The Office of Federal Contract Compliance Programs (OFCCP) recently announced that effective immediately, it would be using EEO-1 Component 2 pay data for enforcement.

This is a complete departure from the agency’s previous statements. In the official notice, the OFCCP states that its original decision to not leverage the Component 2 Pay Data “was premature and counter to the agency’s interests in ensuring pay equity.”

Now, the agency believes that there are many benefits to the use of pay data, specifically saying it “would be valuable to analyze this data to assess its utility for OFCCP’s enforcement efforts.” 

At the end of the notice, the agency makes clear that it intends to devote additional resources “to evaluate the data’s utility because the joint collection and analysis of compensation data could improve OFCCP’s ability to efficiently and effectively investigate potential pay discrimination.” 

Federal contractors should pay attention to this recent development as it indicates the federal agency will be leveraging the pay data collected to ensure organizations are not practicing pay discrimination of any kind. More importantly, however, it demonstrates that the OFCCP will support the Equal Employment Opportunity Commission’s (EEOC) decision to bring back the pay data reporting requirement for employers. Non-federal contractors too should note that the OFCCP’s new position aligns with California’s decision to leverage SB 973 pay data reporting for enforcement of its equal pay act.

While not on the immediate horizon, Component 2 pay data reporting requirements have been a renewed focus for both federal agencies, as they drive home the importance of pay equity, both at the intersections of race and gender.

The OFCCP’s complete flip to use the data is yet another example of a unified front for achieving pay equity. The OFCCP’s director Jenny R. Yang, recently made it clear her top priority for the agency is closing gender/race pay gaps. This announcement confirms the agency is making good on its commitment to do that.

The EEOC’s newest Chair, Charlotte A. Burrow, too, has made it known that pay equity is a top priority. It seems it’s only a matter of time now before the requirement is reinstated for employers.

Best practices for preparing for the return of Component 2 pay data reporting include being proactive and conducting a pay equity audit. Not only will this help you prepare for the inevitable return of pay data reporting, but it will also give your organization legal protections in certain jurisdictions. States such as Rhode Island, Massachusetts, and Oregon have already introduced safe harbors for organizations that proactively perform a pay equity audit.

Contact us to learn more about how we can help your organization achieve pay equity with our comprehensive pay equity monitoring solution, PayParity, or download our white paper Designing a Successful Pay Equity Policy for Your Organization.

Organizations looking to disclose pay equity, diversity, and inclusion data information should do so within an ESG reporting framework. Download our white paper, DEI in ESG Reporting to learn about the different standards you can leverage for sharing your progress.

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