Federal Contractor Corner: OFCCP issues new compensation directive

On Equal Pay Day, March 15, the Office of Federal Contract Compliance Programs (OFCCP) issued Directive 2022-01, Pay Equity Audits. The new directive provides detailed information on how the OFCCP will assess compliance with federal contractors’ obligation to conduct an annual in-depth analysis of their compensation systems to determine whether there are gender-, race-, or ethnicity-based disparities.

The OFCCP’s new directive takes an expansive view of what the required analysis should include, and lists examining pay disparities across similarly situated employees, looking broadly at a contractor’s workforce (across job titles, levels, roles, positions, and functions) to identify patterns of segregation by race, ethnicity, and gender, which may result from assignment, placement, or promotion barriers that drive pay disparities. The OFCCP notes it may request additional information, including the contractor’s pay equity audit, to investigate the contractor’s compliance. The question of whether pay equity studies prepared at the direction of counsel, which are privileged, must be disclosed to the OFCCP also is addressed.

New requirements