OFCCP Announces a Final Rule to Promote Pay Transparency

In too many workplaces around the country, women and people of color don’t know what their counterparts are earning for the same work. A culture of secrecy prevents them from finding out if they are being discriminated against in time to act on it. Lilly Ledbetter learned, only after decades at her job, that she had been paid less than her male counterparts. Her company’s policy forbidding her from discussing pay with co-workers prevented her from getting the information she needed to bring a complaint in time. The Lilly Ledbetter Fair Pay Restoration Act, the first piece of legislation signed by President Obama in 2009, helped people like her more effectively challenge unequal pay. However, pay secrecy policies still stand in the way of the fundamental principle of equal pay for equal work. If one of Lilly Ledbetter’s co-workers had simply been able to tell her about the discrimination that was taking place, she would have been better able to act in time to exercise her workplace rights. Indeed, the ability of workers to share information and effectively organize for their rights is a cornerstone of building an economy that works for everyone. Promoting pay transparency by prohibiting pay secrecy policies helps make the federal contractor workforce more efficient. Pay transparency helps level the playing field for women and people of color, and provides employers access to a diverse pool of qualified talent.

We know that Lilly Ledbetter’s case was not unique. Despite the existence of laws protecting workers from gender-based compensation discrimination for more than five decades, a pay gap between men and women persists today. Assuming that she works every year between ages 25 and 65, the typical woman will have lost $420,000 over her working lifetime because of the earnings gap, based on median annual earnings for full-time, year-round workers at age 25 and above in 2013. In addition to a wage gap between men and women, the research reveals a wage gap amongst various racial groups. At the beginning of 2015, median weekly earnings for African-American men working at full-time jobs totaled $680 per week - only 76 percent of the median for white men, who earned $897 per week. The median weekly earnings for African-American women equaled $611 per week, or 68 percent of the median for white men. When employees and applicants are prohibited from inquiring about, disclosing, or discussing their compensation with other workers, compensation discrimination is much more difficult to discover and remediate, and more likely to persist.

That is why, in 2014, President Obama issued Executive Order 13665, promoting pay transparency and openness, making it possible for workers and job applicants to share information about their pay and compensation without fear of discrimination. On September 10, 2015, the Department of Labor issued a Final Rule implementing that order. This Final Rule takes effect on January 11, 2016, 120 days after its publication in the Federal Register, and amends the existing regulations that implement EO 11246.
 
The Final Rule amends the EO 11246 implementing regulations by:

• Requiring that certain information be included in covered federal contracts and subcontracts. The Final Rule requires that the equal opportunity clause included in covered federal contracts and subcontracts be amended to include that federal contractors and subcontractors must refrain from discharging, or otherwise discriminating against, employees or applicants who inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants. An exception exists where the employee or applicant makes the disclosure based on information obtained in the course of performing his or her essential job functions;

• Requiring that federal contractors incorporate a prescribed nondiscrimination provision into their existing employee manuals or handbooks and disseminate the nondiscrimination provision to employees and to job applicants;

• Defining key terms such as compensation, compensation information, and essential job functions as used in EO 11246, as amended; and

• Providing employers with two defenses to an allegation of discrimination: a general defense, which could be based on the enforcement of a "workplace rule" that does not prohibit the discussion of compensation information; and an essential job functions defense. 

The Final Rule is effective January 11, 2016 and applies to all new contracts over $10K.  The FAQ section provides additional insight and details on this final rule.

Read the Final Rule and Executive Orders
•    Read the Final Rule
•    Read Executive Order 13665
•    Read Executive Order 11246

Source: Office of Federal Contract Compliance Programs (OFCCP)

OFCCP Directive 307, Procedures for Reviewing Contractor Compensation Systems and Practices

Office of Federal Contract Compliance Programs (OFCCP) released Directive 307 on Feb 26, 2013 containing “Procedures for Reviewing Contractor Compensation Systems and Practices.” Directive 307 applies to all reviews scheduled on or after February 28, 2013. It will also apply to open reviews initiated by the OFCCP prior to February 28, 2013 as long as there is no conflict with their earlier procedures or guidance related to compensation.

OFCCP has clarified the 2006 Compensation Standards and Voluntary Guidelines will “govern determinations regarding the issuance of a Notice of Violation (NOV) for systemic compensation discrimination in any OFCCP review scheduled, opened, or otherwise pending on the effective date of this Directive.”

The OFCCP has a fact sheet and FAQs on their website as resources for the contractors.  Information on compliance assistance(i.e. Webinar) will be out shortly.

Source: DOL
 

This information is intended to be educational and should not be considered legal advice on any specific matter.

US Labor Department rescinds restrictions on investigating pay discrimination

The U.S. Department of Labor today announced that its Office of Federal Contract Compliance Programs is rescinding two enforcement guidance documents on pay discrimination originally issued in 2006, commonly known as the "Compensation Standards" and "Voluntary Guidelines. "This action, to be effective Feb. 28, is intended to protect workers and strengthen OFCCP's ability to identify and remedy different forms of pay discrimination. It will enable OFCCP to conduct investigations of contractor pay practices consistent with Title VII of the Civil Rights Act of 1964.

