Administering an Early Resolution Conciliation Agreement

The Office of Federal Contract Compliance (OFCCP) is the government agency responsible for ensuring nondiscrimination and equal employment opportunity through monitoring and enforcement of affirmative action requirements that apply to federal contractors.

In 2019, the OFCCP alleged that during its compliance evaluations of certain Intel Corporation (Intel) facilities, it was determined through regression analysis that there were statistically significant pay disparities for the years of 2016 and 2017 based on gender and race. Intel performed its own regression analysis to explain pay differentials and denied that it engaged in any pay discrimination. Ultimately, the OFCCP and Intel agreed to resolve the issue through an Early Resolution Conciliation Agreement (ERCA), wherein Intel agreed to pay current and former employees $3.5 million in back pay and interest. Kroll was engaged to provide notice to the affected employees and other administrative services.

Conciliation Agreement

At the outset of this notice program and administration, Intel provided Kroll with a class list that contained records for 1,057 Intel employees that included names, addresses, employment status as either active or inactive, and back pay amounts owed for the years 2016 and/or 2017 (potential class members).

The ERCA included the approved Notice to be sent to all potential class members as well as the release form. The Notice informed potential class members that they may be eligible to receive a payment of a specified dollar amount and may be eligible for a salary adjustment. To receive the back pay benefits, potential class members were required to sign and return the release form by the indicated deadline.

Administration

There were several administrative steps in this Conciliation Agreement administration that were different from class action administrations and from other government enforcement administrations. For example, Kroll was required to use certified mail with return receipt to mail the Notice, release form, frequently asked questions, and a postage paid return envelope to the potential class members. Also, Kroll did not address-trace Notices that were returned as undeliverable but was required to notify the OFCCP of any returned mail. The OFCCP then attempted to obtain updated addresses for these individuals and provided the updated data to Kroll for a second notice package to be mailed via certified mail with return receipt.

Of the 1,057 potential class members on the damages class list, 87% of the individuals returned completed release forms to Kroll. Kroll electronically provided the OFCCP with a list of all individuals who returned completed release forms, as well as copies of the forms. The OFCCP approved Kroll’s list, which became the final class member list (“Final Class Member List”).

Final Numbers

Upon receipt of the Final Class Member List from the OFCCP, Kroll mailed checks or wired payments to all individuals thereon. This participation rate of over 87% is much higher than the vast majority of class action and government enforcement administrations. In addition, 100% of checks/wires were successfully cleared, which is also higher than almost all class action and government enforcement administrations. 

Kroll’s administration responsibilities also included calculating and performing all tax withholding on individuals’ back pay, and remitting payments to the appropriate taxing authorities. At the conclusion of this ERCA, Kroll provided a final accounting to the OFCCP and Intel.

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