OFCCP ‘Compensation Data Collection Tool’ Notice Published in Federal Register

The Office of Federal Contract Compliance Programs’ (OFCCP) much awaited Advance Notice of Proposed Rulemaking (ANPRM) regarding ‘Non-Discrimination in Compensation; Compensation Data Collection Tool’ was recently published in the Federal Register. In this ANPRM, the OFCCP is inviting public ideas, comments, or concerns in the form of answers to their 15 questions by October 11, 2011. The responses will shape the development and implementation of a compensation data collection tool. OFCCP intends to use this tool to gain “insight into potential problems of compensation discrimination at the establishment level.” Additionally, they could use the data collected “to conduct analyses at the establishment level, as well as to identify and analyze industry trends, Federal contractors' compensation practices and potential equal employment-related issues.”
 
Background:
As part of the affirmative action program, OFCCP required contractors to conduct in-depth analyses of their compensation systems to ensure non-discrimination, and collect limited compensation data as part of compliance evaluations. During the last ten years, contractors have seen the Equal Opportunity Survey (EO Survey) come and go as an annual reporting requirement. The survey required a portion of contractors to submit information to OFCCP independent of compliance evaluations, which collected information on personnel actions, compensation, and time in company by AAP job group. OFCCP hoped contractors would use the EO Surveys as a self monitoring tool and to focus their resources on contractors that were likely to be in non-compliance. The survey was rescinded in 2006 after an independent study concluded “the EO Survey had little predictive value as a tool for indicating discrimination or non-compliance.” Currently, the agency points to recent statistics that indicate “women still earn only 77 cents for each dollar earned by a man” and the “narrowing of the pay gap has slowed since the 1980’s [sic].” The agency makes the case that race and ethnicity-based pay gaps put minority workers at a disadvantage, discredits the role of non-discriminatory factors like work experience and education, and postulates that job segregation could be the root cause of the inequity. Hence, designing a new tool and eliminating compensation discrimination in the Federal contractor community is a priority issue for OFCCP.
 
Purpose of the Proposed Tool:
The ANPRM states the purpose of the proposed tool is to identify “potential problems of compensation discrimination at the establishment level that warrant further review or evaluation by OFCCP or contractor self-audit.” The tool will primarily be used by OFCCP for screening purposes. It will help identify contractors where compensation may need investigation in the form of focused reviews or full compliance reviews. Below is a list of the 15 questions in which OFCCP is soliciting feedback:
 
  1. What data should be collected to assess whether OFCCP should investigate a contractor’s compensation decisions or policies? The ANPRM suggests: averages of starting salary and total compensation; minimum and maximum salary; standard deviation or variance; average tenure; and numbers of workers by race or ethnicity and gender. Another suggestion is average compensation data by job series. A job series may be a department or a classification such as all engineers or secretaries.
  2. How should the compensation data be grouped? Suggestions are EEO-1 categories, AAP job groups, standard occupational classification codes (commonly known as census codes), job title, or job title within EEO-1 category.
  3. What should be considered compensation? W-2 earnings, base salary, holiday pay, hourly rate, shift differential, commission, stock options, and health and welfare benefits are all options up for consideration.
  4. What questions should the OFCCP ask contractors to help them understand their compensation systems? These questions would likely be used in the initial request once compensation issues are identified during audits.
  5. OFCCP may use the data to perform industry-wide trend analyses. If such an analysis were completed, what type of analysis—in terms of types of data and job groupings collected—would be appropriate?
  6. OFCCP may want to conduct industry-specific analyses. Once an industry is identified for further review, what data could be used to flag contractors within that industry for further review?
  7. OFCCP could use the compensation data to perform nationwide multi establishment compensation reviews. What data should be used for this purpose? What are the advantages and disadvantages of collecting data on a nationwide basis versus an establishment basis, or on both an establishment basis and nationwide basis?
  8. OFCCP would like feedback from contractors about their methods and processes for collecting and reporting this compensation data on an establishment basis, and information currently available in the HRIS. Contractors are invited to provide a cost/benefit analysis of providing this data.
  9. OFCCP would like the contractor community to use the tool to assess the effect of compensation decisions. The agency would like feedback on what categories of data would be most useful to contractors in conducting such internal assessments.
  10. The agency is seeking comments on the strengths and weaknesses of the compensation section of the previously used EO Survey.
  11. OFCCP is considering requiring data be submitted in electronic format. Comments are requested on the preferred formats to submit data (Excel®, web based forms, etc.) and types of databases that contractors currently use to maintain payroll and personnel data.
  12. The agency is also proposing requiring submission of compensation data as part of the Request for Proposal process in bidding for future Federal contracts. They intend to use this data to conduct trend analyses and to target contractors in post-award compliance reviews. OFCCP would like to know benefits or drawbacks of this approach.
  13. The agency requests comments on what factors to consider in extending the scope of this tool to include construction contractors.
  14. OFCCP is looking for “constructive suggestions for the design, content, analysis, and implementation of a compensation data collection tool.”
  15. In proposing this rule, OFCCP must consider the impact on small businesses, non-profit organizations, and government jurisdictions. They are specifically seeking comment on the types and number of small businesses that may be impacted by this. The agency is also asking such entities to provide:
  • Identifiable costs associated with such data collection
  • Alternative measures that can be adopted by the OFCCP to help in fulfilling its objective and minimizing impact on small entities (one suggestion was to collect the wage, race, and gender information with the quarterly unemployment insurance tax payments)
 
In response to these sweeping changes in how the agency would like to collect compensation data, Berkshire Associates will be submitting comments to the agency before the deadline of October 11, 2011. If you would like to contribute to our response in a cited or anonymous capacity, please send your responses to comments@berkshireassociates.com.
 
Berkshire’s experts will continue to monitor developments in this area and provide updates as needed.