Have you ever been lost? I mean really lost, like you have no idea where you are or which way is up. That's how some federal contractors felt when they heard the news that the OFCCP is going to rescind the compensation standards and guidelines. Director Shiu made the announcement at the National Industry Liaison Group Conference earlier this month. Since then, a lot of employers have been experiencing what some have referred to as an "informational void".
What's the big deal about the compensation standards and guidelines? They served as a roadmap for OFCCP compliance officers and employers alike. The standards codified how the OFCCP was enforcing systemic compensation discrimination. They gave employers some insight into the OFCCP's process, and helped them proactively identify potential problem areas. Since they were published in June of 2006, nearly every federal contractor relied on them to perform the required compensation self-evaluation. Even employers who don't have federal contracts used them, and I've relied on them in designing compensation analyses for my clients.
And now they're being rescinded with no replacement in sight. The OFCCP hasn't given us any idea of what the replacement will look like, or when a new set of standards will be published. This uncertainty leads to speculation - will they abandon multiple regression analysis? If they do, what will they use? A means test? Matched pairs? The "Four-Fifths Rule" popularized by the EEOC? The OFCCP and the EEOC have promised greater collaboration, so it's possible...
Why are they rescinding the standards and guidelines? Here's what Director Shiu had to say in her keynote speech at the NILG:
OFCCP will rescind the 2006 Guidance and will issue an Advanced Notice of Proposed Rulemaking to solicit your ideas and views about the new wage data collection instrument.
What? A new wage data collection instrument? What does that have to do with compensation standards and guidelines? It ties back in to my earlier post on the National Equal Pay Enforcement Taskforce. Part of the agenda of NEPET is to identify ways to collect wage data from employers. With this flood of data, regulators are supposed to be able to better identify employers who are out of compliance. If we're speculating, my guess is that the replacement guidelines will rely heavily on this data collection tool, and the whole process will be a lot more automated than it is now. The current administration is focusing on compensation issues: gender pay equity, wage and hour compliance, misclassification of employees, etc., The Department of Labor is continuing to ramp up enforcement efforts. In order to keep up with the workload of increased enforcement, some kind of automation is needed. Remember the EEOC backlog? The OFCCP remembers, and doesn't want to get itself into the same kind of situation. My guess is that all of this new data will be fed into an analysis program or algorithm, and the program will simply spit out an "OK" or "VIOLATION!" result.
My concern with this - and remember, this concern is based on my previous speculation - is that employers are no longer going to have the guidance they need from the OFCCP. Rather than providing employers with a roadmap, the OFCCP is now going to collect your data and tell you where you are. It's kind of like heading out on the road, not knowing your ultimate destination, and the only way you have of getting there is someone telling you "drive 50 miles north. When you get there, stop, and I'll tell you what to do next." It might get you where you're going, but it's a long and difficult process.
My advice for employers is this: you're not as lost as you think you are. Don't wait for the OFCCP to come and rescue you with new compensation standards and guidelines. You know your ultimate destination: non-discriminatory compensation policies and practices. Chances are, you're already on your way to that destination. Use what you already know. Keep a clean house when it comes to documentation. Perform compensation self-audits using reliable statistical tools. When in doubt, ask your fellow travelers or the gas station attendants who happen to be experts in equal employment opportunity. If we stay proactive, it's likely that we'll get to the final destination before the OFCCP does.
Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. For more than a decade, she's been working with businesses and government agencies providing expert EEO analysis. Stephanie has published several articles on examining compensation systems with respect to equity. She is the host of The Proactive Employer, and is the Director of the Equal Employment Advisory and Litigation Support Division of MCG.
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