New Pay Discrimination Directive Issued by the Office of Federal Contract Compliance Programs (“OFCCP”)

by Proskauer Rose LLP

On February 26, 2013, OFCCP announced the rescission of two guidance documents on pay discrimination issued in 2006: Interpreting Nondiscrimination Requirements of Executive Order 11246 With Respect to Systemic Compensation Discrimination ("Compensation Standards") and Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance With Nondiscrimination Requirements of Executive Order 11246 With Respect to Systemic Compensation Discrimination ("Voluntary Guidelines"). The rescissions took effect on February 28, 2013. OFCCP also issued Directive 307, Procedures for Reviewing Contractor Compensation Systems and Practices, ("Directive 307" or "Directive"), effective February 28, 2013, which describes the procedures that OFCCP will use when conducting compensation investigations.

Directive 307's investigative procedures will apply to scheduling letters issued by OFCCP on or after February 28, 2013. The Directive's investigative procedures will also apply to open reviews to the extent that the procedures are not in conflict with OFCCP guidance or procedures in place prior to the effective date of the Directive. The rescinded 2006 guidance documents will apply to determinations of whether to issue a Notice of Violation for systemic compensation discrimination in reviews scheduled or pending on the effective date of the new Directive.

Reasons For The Rescission

According to the Notice of Rescission ("Rescission"), the 2006 guidance documents restricted OFCCP's ability to fully investigate pay discrimination and the rescission of the documents will improve its ability to combat pay discrimination. OFCCP noted that the 2006 documents addressed one type of compensation practice using limited evidence and required the use of a very narrow analytical procedure regardless of the circumstances of a particular case. This narrow approach, according to OFCCP, conflicted with the approach that OFCCP employs in investigating other discrimination practices. Further, although the Voluntary Guidelines attempted to inform contractors how to satisfy their self-monitoring duties, OFCCP found that the guidelines were inadequate and rarely used.

OFCCP concluded that the Compensation Standards and Voluntary Guidelines were also inconsistent with how other federal agencies address pay discrimination. In 2010, President Obama created the National Equal Pay Task Force, which brought together the Department of Labor, the Equal Employment Opportunity Commission, the Department of Justice, and the Office of Personnel Management to address pay discrimination. The rescission of the 2006 guidelines is part of the overall effort of the federal agencies to coordinate efforts consistent with the goals of the National Equal Pay Task Force.

OFCCP's New Approach To Pay Investigations

OFCCP believes the new Directive will allow OFCCP to investigate contractor pay practices through a case-by-case approach consistent with Title VII of the Civil Rights Act of 1964, which OFCCP currently applies to other discrimination investigations. Specifically, OFCCP will consider five principles when reviewing compensation practices:

  • Determine the most appropriate and effective approach from a range of investigative and analytical tools;

  • Consider all employment practices that may lead to compensation discrimination;

  • Develop appropriate pay analysis groups;

  • Investigate large systemic, smaller unit, and individual discrimination; and

  • Review and test factors before including them in the analysis.

OFCCP is not limited to reviewing employee pay. It can also examine other employment practices and opportunities that may affect compensation including, among other things, work assignments, training, preferred or higher paid shift work, desired sales territories, promotions, and other opportunities for advancement.

OFCCP stated in the rescission of the 2006 documents that it is committed to providing greater transparency for contractors. Specifically, in both the Rescission and the new Directive, OFCCP described the investigative procedures that it will use and how it will review contractor pay practices. Further, OFCCP will provide assistance to contractors through written materials, for instance, case examples and frequently asked questions, and other online and in-person interactions such as webinars, online chats, conference calls, presentations, and workshops.

The newly announced OFCCP compensation "methodology" in effect removes any standardized method for reviewing compensation and possibly substitutes a results examination for a consistent analytical framework. Too, careful attention will be paid to how OFCCP develops "pay analysis groups" and whether the agency will combine disparate jobs that might fall into different job groups or locations to justify conclusions regarding pay practices. This will represent a dramatic change in the accepted methodology of reviewing compensation under current law.

OFCCP has issued frequently asked questions regarding the Rescission and new Directive on its website at

Implications For Government Contractors

  • It is more important than ever to regularly undertake a privileged self-audit of compensation and policies that may contribute to compensation disparities, including hiring, promotions, and performance management.

  • OFCCP now has greater flexibility in investigating compensation discrimination and is not constrained to using a particular methodology, which may make it more difficult for contractors to determine if they are compliant.

  • Please see our prior client alerts - April 2009 Tip of the Month (Best Practices for Compensation Audits) and April 17, 2012 (Government Interest in Pay Equity Still High, Increased Enforcement Efforts Afoot) - on pay equity audits and EEOC directed investigations.

  • Proskauer will be keeping a close watch on OFCCP to see how the new Directive is being implemented and which methodologies the agency is utilizing.

Please contact your Proskauer lawyer for more information.


Special thanks to Associate, Madeline Chimento Rea, for her assistance
preparing this alert.

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.

© Proskauer Rose LLP | Attorney Advertising

Written by:

Proskauer Rose LLP

Proskauer Rose LLP 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.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

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.


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 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:

- 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.