Employment Law Blog

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Mar 14, 2013

Affirmative Action: OFCCP updates compensation analysis procedures

Affirmative Action 

The Office of Federal Contract Compliance Programs (OFCCP) has finally published new procedures describing how it will analyze compensation during affirmative action audits.

The Office of Federal Contract Compliance Programs (OFCCP) has finally published new procedures describing how it will analyze compensation during affirmative action audits. The agency rescinded its 2006 guidance, which it found to be too rigid in practice. Now the agency says it will use a flexible approach, using all possible tools at its disposal. During an audit, the compliance officer will establish “pay analysis groups” for “comparable” employees. The OFCCP’s diagram of their new process looks like an upside-down pyramid: Start with large groups if applicable, then compare small groups, and then compare individuals. The agency says it will consider all employment practices that affect compensation, including whether employees are steered into lower-paying jobs based on race or gender. The new procedures apply to audits scheduled on or after February 28, 2013 (OFCCP Directive 307).

Tips:  In addition to the new directive, the OFCCP has posted a fact sheet and detailed FAQs on its website. They are also hosting free webinars on March 11 and March 22; we encourage you to register soon, as these will likely fill up fast.

The most challenging aspect of the new directive for employers is that the OFCCP in essence is giving its compliance officers carte blanche to determine which jobs should be grouped together for purposes of analyzing pay. They may take into account a variety of factors to determine whether employees are similarly situated, and those factors may vary depending on each specific analysis. Because it’s not possible to predict what groupings or methods they will choose in a given audit, it’s important as an employer to ensure that you have clearly defined your own standards for pay decisions, and can defend them on a job-related, non-discriminatory basis. If you have any questions, please contact Karen Davis or your Vigilant affirmative action representative. If you are interested in learning more about Vigilant's Affirmative Action services check out our brochure.

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