Compensation – it’s on everyone’s mind and it’s what everyone was talking about at the 33rd Annual ILG National Conference in New York City.  Conference attendees, government officials and practitioners alike were all talking about pay and the tools available to employers and agencies to identify and investigate compensation issues.

Our Jackson Lewis colleague Scott M. Pechaitis has put together his thoughts on OFCCP’s use of a new “tool” in its pay enforcement toolbox: the Compensation Manager Interview.

This is what Scott has to say:

As the Obama Administration continues to make headlines promoting “equal pay,” the directive from the White House to EEOC and OFCCP is, “we know pay discrimination exists – go find it.” OFCCP, which historically has not brought back a lot of compensation discrimination findings and settlements, has sharpened the tools in its compensation investigation toolbox, including the following:

Over the last two years, OFCCP has systematically overhauled its approach to investigating pay discrimination. And now, the Agency has developed yet another investigatory tool – compensation manager interviews.

Now, before sending pay data to the Agency’s statisticians, OFCCP is conducting compensation manager interviews to (1) learn how pay is administered (i.e., what larger groups are appropriate for analysis), (2) determine what additional components of compensation comprise total compensation, (3) ascertain what policies, documents, and analyses are available to be requested, and (4) identify any and all variables affecting pay for future data requests.

This makes the compensation manager interview critically important to the success of an OFCCP compensation investigation. The Agency will use the information learned during the interview to analyze your pay data. And yet, many employers are not treating the situation seriously or are otherwise failing to properly prepare for these important interviews. So how should you prepare for a compensation manager interview?   Below are four important tips to help you prepare for and successfully conduct an OFCCP compensation manager interview.

  1. Review Your Pay Policies

OFCCP will review the policies to determine what data to ask for in subsequent requests, how to group employees, and for other documents and policies referenced therein. Know what they say before you turn them over.

  1. Communicating the Theme: Analyze Your Pay Data to Develop “Talking Points”

The employer’s goal in the compensation manager interview should be to convey themes explaining differences in pay, which is why it pays to do pay analyses in advance of the interview.

Federal contractors are required to analyze their compensation systems for EEO issues at least annually. 41 CFR § 60-2.17(b)(3). You should use your pay analyses to help shape the compensation manager’s talking points. The analyses should tell you what factors affect pay, what groupings look best for your organization, and where there are any issues.

The answers to these questions should become the Compensation Manager’s “talking points” in how pay is administered. Then, when OFCCP goes to analyze pay, it becomes a self-fulfilling prophecy – what we tell OFCCP about how pay is administered is confirmed by their analysis.

  1. Identify and Prepare the Interviewee

The interviewee should be someone who has first-hand knowledge of pay practices at the ground level. Consider conducting a mock interview to get the interviewee used to the format, tone, and types of questions that will be asked. Prepare the interviewee like a formal deposition. Substantively, be prepared to discuss all types of pay, including what groups of employees are eligible for each type of pay. For each grouping and each type of pay, be prepared to discuss how and when pay decisions are made. You do not need to be able to (and should not have to) speak to the pay for each employee included in the audit.

  1. OFCCP Requests for Pay Analyses

And one final word of caution – OFCCP will likely request copies of your pay analysis.  The Agency knows we must conduct annual pay analyses as part of our affirmative action plans and will often ask for these analyses during the compensation manager interview or in subsequent data requests. So it is more important than ever to make sure these analyses are protected by the attorney-client privilege.

And, the Agency will make us “prove” the privilege, which means much more than just having a lawyer involved in the process.  There are certain precautions an attorney must take to establish the privilege and protocols the employer’s team must follow to maintain it. 

While it is important to proactively analyze your pay data, it is equally importantly to take great care in establishing and protecting the privilege when doing so.  Otherwise you risk handing OFCCP the best evidence against you.