Ms. Coukos, who is intensively involved in pay equity issues on behalf of OFCCP, opened the presentation by talking about the legal requirements regarding pay found in OFCCP's regulations. She indicated that employers are required to conduct a self-audit of pay practices on a regular basis, checking for race and gender disparities. While no specific methodology is required by the federal affirmative action regulations, federal contractors must take action when adverse results are found.
Ms. Coukos indicated that in federal fiscal year 2011, there had been 27 conciliation agreements that awarded $1.06 million in remedies for pay equity issues. Pay equity remedies constituted 4% of the dollars associated with the settlement of OFCCP investigations during 2009, 10% in 2010, and 20% in 2011.
OFCCP is using a variety of approaches to test for pay equity issues. This includes both statistical and non-statistical methods. Under Title VII law, OFCCP is attempting to determine whether there is a statistically significant difference in pay between the individuals at issue, whether the workers at issue are in comparable situations, and whether there are legitimate reasons for the the differences in pay. Ms. Coukos suggested that OFCCP will do a case-by-case examination to determine whether there are pay equity issues.
Ms. Coukos said that OFCCP is currently in the process of rescinding the compensation guidelines that were adopted in 2006, and that the agency is considering the using of a new tool that will be used to evaluate pay issues. OFCCP is involved in a multi-agency approach to examining pay that also involves the Department of Justice, the Equal Employment Opportunity Commission, the Office of Management and Budget, and the White House Pay Equity Taskforce.
Ms. Speer and Ms. Hodge discussed the approaches taken by their regional offices in regard to examining pay issues. They indicated that OFCCP is examining all forms of compensation. OFCCP wants to understand how employees are grouped within various pay classifications, and wants to understand all the factors that are relevant to pay.
OFCCP is seeking data related to pay that is both accessible and quantifiable. Among the factors that are universally requested during compensation evaluations are exempt status, time in job, and time at the company. Other factors requested may vary.
Ms. Speer and Ms. Hodge indicated that among the pay-related actions to monitor are the following:
- Application of compensation policies
- Pay decisions at time of hire
- Decisions regarding merit increases
- Decisions regarding special compensation increases
- Subjective decisions affecting pay increases
The regional directors indicated that OFCCP has found pay issues associated with mergers and acquisitions. When mergers or acquisitions occur, it is not unusual that payroll systems are not effectively merged, resulting in pay anomalies. Pay disparities can also arise from different policies used by managers who are part of different legacy groups within a merged entity. OFCCP has also found situations where employees in the same job title in an organization where a merger has occurred have different pay. OFCCP expects that companies will work to quickly correct any pay disparities associated with a merger.
Ms. Speer and Ms. Hodge indicated that an annual analysis of pay is absolutely required. When disparties are discovered, OFCCP expects that companies will remedy these issues as soon as possible rather than waiting for some particular event or resolving these problems over a long period. Situations where there is a merger or acquisition or situations where a former agency employee is converted to the regular workforce will not act as an excuse for pay equity issues.
OFCCP is particularly concerned about situations where particular genders or racial groups are steered to lower paying jobs. Job assignments that have an impact on pay will results in scrutiny by OFCCP. For example, decisions regarding part-time or full-time status, decisions regarding sales territories assigned to employees, and decisions regarding assigment to federal or non-federal work may be closely scrutinized by OFCCP when these decisions result in pay disparties.
The regional directors indicated that they were concerned about situations they had seen where misclassification of employees had resulted in pay disparities. For example, the use of different job titles where the same work is done is problematic. There have also been situations where employees have been improperly grouped in the same job title while doing different work.
Ms. Speer and Ms. Hodge strongly recommended that federal contractors have data retention protocols to ensure sufficient information is available to show there are no pay disparities. Contractors should also monitor the integrity of their data and examine this data at least annually.
Ms. Pinto discussed the effects of several recent legal actions on pay equity evaluations. She focused on the United Space Alliance decision, noting that this decision gives OFCCP significant latitude to request compensation-related information. Ms. Pinto indicated that OFCCP takes situations where the agency is denied access to data like the United Space Alliance situation very seriously. Ms. Pinto also reiterated the idea that OFCCP is interested in the groupings and factors that companies can show influence compensation. When OFCCP finds there are pay disparities, the agency may ask for back pay, salary adjustments, and various forms of monetary relief.
In response to a question from the audience regarding the groupings that are used by OFCCP to evaluate pay, the panel indicated that OFCCP may use a variety of groupings depending on the contractor's specific circumstances.
Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization's particular circumstances. None of the presenters nor any person at OFCCP or the Department of Labor has reviewed this summary of the panel presentation. All original materials copyright © HR Analytical Services Inc. 2012
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