OFCCP Enters into a Conciliation Agreement with Midwest Canvas to Resolve Allegations of Hiring Discrimination

Midwest Canvas will pay $230,000 in back pay and interest to a class of 38 non-Hispanic applicants

Midwest Canvas Corporation, a construction manufacturer of pool covers, agreed to pay $230,204.80 in backpay and interest to resolve hiring discrimination allegations. Midwest Canvas entered into a conciliation agreement (CA) with the Office of Federal Contract Compliance Programs (OFCCP) after the agency found statistically significant differences in the hiring rates of Black, Asian, and White applicants in favor of Hispanic applicants, for the Laborer position at their Chicago, Illinois establishment. The hiring period occurred from March 20, 2018 through September 30, 2019 and resulted in shortfalls of 38 Black hires, two (2) Asian hirings, and one (1) White hire. The company also failed to include an EEO statement in all solicitations or advertisements, failed to keep accurate personnel and employment records, failed to conduct an adverse impact analysis by gender, race or ethnic group, did not list employment openings with the appropriate employment service delivery system (ESDS) or conduct outreach, failed to collect self-identification information, and did not maintain hiring and termination records.

As part of the settlement, Midwest Canvas will also make bona fide job offers to class members who have an interest in employment and who are not currently employed by the company. Class members will have priority over all other candidates for hire in the Laborer position.

The CA sets several conditions that are dependent upon Midwest Canvas becoming a government contractor during the monitoring period.

• Train all management and individuals involved in the recruiting, selecting and tracking applicants for the Laborer position.
• Implement or revise procedures to ensure that applicants are tracked, and decisions are documented, at each step in the hiring process.
• Implement or revise procedures to ensure that terminations are tracked, and decisions are documented.
• Monitor the selection rates at each step of its selection process. If adverse impact is found, Midwest Canvas will either eliminate the procedure, identify a legitimate business need for the section procedures, choose an alternative procedure, or validate the procedure.
• Make available to OFCCP records of the impact of the section process for Laborer positions, to include the race and gender of applicants and hires.

Midwest Canvas will submit two progress reports to the Chicago District Office covering each 12-month period of the agreement.

OutSolve’s Take 

This is an interesting situation whereby Midwest Canvas was a government contractor during the compliance evaluation; however, was no longer a government contractor at the time of the negotiated CA. Therefore, OFCCP’s authority only goes so far with respect to requiring future changes. There would be no incentive for Midwest Canvas to seek out government contracts knowing of the additional requirements imposed by the CA.

This becomes yet another hiring settlement for OFCCP. Even though the company failed to implement most of the requirements under E.O. 11246, VEVRAA or Section 503, the most impactful deficiency was the failure to analyze the steps and outcomes of the hiring process. This led to the large financial settlement and obligations associated with identifying, finding and communicating with the class of 38 applicants.

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