Jones Day attorney Alison B.Marshall weighs in on the renewed focus by the Equal Employment Opportunity Commission and the Office of Federal Contract Compliance Programs to combat pay discrimination based on race, gender, and ethnicity. 

Bloomberg BNA spoke with Marshall after her March 12 session on pay equity enforcement at the Society for Human Resource Management's 2013 Employment Law and Legislative Conference.

"The Equal Pay Act is receiving a tremendous amount of attention from the EEOC," Marshall told attendees, pointing out that the commission has designated pay equity as a top priority in its strategic enforcement plan for fiscal years 2013-2016.

On Feb. 26, OFCCP rescinded the 2006 Voluntary Guidelines for Self-Evaluation of Compensation Practices and the Interpretative Standards for Systemic Compensation Discrimination and issued a directive, establishing new enforcement guidance on compensation audits for federal contractors.

In its fiscal year 2013 budget justification submitted to Congress, OFCCP listed pay discrimination as a top priority because 2011 research by the Labor Department's Bureau of Labor Statistics showed that women are paid an average of approximately 80 cents for every dollar paid to men.

Since 2010, the agency "has closed more than 70 compliance evaluations with financial settlements remedying pay discrimination on the bases of gender and race," OFCCP Director Patricia Shiu wrote in a recent blog post. The agency "recovered more than $2.3 million in back pay and salary adjustments for more than 800 workers. But we can do more - much more," she added.

Bloomberg BNA: Is there a provision or procedure in the OFCCP compensation directive that grabs your attention?

Marshall: The term "pay analysis group" gave me pause because it's a term that we haven't heard before from the OFCCP. It wasn't clear, to me, as to what the definition of that term was going to be. It looks like it's going to be more aggregated analyses.

The other thing was the decision not to require anecdotal evidence, which is a remarkable change.

The OFCCP has said the reason for rescinding the 2006 standards was the agency felt that the guidance was not in line with Title VII [of the Civil Rights Act] precedent and the new procedures are more in line with Title VII precedent.

I questioned this, especially on anecdotal evidence. I don't think it's that clear cut in that you can find systemic discrimination absent anecdotal evidence in aggregation.

I think the U.S. Supreme Court's decision in Wal-Mart Stores Inc. v. Dukes, for instance, suggests that the court is going to have trouble with aggregated statistics. The court didn't like the fact that there were these broad regional statistical analyses.  And that is from the Supreme Court.

The point here is that I am not really sure if the new procedures bring the agency back in line with Title VII precedent.

Bloomberg BNA: Does the compensation directive apply to a contractor's single establishment? Or can it be used for a company-wide investigation into pay discrimination?

Marshall: It really depends on how the OFCCP has framed the desk audit stage. In other words, the agency can look at the one establishment, which is often the case, or can roll in corporate headquarters or look across several establishments. OFCCP has indicated, however, that the data request on compensation will focus on the job groups in the affirmative action plan.

Bloomberg BNA: Any comments about EEOC's strategic enforcement priority on pay equity?

Marshall: The EEOC can use the Equal Pay Act as a vehicle to launch an investigation. The fact is there is no requirement that a charge has to be filed. We are anticipating that the EEOC will be doing more of these types of investigations in light of the agency listing pay equity as a top priority in its strategic enforcement plan.

This raises the question, however, as to whether the commission might use compensation data obtained through an Equal Pay Act investigation to issue a commissioner charge under Title VII.

Bloomberg BNA: What are the implications for using an employee's prior salary as a factor in determining compensation?

Marshall: If two people are doing the same job, and one has a higher salary simply because that individual brought to the employer's attention during the salary negations that he or she had a higher salary at his or her former employer, then that could be problematic down the line.

Employers really need to pay attention to those types of scenarios because you would expect, at least according to the U.S. Court of Appeals for the Seventh Circuit, the salaries would eventually converge over time.

Bloomberg BNA: Any practical advice for employers in light of the compensation directive and EEOC's strategic enforcement priority on pay equity?

Marshall: I would recommend that employers consider doing privileged pay equity analyses. I emphasize "privileged" in that the analyses should be conducted under attorney-client privilege doctrine. Companies should also be careful about the documentation that is created.

In addition, employers should go back and look at the training their managers have received on setting compensation, making sure managers understand the company's procedures.

The companies should look at their documentation on what factors are used within an organization in terms of setting compensation. For example, if someone is coming in at a higher salary because he or she has a particular skill, then you need to document that justification.

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If you are interested in participating in a Q&A on enforcement actions, legal developments and news related to the Equal Employment Opportunity Commission or the Office of Federal Contract Compliance Programs or have a suggestion for a Q&A topic, send an email to lbridgeford@bna.com. You can also follow me on Twitter  @LCBridgeford.