The Office of Federal Contract Compliance Programs issued its proposed regulations for an Annual Equal Pay Report on August 8th. These proposed regulations were required as directed by the Presidential Memorandum — Advancing Pay Equality through Compensation Data Collectionthat President Obama signed on April 8th. The regulations run only five pages but include over 146 pages of discussion. The following is a very brief summary of the proposed regulations:
The Equal Pay Report must be filed by each prime contractor and first-tier subcontractor that is required to file the EEO-1 Report(s) with the Joint Reporting Committee. They must have more than 100 employees and a contract, subcontract, or purchase order amounting to $50,000 or more covering a period of at least 30 days, including modifications. This means the universe of those having to report in the Equal Pay report will be limited. For example, tier-two suppliers and universities will not be required to report.
The Equal Pay Report, with instructions and supporting statement, was released by the OFCCP on Monday, August 11.
Each contractor required to report will submit the Equal Pay Report electronically through OFCCP’s web-based filing system (not yet designed). Filing would be similar to the filing of the EEO-1 report by location or establishment, but there will be no consolidated reporting required.
The data to be provided is summary information on compensation paid to employees, as contained in the W-2 form, by sex, race, ethnicity, and specified job categories. Other required data points include hours worked and the number of employees who worked for the employer during the previous year (even if only for one day). Therefore, the headcount of employees will not likely match the contractor’s EEO-1 report headcount or even the Affirmative Acton Plan headcount.
The OFCCP is using EEO-1 job categories as an “effort to harmonize” it with the EEO-1 report.
The use of W-2 information may also be misleading because it will likely encompass more than base pay. Per the OFCCP, “[t]he pay practices would not just include salary but incentives or other earnings opportunities. OFCCP can use the representation data in EEO-1 reports to identify potential hiring or affirmative action violations, but cannot provide insight into potential compensation violations.” On the other hand, OFCCP is not proposing that contractors provide data on “factors” that affect compensation.
Hours worked will be an aggregate report by EEO classification for non-exempt employees, and for exempt employees only if tracked by the employer.
The OFCCP indicated that its extensive data collection will enable it to do analysis and to “establish industry standards.” Further, it believes the data, which will be available to contractors, will encourage them to conduct their own analyses and self-correct violations or potential violations. OFCCP may publish aggregate information on compensation data collected from the Equal Pay Report, such as ranges or averages by industry, labor market, or other groupings. But it will do it only in such a way as to not reveal any particular establishment’s or individual employee’s data.
Contractors would be required to keep their Equal Pay Reports for a period of at least two years from the date they made the report. This provision may conflict with the three-year recordkeeping requirement of the Veteran and Disabled regulations.
OFCCP will treat information contained in the Equal Pay Report as confidential to the maximum extent the information is exempt from public disclosure under the Freedom of Information Act, 5 U.S.C. 552. OFCCP’s practice is to not release contractor data where: (A) The contractor is still in business; and (B) The contractor indicates, and it is determined through the DOL’s review process, that the data are confidential and sensitive and that the release of data would subject the contractor to commercial harm.
OFCCP anticipates that it will conduct approximately the same number of audits under this rule as it has in the past few years–approximately 4,000 per year.
The proposed rule requires prospective contractors to represent whether they have complied with all requisite reporting as part of the bidding pre-award process. This would include the proposed Equal Pay Report if they currently are Federal contractors or subcontractors.
Finally, OFCCP will be requesting public comment on the advantages and disadvantages of piloting the Equal Pay Report, the extent its prior work with the Equal Opportunity Survey satisfies the purposes of a pilot, and the design of a pilot of the Equal Pay Report.
The agency expects that running a pilot would likely take 18-24 months. In other words, full implementation of the Equal Pay Report will not likely occur before a new administration office takes office in 2017.