OFCCP pay data reporting law guide

Who Needs to Report?

Federal contractors and subcontractors with 50 or more employees that also have contracts of $50,000 or more must develop and maintain a written Affirmative Action Program (AAP) and are subject to OFCCP audits.

Companies operating at multiple sites are required to create AAPs for each location, facility, or establishment that has 50 or more employees.

Reporting requirements are governed by the Code of Federal Regulations.

When to Report?

An AAP ensures that applicable federal contractors provide equal employment opportunities. As part of the AAP, an in-depth analysis of the contractor's employment process must be carried out to identify any barriers to equal employment, including those for women and minorities.

Contractors must develop an AAP within 120 days of the start of a government contract. Among other requirements, plans must include evaluations of:

• Workforce profile by organizational unit and job group to determine whether female and minority candidates are disproportionately underutilized in the workforce or distributed across the organization;
• Personnel activity (applicant flow, hires, terminations, promotions, and other personnel actions) to determine whether there are selection disparities;
• Compensation system to determine whether there are gender, race, or ethnicity-based disparities. Employers must confirm that compensation is analyzed by gender, race, and ethnicity for disparities;
• Selection, recruitment, referral, and other personnel procedures to determine whether they result in disparities in the employment or advancement of minorities or women; and
• Any other areas that might impact the success of the AAP.

If the compensation analysis identifies any problem areas (including gender, race, or ethnicity-based pay disparities), the employer must develop and execute action-oriented programs to correct them. Additionally, the contractor must carry out periodic self-audits to measure the AAP's effectiveness.

Compliance Evaluations

In addition, the OFCCP audits federal contractors through compliance evaluations. Contractors are notified of an audit by the Supply and Services Scheduling Letter and Itemized Listing.

Upon receipt of a Scheduling Letter, contractors have 30 calendar days to respond. A compliance review may include a number of different evaluations, for instance, a desk audit, an on-site review, and an off-site analysis.

Compensation data submissions include:

Item 19

• Two snapshot dates of compensation data are required, i.e. (1) as of the date of the organizational display or workforce analysis and (2) as of the date of the prior year's organizational display or workforce analysis.
• Contractors must submit employee-level (individual) compensation data for all employees on each snapshot date. That includes gender, race/ethnicity, hire date, job title, EEO-1 Job Category, and AAP job group.
• In addition, they must include "relevant data on the factors used to determine employee compensation such as education, experience, time in current position, duty location, geographical differentials, performance ratings, department or function, job families and/or subfamilies, and salary level/band/range/grade."
• For each employee, contractors must also provide base salary and/or wage rate, annualized base compensation, and hours worked in a typical work week. Other compensation or adjustments to salary must also be identified separately. These may include, for instance, bonuses, incentives, and overtime.

Item 22

Documentation providing the reasoning used to determine compensation, which must include:

• When the compensation analysis was completed;
• The number of employees included, and the number and categories of employees excluded;
• Which forms of compensation were analyzed and if applicable, how the different forms of compensation were separated or combined for analysis;
• That compensation was analyzed by gender, race, and ethnicity; and
• The method of analysis, such as, multiple regression analysis, decomposition regression analysis, meta-analytic tests of z-scores, compa-ratio regression analysis, rank-sums tests, career-stall analysis, average pay ratio, cohort analysis, etc.

"Employee" refers to part-time, temporary, and full-time employees, including "contract, per diem, or day laborers."

If discrepancies are identified during an audit, OFCCP will make "reasonable efforts" to secure compliance with the employer.

Where and When to Report?

Regulatory Filing

Federal contractors and subcontractors must certify that they are meeting their requirement to develop and maintain AAPs. Certification is through the OFCCP Contractor Portal. Annual submissions for this year must be made by July 1, 2024.

External Reporting

External posting is not required. OFCCP is required to treat information obtained in the compliance evaluation as confidential to the extent possible.

Internal Disclosure

No provisions for employee disclosure are mandated. Federal contractors are bound to reporting confidentiality to the extent possible.

Deadlines and Cadence

AAPs must be completed within 120 days from the start of a contract. Certification is required annually for each employer location, facility, or establishment with more than 50 employees.

Compensation data for compliance evaluations must be submitted within 30 calendar days upon receipt of a Scheduling Letter initiating an audit.