OFCCP Rescinds Guidance on Enforcement of Executive Order 11246 Prohibition of Compensation Discrimination | Practical Law

OFCCP Rescinds Guidance on Enforcement of Executive Order 11246 Prohibition of Compensation Discrimination | Practical Law

The Department of Labor (DOL) Office of Federal Contract Compliance Programs (OFCCP) issued a notice of final rescission rescinding two guidance documents on enforcement of the Executive Order 11246 prohibition on compensation discrimination. The guidance documents, which are commonly known as the Standards and the Voluntary Guidelines, were originally issued in 2006. Their rescission will permit the OFCCP to conduct investigations of contractor pay practices consistent with Title VII of the Civil Rights Act of 1964 (Title VII), allowing it to better identify and remedy the varied forms of compensation discrimination that occur. The notice of final rescission is effective February 28, 2013.

OFCCP Rescinds Guidance on Enforcement of Executive Order 11246 Prohibition of Compensation Discrimination

by PLC Labor & Employment
Published on 28 Feb 2013 • USA (National/Federal)
The Department of Labor (DOL) Office of Federal Contract Compliance Programs (OFCCP) issued a notice of final rescission rescinding two guidance documents on enforcement of the Executive Order 11246 prohibition on compensation discrimination. The guidance documents, which are commonly known as the Standards and the Voluntary Guidelines, were originally issued in 2006. Their rescission will permit the OFCCP to conduct investigations of contractor pay practices consistent with Title VII of the Civil Rights Act of 1964 (Title VII), allowing it to better identify and remedy the varied forms of compensation discrimination that occur. The notice of final rescission is effective February 28, 2013.
On February 26, 2013, the DOL's Office of Federal Contract Compliance Programs (OFCCP) issued a notice of final rescission rescinding two guidance documents which were originally issued in 2006:
  • Interpreting Nondiscrimination Requirements of Executive Order 11246 with respect to Systemic Compensation Discrimination (Standards). The Standards establish analytical procedures to be followed generally by OFCCP when issuing a Notice of Violation (NOV) alleging systemic compensation discrimination.
  • Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Executive Order 11246 with respect to Systemic Compensation Discrimination (Voluntary Guidelines). The Voluntary Guidelines provide a methodology for contractors to use to self-evaluate their pay practices. Following this methodology can provide a "safe harbor" during compliance reviews.
Executive Order 11246 requires Federal Government contractors and subcontractors to provide equal employment opportunity through affirmative action and nondiscrimination based on:
  • Race.
  • Color.
  • National origin.
  • Religion.
  • Sex.
Compensation discrimination is a form of discrimination prohibited by the Executive Order. The OFCCP, which is the agency responsible for enforcement of the Executive Order, enforces its nondiscrimination provisions, including the compensation discrimination prohibition, consistent with Title VII. The OFCCP enforces this requirement through:
  • Review and investigation of contractor pay practices, data and other relevant information for potential systemic and individual evidence of discrimination.
  • Requiring contractors to:
    • review and monitor their compensation systems to determine whether there are gender, race or ethnicity disparities; and
    • maintain records of rates of pay or other compensation terms.
Although compensation discrimination is becoming increasingly more difficult to identify due to the wide variation in pay practices across industries, employers and jobs, the OFCCP, which is the agency responsible for enforcement of the Executive Order, has kept a narrow focus in its enforcement in accordance with the two guidance documents it has followed since their issue in 2006. The Standards and Voluntary Guidelines contained in the guidance documents were ineffective, and unduly burdensome, because:
  • They only addressed a single type of pay practice using limited evidence and a highly specified analytic framework.
  • The Standards did not apply to or explain investigation procedures and left many critical details undefined or subject to potential exceptions.
  • The Voluntary Guidelines attempted to tell contractors exactly how to fulfill their regulatory self-monitoring obligations, yet the Voluntary Guidelines were inadequate and rarely used to demonstrate compliance.
In 2010, President Obama created the National Equal Pay Task Force, bringing together government agencies to collectively address pay discrimination under their enforcement mandates. The Director of OFCCP, a member of the Task Force, committed OFCCP to review and revise its enforcement guidance and practices to more effectively address compensation discrimination under Executive Order 11246. As part of this process, OFCCP assessed the role of the Standards and Voluntary Guidelines and concluded they were inconsistent with the goal of improving enforcement. On January 3, 2011, OFCCP published a Notice of Proposed Rescission, proposing to rescind the Standards and Voluntary Guidelines, and soliciting public comment. Because neither 2006 guidance document has proved workable or effective in practice, OFCCP is rescinding both guidance documents effective immediately.
In place of the two guidance documents, the OFCCP has committed to provide greater clarity for contractors and improve protection for workers by:
  • Applying Title VII principles as the basis for determining whether a contractor has violated the Executive Order's ban on pay discrimination.
  • Disclosing its interpretation of specific legal and technical issues to:
    • assist contractors in evaluating their own practices; and
    • promote greater voluntary compliance.
  • Providing greater transparency on questions of investigation practices and procedures.
The Notice of Final Rescission is effective February 28, 2013. The procedures and principles described apply to all OFCCP reviews scheduled on or after February 26, 2013. The 2006 guidance documents will govern determinations regarding the issuance of an NOV for systemic compensation discrimination in any OFCCP review scheduled, open or otherwise pending on February 28, 2013 (the effective date of this final notice of rescission). Contractors must inform the OFCCP in writing whether they will:
  • Waive application of the 2006 guidance documents.
  • Conduct pending reviews under the under the 2006 guidance documents.