A presidential memorandum (Presidential Memorandum — Advancing Pay Equality Through Compensation Data Collection) was issued on 4/8/14 (quoted below), instructing the US Labor Secretary to establish regulations requiring federal/government contractors to submit summary data on employee compensation. Equal Pay Acts and Federal Laws (Equal Pay Act and EEO) have attempted to close the pay gap between men, and women and minorities, for equal work. The presidential memorandum states, “effective enforcement of this mandate, however, is impeded by a lack of sufficiently robust and reliable data on employee compensation, including data by sex and race.”
Previous Impact of EO Survey
The Office of Federal Contract Compliance Programs (OFCCP) initiated the EO survey in 2000, with a 2005 report denoting that the survey had little value in predicting discrimination or noncompliance. The EO survey was shelved in 2006. The 4/8/14 presidential memorandum therefore requests, “The National Equal Pay Task Force, which I created to improve enforcement of equal pay laws, identified this lack of data as a barrier to closing the persistent pay gap for women and minorities. To address this lack of data, the Department of Labor (DOL) solicited stakeholder input on the design and operation of a potential compensation data collection tool in an Advance Notice of Proposed Rulemaking (ANPRM) published on August 10, 2011. The extensive response to the ANPRM provides ample information from which DOL can develop a tool that will enhance the effectiveness of its enforcement.”
What to Expect from EO Survey Revival
The goal of the new compensation data collection tool is to help combat pay discrimination in federal contractor workplaces. Such a tool could play an important role in promoting OFCCP’s mission to ensure nondiscrimination and equal opportunity in the workplace. From the memorandum. “…to propose, within 120 days of the date of this memorandum, a rule that would require Federal contractors and subcontractors to submit to DOL summary data on the compensation paid their employees, including data by sex and race. In doing so, you shall consider approaches that: (1) maximize efficiency and effectiveness by enabling DOL to direct its enforcement resources toward entities for which reported data suggest potential discrepancies in worker compensation, and not toward entities for which there is no evidence of potential pay violations; (2) minimize, to the extent feasible, the burden on Federal contractors and subcontractors and in particular small entities, including small businesses and small nonprofit organizations; and (3) use the data to encourage greater voluntary compliance by employers with Federal pay laws and to identify and analyze industry trends. To the extent feasible, you shall avoid new record-keeping requirements and rely on existing reporting frameworks to collect the summary data. In addition, in developing the proposal you should consider independent studies regarding the collection of compensation data.”
The OFCCP has the responsibility and opportunity to help address barriers to workplace equality. The following list of questions is from the SHRM article on the 4/8/14 presidential memorandum.
The NPRM indicated that the OFCCP has numerous questions about reviving the form, including:
- What data (e.g., average starting or initial total compensation, average raises, average bonuses, minimum and maximum salaries, standard deviation or variance of salary, number of workers in each gender and race/ethnic category, average tenure, average compensation data by job series) should be collected for the OFCCP to assess whether further investigation into the contractor’s compensation decisions and policies is necessary?
- By what set of job categories should the data be collected?
- What elements of compensation (e.g., total W-2 earnings, base salary, holiday pay, hourly wage, shift differential, commissions, stock options) should be collected?
- What set of questions would capture information that would be helpful to understand contractor’s compensation system, such as policies relating to promotion decisions, bonuses, shift pay, setting of initial pay?
- What type of compensation trend analyses would be appropriate to conduct on an industrywide basis?
- What specific categories of data would be most useful for identifying contractors in specific industries for industry-focused compensation reviews?
- What specific categories of data would be most useful for conducting compensation analyses across a contractor’s various establishments?
- What practical concerns do contractors have regarding responding to the compensation data request? For example, what specific costs would be associated with collecting this type of data?
- What categories of data would be most useful so that contractors may use the survey to conduct self-assessments of their compensation decisions?
- What factors should the OFCCP take into account when designing the EO Survey so that data can be submitted electronically exclusively?
- What would the drawbacks be of requiring businesses that are bidding future federal contracts to submit compensation data as part of the Request for Proposal process?
- If the OFCCP expands the scope of the compensation data collection tool beyond supply and service contractors to include construction contractors, what factors should the agency keep in mind when designing and implementing the tool?
- Are there other constructive suggestions for the design, content, analysis and implementation of a compensation data collection tool?
- What would the effect of the requirement to provide compensation data be on small contractors?
- What were the strengths and weaknesses of the 2000 EO Survey?
Federal Contractor Questions and Actions
If you are a federal contractor, it is important to respond to this memorandum by reviewing your jobs, compensation policies, and compensation bands to ensure consistency. If there are any inconsistencies, it is imperative that your HR team can easily explain the discrepancy and offer internal analyses. If your company has experienced growth or change; compensation bands and jobs should fall in line with those changes.
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