BEWARE, YOU MAY BE A FEDERAL CONTRACTOR AND NOT KNOW IT

Recently, in a discrimination case that spanned over 20 years against Bank of America, the Department of Labor expanded the definition of a federal contractor to include any entity that is federally insured.

Bank of America had argued the traditional view of who is a federal contractor, claiming that it wasn’t a federal contractor because it had not submitted a bid to the federal government to perform services, but was merely receiving a service from the government in exchange for payment of a fee.

The Department of Labor’s broader definition meant that the Bank was subject to the Department’s jurisdiction.

The lawsuit was first filed against Bank of America in 1997, and involved allegations of unfair hiring practices in the Bank’s dealing with more than 1,100 qualified applicants at its Charlotte, North Carolina headquarters. These unfair hiring practices were first discovered in 1993 during a routine compliance review by the Department of Labor’s Office of Federal Contract Compliance Programs, and extend to applicants who applied through 2005. Bank of America was ordered to pay more than $2,000,000 and must offer, as openings become available, positions to 10 of its wrongfully rejected candidates.

Experts in the legal field believe this ruling is very broad, and could open up thousands of businesses to liability. This is especially the case where enrollment in the federal deposit insurance system is mandatory for all federally chartered banks and savings institutions.

Experts also believe that broad interpretation of the federal contractor definition could, at a future point, include recipients of farming subsidies, corporations complying with security laws, and other such companies that, up to now, have not been considered contractors. Taken to its logical extreme, the ruling could extend to individuals who receive food stamps or other social assistance in exchange for compliance with federal guidelines. The ruling sets a new, potentially dangerous precedent for private business liability.

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