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Shhhh…We Appear to Have a New OFCCP Director

January 20, 2021 By Matt Nusbaum

Just don’t tell anyone! The OFCCP’s website has various pages detailing the leadership structure, their biographies, and even a National Office directory that can be used to confirm who is sitting in what chair. Although those pages have yet to be updated and still list Craig Leen as the Director, the parent site over at the Department of Labor was updated on Inauguration Day and now clearly lists Jenny Yang as the Director of the Office of Federal Contract Compliance Programs.

new-ofccp-director-jenny-yang

This appears to confirm what has been swirling around the rumor mill for the last couple of weeks. It could be an over-eager staffer jumping the gun before things are final, but it is looking like the former Chair of the EEOC will be the next OFCCP Director.

So, Who Is Jenny Yang?

Well, she is an attorney who, in her early career, was an investigating prosecutor for the Labor Litigation Section of the DOJ’s Civil Rights Division for three years. Then she joined a private law firm where she primarily represented workers in civil rights litigation. Perhaps her most notable accomplishment there was as counsel of record in Dukes v. Wal-Mart, the largest sex discrimination class action ever in which she represented 1.6 million women alleging discriminatory pay and promotion policies and practices in Walmart stores.

From there, she was appointed to the EEOC by President Barack Obama in 2012 and was eventually chosen as that agency’s Chair. During her tenure at EEOC she established the Select Task Force on the Study of Harassment in the Workplace, specifically focusing on workplace sexual harassment. She was also a prime influence behind the now somewhat defunct “Component 2” pay data reporting requirement.

Since leaving the EEOC in 2017, Yang has championed, among other things, increased workplace protections for temporary workers and independent contractors, LGBTQ+ protections, and has a particular interest in potential discrimination in “algorithmic employment decisions” (selections made with the assistance of artificial intelligence).

So, What Can We Expect From a Yang-led OFCCP?

This is speculation, of course, but it should come as no surprise if the OFCCP continues to focus on pay discrimination and turns up the heat there. Unlike the options Yang had as a private plaintiffs’ attorney and at the EEOC, the options for the OFCCP are more limited to a Title VII discrimination framework, as distinct from other theories of pay equity that have generally gained more traction.

Harassment is likely to become more of a focus in OFCCP audits, and the agency now has more tools at its disposal for that. In addition to simply emphasizing harassment in audits generally, outgoing Director Leen has cleared the path for things like compensation and harassment focused reviews.

And the interest in machine-assisted selection tools and methods will likely add a complicating element to the OFCCP’s traditional bread-and-butter hiring discrimination investigations.

So, What Should You Be Doing Now?

To be clear, nothing changes overnight, though the incoming administration does appear to be hitting the ground running in general, so we might see change come a bit faster to the OFCCP than we have experienced in past transitions.

Proactive federal contractor employers will be partnering with someone to get their compensation house in order. Simply checking the technical compliance box by doing some sort of annual compensation analysis has been insufficient for a couple of years now, so if your organization is not going beyond that, there is no time like the present (to start).

And keep in mind that your compensation analysis project should not be a “one and done” affair. Smart money is invested in ongoing analyses and reviews by people who know what they’re doing and can give your organization a clear picture of potential risk posed by a Title VII framework to be sure, but also an Equal Pay Act perspective, various state and local approaches where you operate, and “pay equity” in more general terms. Because it isn’t just the OFCCP, EEOC, and/or private litigators who could come knocking at your door, but external and internal activist groups could show interest as well, including your own executive leadership and/or employees.

Anti-harassment policies should be reviewed and updated, if necessary, and it would be a good idea to get those policies back in front of your employees’ eyes as a periodic reminder of expectations and the organization’s commitment. Review internal complaint processes and any outstanding or even recently concluded internal complaints and investigations. And review the extent to which employees and supervisors are trained on anti-harassment issues.

