A new directive addressing pay equity reviews issued in March by the Office of Federal Contract Compliance Programs (OFCCP) has caused a swirl of confusion among many federal contractors and subcontractors as they try to determine how they can continue to lean into the push for greater pay transparency, the desire to continue to conduct detailed, privileged pay equity analyses, and the need to meet OFCCP compliance obligations. This is a tough balancing act.
At Syndio, we have a solution through the use of our software to conduct privileged pay reviews and to set equitable starting pay offers combined with partnership with our expert consulting team who can create custom analyses to provide to OFCCP.
What does this mean for your pay equity audits?
Directive 2022-01 outlines how the OFCCP indicates it will evaluate federal contractors’ compliance with pay equity review obligations and outlines what the OFCCP believes is its authority to access and review pay equity analyses conducted in order to comply with the Executive Order 11246 regulations.
As federal contractors and subcontractors know well, covered contractors are required pursuant to 41 CFR 60-2.17(b)(3) to perform in-depth analyses of their compensation systems on an annual basis. OFCCP has indicated that there isn’t one specific method of review or analysis that contractors must undertake to meet this requirement. As a result, contractors have taken many different approaches to analyzing compensation and often this meant conducting a privileged pay equity analysis.
In the new Directive, OFCCP took the position that contractors must provide a complete copy of their pay equity reviews undertaken to comply with the regulatory obligations, including pay groups that were evaluated, any variables used, the results of the analyses, statistical methodology, and noting any disparities found. The OFCCP specifically states that contractors cannot withhold analysis undertaken to comply with the OFCCP requirements by asserting that the analyses are privileged, unless the company can demonstrate it has undertaken some separate review to determine if there are gender or race/ethnicity gaps consistent with the regulations.
What’s the solution for complying with the Directive?
A key point in the Directive is that OFCCP indicates contractors may conduct a separate pay equity audit for the purpose of obtaining privileged legal advice, and not for demonstrating compliance with OFCCP regulations. When the contractor has provided an acceptable pay equity audit sufficient to demonstrate compliance, it says, it won’t require production of these separate pay equity audits, to the extent that the contractor can verify they were conducted under privilege.
Fortunately, with Syndio’s unique combination of best-in-class software and expert support, Syndio can help contractors conduct both privileged pay equity reviews and compliance-focused reviews in compliance with this Directive, Executive Order 11246, and other regulatory requirements.
PayEQ™ empowers organizations to analyze, resolve, and prevent pay disparities due to gender, race, ethnicity, or any other demographics, and is also the ideal solution for OFCCP reviews. The software lets you create multiple, separate “workspaces,” including one for each AAP establishment or FAAP.
But Syndio doesn’t just offer a software solution; we also provide expert advice as part of our integrated support model. Our consultants include top minds in OFCCP compliance, compensation strategy, global legal compliance, labor economics, data science, and pay equity. They partner with you every step of the way — from long-term pay equity strategy, pay transparency, and reporting laws to custom analyses and communications best practices. Our team will help you conduct a review to meet your regulatory obligations.
Federal contractors are taking a variety of approaches to complying with Directive 2022-01. There is no “one size fits all” and our conversations with customers and other large federal contractors have shown us that different employers want different types of compliance-focused, non-privileged review. As a result, we are working with federal contractors to conduct these analyses with the support of our expert advisors.
Want to know more about how Syndio helps with OFCCP compliance? Click below to learn how Syndio can assist in conducting more bespoke analysis while allowing maximum flexibility in complying with Executive Order 11246, Directive 2022-01, and other regulatory requirements.