News

Since the announcement of Directive 307 there has been much speculation about how the OFCCP will audit compensation during a compliance evaluation. Nearly two months after the announcement (and a second wave of CSAL notifications) we are beginning to see some of the OFCCP’s direction through follow-up letters at the Desk Audit phase.

In a recent Desk Audit, the auditor called the contractor and requested additional compensation information.  During the call the auditor asked about the contractor’s compensation practices, the factors that lead to compensation decisions and classifications, as well as, what the contractor considered total compensation (e.g. overtime, commissions, etc.). Shortly after the call, the contractor received a follow-up letter from the auditor requesting that they submit the additional data discussed during the call.  In addition to data, the OFCCP also requested information about the contractor’s compensation policies, guidelines, grading systems, and, internal compensation audits as required in CFR 60-2.17 (b) (3).

Below is an excerpt from that follow-up letter showing the additional information requested by the OFCCP:

1. Unique Employee ID number
2. Gender [1]
3. Race/Ethnicity [2]
4. Job Title
5. Grade
6. Level
7. Department
8. Date of hire (mm/dd/yyyy)
9. Date of last change in grade/job title (mm/dd/yyyy)
10. Part-time vs. full-time status for all employees
11. Exempt vs. non-exempt status
12. Location
13. Years of relevant experience
14. Highest degree attained
15. Year in which highest degree attained
16. Rating received at most recent performance evaluation
17. Market reference system used for the different salaries
18. Annual base salary or hourly wage for full-time employees during the review period [3]
19. Hourly wage and number of hours worked during the review period for part-time employees [4]
20. Other paid allowance, if any, such as commission pay, overtime pay, bonus pay or shift differential [5]. Report each allowance in separate data columns.
21. SSEG’s if developed [6]

Please also provide:

22. A copy of any/all compensation policies and guidelines including but not limited to:
a.  Policies or guidelines for annual performance appraisals, promotions and bonuses

23. A detailed written explanations of grade and level systems

In addition, we are requesting any internal compensation audits you have performed as stated in CFR 60-2.17 (b) (3) and a list of all individuals involved in the compensation process. Furthermore, please provide any additional information that you feel may better explain your company’s compensation system including other factors that influence compensation.

At this stage of the investigation, OFCCP’s goal is to better understand your company’s compensation practices. Therefore, if any of the items requested above are not readily available, please contact us to discuss the specifics of the situation so that the best available information and data is provided in a timely manner.

[1]  If gender is recorded using alpha or numeric codes, provide code definitions.

[2] If race/ethnicity is recorded using alpha or numeric codes, provide code definitions.

[3l Compensation  is reported for all full-time employees, including those on sales commission only. Compensation should be reported as base annual salary (excluding bonus and fringe benefits) or hourly pay rate.

[4] Compensation  for part-time employees should be reported as an hourly wage.

[5] Shift information  is requested to determine whether employees receive pay differentials dependent on shift worked. If an employee works rotating shifts, information  on hours worked in each shift should be submitted.  Shift differential should be reported separately from the base annual pay or hourly rate.

[6] SSEG refers to “similarly situated employee groups”

If you have questions…

If you have questions about Compensation Directive 307  or are facing an OFCCP audit, contact us.
We’re happy to help.

Additional Resources:

• OFCCP Compensation Directive 307:
  http://www.dol.gov/ofccp/regs/compliance/directives/dir307.htm
• Free BCGi Video: “Understanding Compensation Directive 307 – Part I”
  with Dr. Patrick Nooren and Dr. Dan Kuang
• BCGi Platinum Member Video: “Understanding Compensation Directive 307 – Part II”
  with Dr. Patrick Nooren and Dr. Dan Kuang
  Building on Part I, the follow-up webinar goes beyond unwrapping the new compensation Directive as laid out by the OFCCP. The Part II webinar includes a brief recap of our previous discussion, as well as practical implications for the federal contractor community and recommendations for future compensation analyses and strategies. (note: Part II is only available to BCGi Platinum Members)