Biden OFCCP Director Appointment Signals That More Pay Equity Enforcement is on the Horizon for Federal Contractors

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The new Biden administration wasted no time implementing changes at the Office of Federal Contract Compliance Programs (OFCCP).  On January 20, 2021, the day of President Biden’s inauguration, the administration moved promptly to appoint Jenny Yang to serve as the OFCCP’S Director. This appointment does not require Senate confirmation, and went into effect immediately.  The Government Contractor Update previously predicted that contractors should expect heightened pay equity enforcement from OFCCP under the Biden administration, and Director Yang’s appointment appears to be the first step towards the fulfillment of this prediction.

Director Yang previously served in the Obama administration on the Equal Employment Opportunity Commission (EEOC) from 2013-2018 and as the EEOC’s Chair from 2014-2017. During her EEOC tenure, Ms. Yang was a fierce advocate for pay equity and closing the gender wage gap, as she spearheaded the Obama administration’s effort to collect pay data from federal contractors and other employers through Component 2 of the EEO-1 form. Although the Trump-era OFCCP disclaimed any intention to review Component 2 data, the Biden OFCCP under Director Yang can be expected to scrutinize this data in search of potential gender-based, or other, pay disparities. Notably, the OFCCP Director serves in the Department of Labor’s hierarchy, and the appointment of Director Yang prior to the Secretary of Labor’s confirmation appears to indicate that the Biden Administration strongly supports her priorities.

Additional insight on Director Yang’s potential priorities can be found in her 2019 testimony before the House Committee on Education and the Workforce in support of the Paycheck Fairness Act. In her testimony, Director Yang emphasized her view that existing federal law is insufficient to redress the longstanding gender pay gap. In a point of particular concern for contractors, Director Yang expressed her belief that market compensation rates are not an appropriate justification for salary differentials. This belief is consistent with the views of many OFCCP enforcement personnel, who frequently push back against the use of market compensation studies in contractor compensation systems, even though such studies are widely used by corporate employers in setting salary ranges. 

OFCCP collected a record amount of settlements from contractors in 2020, but Director Yang’s appointment signals that federal contractors can expect more to come in 2021 and beyond. Contractors should begin preparing now to defend their compensation systems from potential OFCCP evaluations.  Some important steps federal contractors can immediately take include retaining legal counsel to conduct a privileged pay equity audit that will be protected from disclosure in the event of an OFCCP audit or employee lawsuit, bolstering written compensation policies to identify all relevant factors the contractor may seek to rely upon in the event of an audit, and reviewing the use of market compensation studies to ensure they are appropriately conducted and used in a way that does not perpetuate gender-based pay gaps.

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.

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