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OFCCP Revises Directive on Compensation Analysis

On August 18, 2022, the Office of Federal Contract Compliance Programs (OFCCP) published a revised Directive, “Advancing Pay Equity Through Compensation Analysis” (“Directive”)to clarify its guidance and explain how the agency reviews contractors’ documentation of compliance. For details on the previous guidance, refer to our April blog post.

The revised Directive states that in order to determine that a contractor has satisfied its obligation to conduct a compensation analysis, OFCCP requires certain documentation to demonstrate compliance.

Three things to know about the revised Directive:

  1. It explicitly reaffirms the agency’s position that it does not require the production of attorney-client privileged communications or attorney work product.
  2. It identifies the documentation that OFCCP requires from a contractor to determine that the contractor has satisfied its obligation to perform a compensation analysis.
  3. It explains the documentation required from a contractor when its compensation analysis identifies problem areas to demonstrate that it has implemented action-oriented programs.

Further insight is available in the OFCCP Director’s blog post.

Next Steps for Employers

While directives do not change the laws and/or regulations governing OFCCP’s programs and do not establish any legally enforceable rights or obligations, covered contractors should ensure, or continue to ensure, that they are monitoring their pay practices for equity. Employers should be careful to utilize unbiased procedures for determining wage rates, should proactively conduct a regular analysis of compensation systems, and retain documentation from those analyses in accordance with recordkeeping requirements to ensure that if they are requested by OFCCP, the employer is able to produce records showing compliance. A good review will identify barriers to pay and ensure the development of action-oriented programs to address pay inequities.

Employers should also continue to expect increased federal and state legislation related to pay equity. Notably, several states and localities already have established laws which impact private employers and are more far reaching than just federal contractors.

HR Works will continue to monitor any final rulemaking that is produced related to the President’s EO and provided updates as needed.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.