The U.S. Department of Labor and the University of Texas Southwestern Medical Center entered into a conciliation agreement to resolve allegations of systemic racial hiring discrimination.
The agreement requires the medical center to pay $900,000 in back wages and interest to 6,123 Black applicants who were allegedly discriminated against in the hiring process from August 24, 2016, through August 24, 2018.
This action was taken following a routine compliance evaluation by the Office of Federal Contract Compliance Programs (OFCCP), which found that the center's hiring practices violated Executive Order 11246.
In addition to the financial compensation, the University of Texas Southwestern Medical Center will offer 132 job positions to the affected applicants and ensure that its hiring policies and procedures are non-discriminatory. The center will also provide training to all managers, supervisors, and other officials involved in the hiring process to prevent future discrimination.
The University of Texas Southwestern Medical Center employs about 23,000 people and has held more than $90 million in federal contracts since 2013. The OFCCP enforces several laws, including Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans' Readjustment Assistance Act of 1974, which collectively prohibit employment discrimination by federal contractors.
https://www.dol.gov/newsroom/releases/ofccp/ofccp20241021
Commentary
A federal contractor is any individual or legal entity that is awarded a contract or subcontract under a federal government contract. This includes both prime contractors and all subcontractors of any tier on a contract with the federal government. Essentially, a federal contractor is responsible for providing goods or services to the federal government under the terms of a legally binding agreement.
Most hospitals can be considered federal contractors if they participate in certain federal healthcare programs or have contracts with the federal government. Specifically, hospitals and healthcare providers that participate in programs like TRICARE, the Federal Employee Health Benefits Program (FEHBP), or Medicare Parts C and D may be classified as federal contractors or subcontractors.
The U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) has jurisdiction over these entities, requiring them to comply with affirmative action and equal employment opportunity hiring requirements.
Executive Order 11246 established requirements for non-discriminatory practices in hiring and employment on the part of U.S. government contractors. It prohibited federal contractors and subcontractors from discriminating in employment decisions based on race, color, religion, sex, or national origin. The order also required contractors to take affirmative action to ensure that applicants are employed and treated during employment without regard to these characteristics.
On January 21, 2025, the Administration issued an executive order titled "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," which, among other things, rescinded Executive Order 11246. The executive order is focused on eliminating race-based hiring quotas in federal contractors. Other forms of discrimination are still prohibited, like pay discrimination.
The rescinding of Executive Order 11246 is consistent with the analysis in the U.S. Supreme Court ruling in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College. The 6-3 decision limited the use of affirmative action in college admissions - applicants must be treated based on their experiences as an individual, not based on race or other immutable characteristic(s).
The final takeaway is that hospitals that are federal contractors should work with counsel to determine their new and continued obligations, especially in regard to hiring quotas under the recent executive order.
Sources: https://www.ecfr.gov/current/title-29/subtitle-A/part-10/subpart-A/section-10.2 and https://natlawreview.com/article/breaking-president-trump-rescinds-executive-order-11246
