Dealing with the Chaos at OFCCP

This article originally appeared in the July 2014 edition of the LocalJobNetwork "OFCCP Digest."

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs is a busy place. The agency has announced a multitude of priorities that affect federal contractors and subcontractors. Among these priorities are the following:

• Issues concerning veterans
• Issues concerning individuals with disabilities
• Compensation
• Use of criminal records in the selection process

There were new regulations or directives issued on each of these subjects during 2013.

OFCCP Releases Budget Justification for Fiscal Year 2014

The Office of Federal Contract Compliance Programs (OFCCP) released the agency's budget justification for the 2014 fiscal year, calling for a nearly $3.3 million increase in funding. The budget justification, released in April, outlines OFCCP’s plans for the new fiscal year, which begins in October.  These plans include heightened scrutiny for pay discrimination, increased outreach to communities with high populations of vulnerable workers, and a commitment to getting the agency’s internet-based data collection system online. Of the initiatives found in the budget request, the $1.1 million directed to strengthening pay discrimination enforcement is perhaps the most controversial item considering the budgetary issues the federal government has been facing and the on-going failure by OFCCP to find extensive compensation discrimination during compliance reviews.

What Does OFCCP Want?

This article originally appeared in the April 2013 edition of the LocalJobNetwork "OFCCP Digest." 

Much has been written about the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) in the last few years. OFCCP has a number of significant new initiatives, most notably its recent directive regarding the evaluation of compensation data that federal contractors and subcontractors will be asked to provide during compliance reviews. OFCCP has also gone through a number of changes to the manner in which it conducts compliance reviews. For example, the agency was routinely conducting on-site investigations for a while, but OFCCP is now limiting its on-site presence and is instead requesting many additional documents during the course of a compliance review.

While we know a great deal about what OFCCP is doing, a rarely asked question is this: what does OFCCP want? Phrased somewhat differently, what are OFCCP’s expectations of federal contractors and subcontractors? And, what kind of expectations does the federal government in turn have for OFCCP?

Scheduling Letters Associated with Pre-Scheduling Notices Begin to Appear

Well, that didn't take long.

Some of the facilities that received pre-scheduling notices from OFCCP during the first week in April have already received the letter that formally opens an OFCCP review.  While the pre-scheduling notices were supposed to give companies time to prepare for a review, OFCCP appears to be moving forward aggressively with this round of compliance reviews.  (We are even aware of one situation where a company received the letter opening its compliance review BEFORE the company received its pre-scheduling notice.)

This letter that opens a review, referred to as a scheduling letter, and the itemized listing that accompanies the scheduling letter are the same as they've been for some time.  OFCCP's revised scheduling letter and itemized listing that were first published in May of 2011 are still on hold at the Office of Management and Budget.  (You can find a copy of the revised scheduling letter and itemized listing that OFCCP proposes to use on the documents page of our website.)

We expect that companies receiving this round of scheduling letters will be asked to provide extensive compensation data during their compliance reviews.  This round of reviews will be the first under OFCCP's new Directive 307, the directive that instructs OFCCP compliance officers to give expanded attention to the compensation data and practices of federal contractors and subcontractors.  It will be interesting to see how OFCCP implements this directive and what other priorities OFCCP has for federal contractors and subcontractors in this round of reviews.

Thoughts on OFCCP's New Compensation Directive

We’ve now had some time to digest the compensation directive that OFCCP released on February 28, 2013. We’re going to use this blog post to provide some background and analysis regarding the new directive.

Background

On February 28, OFCCP released its Directive 307, entitled “Procedures for Reviewing Contractor Compensation Systems and Practices.” At the same time, OFCCP finalized the rescission of the compensation guidelines that had been issued in 2006. (All of these documents are available on our website at http://www.hranalytical.com/documents.html.) OFCCP decided to rescind its previous compensation guidelines and introduce Directive 307 in order to give itself additional flexibility to assess compensation issues. Under Directive 307, OFCCP compliance officers are instructed to give scrutiny to any potential disparities in employee pay. The directive makes it clear that there is no single way that compliance officers are required to investigate possible compensation discrimination. This is a departure from OFCCP’s previous compensation guidelines, which suggested that the agency and federal contractors should use multiple regression analyses and other statistical tools to identify compensation disparities.

OFCCP Rescinds Compensation Guidance and Issues New Compensation Directive

OFCCP's website indicates that the agency will be formally rescinding its 2006 compensation guidance as of February 28, 2013. In its place, OFCCP will issue a new directive that is also effective as of February 28.

The new directive appears to make substantial changes to the approaches found in the 2006 compensation guidance, and reinforces the idea that compensation discrimination is a top priority for OFCCP.

To read the notice rescinding the 2006 compensation guidance, the new compensation directive, and other information regarding OFCCP's actions, see OFCCP's website at http://www.dol.gov/ofccp/regs/compliance/CompGuidance/.

We'll have more information about this in the coming days as we have a chance to digest the new directive and other information from OFCCP.

National Research Council Releases Report on Compensation

The National Research Council (NRC) has released a prepublication version of a document entitled "Collecting Compensation Data from Employers" that discusses OFCCP and EEOC's recent efforts to collect and analyze compensation data from employers.  The report can be found on the National Research Council's website.  The 118 page document discusses the various policies and practices related to the collection of compensation data by various regulatory agencies and the interest these agencies have in collecting additional compensation data.

The NRC basically concludes that efforts to collect compensation data should be limited in scope and that the data collected should be carefully protected.  Among their specific conclusions are the following:

1. EEOC, along with OFCCP and the U.S. Department of Justice, should prepare a comprehensive plan in regard to how earnings data will be used before beginning any kind of data collection effort.
2. EEOC, OFCCP, and the DoJ should initiate a pilot study in order to evaluate the value of whatever tool is used to collect compensation data.  The pilot study should be conducted by an independent contractor, and that contractor should be asked to measure items such as data quality, cost, and burden on employers who are required to respond.
3. EEOC should "enhance its capacity" to both analyze earnings data and protect this information.
4. EEOC should collect data on rates of pay rather than actual earnings or pay bands.
5. EEOC should consider how it will develop appropriate data protection techniques and should support research into the development of applications that will assist in data protection.
6. EEOC should seek legislation that would help the agency ensure that it can protect confidential data. Such legislation should deal in part with data-sharing agreements with other agencies and should provide for penalties if compensation data is released.

While the conclusions in the NRC report primarily focus on EEOC, they are by extension also applicable to OFCCP's efforts to collect pay data.  The NRC report is likely to act as a significant deterent to OFCCP's plans regarding the implementation of a new compensation collection tool, and may act as a deterent to the agency's plans to release new guidance regarding how compensation should be analyzed.

Please note that the NRC report may be subject to change.  All information in the report is the copyright of the National Academies Press.

From the NILG Conference: DOL Pay Discrimination Enforcement Update

On Wednesday, August 28, a number of members of the Department of Labor gave a presentation regarding OFCCP's current posture regarding pay discrimination.  The panelists were OFCCP Senior Program Advisor Pamela Coukos, OFCCP SWARM Regional Director Melissa Speer, OFCCP Mid-Atlantic Regional Director Michele Hodge, and Consuela Pinto from the Solicitor's Office in the DoL.

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.