Hot off the press on Equal Pay Day (the day that symbolizes how far into the year women must work to earn what men earned in the previous year) OFCCP has released a new compensation directive.  Directive 2022-01: Pay Equity Audits does little to set out how contractors should be looking at their pay systems and instead focuses on OFCCP’s review of, and right to request, the analysis.

The Directive explains, that in addition to following Directive 2018-05,

“OFCCP will also look 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 upgrading/promotion barriers that drive pay disparities. Where possible, OFCCP will use regression and other systemic analyses to look for disparities in patterns of assignment or in salary paid across similar functions and positions.”

With respect to the Agency’s authority to confirm compliance with contractors’ obligations to review their compensation systems pursuant to 41 CFR 60-2.17(b)(3), the directive states

“OFCCP will request that the contractor provide a complete copy of the pay equity audit(s) conducted pursuant to 2.17(b)(3) that shows all pay groupings that were evaluated, any variables used, and the results of the analyses, including any disparities found.”

OFCCP recognizes many contractors conduct pay equity analyses under attorney privilege.  However, the new directive explicitly states OFCCP’s position that

“Contractors cannot withhold these documents by invoking attorney-client privilege or the attorney work-product doctrine. OFCCP has the authority under its regulations to request the analyses the contractor has conducted to comply with OFCCP regulations.”

The directive goes on to explain that contractors may conduct separate analyses, under privilege, but

“[i]n the event a contractor conducts a dual-purpose pay equity audit or analysis of employment processes − i.e., one that implicates both legal concerns and OFCCP compliance − OFCCP may request those records in appropriate circumstances.”

We are still in the process of reviewing this new directive and will be providing additional insights and updates soon.