The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) has issued Frequently Asked Questions (FAQs) on its reviews of contractors' compensation practices. These FAQs are not intended to be comprehensive, however, but address its recently released revised procedures for reviewing compensation data while conducting compliance evaluations. These FAQs also address the Department of Labor's position regarding the implications of the Supreme Court's Ledbetter decision on agency compliance actions regarding compensation. For more information, go to: http://www.dol.gov/esa/regs/compliance/ofccp/faqs/emprnewfaqs.htm
FREQUENTLY ASKED QUESTIONS:
What process does OFCCP use to review a contractor's compensation practices?
Has OFCCP developed procedures for conducting a desk audit of a contractor's compensation practices?
What should a contractor expect when a desk audit of its compensation practices reveals an indicator of potential compensation discrimination?
What is the impact of the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co. on OFCCP compensation evaluation and enforcement practices?
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What process does OFCCP use to review a contractor's compensation practices?
OFCCP uses a tiered review process to conduct most compliance evaluations. This tiered review consists of an initial desk audit review followed, where indicated, by either a focused review or a full compliance review. OFCCP examines a contractor's compensation practices as part of every tiered review.
In addition, OFCCP conducts a full compliance review on a certain percentage of contractors scheduled for a compliance evaluation. During a full compliance review, OFCCP examines a contractor's total employment process, including its compensation practices.
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Has OFCCP developed procedures for conducting a desk audit of a contractor's compensation practices?
Each of OFCCP's regional offices uses the same basic procedures for conducting a desk audit review of a contractor's compensation practices. Generally speaking, during a desk audit, the agency will examine the following three criteria when evaluating a contractor's compensation practices:
Whether, for at least one pay division, there is a specified difference in average compensation between the groups being compared and, if so, whether at least one group appears to be adversely affected.
After combining the pay divisions meeting the above condition, whether the number of employees in the non-favored group is greater than a specified number and represents a specified percentage of the total employees in that group in the overall workforce.
Whether the overall percentage of the group most adversely affected in the combined pay divisions is larger, by a specified amount, than the overall percentage of the other groups adversely affected.
The specific thresholds used in each of the three criteria above are not static, but rather are subject to change as OFCCP continues to evaluate its targeting methodology.
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What should a contractor expect when a desk audit of its compensation practices reveals an indicator of potential compensation discrimination?
OFCCP does not consider the outcome of a desk audit to be a final indicator of discrimination. The desk audit is a screening procedure to identify areas requiring further review, including additional data requests, on-site investigation, or witness interviews.
When indicators are found, OFCCP will request detailed information on each employee in the overall workforce or appropriately determined subset. The information requested will cover those factors which OFCCP has observed to generally influence pay, as well as any influencing factors specific to the contractor. OFCCP may request data regarding any or all of the following factors, as appropriate:
Employee ID number or suitable ID for matching purposes
Gender
Race / Ethnicity
Job Title
Grade level or salary classification
Employee location
Time with the company or date of hire
Time in current job or date of last change in grade/title
Date of Birth
Current salary, hourly or annually
Part-time, Full-time, or Temporary status
Exempt or Non-exempt status
The specific additional data requested by OFCCP will vary depending on the contractor's pay system and the agency's investigation. However, OFCCP has found that the above data is often helpful in examining a contractor's compensation practices. Contractors are encouraged to provide this data to OFCCP electronically whenever possible.
If an evaluation of this additional data continues to reveal an indication of discrimination, then OFCCP will review the contractor's compensation practices under the Interpretative Standards for Systemic Compensation Discrimination under E.O. 11246 to determine if a violation of the law has occurred.
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What is the impact of the Supreme Court's decision in Ledbetter v. Goodyear Tire & Rubber Co. on OFCCP compensation evaluation and enforcement practices?
In Ledbetter v. Goodyear Tire & Rubber Co., 127 S.Ct. 2162 (2007), the Supreme Court held that an allegation of pay discrimination under Title VII by a single employee is a discrete employment action that must be challenged within 180 (or 300) days of the allegedly discriminatory pay decision. OFCCP does not believe that Ledbetter invalidates its Interpretative Standards for Systemic Compensation Discrimination under E.O. 11246 ("Standards"). The agency will continue to use statistical analysis, including multiple regression techniques, to discover class-wide salary disparities of a systemic nature. As it has in the past, the agency will gather all relevant data regarding the factors that actually influenced the contractor's compensation systems or pay decisions as a whole and will continue to supplement any statistical analyses with anecdotal evidence of discrimination, as discussed in the Standards.
While OFCCP is still examining the impact of Ledbetter in specific cases, nothing in the decision permits a contractor to refuse to provide requested compensation data. To the extent a contractor wishes to present data regarding specific pay decisions, the data will be accepted and evaluated in conjunction with the data items requested by OFCCP.
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