The Office of Federal Contract Compliance Programs (OFCCP), which enforces federal anti-bias and affirmative action laws affecting federal contractors, has issued new rules for finding discrimination in federal contractors’ pay systems, as well as guidelines for contractors to conduct self-audits. The rules went into effect on the same day the OFCCP published them, June 16, 2006.
Under the new rules, the OFCCP will compare pay rates of “similarly situated” individuals, using a complex statistical analysis known as “multiple regression.” This type of analysis will allow the OFCCP to compare the compensation of similarly situated employees while taking into account legitimate factors—such as education, experience, and performance—that may have influenced the employers’ pay decisions. Determining whether employees are “similarly situated” will focus on the similarity of the work performed, the levels of responsibility, and the skills and qualifications involved in the positions.
The new self-audit guidelines will assist federal contractors in meeting their existing legal duty to evaluate their compensation systems to detect gender, race, or ethnicity-based disparities. While the OFCCP has made it clear that the new guidelines are voluntary and contractors can choose their own form of compensation self-evaluation techniques, the agency is offering an incentive for contractors to implement a compensation self-evaluation system that conforms to the new voluntary guidelines. Specifically, if the contractor’s compensation self-evaluation system meets the general standards outlined in the guidelines, the OFCCP will consider the contractor’s compensation practices to be legally compliant.
We’ll have more details on the new rules in an upcoming issue of the California Employer Advisor.
Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance With Nondiscrimination Requirements of Executive Order 11246 With Respect to Systemic Compensation Discrimination