***Updated Post***
Blog readers have requested clarification on this posting regarding the “newness” of the OFCCP’s FAQ’s. These standards are not “new.” They were first published in 2006 but later received criticism under the Obama administration as “limiting” and not providing the OFCCP with the breadth and scope they felt was required to fully assess equal pay when evaluating a federal contractors compensation practices. In January 2011, through a Notice of Proposed Rescission (RIN 1250-ZA00), the OFCCP announced that they planned to rescind the Interpretive Systemic Compensation Discrimination and Voluntary Guidelines for Self-Evaluation of Compensation Practices. The proposed rescission does not eliminate the guidelines as found on this FAQ, nor, does it eliminate the value of understanding systemic compensation disparity utilizing regression analyses. While the OFCCP’s FAQ’s are not new, they still provide value to federal contractors. Thank you for seeking clarification.
OFCCP FAQ: Compensation Discrimination Standards
(source: http://www.dol.gov/ofccp/regs/compliance/faqs/comstrds)
What are the new compensation discrimination standards and what are their significance?
The Interpretative Standards for Systemic Compensation Discrimination (71 FR 35124, June 16, 2006) (the “Standards”) are a set of formal standards for interpreting the nondiscrimination requirements of Executive Order 11246 (“E.O. 11246”) with respect to systemic compensation discrimination. The Office of Federal Contract Compliance Programs (OFCCP) conducts compliance reviews to determine whether covered contractors have been engaging in workplace discrimination prohibited by E.O. 11246. As part of its compliance review process, OFCCP investigates whether contractors’ pay practices are discriminatory. The Standards will provide standards and methods for OFCCP evaluations of contractors’ compensation practices during compliance reviews. In addition, the Standards are intended to provide – for the first time – a definitive interpretation of the 1978 Sex Discrimination Guidelines, codified at 41 CFR 60-20, as well as E.O. 11246 with respect to systemic compensation discrimination.View Compensation Discrimination Standards online.
The systemic compensation discrimination analysis as set forth in the Standards has two major characteristics: (1) the determination of employees who are “similarly situated,” for purposes of comparing contractor pay decisions, will focus on the similarity of the work performed, the levels of responsibility, and the skills and qualifications involved in the positions; and (2) the analysis relies on a statistical technique known as multiple regression. The Standards focus on similarity in job content, skills and qualifications, and responsibility level. These are the criteria for establishing systemic pay discrimination under Title VII court decisions and the Equal Employment Opportunity Commission’s compliance manual chapter on compensation discrimination.
Systemic compensation discrimination exists where there are statistically significant compensation disparities (as established by a regression analysis) between similarly situated employees, after taking into account the legitimate factors which influence compensation, such as: education, prior work experience, performance, productivity, and time in the job. Under the Standards, a statistically significant disparity occurs at a level of two or more standard deviations, based on measures of statistical significance that are generally accepted in the statistics profession.
OFCCP will issue a Notice of Violation (NOV) only based on these Standards. In determining whether a violation has occurred, OFCCP will also consider whether there is anecdotal evidence of compensation discrimination, in addition to statistically significant compensation disparities. Except in unusual cases, OFCCP will not issue an NOV alleging systemic compensation discrimination without providing anecdotal evidence to support the statistical analysis. In unusual cases, OFCCP may assert a systemic discrimination violation based only on anecdotal evidence, if such evidence presents a pattern or practice of compensation discrimination.
If you have any questions regarding the compensation discrimination standards or other AAP issues, please let us know. We’re happy to help.
John Piatt jpiatt@biddle.com 800-999-0438, ext. 118 |
Nancy Tipton ntipton@biddle.com 800-999-0438, ext. 175 |