OFCCP Clarifies Approach to Federal Contractor Compensation Evaluations
The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently issued Directive 2018-05, Analysis of Contractor Compensation Practices During a Compliance Evaluation. The directive clarifies OFCCP’s approach to compensation evaluations to help contractors perform self-audits and ideally come into full compliance in advance of a compliance review or enforcement matter. Key areas of clarification include:
the use of statistical and other evidence, such as anecdotal evidence drawn from the review of documents and interviews with managers and workers.
pay analysis groupings (PAGs): OFCCP’s objective is to use PAGs that mirror a contractor’s compensation system, assuming the PAGs are reasonable, supported by compensation policies, and of sufficient size to conduct meaningful analysis.
statistical methodology and modeling, and control variables.
This directive supercedes Directive 2013-03 (also known as Directive 307).
See the OFCCP website for a list of FAQs about Directive 2018-05, which applies to all OFCCP compliance evaluations scheduled on or after August 24, 2018.