In his first week in office, President Joe Biden revamped the U.S. Labor Department’s Office of Federal Contract Compliance Programs (OFCCP) and immediately signaled more aggressive enforcement of anti-discriminatory hiring and pay practices than that of the prior administration. Along with signing the “Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,”[1] making it the policy of his administration that “the Federal Government should pursue a comprehensive approach to advancing equity for all,” Biden appointed former Equal Employment Opportunity Commission (EEOC) Chair Jenny Yang to serve as director of the OFCCP. That selection, in addition to promises made during his campaign, suggest that there will be increased pressure on federal contractors to abide by anti-discrimination regulations, including those dealing with pay equity.

The OFCCP is responsible for ensuring that federal contractors, which employ a significant portion of the American workforce, comply with regulatory requirements. In part, this includes ensuring the enforcement of anti-discrimination regulations and equitable wages. As a consequence, it is expected that the Biden administration will revitalize the OFCCP’s analysis of Equal Information Reports (EEO-1) for contractors. EEO-1 Reports involve the number of employees by job category and by sex and race and ethnicity (Component 1) as well as aggregated wage and hours data (Component 2). Specifically as it relates to Component 2 of the EEO-1 Report dealing with wage and hours data, all federal contractors are required to report W-2 wage information within 12 pay bands and the total hours worked for employees by sex, race and ethnicity, and job category.

For years, the OFCCP has refrained from analyzing aggregated wage and hour data collected from EEO-1 Reports. Since Aug. 29, 2017, the Trump administration’s Office of Management and Budget (OMB) directed the OFCCP to pause collection of wage and hour data.[2] Rejecting the Trump administration’s stay, the United States District Court for the District of Columbia ordered the EEOC and the OFCCP to continue collecting pay and hours data for the calendar years 2017 and 2018.[3] Soon thereafter, the OFCCP entered a regulatory order indicating that it would not consider pay and hours data.[4]

Increased OFCCP enforcement is significant for federal contractors. Yang, a proponent of collecting pay and hours data during her time at the EEOC, will likely direct the OFCCP to renew its analysis of wage and hour data. Analysis of this information will reveal pay equity issues known and sometimes unknown by employers. Those findings will certainly lead the OFCCP to pursue sanctions and damages like those pursued in OFCCP v. Oracle.[5] Due to Oracle, subsequent investigations and discovery conducted by the OFCCP will likely be more – not less – stringent. In Oracle, the OFCCP alleged that Oracle breached its obligations as a federal contractor by engaging in a pattern and practice of pay discrimination on the basis of gender and race. After reviewing the pay and equity data, the presiding administrative law judge (ALJ) held that no pattern and practice of pay discrimination could be determined due to the OFCCP’s inability to explain the difference in jobs, the OFCCP’s inability to make comparisons between relevant groups of employees, and an explanation of nondiscriminatory factors that influenced pay or the position an employee occupies. Certainly, in future investigations, the OFCCP will look to gather further information pertaining to specific job categories in order to avoid a fate similar as it did in Oracle.

Federal contractors must be attentive to ensuring that anti-discriminatory practices and policies, particularly as they pertain to wage and hours issues, are implemented. Federal contractors unaware of the demographics of their workforce should strongly consider hiring private counsel to perform an audit. If you have any questions about this guidance, please reach out to a member of our Labor and Employment Group, and we will be happy to assist.