Certain federal contractors and subcontractors would have to submit summary data annually to the federal government that would identify employee compensation based on sex, race, hours worked and other factors, under new regulations proposed by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs. The rules’ preamble called this “a critical tool for eradicating compensation discrimination.” The issuance of the rules was spurred a memorandum issued by President Obama on April 8, 2014, to address wage disparities.
The requirement to file the proposed “equal pay report” would encompass roughly 20 percent of the federal contractors and subcontractors that have at least 50 employees and a contract or subcontract of $50,000 or more and file EEO-1 Reports (21,251 contractors out of the more than 116,000 establishments subject to OFCCP’s jurisdiction).
The purpose of the rules, according to OFCCP, would be to: (1) enable the agency to direct its enforcement resources toward entities that may have potential pay violations based on the reported data; and (2) enhance two enforcement objectives: greater voluntary compliance, and greater deterrence of noncompliant behaviors by contractors and subcontractors.
Background
The legal authority for the OFCCP proposal rests with Executive Order 11246, as amended. That order prohibits employment discrimination by covered federal contractors and subcontractors based on race, color, religion, sex, sexual orientation, and gender identity and national origin against employees and applicants. This includes prohibiting compensation discrimination.
The proposal would amend the existing OFCCP regulations at 41 C.F.R. 60-1.7 to:
- Add a requirement that contractors submit an equal pay report to OFCCP if they: (1) file EEO-1 reports; (2) have more than 100 employees; and (3) have a contract, subcontract or purchase order amounting to $50,000 or more that covers a period of at least 30 days, including modifications.
- Require that the contractors electronically submit the proposed report using a web-based data tool. OFCCP is to establish a process for requesting an exemption to this requirement.
- Require contract bidders to make a representation on whether they currently hold a federal contract or subcontract that requires them to file the proposed report and, if so, whether they filed it for the most recent reporting period.
- Extend existing OFCCP sanctions to contractors for the failure to file timely, complete and accurate reports, and the representation of compliance.
- Require bidders on federal contracts and subcontracts to state whether they currently have a contract or subcontract that requires them to create affirmative action programs and file EEO-1 and equal pay reports. If so, the contractor or subcontractor must state whether it has prepared the AA programs and filed the most recent EEO-1 and equal pay reports.
Collection Process
The equal pay report would collect the following information:
- the total number of workers within a specific EEO-1 job category by race, ethnicity and sex;
- total W-2 earnings defined as the total individual W-2 earnings for all workers in the job category by race, ethnicity and sex; and
- total hours worked defined as the total number of hours worked for all workers in the job category by race, ethnicity and sex.
Each year, affected contractors would have to submit electronically to OFCCP summary employee compensation data from the report.
Contractors would be required to keep an equal pay report for a period of not less than two years from the date of the report’s creation. However, there would only be a one-year retention policy for contractors with fewer than 150 employees or with a contract of less than $150,000.
For more details on the rules, go to hr.complianceexpert.com.