The Office of Federal Contractor Compliance (OFCCP) has adopted new policies and procedures that will make it easier for its compliance officers to uncover pay discrimination among federal contractors.

The new directive rescinds prior guidance, which had applied a "cookie cutter" approach to investigations, "severely limiting OFCCP's ability to enforce the ban of pay discrimination," the agency said.

The new protocol mirrors Title VII principles and standards and provides the OFCCP broad discretion to investigate and evaluate instances of compensation discrimination against individuals and groups. Review of compensation structures will be on a case-by-case basis depending on the specific facts. The OFCCP will focus less on statistical analysis and more on non-statistical and anecdotal evidence to identify job titles with differences in pay because of protected class status, and then to make sure that the employer has a legitimate and nondiscriminatory reason for any wage differentials.

The following employment practices may lead to an investigation of compensation practices and potential wage discrimination claims:

• Differences in salary or hourly rates of pay;
• Differences in job assignment or placement;
• Differences in training or advancement opportunities;
• Differences in earning opportunities; and
• Differences in access to increases and add-ons (such as bonuses or raises).

Advice for Federal Contractors

In announcing these revised compensation discrimination policies and procedures, the OFCCP is closely following the lead of the Equal Employment Opportunity Commission (EEOC) which vowed to renew their focus on equal pay and wage discrimination claims. Additionally, Congress has focused on making equal pay a central issue with the passage of the Lilly Ledbetter Fair Pay Act of 2009 and the introduction of the Paycheck Fairness Act and the Fair Pay Act in Congress.

As a result of the policy change, the number of federal contractors liable for compensation discrimination is likely to increase. To avoid wage discrimination claims, federal contractors should review and revise their policies and practices related to hiring, compensation, promotions, evaluations, and pay increases that may lead to compensation discrimination claims using the new protocol. Further, all supervisors and managers should be trained on the importance of avoiding compensation discrimination.

Additional Resources

Employee Compensation > Federal Contracts

Employee Management > EEO - Affirmative Action

Primer on Employer Obligations Regarding Equal Pay