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On November 16, 2004, the Office of Contract Compliance Programs (OFCCP) published proposed standards for contractors to self-evaluate compensation practices in compliance with CFR 60-2.17(b)(3). The guidelines can be found in the Federal Register, Volume 69, No. 220 or in the "News" section of our website.
The OFCCP had been using a mean and median salary analysis by salary grade or range to identify potential discrimination. This approach is now expressly recognized as inconsistent with Title VII.
The new guidelines propose that contractors with 250 or more employees use a multiple regression analysis to self- evaluate compensation practices. A Regression Analysis attempts to identify factors which may influence salaries. These could include date of hire, time in position, performance, education, and any other relevant factor. The Complete AAP software and our affirmative action services include a Salary Regression Analysis. The guidelines suggest evaluating groups of employees who are similarly situated. SSEGs (Similarly Situated Employee Groupings) are comprised of employees whose work is similar in content, responsibility,
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requisite skill and qualifications. A separate Regression Analysis would be completed for each SSEG.
A contractor must investigate any statistically significant disparities revealed in the regression analysis. Disparities that cannot be explained by relevant factors must be adequately remedied. The OFCCP reserves the right to review whether a contractor has adequately investigated and remedied any disparities.
The proposed guidelines give contractors an alternate option to certify their compliance with the compensation self-examination. In lieu of producing the methodology or results of its compensation self-evaluation analyses to OFCCP during a compliance review, the contractor may certify in writing that a compensation self-examination has been performed at the direction of legal counsel, and that the results of the analysis are subject to the attorney-client privilege or attorney work product doctrine. The OFCCP will then evaluate their compensation practices without regard to the self-analysis.
The proposed guidelines raise a number of issues, including:
The Proposed Guideline is not a regulation, so it lacks the full force of law. The OFCCP can suggest con
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tractors follow the guidelines, can follow them themselves or complete any other type of analysis they feel is appropriate. Remember, for the past several years, the OFCCP has been consistently using the "mean and median by salary grade" approach that the new guidelines specifically discredit. How long will the OFCCP use this "new guideline" and will it also be discredited at some point in the future?
Item #11 on the Itemized Listing attached to the Compliance Review Scheduling letter requires the submission of "...annualized compensation by either salary range, rate, grade or level showing total number of minorities by race and gender and total compensation by race and gender." Will the OFCCP update this item in light of the new Proposed Guidelines? Changes to the Itemized Listing must be submitted to and approved by the Office of Budget and Management. If this is a regulatory change, the analysis done pursuant to the regulatory requirement would not be protected by the attorney-client privilege or attorney work product doctrine. This would eliminate the option of certifying, but not giving the
(Continued on page 4)
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