OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit...

22
OFCCP EQUAL PAY COMPLIANCE Neil Dickinson, SPHR - Managing Partner HudsonMann Client Conference 2015

Transcript of OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit...

Page 1: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

OFCCP EQUAL PAY COMPLIANCENeil Dickinson, SPHR - Managing PartnerHudsonMann Client

Conference 2015

Page 2: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Brief History of OFCCP Equal Pay Enforcement Pre-2006 Compensation low priority in compliance

reviews

OFCCP was consistently beaten when compensation charges went to litigation

Page 3: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Brief History of OFFCP Equal Pay Enforcement

2006-2011 Compensation Standards Established

OFCCP focuses on systemic discrimination

SSEGs and Multiple Regression analysis standards set

Very few charges of discrimination

Page 4: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Brief History of OFFCP Equal Pay Enforcement2011- Present Obama/Shiu Era OFCCP goes into enforcement mode Equal pay becomes priority Bigger budgets Legislation aimed squarely at federal contractors OFCCP expands to pay discrimination against

individuals

Page 5: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Results OFCCP has spent approximately $120 million in

investigating compensation discrimination since 2010

Agency has taken in less than $1 million in settlements for alleged victims of discrimination

One systemic discrimination settlement since 2010 AstraZeneca paid $250,000 in June 2011

Page 6: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Sooo……..

Page 7: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

New OFCCP Regulations

Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Aug 8, 2014 Executive Order 13665 Pay Transparency

Aug 6, 2014 Equal Pay Report

Page 8: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Real World Effect

Dramatic increase in compensation data requests during audits

Frequent compensation interviews and follow- up questions

Expect findings that lead to increased conciliation agreements

Page 9: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

New Audit Procedures

No longer provide summarized compensation Employee level compensation at front end Compliance Officers have broad scope to conduct

audits Case specific approaches Qualitative and Quantitative factors to be

considered

Page 10: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Initial Audit Data Submission All employees on payroll 1st day of plan year Employee ID Gender Race/Ethnicity Job Group Job Title Hire Date

Page 11: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Salary

Base Salary/Wage Rate Hours Worked in Typical Week Bonuses Incentives Commissions Merit Increases Overtime

Page 12: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Pay Factors

EducationExperienceLocation

Performance Rating

Department/Function

Pay Grade

Time in Position

Work Contract

Shift Differential

Certifications

People Managed

Unique Skills

Page 13: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Preliminary Analysis

Size of the overall average pay difference based on race and gender

Size of the largest average pay difference within AAP job groups, or the contractors existing salary band or pay grade

The number of job groups where average pay differences based on race or gender exceed a certain threshold

The number of employees affected by race or gender based average pay differences within job groups or grades.

Compliance history

OFCCP or EEOC complaints

Anecdotal evidence

Potential violations involving other employment practices

Data integrity issues

Quantitative Factors Qualitative Factors

Page 14: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

During this stage, there are three questions the Compliance Officer is trying to answer:

1. Is there a measureable difference in compensation on the basis of sex, race, or ethnicity?

2. Is there a difference in compensation betweenemployees who are comparable under thecontractor’s wage or salary system?

3. Is there a legitimate (i.e. nondiscriminatory)explanation for the difference

Page 15: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

OFCCP Compensation Interview When discrimination indicators exist a

telephone interview will be scheduled Broad questions on companies pay practices Does a compensation system exist What pay factors are used Promotion practices Who has oversight

Page 16: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Recognizing Red Flags Pay differences normally begin at time of hire

Culture of bargaining initial pay could backfire

Mergers and Acquisitions

Inadvertent discrimination is not a defense

Page 17: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

How to Prepare

Compensation systems that are: Well-defined

Well-documented

Consistently applied

Page 18: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

How to Prepare Ensure work being performed is equivalent to job

title

Review compensation at job title level *

Are protected classes making less than peers

Where differences exist are their business factors to explain

Page 19: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation
Page 20: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Compensation Data Collection Tool

Annual Reporting 100 employees and $50,000 in federal

contracts/subcontracts Due by March 31 covering previous year’s

data Web-based filing May affect likelihood of audit

Page 21: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

Compensation Data Collection Tool1. The total number of workers within a specific EEO-1

job category by race, ethnicity and sex;

2. Total W-2 wages defined as the total individual W-2 wages for all workers in the job category by race, ethnicity and sex; and

3. Total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity and sex

Page 22: OFCCP EQUAL PAY COMPLIANCE - OFCCP Audit …hudsonmann.com/wp-content/uploads/2015/02/Compensation...Feb 28, 2013 OFCCP Rescinds “Restrictions” on Pay Discrimination Investigation

That’s all folks

T h a n k Yo u … A n y Qu es t io n s?