March 15, 2022 (Tuesday), is reported as Equal Pay Day. Equal Pay Day’s importance for Federal Contractors is immense. It appreciates the efforts made by women across the world to earn an amount similar to men. Of course, the pay equity topic is not new. But there has been a rising force at federal and state levels to drive toward equal pay across both genders.
The Office of Federal Contract Compliance Programs (OFCCP) is the agency that commemorates Equal Pay Day. Equal Pay Day’s importance for federal contractors ensures that federal contractors reach non-discrimination obligations and affirmative actions toward human resources by issuing a new directive. This Pay Equity Audits (directive 2022-01) focuses mainly on the duties of federal contractors to analyze pay equity.
Here are some important conclusions for federal contractors and suggestions to ensure compliance:
Jenny Yan is the newly-appointed director of OFCCP. She led the movement for pay equity as the Chairperson of the U.S. Equal Employment Opportunity Commission. Due to her background, many people consider it unavoidable for Director Yang to continue the efforts at the OFCCP. And indeed, those predictions were true.
The OFCCP states that it announced the Directive to offer guidance on the OFCCP’s evaluation of federal contractors’ compliance with pay equity audit duties. It also explains the OFCCP’s authority to review the payday equity audits.
The Directive specifically directs that federal contractors are responsible for performing an in-depth analysis of compensation practices annually. It identifies the existing pay disparities and corrects problematic areas. While evaluating the compliance, the OCCP requests the contractor’s copy of the pay equity analysis and other information useful to reveal pay practices. This information includes prior experience, promotions, and assignments details.
By expanding equity pay protections at the national and state level, federal contracts need to be careful about identifying and rectifying uncalled variations. The OFCCP can get federal contractors’ copies of pay equity audits to follow the OFCCP rules. But interactions with counsel can remain prosperous thanks to attorney-client privilege.
So, legal counsel engagement to show effort and give legal advice has essential benefits of linking confidentiality to discussions with counsel. It involves corrective actions, analysis processes, and strategic decisions. In addition, nothing stops federal contractors from doing a proactive initial analysis with legal counsel to obtain legal advice. The Directive makes it very clear that this analysis will remain privileged.
By conducting a proactive pay analysis, the company can find unjustified pay disparities and measures helpful to mitigate any liability risk. Other than pay analysis, legal counsel can assist in reviewing and making policies about pay practices and help in diagnosing and reacting to disparities.
Performing proactive favored pay analysis will provide contractors with the required information and strategies to perform pay adjustments. It also helps identify and fix systemic compensation operations to avoid future disparities.
Final Words
This new Directive demonstrates the prioritization of pay equity and compensation in compliance reviews. Moreover, it emphasizes the significance of performing annual self-audits, helpful tools in addressing and retaining pay equity. Contractors need to use this Directive as a chance to discuss with counsel and reassess the compensation system reviews.
