similarly situated to those who have to compete. Non-competitive promotions occur when a position has built in lines of progression often based on demonstrated likelihood to perform acceptably at the next higher level. These promotions automatically occur if the standard is met by the incumbent in the position. Only the incumbent is eligible for the promotion, unlike competitive promotions, it is not open to other candidates. Non-competitive promotions should not be combined with competitive promotions in determining whether there is discrimination in the contractor's promotion process.
If your succession planning identifies high potential employees who are groomed for promotion positions, the similarly situated are other employees you might have identified for inclusion in this group but did not. The easiest way to narrow the similarly situated in this situation is to establish specific criteria in advance that must be met in order to be considered for such grooming. The similarly situated would be those who met the established criteria. It should be noted that those not meeting the criteria are also similarly situated to each other. If some not meeting the criteria are nevertheless included for special grooming all the others for whom a similar exception could have been made become similarly situated to the selectees.
Contractors can greatly influence the perception of who is and is not similarly situated by establishing policies in advance for discipline up to and including terminations; by establishing policies for lay off and reductions-in-force and for competitive and non-competitive promotions. Establishing non-discriminatory policies is only half the battle. Ensuring consistent implementation and application of the policies is critical. This requires routine review by knowledgeable staff throughout the year not just when the AAP has to be submitted to OFCCP. It is easier than you realize to lose control over these policies and practices if adequate self auditing controls are not built into your system.
If the policies are not working or are outdated, instead of making ad hoc exceptions, revisit the policies and standards in a formal way unrelated to any specific selection decision and revise them to be more effective for your business needs. When decisions have to be made in the moment it is very tempting to make ad hoc exceptions but ad hoc exceptions can significantly expand the pool of the similarly situated. By taking these prudent steps, a contractor can better ensure non-discrimination in terminations and promotions. The contractor will also be better able to evaluate the appropriateness of the terminations and promotions pools constructed by OFCCP potentially avoiding violations.