Private Employers Handed Death Sentence While Fed Flouts Laws

September 4, 2014 - 5:13 PM

Government contractors could face a financial death sentence over labor law, civil-rights law, or wage-and-hour law violations under a recent Obama executive order I discussed earlier, EO #13673. By contrast, Federal agencies, like the Consumer Financial Protection Bureau, often face little penalty for violating the law.

Minority employees at the CFPB allege pervasive discrimination there, reports the Washington Times. The discrimination itself is unproven, but it seems clear that minority employees have been subjected to retaliation for speaking out about what they perceive as discrimination. Such retaliation is typically illegal, even when the employee’s complaint of discrimination turns out to be mistaken.

The CFPB responded to allegations of discrimination in pay by essentially raising employee salaries in general, at taxpayer expense (the agency funds itself out of money it takes from the Federal Reserve): minority “employees say the pay increases are just restitution, but because almost everyone got bonuses and promotions, it just raised the playing field instead of equalizing it.” The net result was to reward the agency for its own wrongdoing.

Federal agencies explicitly receive preferential treatment compared to private companies in federal labor and employment laws. Federal agencies are completely exempt from punitive damages under federal employment and civil-rights laws. And a deadline for suing that is 300 days against a private employer may be only 30 days against a federal agency.

I discussed this in yesterday’s Washington Times:

"Big government means ideological double standards. The Consumer Financial Protection Bureau, a new federal agency headed by an Obama crony, is illegally and without consequence retaliating against employees who allege discrimination (“Bureaucrats gone wild: Feds describe racial hostility, discrimination inside new Obama agency,” Web, Aug. 27).

"Yet, under a recent Obama executive order, private companies can now be entirely barred from federal contracts if bureaucrats or courts say they committed labor-law violations. This includes even very vague laws that large companies inevitably violate by mistake (“Obama fantasizes about more executive power, signs new order on federal contractors,” Web, July 31). Thus, some private companies face a financial death sentence for the very conduct that bureaucrats engage in with impunity.

"President Obama’s executive order will increase the cost of government contracts by making them riskier and by enabling trial lawyers to extort huge payoffs from companies. The president claims he has the power to issue this order to promote efficiency in federal procurement, but many laws covered by his order seek to promote social justice at the expense of efficiency. Ironically, one of those laws (the Davis-Bacon Act) not only requires excessive and uneconomical wages for certain workers, but also had racist origins."

Federal employment laws are enforced primarily by the Equal Employment Opportunity Commission, which frequently flouts labor laws, including but not limited to the very laws it is charged with enforcing.

As law professor Jonathan Adler has noted, "The Equal Employment Opportunity Commission, responsible for ensuring that the nation's workers are treated fairly, has itself willfully violated the Fair Labor Standards Act on a nationwide basis with its own employees, an arbitrator has ruled."

The EEOC has a much worse record of labor and civil-rights violations than most corporations and agencies with a similar-size workforce.

The EEOC was found guilty of systematic, illegal, reverse discrimination (discrimination against white males) in Jurgens v. Thomas, 29 Fair Empl. Prac. Cas. (BNA) 1561, 1982 WL 409 (N.D.Tex.1982). Even after that verdict, the EEOC continued to illegally discriminate against its white male employees. See, e.g., Terry v. Gallegos, 926 F.Supp. 679 (W.D. Tenn. 1996).

The EEOC has also lost a number of sexual harassment lawsuits brought against it. See, e.g., Spain v. Gallegos, 26 F.3d 439 (3rd Cir.1994).

In short, the EEOC is like “the fox guarding the henhouse,” argued CEI's John Berlau in a May 19, 1997, news story he authored for Insight before he came to CEI.

Recent EEOC guidance has made more difficult and costly for employers to hire, reducing employment.