[Federal Register Volume 76, Number 1 (Monday, January 3, 2011)]
[Proposed Rules]
[Pages 62-64]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32602]
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DEPARTMENT OF LABOR
Office of Federal Contract Compliance Programs
41 CFR Parts 60-1 and 60-2
RIN 1250-ZA00
Interpretive Standards for Systemic Compensation Discrimination
and Voluntary Guidelines for Self-Evaluation of Compensation Practices
Under Executive Order 11246; Notice of Proposed Rescission
AGENCY: Office of Federal Contract Compliance Programs, Labor.
ACTION: Notice of proposed rescission.
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SUMMARY: The Office of Federal Contract Compliance Programs (OFCCP) is
proposing to rescind two guidance documents addressing compensation
discrimination: Interpreting Nondiscrimination Requirements of
Executive Order 11246 with respect to Systemic Compensation
Discrimination (Standards) and Voluntary Guidelines for Self-Evaluation
of Compensation Practices for Compliance with Executive Order 11246
with respect to Systemic Compensation Discrimination (Voluntary
Guidelines). OFCCP is proposing to rescind the Standards which have
limited OFCCP's ability to effectively investigate, analyze and
identify compensation discrimination. In so doing, OFCCP will continue
to adhere to the principles of Title VII of the Civil Rights Act of
1964, as amended (Title VII) in investigating compensation
discrimination and will reinstitute flexibility in its use of
investigative approaches and tools. OFCCP also proposes to establish
procedures for investigating compensation discrimination through the
traditional means of using its compliance manual, directives and other
staff guidance. OFCCP is proposing to rescind the Voluntary Guidelines
because they are largely unused by the Federal Government contracting
community and have not been an effective enforcement strategy.
DATES: Comments must be received on or before March 4, 2011.
ADDRESSES: You may submit comments, identified by number 1250-ZNE, by
any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Fax: (202) 693-1304 (for comments of 6 pages or fewer).
Mail: Director, Division of Policy, Planning, and Program
Development, Office of Federal Contract Compliance Programs, Room
N3422, 200 Constitution Avenue, NW., Washington, DC 20210.
Receipt of submissions will not be acknowledged; however, the
sender may request confirmation that a submission has been received by
telephoning OFCCP at (202) 693-0102 (voice) or (202) 693-1337 (TTY)
(these are not toll-free numbers).
All comments received, including any personal information provided,
will be available online at http://www.regulations.gov and for public
inspection during normal business hours at Room C3325, 200 Constitution
Avenue, NW., Washington, DC 20210. Individuals needing assistance to
review comments will be provided with appropriate aids such as readers
or print magnifiers. Copies of this Notice of Proposed Rescission will
be made available in the following formats: Large print; Braille;
electronic file on computer disk; and audiotape. To schedule an
appointment to review the comments and/or to obtain this Notice of
Proposed Rescission in an alternate format, contact OFCCP at the
telephone numbers or address listed above.
FOR FURTHER INFORMATION CONTACT: Director, Division of Policy,
Planning, and Program Development, Office of Federal Contract
Compliance Programs, 200 Constitution Avenue, NW., Room N3422,
Washington, DC 20210. Telephone: (202) 693-0102 (voice) or (202) 693-
1337 (TTY).
SUPPLEMENTARY INFORMATION:
I. Background
The Department of Labor's OFCCP enforces Executive Order 11246
which requires Federal Government contractors and subcontractors to
provide equal employment opportunity through affirmative action and
nondiscrimination based on race, color, national origin, religion, or
sex. Compensation discrimination is one form of discrimination
prohibited by the Executive Order.
OFCCP enforces contractors' compliance with this obligation
primarily by conducting compliance evaluations. (See 41 CFR 60-1.20.)
OFCCP's longstanding policy is to follow Title VII principles when
conducting analyses of potential discrimination under Executive Order
11246, including compensation discrimination. Compensation
discrimination may occur on an individual basis, or systemically, that
is, it is widespread in an organization due to discriminatory
compensation systems. OFCCP traditionally has established procedures
for investigating compensation discrimination, as well as other forms
of discrimination, through instructions for its compliance officers
contained in the OFCCP Federal Contract Compliance Manual (FCCM),
directives and other staff guidance materials.
