Speaking to the Institute For Workplace Equality during its 2022 Annual Summit in Washington D.C., personnel from the U.S. Department of Labor Solicitor’s office (OFCCP’s attorneys) clarified the intent of the Agency’s new Compensation Directive 2022-01.  Speaking to conference attendees, Beverly Dankowitz, Associate Solicitor for the Civil Rights and Labor- Management, explained the purpose of Directive 2022-01: Pay Equity Audits is to promote greater attention to proactive audits, sharing that the Directive was in no way intended to chill contractors’ work on pay equity.

Acknowledging some confusion stemming from the Agency’s Directive, Beverly also clarified OFCCP’s intent around the issue of contractors’ privileged proactive pay equity analyses, reporting that OFCCP does not want contractors’ privileged studies.  Instead, OFCCP is looking for, and entitled to, demonstration of compliance with 41 CFR 60-2.17(b)(3) which requires an in-depth analysis to evaluate contractor compensation systems to determine whether there are gender-, race-, or ethnicity-based disparities.  To be clear, the Solicitor’s office does not believe this requires disclosure of privileged analyses – if OFCCP can confirm, likely through some question asking, that the study is privileged, OFCCP “will not ask for the study.”

The key here though is contractors need to be able to demonstrate compliance  – and Bev provided guidance on this point as well.  OFCCP has not told contractors what analysis is required – at least not yet.

You don’t have to do a regression, no advanced statistics, you just have to do something.

To be clear, the “something” should rise above the level of perfunctory – it has to at least demonstrate “evaluation of gender-, race- or ethnicity-based disparities.”

Another important take away from the presentation was the confirmation that Directive 2018-05 is still in effect and on which contractors should rely for information as to how OFCCP is evaluating contractor pay.  As a reminder Directive 2018-05 states

If a contractor provides its compensation hierarchy and job structure in the submission to the Itemized Listing, OFCCP will attempt to design its analysis based on that structure. Nevertheless, this assumes that the structure provided is reasonable,¹¹ that OFCCP can verify the structure as reflected in the contractor compensation policies, if necessary, and that the analytical groupings are of sufficient size to conduct a meaningful systemic statistical analysis.¹²

In the absence of information about a contractor’s compensation system, OFCCP will conduct its preliminary desk audit analysis using either EEO-1 or AAP job groups, provided they are reasonable,¹³ meet the requirements of 41 C.F.R. § 60-2.12, and are of a sufficient size to conduct a meaningful systemic statistical analysis. OFCCP will control further for sub-job groupings, functions, units, or titles, as appropriate. During the preliminary analysis, OFCCP will also control for tenure, full-time status as well as other factors, as appropriate.

We anticipate continued developments and discussions regarding OFCCP’s evaluation and enforcement of contactor compensation obligations for stay tuned for more!