The U.S. Department of Labor’s Office of Federal Contract Compliance Programs has issued new guidance on enforcement and compliance for reviewing contractor compensation practices during a compliance evaluation.

The new guidance – Directive (DIR) 2018-05, Analysis of Contractor Compensation Practices During a Compliance Evaluation – is meant to emphasize OFCCP’s priority of eliminating pay discrimination through enforcement by OFCCP and compliance by contractors through proactive self-auditing. It is part of the agency’s new focus on increased transparency.

The procedures established in the directive apply to all OFCCP reviews being conducted on or after August 24, 2018. They also apply to open reviews to the extent they do not conflict with OFCCP guidance or procedures existing prior to the effective date.

In particular, contractors should take note that the OFCCP will consider rebuttal evidence and defenses to identified pay disparities. This is further encouragement to do a pay equity audit, in order to be prepared with defenses for the OFCCP.

OFCCP said it was issuing DIR 2018-05 to replace DIR 2013-03 for the following three reasons:

(1) to further clarify and provide additional transparency to contractors about OFCCP’s approach to conducting compensation evaluations.

(2) to support compliance and compensation self-analyses by contractors under applicable law, and OFCCP regulations and practices.

(3) to generally improve compensation analysis consistency and efficiency during compliance evaluations.

OFCCP provides additional information in an online FAQ, which you can access by clicking here.

The new directive does not create new legal rights or requirements or change current legal rights or requirements for contractors. However, contractors should consider this new guidance as they review their compensation policies and self-audit processes to ensure that they are in compliance with Equal Pay Act provisions and OFCCP requirements.

To learn more about achieving pay equity, click here.