Labor Dept. to Relax Obama Pay Bias Policy, Hand Reins to Businesses

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By Ben Penn and Porter Wells

The Trump administration plans to ease the way it reviews federal contractors for pay discrimination by letting businesses help shape those investigations, two sources with knowledge of the plans told Bloomberg Law.

The Labor Department will rescind an Obama-era policy as soon as April 20, instructing investigators to analyze pay rates among groups of workers at a particular business based on job categories set by the companies. The DOL currently audits federal contractors for salary bias by determining for itself whether certain workers should be considered to be doing the same job.

The change could have significant consequences for companies—and their workers—that do business with the federal government. It would allow businesses to shape the random Labor Department audits by determining which workers investigators should be comparing for possible pay bias.

“It sounds like another effort by this administration to really empower employers to hide pay discrimination under the rug,” Emily Martin, general counsel at the National Women’s Law Center, told Bloomberg Law. “It does seem like a clear indicator that this OFCCP thinks that the fox is well qualified to guard the henhouse.”

The new guidance replaces a 2013 DOL directive that the agency’s Office of Federal Contractor Compliance Programs used as leverage to reach multimillion-dollar settlements with State Street Corp. and Humana. The Obama Labor Department also targeted corporations like Google, Oracle, and JPMorgan for allegedly paying women or minorities less than their similarly situated counterparts.

The OFCCP audits federal contractors—identified in a “neutral selection process”—to ensure they abide by pay discrimination regulations and other worker protections.

The new policy comes amid calls for tougher compensation bias enforcement from worker advocates. Those groups highlighted what they said is a persistent gap between pay for men and women as part of an annual awareness day April 10.

The move to replace the Obama-era policy answers calls from the U.S. Chamber of Commerce and its federal contractor members, who criticized the 2013 directive for being overly broad and for side-stepping notice-and-comment rulemaking.

“I think it’s about time, if they do it,” Larry Lorber, a former OFCCP official during Republican administrations, told Bloomberg Law of the potential rescission. “It’s really a productive step because it will bring them back to dealing with compensation issues as the law requires, rather than just an arbitrary set of methodologies which don’t have any basis in the law.”

Lorber, who now represents businesses at Seyfarth Shaw in Washington, contributed to the U.S. Chamber’s 2017 report on how to overhaul the OFCCP. That report, which recommended rescinding the Obama directive in question, has been reviewed by the Trump-appointed OFCCP Director Ondray Harris and his adviser, Craig Leen.

Both Leen and Harris are said to be the driving forces behind the new policy.

The DOL did not immediately provide a comment.

Ends Major Obama Priority

Enforcing pay equity by relying on the soon-to-be erased policy—known as Directive 307—was a top priority for the OFCCP under the Obama administration.

The 2013 directive rescinded two Bush-era pay discrimination guidance documents. Then-director Patricia Shiu said that the instructions were designed to both help investigators find and combat pay discrimination and to give contractors guidance on pay equity practices.

Before rescinding the Bush-era guidance, the OFCCP gave public notice and called for comments from stakeholders on what should be considered in the replacement directive.

The OFCCP engaged in a “long and thoughtful process” to draft the Directive 307, Pam Coukos told Bloomberg Law after being told of the plans to rescind it. Coukos was an OFCCP senior program adviser with a specialty in compensation discrimination during the Obama administration.

The office took on “a large effort to train our investigators to make sure they applied strict factual, legal, and statistical rigor to each compliance evaluation,” Coukos said.

With assistance from Jay-Anne Casuga

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