Despite resistance from the employer community, EEO-1 “Component 2” compensation reporting requirements will most likely be upheld by federal courts. As employers scramble to assemble their reports, many are also concerned with the potential risk exposure these reports may introduce. First and foremost, how will the OFCCP and EEOC use this information in their pay equity investigations?
Strategically, the OFCCP has largely shared their two-part game plan:
- Internal Pay Equity: The OFCCP will measure pay equity within a company to ensure that there is internal equity; in other words, that employees within the same EEO Category are paid equitably.
- External Pay Equity: The OFCCP will measure pay equity between companies; specifically, they will compare a company’s EEO-1 Pay Data against others in the relevant business sector.
Measuring Internal Pay Equity
To measure internal pay equity, the OFCCP is clear1:
- Mann-Whitney U test will be used to measure pay equity for gender and