On August 18, 2022, the Office of Federal Contract Compliance Programs (“OFCCP”) issued “Advancing Pay Equity Through Compensation Analysis,” a revision to Directive 2022-01, “Pay Equity Audits.” The revised Directive states that in order to determine that a contractor has satisfied its obligation to conduct a compensation analysis under 41 CFR § 60-2.17(b)(3), OFCCP requires certain documentation. Although the original Directive used the phrase “pay equity audit” to refer to contractors’ obligations under 41 CFR § 60-2.17(b)(3), this revised Directive instead uses the term “compensation analysis” to avoid any confusion regarding the nature of a contractor’s obligations.

Three things to know about the revised Directive:

  1. It explicitly reaffirms OFCCP’s position that it does not require the production of attorney-client privileged communications or attorney work product. The Directive lays out three options for providing the required documentation while maintaining such privilege:
    • a. Make available a redacted version of compensation analysis, provided that the non-redacted portions include the required facts (see below);
      b. Conduct a separate analysis during the relevant affirmative action plan (“AAP”) period that does not implicate privilege concerns and provide the analysis in full to OFCCP; or
      c. Generate a detailed affidavit that sets forth the required facts (see below) but does not contain privileged material.
  2. It identifies the documentation OFCCP requires from a contractor to determine that the contractor has satisfied its obligation to perform a compensation analysis. Such documentation must demonstrate at least the following:
    • a. When the compensation analysis was completed;
      b. The number of employees the compensation analysis included and the number and categories of employees the compensation analysis excluded;
      c. Which forms of compensation were analyzed and, where applicable, how the different forms of compensation were separated or combined for analysis;
      d. That compensation was analyzed by gender, race, and ethnicity; and
      e. The method of analysis employed by the contractor.
  3. It explains the documentation required from a contractor when its compensation analysis identifies problem areas to demonstrate that it has implemented action-oriented programs. Such documentation must demonstrate, at a minimum:
    • a. The nature and extent of any pay disparities found, including the categories of jobs for which disparities were found, the degree of the disparities, and the groups adversely affected;
      b. Whether the contractor investigated the reasons for any pay disparities found;
      c. That the contractor has instituted action-oriented programs designed to correct any problem areas identified;
      d. The nature and scope of these programs, including the job(s) for which the programs apply and any changes (e.g., pay increases, amendments to compensation policies and procedures) the contractor made to the compensation system; and
      e. How the contractor intends to measure the impact of these programs on employment opportunities and identified barriers.

The revised Directive is further evidence of OFCCP’s focus on compensation discrimination.  The revised Directive provides some clarity for contractors who expressed concern about effectively being punished for conducting thorough pay analyses with legal counsel for purposes of legal advice. Contractors should review their current compensation review processes to confirm that they will be able to produce the information OFCCP has identified as required for compliance in the event of an audit.

For a summary of the original Directive 2022-01, “Pay Equity Audits,” please see Stinson LLP’s Blog Post on OFCCP’s Issuing Directives On Compliance Evaluations and Pay Equity Audits—Government Contracting Matters (April 7, 2022).

For more information about the revised Directive and its impact on federal contractors, please contact Amy Conway, Kelly Maxwell, or Stephanie Scheck.

OFCCP’s Notice of FOIA Request and Objections

In mid-August OFCCP notified contractors that it received a Freedom of Information Act (FOIA) request for Type 2 Consolidated EEO-1 Report data (one of the reports filed by entities with multiple establishments) submitted by federal contractors and first-tier subcontractors for reporting years 2016 until 2020. OFCCP provided notice to contractors covered by the FOIA request through a published Notice in the Federal Register, contractors’ email addresses known by OFCCP, and its website. The Notice indicates that a contractor’s data will be released unless they explicitly object to it. The OFCCP has clarified that the EEO-1 Component 2 compensation report is not within the scope of the current FOIA request.

For contractors who wish to object to the disclosure of their Type 2 Consolidated EEO-1 Report data, OFCCP has a list of questions that should be addressed in the written objections. OFCCP has also created a Submitter Notice Response Portal to collect the written objections. Written objections are due September 19, 2022

For more information about the FOIA Request and assistance with objecting, please contact Amy Conway, Kelly Maxwell, or Stephanie Scheck.

 

Photo of Amy Conway Amy Conway

Amy is known for developing strong, trusting relationships while counseling clients through complex workplace issues.

Photo of Stephanie Scheck Stephanie Scheck

Clients and peers praise Stephanie’s work ethic, describing her as “quick to respond, attentive and very helpful with her opinions,” “a diligent student of the law and a substantially effective trial lawyer” and “bright, responsive and a pleasure to work with,” according to …

Clients and peers praise Stephanie’s work ethic, describing her as “quick to respond, attentive and very helpful with her opinions,” “a diligent student of the law and a substantially effective trial lawyer” and “bright, responsive and a pleasure to work with,” according to Chambers USA.

Photo of Kelly Maxwell Kelly Maxwell

With acute attention to detail, Kelly works with clients through multiple stages of the litigation process.