The Office of Federal Contract Compliance Programs (OFCCP) has made it well known that compensation inequality is at the top of its enforcement agenda. In its fiscal year 2016 budget, the OFCCP says it will continue to focus on systemic compensation cases where agency reviews can have the greatest impact.
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Wage statements
One means of addressing compensation discrimination and what the agency calls the “persistent pay gap” based on sex and race is requiring more complete wage reporting.
According to recent statements by the OFCCP, this is necessary because “[w]hen workers lack information about how their pay is calculated and their status as employees or independent contractors, workers are less aware of their rights and employers are less likely to comply with labor laws.”
To increase understanding of wage calculations, the Fair Pay and Safe Workplace Executive Order (EO) 13673, signed by President Obama in July 2014, requires covered contractors and subcontractors to provide their workers on federal contracts with a wage statement each pay period regarding how their pay is calculated and to provide notice to those workers whom they treat as independent contractors.
Under the terms of the EO, covered contractors and subcontractors must provide employees with a document containing information on the individual’s hours worked, overtime hours, pay, and any additions made to or deductions made from pay.
Exempt employees are not required to receive a record of hours worked if the contractor informs them of their overtime exempt status. Contractors complying with state or local requirements that the Secretary of Labor determines are substantially similar to those required by the EO will be deemed to be in compliance with the EO.
The provisions of the EO and the proposed guidelines and regulations regarding wage statements have been met with less opposition than other provisions of the EO such as the new requirement to self-report violations of federal and state labor and employment laws.
Proposed guidance and regulations implementing the EO were published in May 2015 and the period for comment closed on August 26, 2015. Final regulations and guidance are expected by the end of 2015 and the Obama administration has committed to implementing the EO in stages during 2016.
OFCCP compensation investigations and interviews
The OFCCP has stated on multiple occasions that it will continue to focus on systemic compensation cases where agency reviews can have the greatest impact. In order to do so, the OFCCP will continue to train staff and hire new specialized staff with expertise in conducting the complex data analyses necessary for evaluating pay practices.
With the additional staff, the OFCCP will provide sufficient expert support for improved data collection and analysis. The OFCCP says that its compensation targets are projected to increase to 40% of all discrimination violations and settlements in fiscal year (FY) 2015 and FY 2016 (up from 35% in FY 2014). As a result, by 2016, the OFCCP expects that virtually all compensation violations and settlements will involve systemic issues.
At the 2015 Industry Liaison Group National Conference held this past summer, Robert LaJeunesse, branch chief for Expert Analysis in OFCCP’s Division of Program Operations outlined OFCCP’s 3-tiered investigative process:
- Identify measurable differences in compensation,
- Identify if the difference is between “comparable employees”; and
- Assess whether there are legitimate explanations for the differences.
In an effort to navigate this 3-step process, during the course of its investigations, the OFCCP has reportedly been utilizing interviews with compensation managers as a means of gathering information on how an organization administers pay and total compensation. The OFCCP has also used interviews with compensation managers to determine what policies, documents, and other contractor information should be requested as part of a compliance review.
As a result of the increased use of interviews with compensation managers, contractors are finding it necessary to prepare managers for the possibility of an OFCCP interview and to review pay policies and analyses with compensation managers, including a full discussion as to how to respond to questions as to how pay decisions are actually made within job groupings.
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 Susan Schoenfeld, JD, is a Senior Legal Editor for BLR’s human resources and employment law publications. Ms. Schoenfeld has practiced in the area of employment litigation and counseling, covering topics such as disability discrimination, wrongful discharge, sexual harassment, and general employment discrimination. She has litigated numerous cases before the U.S. Court of Appeals, state court, and at the U.S. Department of Labor.
In addition to litigating employment cases in state and federal court, she provided training and counseling to corporate clients regarding employment-related issues. Prior to entering private practice, Ms. Schoenfeld was an attorney with the Civil Rights Division at the U.S. Department of Labor in Washington, D.C., where she advised federal agencies, drafted regulations, conducted inspector training courses, and litigated cases for the Office of Federal Contract Compliance Programs, the Directorate of Civil Rights, and the Mine Safety and Health Administration. Ms. Schoenfeld received her undergraduate degree, cum laude, with honors, from Union College, and her law degree from the National Law Center at George Washington University.
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Questions? Comments? Contact Susan at sschoenfeld@blr.com for more information on this topic
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