Automated employment selection tools should be monitored for potential adverse impact just like any other selection process. They should be treated like an employment test, not like a “step” in the overall process (which isn’t examined unless and until analyses of the overall process indicate a problem). Analyze them separately. And speaking of employment tests, be sure those are being analyzed for potential adverse impact and validated, if necessary.

Other than that, keep following developments and reading our blog! We will continue to bring you the news you need when you need it. And, of course, if you have any questions or concerns, feel free to reach out to us at bcgi@biddle.com.

Parsing Colorado’s New Equal Pay Transparency Rules

November 20, 2020 By Matt Nusbaum

Last year, the Colorado General Assembly passed legislation strengthening the state’s pay equity laws. Now the Colorado Department of Labor and Employment (CDLE) has issued final rules implementing the Equal Pay for Equal Work Act, which goes into effect January 1, 2021.

The Equal Pay for Equal Work Act prohibits Colorado employers from paying employees of different sexes differently for substantially similar work and provides limited factors to explain pay disparities based on sex. The entire differential must be explained by a seniority system, merit system, a system that measures earnings by quantity or quality of production, legitimate geographic location differences, or education, training, or experience related to the position in question. The Act also prohibits Colorado employers from asking job applicants about their prior salary history and may not base pay determinations on salary histories should they become known.

But the Act also requires employers to inform Colorado employees of promotional opportunities throughout the organization, and to provide pay and benefit information in postings for jobs to be performed in Colorado. Employers with operations in Colorado are scrambling to parse these new requirements.

Job Posting Pay and Benefit Requirements

The final rules require employers to “disclose in each posting for each job” the following information:

  • The hourly rate, salary, or pay range the employer is offering for the position; and
  • A description of all benefits and “other compensation” to be offered to successful applicants.

With regard to the advertised pay, the final rules note that employers may ultimately pay more or less than the posted amount or range, provided that what was posted was the employer’s “good-faith and reasonable estimate” of possible compensation at the time of posting. In other words, applicants are still free to negotiate their pay.

With regard to the description of benefits, the final rules require a “general description” of any bonuses, commissions, or other forms of compensation being offered, as well as a description of “all employment benefits” including (but not limited to):

  • Health care;
  • Retirement;
  • Leave (sick, parental, vacation, etc.); and
  • Any other benefits that must be reported for federal tax purposes.

The final rules explicitly exclude benefits “in the form of minor perks” from the posting requirement, but does not elaborate or provide examples.

Geographic Limits

The job posting pay and benefit requirements do not apply to jobs to be performed entirely outside of Colorado, nor do they apply to postings entirely outside Colorado. The distinction between “jobs to be performed entirely outside of Colorado” and “postings entirely outside Colorado” is unclear.

Unfortunately, the final rules do not provide clarification here and do not appear to consider the complexity arising from remote work situations.

Whether or not the organization is a “Colorado employer,” defined to include the state and “every other person employing a person in the state,” does not appear to be a consideration, though there are clearly jurisdictional issues that would arise if the state attempted to enforce these provisions on organizations with no physical presence in the state.

Positions at physical work locations outside the state where the work does not involve travel to and work performed in Colorado would appear to be exempted, regardless of whether or not the employer could be considered a “Colorado employer.”

Jobs held by Colorado residents who commute out of state for work, such as employees who live near a state border and who live on the Colorado side, but work in one of the surrounding states (Wyoming, Nebraska, Kansas, Oklahoma, New Mexico, Arizona, or Utah) also appear to be exempted, again regardless of whether or not the employer has operations within the state. However, if such an employee does work for an organization with operations in Colorado, even if they do not work at a Colorado location, these provisions could be triggered if such an employee were allowed to perform work at home or could reasonably foreseeably use the employer’s Colorado facilities for any reason.

Employers with no facilities in Colorado but that nonetheless do business in Colorado may have reason to worry. Consider a consulting firm that advises Colorado organizations and might even send consultants to work temporarily at client sites within the state. It is unlikely that the state would have jurisdiction over such organizations sufficient to enforce these provisions, but they would be wise to seek the advice of legal counsel on that point.

