Affirmative Action and Compensation Reviews

HRDir1

We are a federal government contractor with affirmative action obligations under EO 11246. With all of the emphasis on compensation discrimination, we are concerned that an audit by OFCCP might catch us unaware. We are wondering what other government contractors are doing to document and check compensation practices to catch potential pay discrimination claims. Also wondering if anyone has gone through an OFCCP audit lately and what their experince was. Thanks in advance for your help! 

Jake2

Under OFCCP's “compliance coordination” program for contractors that do choose to follow the new comp self evaluation guidelines, OFCCP will forego independent review of a contractor's raw compensation data and instead evaluate the adequacy of the contractor's compliance with the Self-Eval Guidelines. But , beware -- although the compliance coordination program may appear to make things easier for contractors in the short run, OFCCP’s use of the data from the self analysis  for pay “fixes” and potential liability for discrimination charges outside of the context of affirmative action could make compliance with the guidelines less attractive to contractors -- it did to us and we are sticking with the "old" compensation analysis methods. If you are interested in OFCCP's self-evaluation program, you must prove that the self evaluation:

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• Is performed annually.
• Covers 70 percent of the workforce.
• Is based on similarly situated employee groups  (SSEGs), which contain 30 or more employees, at least five of whom come from comparison groups, i.e., women or minorities (the so-called 30/5 rule.)
• Contains some form of nonstatistical analysis to cover employees who do not fall into SSEGs.
• Uses a form of statistical analysis that allows evaluation of SSEGs and accounts for factors that influence compensation, such as experience, education, location, and performance (for facilities of less than 250 employees).Uses multiple regression analysis (for facility or plan workforces of 250 or more employees).
• Tests for statistical significance using the OFCCP’s two standard deviation threshold.
• Resolves statistically significant pay disparities that cannot be resolved through make-whole relief. Appropriate remedies normally include pay adjustments with a two-year window for back pay corrections. OFCCP will evaluate whether a contractor has properly investigated disparities found in a self-evaluation and adequately corrected those not explained by legitimate factors.

 Also beware that if the SSEGs that meet the 30/5 rule do not encompass 70 percent of the workforce, OFCCP will review the SSEGs’ components to determine whether the definitions seem reasonable. At some facilities, the size of the workforce and the tyoe of work conducted may produce few groupings that meet the 30/5 rule. In such cases, the agency may accept SSEGs of less than 70 percent of the workforce to find the analyses meet the Voluntary Guidelines. Good luck!