The Office of Federal Contract Compliance Programs (OFCCP) recently held three “listening sessions” with representatives of the federal contractor community for feedback on “pay equity audits, multi-establishment reviews, and gender non-binary identification”. Opening the June 2022 sessions, Director Yang stated that OFCCP is soliciting stakeholder input as it prepares to implement her long-standing goal of “modernizing” the supply and services regulation (41 CFR Part 60-2).

A different set of approximately 20 representatives of federal contractors and consultants to the contractor community attended each session.

Pay Equity Review

Attendees at the pay equity session stressed the need for OFCCP to establish clear standards for review. Those present also stressed the importance that, in accordance with title Title VII requirement, Agency review consider only “similarly situated employees”. (Participants stressed that OFCCP can improperly analyze employees that the federal contractor knows have different responsibilities and possibilities for advancement, and who therefore should be paid differently.)

Participants also stressed that because contractors’ rationale for pay practices are specific to individual company business needs, there is no one-size-fits-all solution for pay analysis. This feedback is very important, particularly should OFCCP changes to the supply and service regulation add detail on how contractors should “review their compensation systems” under 41 CFR 61-2.17(b)(3).1

Attendees suggested that the Agency keep its initial review of contractor pay equity simple, using a set of tests held in common with the contractor community. OFCCP could use such tests to determine which audits warrant fuller review; the contractor could use the tests to identify issues for further analysis and appropriate action.

Participants also recommended that the Agency allow privileged pay equity reviews to remain private. They stated that by attempting to secure protected work product, the OFCCP can discourage contractors from taking the deeper look across business organizations that can help identify pay disparities. Attendees made the point that if contractors know that the privileged data will not be used against them, more will work hard to identify and remediate pay issues – to the benefit of workers.

Attendees also encouraged the Agency to focus on Compliance Officer training to ensure consistency in Agency review. Another point raised concerned the importance of transparency in pay reviews. Participants noted that statisticians reviewing the same data sets can come up with different conclusions. Sharing information on how results are derived can save OFCCP and contractors significant time – and may lead to a meeting of the minds!

Multi-Establishment Review

Director Yang made it clear that to “modernize” the supply and service regulation and permit a broader view of the contractor’s compliance program, the Agency is considering how to go beyond Affirmative Action Plans (AAPs) based on individual work location (establishment plans).

Attendees noted that many federal contractors are small firms for which reporting by work location is perfectly suitable. Also, the consensus of opinion was that lumping all work locations into a single analysis can create ‘false positive’ results, that is, indicate discrimination is likely where it does not in fact exist. A one-size-fits-all roll-up model might not reflect actual company structure, the different labor conditions of different geographies, and other elements unique to the contractor’s business. Participants asked that the OFCCP let the federal contractor decide how to structure its AAPs, with “multi-establishment” views that compare similar employees assigned to different work locations as one option.

Gender Non-Binary identification

The third session focused on gender reporting beyond the male/female ‘binary’ (two option) reporting currently mandated. Attendees asked that EEOC and OFCCP coordinate on any changes in this area. Speakers referenced the difficulties involved in any mandated form of non-binary, LGBTQ+ reporting. These include the lack of relevant census information, the relatively small size of the community, applicant and associate reluctance to self-ID, and the complexities of updating AAP software. Others noted that as LGBTQ+ inclusion remains relatively new in the workplace, a focus on creating a culture where employees feel comfortable about bringing their authentic selves to work might be a better first step than mandated reporting.

Conclusion

The sessions were a good opportunity for the contractor community to be heard. Excellent advice was given by knowledgeable practitioners and consultants. The question, of course, is what OFCCP will do with this information.

The focus of OFCCP’s questions in each session was on how the Agency can expand its reviews beyond individual work locations. The focus of the participants responses was that global views do not always do justice to the complexities of contractors’ operations. Contractors insisted that there is no one-size-fits-all solution for pay equity analysis, no single AAP structure suitable for all contractors, and more questions than answers on non-binary reporting. Let’s hope that the OFCCP takes this feedback to heart.

1OFCCP outlined some requirements for this review in Directive 2022-01. See Circa’s blog concerning the Directive. Agency statements made after the March 2022 release of the Directive clarify that the contractor is, for now at least, free to choose its own methodology for reviewing its compensation system. Also, the Agency will not require the production of privileged compensation analyses.

Author

Paul McGovern
Managing Partner
Praxis Compliance

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