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© 2013 Jackson Lewis LLP
THE MATERIALS CONTAINED IN THIS PRESENTATION
WERE PREPARED BY THE LAW FIRM OF JACKSON
LEWIS
LLP
FOR
THE
PARTICIPANTS’
OWN
REFERENCE IN CONNECTION WITH EDUCATION
SEMINARS PRESENTED BY JACKSON LEWIS
LLP. ATTENDEES SHOULD CONSULT WITH COUNSEL
BEFORE TAKING ANY ACTIONS AND SHOULD NOT
CONSIDER THESE MATERIALS OR DISCUSSIONS
THEREABOUT TO BE LEGAL OR OTHER ADVICE.
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© 2013 Jackson Lewis LLP
Represents management exclusively in every aspect of
employment, labor, OFCCP and human resources law
and related litigation
Works extensively with non-profits, including many
Goodwills throughout the country
750 attorneys in 52 locations nationwide
Current caseload of over 6,500 litigations and
approximately 415 class actions
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© 2013 Jackson Lewis LLP
We have unparalleled experience preparing AAPs and
defending them before the OFCCP in all industries and
areas of the country. Our diverse team of 35 attorneys,
paralegals, and support staff prepares approximately 2,500
AAPs a year.
Since 2011, we have defended over 350 OFCCP audits,
including successful defense of Corporate Management
(“Glass Ceiling”) Compliance Evaluations. As a law firm,
we offer more than consulting services, we offer strategic
thinking and sophisticated legal representation.
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© 2013 Jackson Lewis LLP
Mickey is the Chair of the Jackson Lewis Affirmative Action
Practice Group and Managing Partner of the firm’s Denver
office. Mickey represents management in all areas of
employment law and specializes in EEO, affirmative action
and diversity.
Mickey spends much of his time counseling employers on
complex, “real world” issues relating to Equal Employment
Opportunity and affirmative action compliance, including
counseling employers on pay issues. He has helped
employers develop strategic compliance processes relating
to applicant tracking, recruitment, pre-employment testing,
pay systems, etc.
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© 2013 Jackson Lewis LLP
Pay Discrimination:
The Rules have Changed
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© 2013 Jackson Lewis LLP
President Obama and OFCCP made pay discrimination
among its top enforcement priorities.
WHY? The persistent “Pay Gap”
Since early 1980s, pay gap for women plateaued around
80¢ on the dollar for men
In 2011, women earned approximately 77¢ for every $1
earned by men
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© 2013 Jackson Lewis LLP
For years, OFCCP investigated compensation
for discrimination but had little to show for it
In 2006, OFCCP issued the Systemic Pay
Discrimination Standards and Self-Audit
Guidelines
But there were very few large systemic pay
discrimination findings or settlements
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© 2013 Jackson Lewis LLP
Settlements for alleged discriminatory pay are on the
rise. . .
o
FY 2008 – 0 pay settlements
o
FY 2009 – 2 pay settlements
o
FY 2010 – 10 pay settlements
o
FY 2011 – 27 pay settlements
o
FY 2012 – 32 pay settlements
Mostly from individual or small group findings
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© 2013 Jackson Lewis LLP
OFCCP rescinds 2006 Standards and
Voluntary Guidelines…
Issues “Game-Changing”
Compensation Directive
© 2013 Jackson Lewis LLP
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• Directive 307: Procedures for Reviewing
Compensation Systems and Practices
• Effective Date: February 28, 2013
• A copy of the Directive and related material can
be found at
http://www.dol.gov/ofccp/regs/compliance/
directives/dir307.htm.
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© 2013 Jackson Lewis LLP
• A directive is not a law or regulation.
– United Space Alliance, LLC v. Solis (D.D.C. 2011).
• Directive 307
– Affects how OFCCP will conduct compensation
analyses
– It is not law and carries limited legal weight
– It is not designed as guidance for contractors
– Rulemaking procedures that include input from
outside experts and contractor comments were not
followed.
• No Notice and Comment period or review/approval by Office
of Management & Budget.
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© 2013 Jackson Lewis LLP
The Standards and Voluntary Guidelines govern
audits scheduled before, or pending as of,
February 28, 2013.
Directive 307 will apply to all audits scheduled
on or after February 28, 2013… and all audits
pending as of February 28, 2013 to the extent
Directive 307 is not inconsistent with the
Standards and Voluntary Guidelines
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© 2013 Jackson Lewis LLP
• OFCCP wants greater flexibility.
– Consistent with Title VII’s flexible, fact-specific
approach
– Tailor the pay investigation and analytical
procedures to the facts of the case
– “Case-by-case” approach uses of a range of
investigative and analytical tools (multiple
regression and cohort)
– Allow OFCCP to identify and remedy all forms of
compensation discrimination
– Anecdotal evidence not required
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© 2013 Jackson Lewis LLP
Bigger, broader groups
o Non-similarly situated employees and PAGs (more on that later)
All forms of comp under review – not just base pay
o Bonuses, over time, commissions
Steering or “channeling” issues
Greater scrutiny and in-depth reviews
o On-sites and in-depth interviews
o Detailed document review
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© 2013 Jackson Lewis LLP
1. Conduct Preliminary Analysis of Summary Data (if necessary or appropriate)
2. Conduct an Analysis of Individual Employee-Level Data
3. Determine Approach from a Range of Investigative and Analytical Tools
4. Consider All Employment Practices That May Lead to Compensation Disparities
5. Develop Pay Analysis Groups (this is a big one)
6. Investigate Systemic, Small Group and Individual Discrimination
7. Review and Test Factors Before Accepting the Factors for Analysis
8. Conduct Onsite Investigation, Offsite Analysis, and Refinement of Model
**OFCCP states that it does not need to follow this order or do all of these**
CONFIDENTIAL
© 2013 Jackson Lewis LLP
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Stage 1 of Analysis – Analyze for Potential
Systemic Discrimination in large groups
If found,
determine if
appropriate to
limit to group
If not
found,
then . . .
