OFCCP’s New Compensation Evaluation Directive
March 15, 2022
The OFCCP issued Directive 2022-01, Pay Equity Audits, to help mark Equal Pay Day on March 15, 2022. The new Directive provides detailed information on how OFCCP will assess compliance with federal contractors’ obligation to conduct an annual in-depth analysis of their compensation systems to determine whether there are gender-, race-, or ethnicity-based disparities, as required in OFCCP’s regulations (41 CFR 60-2.17(b)(3)).
The OFCCP’s new Directive takes an expansive view of what the required analysis should include, and lists examining pay disparities across similarly situated employees, looking broadly at a contractor’s workforce (across job titles, levels, roles, positions, and functions) to identify patterns of segregation by race, ethnicity, and gender, which may result from assignment, placement, or promotion barriers that drive pay disparities. OFCCP notes that it may request additional information, including the contractor’s pay equity audit, to investigate the contractor’s compliance. The question of whether pay equity studies prepared at the direction of counsel, that are privileged, must be disclosed to OFCCP also is addressed.
Key Takeaways: OFCCP will demand much greater information to meet the obligation to annually conduct the in-depth analysis of their compensation systems. Federal contractors should conduct an assessment of their compensation systems for each AAP or Functional AAP that can be provided to the Agency during an audit. The regulatory compliance assessments should be separate from the confidential, attorney-privileged pay equity compliance audits that well-counseled employers conduct.
FortneyScott can assist in meeting federal contractors’ regulatory obligations to conduct in-depth analysis of their compensation systems, and in conducting privileged pay equity compliance audits. Please contact your FortneyScott attorney or email us at info@fortneyscott.com.
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