NEWS
OFCCP Requests Extensive Compensation Data During All Compliance Reviews
During 2011, the Office of Federal Contract Compliance Programs has been requesting extensive data from all companies during affirmative action compliance reviews in order to determine whether there is any evidence of compensation discrimination. OFCCP is using a new test to determine which contractors will need to provide additional data. The test analyzes the preliminary data submitted at the start of a compliance review to determine whether there is a 2% or $2,000 differential in how males and females are paid in any grouping (e.g. job title, grade, job group) and whether there is a 2% or $2,000 differential in how minorities and whites are paid. If there is such a differential in even one grouping, OFCCP asks for additional data on ALL employees. From what we know, every contractor fails this test; thus, every contractor undergoing review is being asked to provide the additional data.
While we have seen slightly different versions of the request for additional data, the standard request issued by the OFCCP Midwest region includes the following items:
1. Employee ID Number;
2. Gender;
3. Race/Ethnicity;
4. Time with Company;
5. Time in Current Position;
6. Date of Birth;
7. Annual Base Salary;
8. Full Time or Part Time;
9. Exempt or Non Exempt;
10. Job Title and corresponding Job Group;
11. Salary Grade/Salary Level/Salary Band Classification;
12. Employee Location;
13. Commissions, overtime, tips, bonuses, shift differential, etc.;
14. Snapshot Date.
OFCCP uses this data to prepare multiple regression analyses. The agency also uses this data to look for anomalies in the way that individual employees are being paid. Regression analyses may be prepared by OFCCP statisticians in Washington D.C. while investigations of anomalies involving individuals may be evaluated by OFCCP compliance officers in regional or district offices.
What does this mean for companies that may be undergoing review?
- Companies should expect compensation to be a focus area during any OFCCP compliance review.
- It is critical for companies to review compensation data on a regular basis to determine where there are differentials in how males vs. females and minorities vs. whites are paid.
- Compensation data should minimally be reviewed by job title and grade to find anomalies.
- Explanations for pay differentials should involve objective factors that are supported by data in personnel files such as hire date, date in job, or performance.
- When market data is used as the explanation for differentials, companies should be prepared to provide specific market data supporting pay differentials.
OFCCP is currently in the process of withdrawing compensation guidance it provided in 2006. The agency released an Advanced Notice of Proposed Rulemaking in August of 2011 that requests input on what should be in any new guidance it issues. While it is not clear what the final form of OFCCP's compensation guidance will be, it is clear that OFCCP will be doing intensive evaluation of compensation data during all compliance reviews.
Did You Know...that OFCCP is the only federal agency currently in a position to do wholesale evaluations of possible discrimination in regard to private sector compensation? Agencies such as EEOC and the U.S. Department of Labor's Wage and Hour Division must wait for a complaint to review data and then they rarely investigate compensation data for an entire facility or company.