"A strong American middle class hinges on ensuring equal pay," said acting Secretary of Labor Seth D. Harris. "As President Obama has made clear, everyone – including the wives, mothers, sisters and daughters among us – must be paid fairly and without discrimination. These new standards will strengthen our ability to ensure that women and men are fully protected under our nation's laws."

The notice of final rescission withdrawing these two documents also includes new guidance for employers and other interested stakeholders setting forth the procedures, analysis and protocols OFCCP will utilize going forward when conducting compensation discrimination investigations. OFCCP will supplement the guidance with frequently asked questions, technical assistance, webinars, and other resources and materials to ensure that contractors have ample information about how to comply with the law.

"Today, we are lifting arbitrary barriers that have prevented our investigators from finding and combating illegal pay discrimination," said OFCCP Director Patricia A. Shiu, a member of the President's National Equal Pay Task Force. "At the same time, we are providing clear guidance for contractors to facilitate their success when it comes to providing equal opportunity to all of their workers."

The new approach described in the notice will enable OFCCP investigators to better examine practices and available evidence to uncover discrimination and evaluate contractor compliance with Executive Order 11246. That longstanding executive order requires federal contractors to comply with antidiscrimination obligations, including prohibitions against pay discrimination. Prior to this action, OFCCP was constrained by a methodology adopted in 2006 that made it harder for the agency to exercise its full legal authority because it required use of the same narrow formula to review all contractor pay practices, regardless of the industry, types of jobs, issues presented or available data. Now, OFCCP will be using its legal authority to hold contractors to the same legal standards – enshrined in Title VII, the landmark civil rights law – that courts and other federal agencies already apply to these businesses to prohibit job discrimination.

For more information, including copies of the notice of final rescission and supporting materials, visit click here.

This information is intended to be educational and should not be considered legal advice on any specific matter.

Compensation Data Collection Tool

For something that is not yet even a Proposed Rule, the “Compensation Data Collection Tool” in the early drafting stages at the Department of Labor’s Office of Federal Contract Compliance Programs is generating a fair share of noise on the Internet. The most recent DOL Uniform Agenda shows June 2013 as the action date for release of a Proposed Rule around the Compensation Data Collection Tool, and has labeled it a “significant priority.”

 

It has taken more than two years for the OFCCP to get this far on the Compensation Data Collection Tool. It may take another two years or longer to reach a final rule. And there may be a grace period before it becomes effective.

So why all the chatter?

Compensation discrimination is one form of discrimination that is already prohibited by Executive Order 11246. That’s not news.

What is news is that OFCCP is once again trying to develop a tool “…to provide insight into potential problems of pay discrimination by contractors that warrant further review or evaluation by OFCCP or contractor self-audit.”

Executive Order 11246 was signed by former President Lyndon B. Johnson on September 24, 1965, applicable to federal contractors above a certain annual contract value, to prevent discrimination and take affirmative action in employment and compensation on the basis of race, color, religion, gender, or ethnicity.

The most recent OFCCP data collection and analysis aimed at federal contractors took place in two stages from 2000 to 2005. Equal Opportunity Surveys were sent out and the collected data analyzed. But, the EO Survey was rescinded in 2006.

Then, in 2011, OFCCP issued a Request for Comments about “…the possible design of its new data collection tool,” the Federal Register posting described 15 categories of data or information that might be collected by OFCCP. The Request for Comments lists the potential uses of the data as

— conduct analysis
— identify and analyze industry trends, practices, and issues
— develop indicators for identifying potential noncompliance by contractors

You can find the Federal Register posting in Volume 76, at pages 49398 to 49901.

When you read through the 15 categories of data listed by OFCCP, you quickly see that for an individual employee these are the same compensation decisions and data an employer routinely makes. For any employee, the contractor knows the starting salary or hourly rate, any shift differential, possible commissions, how many paid holidays, paid sick or personal days, and more. At the individual employee level, it looks likely no additional work would be involved beyond the transposition of information already known to and recorded by the employer.

What could require additional work are some of the ideas within the 15 categories of data such as computing averages and matching jobs to one of the standard job classification schemes (e.g,. the Occupational Classification Codes), and company policies relating to wages and benefits. Even so, the data collection is likely to be in an electronic form, and could easily function like any other computer program, simply taking the individual data entered and automatically converting it into the desired aggregate data.

As with any compliance rule or regulation, the Compensation Data Collection Tool would present an opportunity for contractors to learn more about their own companies. When a contractor goes through data capture and analysis, it can dispel misimpressions that were holding back a company from reaching its full potential through diversity and equality in its workforce.

Source: HR Unlimited, Inc.

This information is intended to be educational and should not be considered legal advice on any specific matter.

Panel Conclusions on Collection of Compensation Data

Source:  Collecting Compensation Data from Employers (2012) by Committee on National Statistics (CNSTAT) of the National Research Council

Currently available in prepublication status, the book Collecting Compensation Data from Employers (2012), by the Committee of National Statistics (CNSTAT), draws conclusions on how collected wage data could be used in the conduct of enforcement responsibilities of certain agencies (i.e. EEOC, OFCCP). The review incorporated presentations by the EEOC, OFCCP, and DOJ as well as informational documents that included the Compensation Data Collection Tool ANPRM from the OFCCP.

