OFCCP Proposes Rescission of Compensation Discrimination Guidance Documents

The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) is proposing to rescind guidance materials addressing compensation discrimination that would ultimately give the agency more leeway in finding federal contractors and subcontractors liable for pay disparities. According to the agency, the first guidance document at issue – Interpreting Nondiscrimination Requirements of Executive Order 11246 with respect to Systemic Compensation Discrimination (Standards) (pdf) – has limited the OFCCP’s ability to “effectively investigate, analyze and identify compensation discrimination.” As for the second document up for rescission – Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Executive Order 11246 with respect to Systemic Compensation Discrimination (Voluntary Guidelines) (pdf) – the OFCCP claims that it has been “largely unused” by federal contractors and is not an effective enforcement strategy.

Executive order 11246 requires federal contractors and subcontractors to provide equal employment opportunity through affirmative action and nondiscrimination, including compensation nondiscrimination. The OFCCP is charged with auditing and enforcing this nondiscrimination requirement and issuing related compliance materials. In 2006, the agency issued the two aforementioned documents. The Standards, according to background material included in the rescission notice, “set forth a new, rigid procedure for investigating and analyzing systemic compensation discrimination cases.” Under the Standards, the OFCCP cannot issue a notice of violation (NOV) to the contractor unless it also has anecdotal evidence to support the agency’s statistical analysis of alleged pay inequities. In addition, the Standards require the agency to use multiple regression analysis to identify compensation discrimination. Both of these obligations, the OFCCP claims, are overly restrictive and “undermine OFCCP’s ability to vigorously investigate and identify compensation discrimination.”

The OFCCP finds fault with the Voluntary Guidelines as well. Such guidelines establish procedures contractors may use to conduct the required self-analysis of their pay practices. Contractors whose self-evaluation “reasonably meets” the Voluntary Guidelines’ procedures are deemed to be in compliance. The agency claims, however, that contractors have rarely used the these procedures, and that the analytical model established by the guidelines is too rigid.

If the Standards are rescinded, the OFCCP says that it will “reinstitute the practice of exercising its discretion to develop compensation discrimination investigation procedures in the same manner it develops other investigation procedures.” If the Voluntary Guidelines are rescinded, the OFCCP advises that contractors will still be required to conduct self-evaluations of their compensation practices.

This proposed rescission follows other recent changes instituted by the OFCCP to strengthen its enforcement efforts.

Comments on the proposed rescission must be made within 60 days of the publication of the notice in the Federal Register, which is scheduled for January 3, 2011. All comments must contain the identification number: 1250-ZNE, and be submitted in one of the following ways: through the federal eRulemaking Portal, via facsimile: (202) 693-1304 (for comments of 6 pages or fewer), or by mail to: Director, Division of Policy, Planning, and Program Development, Office of Federal Contract Compliance Programs, Room N3422, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

Photo credit: borisyankov

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.