"Take a good look my dear. It's an historic moment you can tell your grandchildren about."
-Rhett Butler, Gone With The Wind
On February 26, the Office of Federal Contract Compliance Programs (OFCCP) officially rescinded the "Standards" and "Voluntary Guidelines", two enforcement guidance documents on pay discrimination (read the News Release here).
In short, the Standards established analytical procedures followed by OFCCP when issuing a Notice of Violation alleging systemic compensation discrimination. The Voluntary Guidelines provided a methodology for contractors' self-evaluation of their pay practices.
The rescission, effective February 28, 2013, clears the way for OFCCP to use "broad Title VII principles" in its enforcement of equal pay laws. In her blog post about the rescission, Director Shiu stated the Standards forced a "narrowly defined, cookie-cutter approach to evaluating contractor pay practices" that "prevented [OFCCP] from detecting evidence of illegal pay discrimination."
The practical implication of the rescission is that contractors are now left with minimal guidance on equal pay compliance. Director Shiu acknowledged the importance of providing guidance to contractors, noting that "[the contractor community] asked, quite reasonably, that if we rescinded the old guidance, we also provide clarity on how we would evaluate their compliance."
The Notice of Rescission outlines a five-step process the agency will use when reviewing contractor pay practices:
- Determine the most appropriate and effective approach from a range of investigative and analytical tools;
- Consider all employment practices that may lead to compensation discrimination;
- Develop appropriate pay analysis groups;
- Investigate large systemic, smaller unit and individual discrimination;
- Review and test factors before including them in the analysis.
The lengthy discussion is non-specific, referring to tools and techniques could be used and how this new open-endedness will benefit OFCCP in detecting all forms of pay discrimination. Based on my review of the Notice of Rescission, Directive, Fact Sheet, the Compliance Assistance page and Frequently Asked Questions, the guidance available right now boils down into the following: application of broad Title VII principles on a case-by-case basis.
The Notice also indicates that the types of questions addressed by OFCCP will be expanded to include assignment and selection decisions:
Pay discrimination can be easy to spot, like a clear pattern of paying women less than men in the same job, where they are just as qualified. But it can also be complex, like a practice of discriminating against African-American sales workers in handing out territory assignments - so that no matter how well they perform, they can never have the same earnings opportunities as their white counterparts. Title VII addresses all forms of compensation differences, including those that come from channeling a favored group into the better paying entry level jobs with better long-term oppotunities, or where glass ceillings or other unfair promotion practices wrongly block advancement of talented workers on the basis of illegal criteria like race or gender.
It seems as though OFCCP pay investigations will now be akin to TItle VII compensation discrimination litigation in both content and form. This means that contractors will be facing more uncertainty. How will you prepare?
Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. Since 1999, she's been working with businesses and government agencies providing expert quantitative analysis. Stephanie's articles on examining compensation systems for internal equity have appeared in professional journals and she has appeared on NPR to discuss the gender wage gap. Stephanie is the founder of Thomas Econometrics Inc., the host of The Proactive Employer radio show, and author of the upcoming book Compensating Your Employees Fairly: A Guide to Internal Pay Equity. Follow her on Twitter at @proactivemployr.
image courtesy of Wikimedia Commons