The conclusion of the panel, which is detailed in, Collecting Compensation Data from Employers (2012) is that the collection of earnings data would be a significant undertaking for the EEOC and that there might be an increased reporting burden on some employers. The panel also concluded that, currently, there is no clearly articulated vision of how the data on wages could be used in the conduct of the enforcement responsibilities of the relevant agencies. Collecting Compensation Data from Employers also gives recommendations for targeting employers for investigation regarding their compliance with antidiscrimination laws.

CNSTAT is an independent and objective resource for evaluating and improving the work of the highly decentralized U.S. federal statistical system. It undertakes studies from a broad range of statistical, research, and program agencies of the federal government. Committee members and staff are generally statisticians, economists, and other quantitative social scientists with special interests in applications across many scientific disciplines and issues of public policy. Study panel members typically represent a broad range of scientific disciplines relevant to the topic of study.

This information is intended to be educational and should not be considered legal advice on any specific matter.

 

 

A Picture is Worth a Thousand Words

Source:  OFCCP Equal Pay Enforcement Fact Sheet

The OFCCP has substantially increased the number of enforcement actions addressing pay discrimination: conciliation agreements with pay remedies have more than doubled between FY 2010 and 2011. In fact, about 20% of the agency's financial settlements addressed compensation issues in FY 2011, a substantial increase over prior years.

The President has made "Fair Pay" one of his top priorities:

• Signed the Lilly Ledbetter Fair Pay Act 9 days after taking office;
• Launched National Equal Pay Task Force (an interagency coordinating body of enforcement/oversight agencies);
• Mentioned fair pay in every State of the Union Address; and,
• Lobbied for legislation on Capitol Hill to strengthen enforcement.

The OFCCP has stepped-up its enforcement - evaluating the compensation practices of over 10,000 businesses (and recovering $1.4 million dollars in back pay) since January 2010, and looking for novel means to review employer compensation across business entities, states and even regions. An example may be found in the current round of Corporate Scheduling Announcement Letters (CSAL):

"This notification is not all-inclusive; therefore, it is possible that other establishments within your company may be selected for a supply-and-service compliance evaluation during this scheduling cycle."

Just last month, Secretary of Labor Solis announced the winners of the President's Equal Pay App Challenge - an initiative to bring tools to remedy pay inequities to one's smart phone, laptop or tablet. The winners (Aequitas, Close the Wage Gap, Demand Equal Pay for Women, and Gender Gap App) designed Apps designed to help women negotiate starting salaries, as well as a pay raise, or promotion.

Federal contractors and grant recipients have an obligation to monitor compensation practices, and all employers are encouraged to routinely review their procedures to ensure they are being implemented fairly and that systems are working well for all.

Top Ten Tips to Monitoring Compensation . . .

1. Review initial job placements to ensure that equally-qualified minority group members/women are not disproportionately steered into lower-level or less desirable positions, product lines, routes, etc.;
2. Ensure compensation monitoring is conducted utilizing substantially equal positions (Equal Pay Act);
3. Monitor starting salaries amongst peer groups to ensure valid, legal rationale(s) for differentials in salary at time of hire;
4. Monitor the use of "sub-salary grades" to ensure nondiscrimination in treatment;
5. Review underlying performance management system(s) to ensure consistency in application and nondiscrimination;
6. Ensure managers are utilizing compensation vehicles properly such as not to undermine the entire system (i.e., retention bonuses as one-time lump sums rather than as large salary increases, etc.);
7. Review all out-of-guideline compensation decisions to ensure nondiscrimination in treatment;
8. Perform annual review of merit increases;
9. Review compensation annually utilizing the OFCCP mean (average) approach; and,
10. Review all other forms of compensation - bonuses, long-term incentives, requisites and benefits - to ensure nondiscrimination.

Need more information?

Don't wait until a complaint has been filed or an OFCCP Scheduling Letter arrives; contact THOMAS HOUSTON today.

For information on the services offered by THOMAS HOUSTON associates, inc., please call (800) 330-9000 or click here to schedule a convenient time to receive a call from a member of our Sales Team.

This information is intended to be educational and should not be considered legal advice on any specific matter.

OFCCP Hosts Compensation Data Collection Tool Listening Session - TODAY

 Today from 3:30 p.m. – 4:30 p.m. (Eastern Standard Time)
Dial 1-800-857-9452 and enter passcode 6646661

On August 10, 2011, OFCCP published an Advance Notice of Proposed Rulemaking (ANPRM) on a proposed new compensation data collection tool.   Stated possible uses for the collected data include generating insight into potential problems of compensation discrimination by federal contractors and subcontractors that warrant further review or evaluation by OFCCP or a contractor self-audit. 

This listening session is an opportunity to offer suggestions and recommendations related to the scope, content and format of the data collection tool.

Public comments on the ANPRM are accepted through October 11, 2011 and can be submitted on regulations.gov or by mail/courier to OFCCP. 

To participate in this web chat session, please dial 1-800-857-9452 and enter passcode 6646661.