OFCCP Overhauls Compensation Components in Its Scheduling Letter

A revised Office of Federal Contract Compliance Programs (OFCCP) scheduling letter requires that federal contractors provide two years of individual compensation data, instead of one. The OFCCP made other changes to the letter that expanded the agency’s focus on compensation disparities, in addition to new requirements on documentation regarding recruiting. We’ve gathered articles on the news from SHRM Online and other outlets.

Breadth and Scope of Items Required of Contractors Expanded

The agency made significant changes to the breadth and scope of items that will be required of federal contractors in response to scheduling letters, which inform contractors that they will be audited by the agency through a compliance evaluation.

The OFCCP will now require contractors to include “other compensation or adjustments to salary” in their snapshots of compensation data. This clarifies that the information for total compensation, not merely base compensation data, is now a required part of the submission. The OFCCP also now mandates the submission of “relevant data on the factors used to determine employee compensation” and “documentation and policies related to the contractor’s compensation practices,” which were previously optional.

(Fisher Phillips)

Documentation Regarding Recruiting

Contractors also will now have to provide documentation of their policies and practices regarding all employment recruiting, screening and hiring mechanisms. This includes the use of artificial intelligence, algorithms, automated systems or other technology-based selection procedures. Now that the OFCCP can obtain information about contractor assessment tools—including any use of recruiting, screening and hiring AI tools—contractors should start tracking and evaluating their use of such tools to understand how they are being used.

(Morrison Foerster)

Pay Equity Will Be a Focus of OFCCP Audits

After the OFCCP issued its proposed changes to the scheduling letter, it was “clear from these proposed amendments that pay equity will be a main focus of the OFCCP in its audits,” according to Craig Leen, an attorney with K&L Gates in Washington, D.C., a former director of the OFCCP. “Contractors should develop a pay equity program, conduct an annual pay equity self-audit under attorney-client privilege, make pay adjustments where needed and be prepared to prove they did one while preserving privilege,” he recommended.

(SHRM Online)

One Notable Modification from Proposed Rule

The final revised scheduling letter and itemized listing adopted its proposed changes with one notable modification. In a change from the prior draft of the revised itemized listing, the final version does not require contractors and subcontractors to provide documentation indicating the method of compensation analysis they used as part of their annual compensation analysis.

Even so, the new scheduling letter and itemized listing significantly expand the volume of information contractors are required to submit at the outset of an OFCCP audit. The 26 broad categories of materials must be submitted within 30 days of receipt of the scheduling letter with extensions of the deadline only in extraordinary circumstances.

(Proskauer via JD Supra)

Contractors’ Time to Respond to a Predetermination Notice Reduced

In other recent OFCCP action, the agency has limited the time federal contractors have to respond to a predetermination notice from 30 calendar days of receiving the notice to 15 calendar days, according to a rule published Aug. 4. Predetermination notices alert contractors of a preliminary finding that the contractor engaged in individual or systemic discrimination. The new rule takes effect Sept. 5

(SHRM Online)