Looser Examination of Pay Bias in Store for Federal Contractors (1)

A new pay directive covering federal contractors loosens the standards under which they will be audited for potential discrimination, a Labor Department agency said Aug. 24.

The document released by the Office of Federal Contract Compliance Programs takes a more business-friendly approach to the auditing process. The previous practice was to look only at statistical data when evaluating pay discrimination.

Under the directive, the federal watchdog will “be less likely to pursue a matter where the statistical data are not corroborated by non-statistical evidence,” it said.

“The compensation directive demonstrates OFCCP’s commitment to eliminating pay discrimination through providing clear guidelines that contractors must comply with proactively, and through strict enforcement when they do not comply,” Craig Leen, the agency’s acting director, said in a statement.

Employers are happy to see the old directive “in their rear-view mirror,” Mickey Silberman, a management attorney with Fortney Scott, told Bloomberg Law.

In the past, contractors sent all employee pay data to be analyzed for bias. The new directive allows contractors to present the information in a manner that explains differences in pay by showing the corporate hierarchy. The regulated community pushed back on the agency’s past analysis because of those constraints.

Another management-side practitioner has another view of the change.

“The new Directive does not appear to provide contractors with any definitive guidance as to how OFCCP will conduct its compensation analyses, leaving contractors in the same difficult situation in which they are today: not knowing whether the manner in which they analyze their pay practices will match that of OFCCP,” Guy Brenner with Proskauer said.

Brenner welcomes the effort at more transparency.