Be Aware of More Aggressive Enforcement of Equal Pay

Gender equality wagesThe Director of the Office of Federal Contract Compliance Programs (OFCCP), Patricia A. Shiu, just announced that prior voluntary guidelines and compliance standards for federal contractors and subcontractors to comply with equal pay obligations will be rescinded, effective February 28, 2013.  The OFCCP will be instituting new procedures which, in effect, would broaden the scope of OFCCP’s investigations and allow OFCCP to “use every enforcement tool at its disposal to combat pay discrimination.”

In connection with its new efforts to remedy pay discrimination, the OFCCP issued Directive 307, setting forth the procedures for OFCCP contractors to review contractor compensation systems and practices.  The OFCCP also issued helpful “FAQs” to assist in navigating through the Directive and will be providing webinars to assist contractors with compliance.

We have a few of our own FAQs which may be helpful to employers and in-house counsel:

Q:  Does this apply to my company?

A:  If you are an employer with federal service or supply contracts or subcontracts that exceed $10,000 or that will (or can reasonably be expected to) accumulate to more than $10,000 in any 12-month period, you are required to comply with Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974.  These three laws require that federal contractors and subcontractors not discriminate in employment on the basis of sex, race, color, religion, national origin, disability or status as a protected veteran.  (Of course, state laws may require that an employer not discriminate based on a host of other protected classes.)  Equal pay is just one form of discrimination protected by these laws.  If you have 50 or more employees and have federal service or supply contracts or subcontracts that exceed $50,000, then you are further required to have an Affirmative Action Plan. 

Q:  How will I know my company is being investigated?

A:  Usually, the OFCCP will send a Scheduling Letter to the employer requesting compensation and other data for a “desk audit.”  Based on the new directive, the OFCCP will analyze the data under the same standards as are applied in claims brought under other discrimination laws, rather than limiting their analysis to whether or not the employer had complied with previously issued OFCCP compliance standards or voluntary guidelines.

Q:  If my company is found to have discriminated, what are the penalties?

A:  Remedies for discrimination under Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 may include backpay and benefits; frontpay salary adjustments; non-discrimination training requirements; modifications in hiring, compensation, record-keeping and other policies and practices; providing training opportunities, work assignments, promotions or job placements and other affirmative action.

Taking proactive measures now, such as voluntarily conducting self-audits and taking measures to correct discovered noncompliance, is likely to place employers in a better position if the OFCCP comes knocking on your door.