Contractors Should Prepare for Increased OFCCP Pay Scrutiny

Stinson - Government Contracting Matters

Stinson - Government Contracting Matters

With the change in administration, government contractors should anticipate increased scrutiny of their pay practices. President Biden signaled heightened pay equity enforcement on his first day in office by appointing Jenny Yang the Director of the Office of Federal Contract Compliance Programs (“OFCCP”). Director Yang previously served as the Equal Employment Opportunity Commission (“EEOC”) Chair in the Obama Administration, where she spearheaded the effort to collect pay data from employers as part of the EEO-1 form. See our prior article on the pay data collection saga here. While the result of this story was that pay data will not be part of the 2021 EEO-1 report, like OFCCP, the EEOC also is expected to focus on compensation discrimination under the Biden Administration.

Government contractors are strongly encouraged to be proactive about pay equity analyses and to retain legal counsel to conduct a privileged audit. Such an audit is important for locating potential disparities, obtaining information about whether those disparities can be explained by legitimate non-discriminatory reasons, and, when necessary, identifying actions that may need to be taken to address unexplainable discrepancies. Contractors should also review written compensation policies to ensure that all relevant factors are identified and that the use of market compensation studies do not perpetrate sex-based pay gaps.

The 2019 and 2020 EEO-1 Component 1 data collection is expected to open in April 2021. While again, the data collection does not currently include reporting of pay data, we anticipate subsequent data collections to require pay data collection in some form. States are also beginning to consider pay data reporting laws, and California has already enacted a pay reporting law that requires the first report by March 31, 2021.

Stinson’s government contracting and employment attorneys are monitoring developments in this area.

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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