The Office of Federal Contract Compliance Programs (OFCCP) is charged with enforcing the affirmative action and non-discrimination obligations of federal contractors and subcontractors. Through compliance reviews and complaint investigations, OFCCP can allege and seek remedies for discrimination in hiring, compensation, and other employment scenarios.

In late July of 2013, OFCCP published its internal Directive 310 addressing the calculation of back pay awards for victims of discrimination. Two types of back pay relief are available to OFCCP when trying to calculate awards—“formula relief” and “individual relief.” Formula relief—the preferred method of calculating damages that cannot be ascertained with specificity—is generally used for systemic cases of hiring discrimination. Individual relief is more appropriate for victim-specific situations, such as compensation discrimination claims. Mitigation options and prohibitions are also discussed in the Directive.

Most contractors will never need to parse Directive 310’s nuances regarding the calculation and mitigation of damages in OFCCP discrimination claims. However, contractors faced with the possibility of settling or litigating OFCCP violations should note that despite Directive 310’s mandates, OFCCP settlements can involve extensive negotiation over the amount and parameters of make-whole relief. Our experience in this area with both systemic and individual discrimination claims reveals that the settlement of discrimination claims is not only a legal issue, but also a business decision. Properly evaluated, Directive 310’s information can be used to positively affect a contractor’s monetary obligations to resolve systemic or individual claims of discrimination.