Identifying and remedying compensation discrimination has been an
important part of OFCCP compliance efforts for many years. Concerns
about compensation discrimination led OFCCP in Calendar Year (CY) 2000
to begin requiring contractors to submit compensation data requested in
the scheduling letter at the outset of a compliance evaluation as a
matter of course and as part of the data reported in a new Equal
Opportunity Survey, which covered contractors were required to submit
to OFCCP. (The Scheduling Letter was approved under the Paperwork
Reduction Act OMB NO. 1215-0072; see 65 FR 68022, 68036 (November 13,
2000) for the notice regarding the Equal Opportunity Survey.) In CY
2000, OFCCP also began requiring contractors to proactively conduct in-
depth analyses of their compensation systems to ensure that those
systems were not discriminatory. (See 41 CFR 60-2.17(b)(3).)
OFCCP changed its approach to investigating compensation
discrimination in 2006. On June 16, 2006, OFCCP published in the
Federal Register two final guidance documents related to identifying
compensation discrimination under Executive Order 11246 that contained
interpretations of OFCCP regulations and Title VII principles:
Interpreting Nondiscrimination Requirements of Executive Order 11246
with respect to Systemic Compensation Discrimination
[[Page 63]]
(Standards) and Voluntary Guidelines for Self-Evaluation of
Compensation Practices for Compliance with Executive Order 11246 with
respect to Systemic Compensation Discrimination (Voluntary Guidelines).
(See 71 FR 35124 (June 16, 2006) for the Standards and 71 FR 35114
(June 16, 2006) for the Voluntary Guidelines.) Further, OFCCP rescinded
the Equal Opportunity Survey in 2006. (See 71 FR 53032 (September 8,
2006).)
The Standards set forth a new, rigid procedure for investigating
and analyzing systemic compensation discrimination cases. Systemic
compensation discrimination is defined as discrimination under a
pattern or practice of disparate treatment. (See 71 FR at 35140.) The
Standards prescribe procedures to be followed by OFCCP compliance
officers when conducting investigations of systemic compensation
discrimination in all cases, including how to group employees whose
compensation is to be compared in a discrimination analysis, requiring
anecdotal evidence of compensation discrimination except in unusual
cases, and requiring the use of multiple regression analysis when
deciding whether wage differences between groups are discriminatory.
These procedures are to be followed regardless of the facts of a
particular case. The rigidity of the Standards represents a significant
departure from OFCCP's traditional tailoring of compensation
investigation and analytical procedures to the facts of the case based
on Title VII principles. Investigations of systemic compensation
discrimination are complex and nuanced. During the conduct of
compliance evaluations, OFCCP has traditionally focused on identifying
compensation discrimination through the development of a variety of
investigative and analytical tools. The use of a particular tool, or
combination of tools, depends upon the facts of a specific case, and
includes consulting with labor economists and other experts, as
appropriate.
The Standards also significantly limit OFCCP's ability to identify
compensation discrimination by imposing overly narrow investigation
procedures that go beyond what would be required under Title VII
principles in litigation. For example, the Standards state that, except
in unusual cases, OFCCP will not issue a notice of violation (NOV)
without providing anecdotal evidence to support OFCCP's statistical
analysis. But under Title VII, a pattern or practice class-wide
disparate treatment case may be proven by statistics. See, e.g., Int'l
Brotherhood of Teamsters v. United States, 431 U.S. 324, 339-40 (1977);
Palmer v. Shultz, 815 F.2d 84, 90-91 (DC Cir. 1987). Cf. OFCCP v.
Greenwood Mills, Inc., No. 89-OFC-39, Decision and Order of Remand,
slip op. at 14 (Sec'y of Labor Nov. 20, 1995); OFCCP v. Jacksonville
Shipyards, 89-OFC-1, Decision and Remand Order, slip op. at 5 (Sec'y of
Labor May 9, 1995). Moreover, requiring anecdotal evidence is
particularly problematic in compensation cases as employees often are
unaware of the compensation received by co-workers and, as a result,
anecdotal evidence from victims of pay discrimination may not exist.
