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Labor Department to scrutinize contractors for pay discrimination

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs has just announced that it is changing the way it will investigate pay discrimination by federal contractors. The mission of the OFCCP is to ensure federal contractors comply with equal employment policies, and it believes the change will bring federal contract compliance more in line with the Civil Rights Act of 1964. The directive changing the enforcement policy went into effect March 1.

Previously, investigators for the OFCCP had largely relied on statistical evidence to determine whether discrimination was taking place. By analyzing data from its audits, agents were able to spot disparities in compensation that were not otherwise explained. Since companies that perform contracts for the federal government are required to pay the prevailing wage in the area, along with other benefits, theoretically there should be no noticeable disparities between companies operating in the same geographical area.

Under the new policy directive, investigators will be examining complaints in a “case-specific” way. Instead of relying on statistics, OFCCP agents are now supposed to “examine policies and practices that unfairly limit a group’s opportunity to earn higher pay, such as ‘glass ceiling’ issues, and access to overtime hours, pay increases, incentive compensation, and higher commission or desired sales territories.”

Many employment law firms that represent employers were concerned about the changes. “I don’t like the fact that they aren’t holding themselves to any standard of what constitutes pay discrimination under Title VII,” one told reporters from Reuters.

At the same time, the new routine may turn out to be an improvement. “I may not be a common voice amongst management attorneys on this, but to have a one-size approach is just not the real world,” said the same lawyer. “The acknowledgement that it’s not good to have a one-size-fits-all approach is grounded in reality.”

Whether this development will be a boon to management or offer better protection for employees’ rights is yet to be seen. However, as the attorney pointed out, the OFCCP’s statistical analyses were not known for their effectiveness. When the agency investigates such discrepancies, he said, “An overwhelming amount of time, there is nothing there.”

Source: Thomson Reuters News & Insight, “Lawyers concerned by new scrutiny of federal contractor pay,” Carlyn Kolker, March 1, 2013

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