Stage 2 of Analysis – May
analyze for Smaller Group or
Unit Discrimination
Stage 3 of Analysis
– May analyze
for Individual
Discrimination
If not
found,
then . . .
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© 2013 Jackson Lewis LLP
The “bottom line”? OFCCP looking to answer 3 key
questions
o Is there a measurable difference in compensation on
the basis of sex, race, or ethnicity?
o Is the difference in compensation between employees
who are comparable under the contractor’s wage or
salary system?
o Is there a legitimate (i.e.,
explanation for the difference?
CONFIDENTIAL
© 2013 Jackson Lewis LLP
nondiscriminatory)
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OFCCP stresses that “summary compensation data submitted in a
format other than by AAP job group, or the contractor’s existing pay
grade, level or band system, generally is not acceptable for analysis.”
The preliminary analysis will assess quantitative factors:
o Size of overall average pay difference based on race and gender [entire
workforce!]
o Size of the largest pay differences with AAP job groups, band or grade
o Number of job groups or grades where average pay differences based on race or
gender exceed a certain threshold (But what is the threshold?)
o Number of employees affected race/gender based average pay differences within
job group or grade
And qualitative factors:
o Compliance history, complaints, anecdotal evidence, etc.
CONFIDENTIAL
© 2013 Jackson Lewis LLP
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The compliance officer will examine all employment practices that
may lead to pay disparities
This includes an examination of all forms of pay (e.g., base, nonbase)
Also examined will be employee access to opportunities affecting
compensation
The compliance officer will tailor the approach based on the
employer’s compensation practices
The compliance officer also is directed to consider the nature of the
jobs in questions when determining which analytical tool to use (e.g.,
high-level management vs. entry-level jobs)
CONFIDENTIAL
© 2013 Jackson Lewis LLP
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From “SSEGs” to “PAGs” - The compliance officer will develop pay
analysis groups “used to test for statistical significance on large groups of
employees”
Beware! - these groupings likely may cross job title and job group lines
“By combining employees into appropriate pay analysis groups, using
statistical controls as necessary for title or level, OFCCP is able to more
easily identify potential systemic discrimination needing further investigation
and potential remedy”
PAGs will be developed by OFCCP by “considering elements such as: the
particular industry, the types of jobs and compensation at issue, the
contractor’s actual compensation practices, and available data”
CONFIDENTIAL
© 2013 Jackson Lewis LLP
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OFCCP PAG approach groups those employees who are
“comparable” for pay system administration purposes only
Where’s “similarly situated”, as required by the law?
CONFIDENTIAL
© 2013 Jackson Lewis LLP
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Before:
o After initial review OFCCP would look to
create SSEGs
o Similarly Situated Employee Groupings
Now:
o OFCCP will create PAGs
o “a group of employees who are
comparable for purposes of the
contractor’s pay practices”
o May be different titles, departments, job
groups
© 2013 Jackson Lewis LLP
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Exempt Titles
Job Title
#
Female
#
Male
Average
Female Pay
Average
Male Pay
Statistically
Significant Difference
Vice President
4
4
$121,000
$148,500
Not Significant
Manager
10
16
$53,000
$66,700
Not Significant
Supervisor
9
7
$23,000
$31,700
Not Significant
Non-Exempt Titles
Job Title
#
Female
#
Male
Average
Female Pay
Average
Male Pay
Statistically
Significant Difference
Specialist
18
12
$18,000
$22,000
Not Significant
Associate
22
10
$16,000
$18,000
Not Significant
Truck Driver
5
26
$20,000
$26,500
Not Significant
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© 2013 Jackson Lewis LLP
Exempt Workforce
Pay Analysis
Group
Vice President/
Manager/
Supervisor
#
Female
#
Male
Average
Female Pay
Average
Male Pay
Statistically
Significant Difference
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$50,500
$70,500
Significant
Non-Exempt Workforce
Job Title
Specialist/
Associate/
Truck Driver
#
Female
#
Male
Average
Female Pay
Average
Male Pay
Statistically
Significant Difference
45
48
$17,000
$24,000
Significant
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© 2013 Jackson Lewis LLP
Large employers with multiple AAPs may see differing,
and even conflicting, application of Directive 307 across
the country.
ALL employers should expect compensation to play a
significant role in any forthcoming audits
o Risks of audits has increased significantly
o Predictability of audits has decreased significantly
o Likelihood of emerging from audit with violations has gone up
• 2004 – 5% of audits resulted in violations
• 2012 – 30% of audits resulted in violations
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© 2013 Jackson Lewis LLP
Let’s try to anticipate what OFCCP will do - Consider all
forms of pay, review documents, analyze policies, create
comparator groupings and refine data
Perform all analyses under the cloak of attorney-client
privileged
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© 2013 Jackson Lewis LLP
Despite what OFCCP says, we still recommend you
submit by group that reflects “similarly situated”
But consider analyzing by job group, job grade, etc.
Identify employees who are “comparable” for pay
administration purposes
Look at all forms of compensation
Bonus
Overtime
Refine your data before submission
Give OFCCP a more accurate picture . . .
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© 2013 Jackson Lewis LLP
© 2013 Jackson Lewis LLP