The Standard's mandate to use a multiple regression analysis to
identify compensation discrimination is also overly narrow and is not
required under Title VII principles. While a multiple regression
analysis may be a useful tool in identifying compensation
discrimination, other statistical or nonstatistical analyses may be
better suited, depending on the facts of the case.
In short, we now believe the Standards significantly undermine
OFCCP's ability to vigorously investigate and identify compensation
discrimination.
The Voluntary Guidelines establish procedures that contractors can
elect to use in conducting the self-analysis of their pay practices
required by 41 CFR 60-2.17(b)(3). As an incentive to encourage
contractors to use the analytical procedures contained in the Voluntary
Guidelines, OFCCP would deem a contractor, whose self-evaluation
``reasonably meets'' the procedures outlined in the Voluntary
Guidelines, to be in compliance with section 60-2.17(b)(3) and would
coordinate OFCCP's review of the contractor's compensation practices
during a compliance evaluation in the manner specified in the Voluntary
Guidelines. (See 71 FR at 35122.) In OFCCP's experience since 2006,
contractors have rarely utilized the analytical procedures outlined in
the Voluntary Guidelines when analyzing their compensation practices
under section 60-2.17(b)(3).
Additionally, the analytical model set forth in the Voluntary
Guidelines suffers from many of the same flaws as the investigative
procedures prescribed by the Standards. For example, the Voluntary
Guidelines established certain rigid numerical thresholds by which the
similarly situated employee groupings are to be analyzed. OFCCP
believes that for some contractors, these thresholds may be exceedingly
difficult to meet.
II. Proposal
OFCCP proposes to rescind the Standards and the Voluntary
Guidelines in their entirety. OFCCP believes it is unnecessary to issue
new Federal Register notices articulating its interpretations of Title
VII principles related to compensation discrimination. OFCCP will
continue to follow Title VII principles in investigating and analyzing
compensation discrimination and in interpreting regulations related to
compensation discrimination. The agency is proposing to normalize its
treatment of those cases with other types of OFCCP discrimination
investigations. Once rescinded, nothing in the Standards or the
Voluntary Guidelines or their preambles could be relied upon as a
statement of OFCCP's interpretation of Title VII principles or OFCCP
regulations.
If the Standards are rescinded, OFCCP will reinstitute the practice
of exercising its discretion to develop compensation discrimination
investigation procedures in the same manner it develops other
investigation procedures. OFCCP will continually refine those
procedures to ensure that they are as effective and efficient as
possible. OFCCP will develop and issue compensation investigation
procedures in the same manner as procedures for investigating other
forms of discrimination, for example through the FCCM, directives and
staff guidance materials.
As mentioned above, OFCCP has found that contractors rarely use the
analytical procedure suggested in the Voluntary Guidelines for
conducting the compensation analyses required by section 60-2.17(b)(3).
In the few instances when contractors have conducted their compensation
analysis in the manner suggested in the Voluntary Guidelines, the
coordination procedures of the Voluntary Guidelines have not proved to
be an efficient method for verifying that the contractor's compensation
system is not discriminatory. The agency has concluded that the
Voluntary Guidelines have not proved to be either an effective vehicle
for providing guidance about how to conduct the analyses required by
section 60-2.17(b)(3) or an effective incentive for contractors to
conduct the analysis in the manner described in the Voluntary
Guidelines.
In the absence of the Voluntary Guidelines, contractors will still
be obligated to conduct self-evaluations of compensation practices as
required by 41 CFR 60-2.17(b)(3). OFCCP will continue to provide any
needed compliance assistance on section 60-
[[Page 64]]
2.17(b)(3) through various means, including webinars and the Web site
distribution of Frequently Asked Questions as appropriate, rather than
through the issuance of a Federal Register notice.
OFCCP invites any interested party to comment on the proposal to
rescind the Standards and the Voluntary Guidelines.
Patricia A. Shiu,
Director, Office of Federal Contract Compliance Programs.
[FR Doc. 2010-32602 Filed 12-30-10; 8:45 am]
BILLING CODE 4510-45-P