Speaking at the Industry Liaison Group’s 29th annual national conference, officials from the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP) and Solicitor’s Office laid out an aggressive agenda for pursuing compensation discrimination claims against federal contractors. In the keynote address, Patricia Shiu, Director of the OFCCP, proclaimed that a “period of renaissance” is underway at the OFCCP, and noted numerous administrative, regulatory, and staffing changes the agency is implementing to “put some teeth” in OFCCP regulations and expand the agency’s enforcement capabilities.  

Federal contractors should be aware of several important changes being implemented by OFCCP that are likely to have a significant impact on both the number of audits they will face and the kind of information the agency will be demanding when audits occur:

  • According to conference speakers, the White House has taken a direct interest in OFCCP’s compensation enforcement capabilities, and has directly intervened to increase the agency’s staffing by more than 35 percent over the last two years.
  • Department of Labor attorney Michelle Duncan said the agency has “very clearly committed” more resources to litigation. In 2011, OFCCP has already filed three times the number of complaints against federal contractors than it typically did in the years prior to 2009.
  • OFCCP has proposed rescinding its 2006 Systemic Compensation Discrimination and Voluntary Compensation Self-Audit Guidelines, which provided guidance on how the agency would define unlawful sex and race discrimination. The notice of proposed rescission criticized the current standards to identify compensation discrimination as “too rigid.” OFCCP has announced that it intends to publish new standards at the time the rescission is finalized, but cautioned that the new guidelines will not lock the agency into a single, “one-size-fits-all” approach.
  • OFCCP is in the process of developing new regulations that would require employers to develop hiring goals for military veterans and persons with disabilities. The proposed changes will pose numerous practical implementation problems for federal contractors and could further impose conflicting legal obligations. For example, requiring contractors to meet “benchmarks” in recruiting and hiring veterans, most of whom are men, may expose them to sex discrimination claims.
  • OFCCP will soon publish new proposed affirmative action standards governing women and racial minorities in the construction industry.  

Federal contractors can take several steps to limit their exposure to OFCCP’s heightened regulations and enforcement, such as doing a self-audit on their pay practices, documenting the audit, and documenting the steps they take in response to the audit. Contractors should also establish record-keeping practices that clearly document all legitimate factors that explain pay disparities, such as work experience. Finally, based on our extensive experience handling OFCCP audits for clients, it is absolutely critical that contractors take particular care in how they submit their compensation data to OFCCP during audits, providing their own similarly situated employee groupings and their own up-front explanations of any pay disparities that are indicated by the data. A good initial presentation of the data can save untold hours of follow-up work with OFCCP.