Companies that do business with the federal government have mostly taken a
position of "see no evil, hear no evil" when it comes to internal pay equity.
Their thinking has been that the government can’t accuse them of having poor
processes in place for assessing internal pay equity if they don’t have any
processes in the first place.
But that’s changed now. On June 16, the Office of Federal Contract Compliance
Programs, the agency that monitors federal contractors for discrimination on the
basis of gender and race, issued new standards for assessing "systemic
compensation discrimination."
This now means that when they are audited, the 16,000 U.S. companies that do
business with the federal government have to provide information gathered from a
compliance self-evaluation or else certify that they have such processes in
place.
The regulations, which are effective immediately, mean that the companies
don’t just have to have processes in place, but they need to have an executive,
usually a senior HR person, attest to them, says Brian Levine, a principal with
Mercer Human Resource Consulting.
Levine says the OFCCP came out with the rules because the agency was
frustrated about not being able to make its claims regarding pay equity stick.
By forcing companies to have a process in place, it makes the matter more
clear-cut, he says.
Mercer is advising clients to adopt the OFCCP’s own methodology for assessing
pay equity. The agency uses a statistical technique called multiple regression,
which is "onerous," to apply, Levine says. But by using this standard, companies
can better anticipate any issues the OFCCP might come across during an audit, he
says.
Levine doesn’t believe that companies should share their processes in the
event of an audit. Instead, Mercer favors having an executive certify that
processes are in place.
"We are telling clients not to share the information because there are many
unresolved confidentiality and privileged information issues associated with
sharing individual employees’ data," he says.
--Jessica Marquez