Posts Tagged ‘audit’

In addition to changing their compliance review process in general, OFCCP is also implementing  a few significant changes to their compensation review process.  These changes include cancelling former compensation analysis guidelines and requesting additional information during audits.

OFCCP is in the process of formally rescinding their “Interpretative Standards for Systemic Compensation Discrimination” and “Voluntary Guidelines for Self-Evaluation of Compensation Practices.”  Published in 2006, these documents set the standard for how OFCCP would evaluate Federal contractors’ compensation systems and provided guidelines for contractors to evaluate themselves.

The rescission of these standards will allow OFCCP to substantially change their formal compensation review practices.  Unfortunately, there is no interim guidance for the Federal contractor community.  To protect your company from claims of compensation discrimination, ensure that you can defend all employee’s compensation down to the job title level.  Well-crafted job descriptions, documentation and consistency will be your best allies.

Additional evidence that OFCCP is changing their compensation review practices is currently being seen during compliance reviews.  Based on an initial compensation analysis during the desk audit phase (the thresholds used for this “tipping-point” analysis are also continually changing), the OFCCP may request additional information.  For several years this request came in the form of a letter asking for a standard set of 12 items.  This has been recently increased to 14 items.  The major new requests are:

• Hourly wage and number of hours worked during the review period for part-time employees
• Other paid allowances, if any, such as commission pay, overtime pay, bonus pay or shift differential. Report each such allowance in separate data columns.  (Compliance officers have clarified that “the amounts should cover the 12 month time period preceding the snapshot date of the data.”
• SSEG’s if developed
• Date of birth is no longer requested

Regulations at  41 CFR 60.2.17(b) require contractors to annually analyze “compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities”  When performing this analysis, be sure to consider pay discrimination against “non-protected classes” since the OFCCP has been increasing their focus on discrimination against whites and males.

As always, please give your HudsonMann Account Manager a call if you would like to discuss how these trends may affect your organization.