Promotion Notification Requirements

Separate from the provisions regarding the content of job postings discussed above, the final rule requires employers to make “reasonable efforts” to “announce, post or otherwise make known all opportunities for promotion to all current employees on the same calendar day and prior to making a promotion decision.”

In other words, employees must be given advance notice of potential promotion opportunities, but only Colorado employees. The final rule exempts “employees entirely outside Colorado” from the promotion notice requirement altogether.

“Promotional opportunity” is defined as when an employer has or anticipates a vacancy in an existing or new position “that could be considered a promotion for one or more employee(s) [sic] in terms of compensation, benefits, status, duties, or access to further advancement.” Note, however, that employers are required to provide notice of such opportunities to all employees and may not limit the notice audience to employees deemed qualified. As a result, anything above an entry-level position is likely to qualify.

The required notices must be “in writing” and must include at least:

  • Job title;
  • Compensation and benefits information if applicable (discussed above); and
  • How employees can apply for the position.

Past that, the form and format is up to the individual employer.

Note that notices of promotional opportunities do not need to include compensation and benefits information if the position is to be performed entirely outside Colorado or for “postings entirely outside Colorado.”

Administrative Headache with Potential Consequences

Understandably, employers that might have a “touch” inside the state of Colorado are concerned about the administrative logistical gymnastics posed by these final rules. The law is clearly intended to push employers to opt for broader solutions that incorporate internal and external transparency regarding pay and benefits for particular positions (typically considered confidential due to business competition concerns, among others) and internal advertising of open positions across the entire organization.

While the latter is likely an attractive option (why not inform the existing workforce of internal opportunities?), the former is unlikely to be an attractive option. Especially for larger, more complex organizations, determining whether or not a particular job posting must include pay and benefit information could very likely be a full-time job.

Often employers that make reasonable determinations in good faith are not harshly punished if they get it wrong. Typically they will be required to correct any deficiencies on a going-forward basis, but here it is unclear. Violations of these provisions appear to be subject to a fine of up to $100 per day that the employer violates the new rules. Whether that starts from the time CDLE determines a violation, or whether the fines can be retroactive (potentially as far back as the implementation date) is unclear.

To the extent that an organization is concerned about compliance with these provisions and does not intend to implement broader solutions, such organizations are well advised to seek legal counsel, specifically from firms with operations in Colorado that are likely to be more intimately familiar with the legislative background and intent, and more plugged-in to the CDLE and its enforcement processes. If you have questions, feel free to contact us at bcgi@biddle.com.

Ask the Expert: PAGs vs. SSEGs

November 8, 2018 By Dan Kuang, Ph.D.

Question: Is there a difference/similarity between Pay Analysis Groups (PAGs) and the Similarly Situated Employee Groups (SSEGs)?

Answer: Yes. There’s actually a big difference between Pay Analysis Group (PAG) and Similarly Situated Employee Groups (SSEGs).

  1. SSEG: Everyone in a particular SSEG are performing duties and tasks that are similar and for that reason, it is appropriate to assume that everyone in an SSEG should be paid the same after controlling for relevant explanatory factors (e.g., tenure, performance, education, etc.).
  2. PAG: A PAG is generally comprised of two or more SSEGs. PAG analyses require the analyst to control for qualitative SSEG differences (e.g., job title, pay grade, job function).
    Why do we need PAGs if there are SSEGs? The simple answer is sample size. For example, it is possible to analyze 3-SSEGs that, by themselves, are too small to be analyzed with regression methods. By aggregating the 3-SSEGs together and controlling for important qualitative SSEG differences (e.g., job title), it is possible to evaluate the 3-SSEGs for pay disparity.

Answered by: Dan Kuang, Ph.D.; Vice President – Legal and Audit Support Services at Biddle Consulting Group

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