OFCCP Proposes Rescinding Standards for Systemic Pay Bias

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The Labor Department's Office of Federal Contract Compliance Programs is officially proposing to rescind Bush-era interpretative standards for systemic compensation discrimination and voluntary guidelines for self-evaluation of pay practices for federal contractors and subcontractors under Executive Order 11246, according to a notice published in the Jan. 3 Federal Register (76 Fed. Reg. 62).

The agency said it is proposing to rescind the interpretive standards because they have limited its ability to “effectively investigate, analyze and identify compensation discrimination.” Additionally, OFCCP said, the voluntary guidelines have been “largely unused” by federal contractors and have “not been an effective enforcement strategy.”

OFCCP issued the standards and guidelines in 2006 under Executive Order 11246 (57 BTM 193, 6/20/06). The agency initially announced its intent to rescind both guidances this past July as part of recommendations issued by the White House's National Equal Pay Enforcement Task Force. OFCCP Director Patricia Shiu reiterated the agency's plans in August.

According to the notice, OFCCP said it also is proposing to “establish procedures for investigating compensation discrimination through the traditional means of using its [Federal Contract Compliance Manual (FCCM)], directives and other staff guidance.”

The rescission proposal follows OFCCP's announcement in DOL's semiannual regulatory agenda of plans to issue in February an advance notice of proposed rulemaking for a new contractor compensation data collection tool.

Comments regarding the proposed rescission may be submitted online at http://www.regulations.gov, by fax at (202) 693-1304, or by mail to Director, Division of Policy, Planning, and Program Development, OFCCP, Room N3422, 200 Constitution Ave. N.W., Washington, D.C. 20210. Comments will be accepted for 60 days after the notice's publication in the Federal Register.

Standards Called Rigid, Limiting

Interpreting OFCCP regulations and Title VII of the 1964 Civil Rights Act, the 2006 interpretive standards incorporated three principal components for assessing systemic compensation discrimination.

They introduced a “similarly situated” standard for grouping and comparing employees, proscribed the use of multiple regression analysis, and required anecdotal evidence for determining the existence of systemic pay discrimination. Those procedures, OFCCP said, were “to be followed regardless of the facts of a particular case.”

“The rigidity of the [s]tandards represents a significant departure from OFCCP's traditional tailoring of compensation investigation and analytical procedures to the facts of the case based on Title VII principles,” the agency said. “Investigations of systemic compensation discrimination are complex and nuanced. The use of a particular tool, or combination of tools, depends upon the facts of a specific case, and includes consulting with labor economists and other experts, as appropriate.”

Additionally, OFCCP said the standards “significantly” limited its ability to identify pay discrimination by “imposing overly narrow investigation procedures that go beyond what would be required under Title VII principles in litigation.”

The agency cited as an example the standards' requirement for anecdotal pay discrimination evidence to support its statistical analysis before the agency could issue a notice of violation.

“But under Title VII, a pattern or practice class-wide disparate treatment case may be proven by statistics,” OFCCP said. “Moreover, requiring anecdotal evidence is particularly problematic in compensation cases as employees often are unaware of the compensation received by co-workers and, as a result, anecdotal evidence from victims of pay discrimination may not exist.”

The agency further stated that the use of multiple regression analysis is “overly narrow” and not required under Title VII.

“While a multiple regression analysis may be a useful tool in identifying compensation discrimination, other statistical or nonstatistical analyses may be better suited, depending on the facts of the case,” OFCCP said.

With regard to the voluntary guidelines for contractor self-evaluation of pay practices, OFCCP said contractors have “rarely used” them.

The guidelines, OFCCP said, established “rigid numerical thresholds by which the similarly situated employee groupings are to be analyzed.” For example, the guidelines encouraged contractors to annually compare similarly situated employees in groups “large enough for meaningful statistical analysis.” Such groups usually consisted of at least 30 employees.

“OFCCP believes that for some contractors, these thresholds may be exceedingly difficult to meet,” the agency said.

In the “few instances” in which contractors used the guidelines for conducting compensation analysis, OFCCP said, the guidelines' coordination procedures “have not proved to be an efficient method for verifying that the contractor's compensation system is not discriminatory.”

By Jay-Anne B. Casuga

Text of the notice of proposed rescission can be accessed at http://op.bna.com/dlrcases.nsf/r?Open=jaca-8cmkbp.