The Office of Federal Contract Compliance Programs (OFCCP) continues to develop more sophisticated statistical tools and resources to help the agency more thoroughly investigate contractors' hiring practices and pay systems. On March 29, 2005, Marika Litras, Ph.D., the OFCCP's regional statistician, made a presentation to the Northern California Industry Liaison Group (NCILG) covering recent changes to the OFCCP's analysis methods. Litras advised the audience that, although the agency has yet to finalize any new procedures, compliance officers are beginning to use new audit methods. While the OFCCP declined to share copies of their overhead slides or provide any other handouts, our notes and diagrams from this presentation can be accessed from our website at www.malyconsulting.com/PressRoom/#Notes.

In summary, the OFCCP is developing tools to compare applicants to hire flow based on chronological groupings of applicants and hires (created using hiring periods and gaps in hiring). The agency will then attempt to apply regression analyses to the hiring data to establish adverse impact.

The OFCCP's new method of reviewing compensation involves a quick initial analysis of the summarized pay data contractors are required to provide for the desk audit. If a contractor's initial submission of pay data does not pass this examination, the OFCCP will ask for what they now term the "12-Factor Data Request." (Editor's note: This request is made for the contractor's entire AAP population — not just those instances where the OFCCP discovered "problems.") Litras would not divulge the particulars of how the agency conducts that initial review nor did the agency know what percentage of audits required this "12-Factor Data Request."

Litras did give some details at to why the OFCCP believes they need the entire employee database — rather than problematic areas only. Their position is that the agency needs to analyze larger groups in order to help prove or disprove pay discrimination. Therefore, upon receiving the entire employee database, the OFCCP will combine like-type jobs to create "similarly situated employee groups" or SSEGs and continue their discrimination analysis (a multiple regression) using the larger groupings. Contractors will need to provide evidence that jobs are truly different if they don't want the OFCCP to group them together for an artificial study of compensation and a possible claim of pay discrimination.

Contractors might want to create their own SSEGs — if that has not already been accomplished through the job evaluation and compensation program. And, if job title is the appropriate level for a company's SSEGs then that fact should be made clear to the agency at the outset of the audit.

Editor's note: It does not appear, at least in the OFCCP's Pacific Region, that these new methods have been significantly tested or thoroughly applied. The use of these new processes and analyses will be nearly as cumbersome for the OFCCP as for contractors and implementation with the agency's current resources may be more difficult than they currently realize. A compliance officer in another region did acknowledge that audits of compensation under the new procedures could last over a year.

Another concern to many contractors will be the off-site release of confidential, individual pay data arising from the agency's "12-Factor Data Request" of the entire employee population. Currently, the OFCCP is not permitted to require wholesale, off-site access to individual pay data and, under the Freedom of Information Act, the OFCCP cannot guarantee the confidentiality of those data. Some contractors acquiesce to the OFCCP's request just to keep the agency off-site. Other contractors ask that the individual data be examined only on-site. A contractor should decide how to answer this request before the audit ever gets underway.

If you have any questions about any information presented here or would like additional information about this or other EEO/AAP issues, please give us a call or send us an email.