Compensation Disparities Are the Focus of Every OFCCP Compliance Review

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
Contact

In 2011, the Office of Federal Contract Compliance Programs (OFCCP) heralded its focus on federal contractor compensation decisions and policies with two significant initiatives. In May, OFCCP announced proposed revisions to Supply and Service Scheduling Letter and Itemized Listing. The revised Itemized Listing, which details the information federal contractors are required to submit to OFCCP during a compliance review (or audit), contains onerous requests for compensation data and policies. In August, OFCCP followed this proposed revision with an Advance Notice of Proposed Rulemaking (ANPRM), announcing its intention to subject federal contractors—even absent a compliance review—to a mandatory reporting requirement on their compensation decisions and policies. OFCCP stated in the ANPRM that  the purpose of the new compensation tool will be to identify contractors whose compensation data indicates potential problem areas requiring further investigation, to serve as a research tool to identifying compensation trends by industry, and to assist contractors in “evaluat[ing] the effects of their compensation decisions.”

As of this writing, both the widely-anticipated compensation data collection tool and revised Scheduling Letter/Itemized Listing remain just that—anticipated. Yet OFCCP is doggedly continuing its pursuit in compliance reviews of allegedly discriminatory compensation practices and policies, including small differences of even two percent or $2,000 between men and women or minorities and non-minorities. At the Society for Human Resource Management’s 2012 Employment Law & Legislative Conference, OFCCP’s Senior Program Advisor Pamela Coukos announced that OFCCP is “shifting our focus on and allocating our resources toward compensation enforcement.” Pay disparities based on sex and minority status remain a very serious problem that will not go away unless addressed, according to Coukos.

How do contractors survive and defend such scrutiny of their compensation practices? We recommend that contractors periodically (and preferably under privilege) analyze and evaluate any pay disparities between males and females and race/ethnicity sub-groups in the same job group, job title, or Similarly Situated Employee Group (SSEG). Can pay disparities be explained by “time with the company” or “time in position”? Can they be explained by other factors, such as experience, level of responsibility, market factors, acquisition/merger factors, etc.?  If pay disparities cannot be explained, are “equity” adjustments warranted—or even possible, in light of budgetary constraints? Unfortunately, if nothing (or not enough) is done to resolve the disparities, contractors risk pay discrimination litigation with OFCCP, the Equal Employment Opportunity Commission (EEOC), and private plaintiffs.

In every OFCCP compliance evaluation, OFCCP is aggressively looking at various factors that influence a contractor’s pay and bonus decisions and is expecting contractors to offer legitimate reasons (and documentary evidence) for even the smallest differences in pay. Recent attempts through the U.S. Department of Labor’s administrative courts to curb OFCCP’s onerous and burdensome requests for compensation information have been unsuccessful, leading to an empowered agency bent on ferreting out allegedly discriminatory pay differences. Contractors that are unprepared for OFCCP’s scrutiny may find themselves fighting an uphill battle during a compliance review that can become protracted, expensive, and public—even over a $2,000 pay difference.

Leigh M. Nason is a shareholder in the Columbia office of Ogletree Deakins, and she chairs the firm’s Affirmative Action Programs and OFCCP Compliance Practice Group.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ogletree, Deakins, Nash, Smoak & Stewart, P.C. | Attorney Advertising

Written by:

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
Contact
more
less

Ogletree, Deakins, Nash, Smoak & Stewart, P.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!