On August 6, 2014, the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) issued a proposed rule directing federal contractors and subcontractors with more than 100 employees and a contract worth $50,000 or more to annually submit an Equal Pay Report. The report must contain the following information:
Total number of workers within each EEO-1 job category by race, ethnicity and sex
Total W-2 wages for all workers in each EEO-1 job category by race, ethnicity and sex
Total hours worked for all workers in each EEO-1 job category by race, ethnicity and sex
OFCCP published a proposed report form and instruction book earlier this week.
The Equal Pay Report would include data for the period January 1 – December 31 and would be due by March 31 of the following year. The EEO-1 report that contractors are currently required to submit includes data on the number of employees from a "snapshot" in time, which is one pay period between July and September. The Equal Pay Report would include compensation data for the calendar year for all employees who were included in the EEO-1 report, regardless of whether any of those employees remained employed at the end of the calendar year.
The proposed rule authorizes OFCCP to sanction contractors who fail to timely file complete and accurate reports. OFCCP will generally treat the compensation data as confidential if the contractor identifies it as such, but the data may be subject to disclosure pursuant to a Freedom of Information Act (FOIA) request.
OFCCP anticipates sharing "industry standards" on compensation with the public annually. The agency suggests it will create those standards with the reports submitted by contractors and other external sources. OFCCP will then use those industry standards to identify for further investigation contractors whose reports show the greatest deviation.
The proposed rule will be open to public comment for 90 days until November 6, 2014. OFCCP released the proposed rule in response to a directive from President Obama in April requiring the agency to create such a rule within 120 days. His directive followed the Department of Labor's Advance Notice of Proposed Rulemaking published in August 2011, regarding which OFCCP received public comments about the design and implementation of a tool by which to measure contractors' equal pay practices.
The release of the proposed rule has been highly anticipated in the contractor community. Contractors are wise to review the proposed rule and determine whether they would like to take the opportunity to register any objections by November 6. To prepare for reporting, contractors should continue to analyze their compensation data to ensure pay disparities can be linked to job-related criteria such as education, years of experience and job performance.