On February 28, 2013, the Department of Labor (DOL), Office of Federal Contract Compliance Programs (OFCCP) published a notice rescinding two guidance documents related to compensation discrimination. OFCCP enforces nondiscrimination and affirmative action requirements for federal contractors. The agency rescinded the Interpreting Nondiscrimination Requirements of Executive Order 11246 with respect to Systemic Compensation Discrimination (Standards) which outlined “analytical procedures” for issuing a Notice of Violation based on compensation discrimination. OFCCP also rescinded the Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Executive Order 11246 (Voluntary Guidelines) which created a method for contractors to evaluate their own pay practices. The agency initially proposed the rescissions on January 3, 2011.
Removing Barriers to Enforcement
OFCCP Director Patricia A. Shiu stated that the Standards and Voluntary Guidelines created arbitrary barriers to “finding and combating illegal pay discrimination.” In particular, the Standards applied to pay differences among workers in specific job categories, leaving little room for analysis of other factors like discrimination in job assignments and unequal access to promotional opportunities. OFCCP further asserted that the Voluntary Guidelines gave employers the flexibility to analyze pay data based on their interpretation of how to apply the guidelines. If the interpretation was reasonable, the Voluntary Guidelines required finding contractors in compliance even if a different analysis suggested pay disparities.
Issuing Clearer Guidance
OFCCP issued Policy Directive 307 (Directive 307) to replace the Standards, Voluntary Guidelines, and any previous policy guidance on investigating pay discrimination. Directive 307 provides a detailed description of the process OFCCP compliance officers should follow when reviewing compensation data during a federal contractor audit. This includes conducting a preliminary analysis of summary data, analyzing individual employee level data, and developing pay analysis groups, among other things. Director Shiu stated that the directive provides “clear guidance for contractors to facilitate their success when it comes to providing equal opportunity to all of their workers.”
For more information about the rescission and Directive 307, visit OFCCP’s website.
This post was originally published on the legacy ABA Section of Administrative Law and Regulatory Practice Notice and Comment blog, which merged with the Yale Journal on Regulation Notice and Comment blog in 2015.