How will OFCCP review two compensation snapshots?

OFCCP’s new Supply and Service Scheduling Letter and itemized Listing expands the data that federal contractors must submit during an audit. Some of the most significant changes are with respect to Item 19, which now requires that contractors provide OFCCP with two years of employee compensation data for all employees as of (1) the date of the organizational display or workforce analysis and (2) as of the date of the prior year’s organizational display or workforce data.

You may be wondering how OFCCP will analyze the two compensation snapshots you provide with your initial submission. While only time will tell how OFCCP compliance officers process this more detailed data, the agency has provided contractors with some insight into how the agency will process multiple years of data. All contractors should familiarize themselves with existing agency guidance on the topic.

The agency’s Supply & Service Technical Assistance Guide (TAG) includes a specific discussion of how the agency will review multiple years of data. The short answer is the agency’s approach will depend on the specific facts and data submitted. However, contractors should be aware that OFCCP may look at each snapshot separately and also may combine, or aggregate, the two snapshots in certain circumstances. The OFCCP suggests that it will control for the year of the pay observation to “control for any time-dependent pay influences” in an aggregated analysis. The TAG also suggests that OFCCP might add control variables to an aggregated analysis if there were changes to the compensation system or other events such as a merger or acquisition. Finally, the TAG notes that OFCCP also may use repeated measures adjustments in aggregated analyses.

Berkshire can help contractors evaluate the two compensation snapshots that must be submitted to OFCCP during a compliance review. Our team of labor economists and industrial/organizational psychologists is uniquely equipped to help contractors navigate this increasingly complex compliance area. For a full discussion of all changes to Item 19, please read our earlier blog, What OFCCP's new scheduling letter means for compensation.