Understanding and Responding to OFCCP's Final Standards on Systemic Compensation Discrimination and

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Understanding and Responding to OFCCP’sFinal Standards on Systemic Compensation Discrimination and Voluntary Compensation Self-Audit GuidelinesPresentersMark S. DichterPhiladelphia, PAPhone: 215.963.5291Email: mdichter@morganlewis.comWilliam E. Doyle, Jr.Washington, DCPhone: 202.739.5208Email: wdoyle@morganlewis.comWebcast Overview• Summary of new Compensation Standards and Voluntary Self-Audit Guidelines• Practical impact on employers• Recommendations New Compensation Standards • Govern OFCCP Compensation Audits• “Definitive Interpretation” of Executive Order 11246– Cannot be modified without notice and comment– Subject to judicial review under APAVoluntary Self-Audit Guidelines• Incentive for contractors to conduct self-audits using methods recommended by OFCCP• Can be changed without notice and comment proceduresSummary of Compensation Standards• Similarly Situated Employee Groupings (“SSEGs”)• Multiple Regression Analysis (“MRA”)• Legitimate factors included in the MRA• Anecdotal evidence• OFCCP’s investigation processesSimilarly Situated Employee Groupings (“SSEGs”)• Similar work• Positions involving similar skills, qualifications and responsibility levels– Skills and qualifications involved in position, not particular to incumbent employees• Additional factors:– Department or other business unit• Budget constraints– Employment status (e.g., part-time vs. full-time)– Compensation status (e.g., salaried, hourly, ...

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UnderstandingandRespondingtoOFCCP’s FinalStandardsonSystemicCompensationDiscrimination andVoluntary CompensationSelf-AuditGuidelines

Presenters

arS.Dichter Philadelphia,PA Phone:.. Email:mdichtermorganleis.com

WilliamE.Doyle,Jr. Washington,DC Phone:.. Email:doy lemorganleis.com

Wecast

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Oerie

SummaryofnewCompensationStandardsand VoluntarySelf-AuditGuidelines

Practicalimpactonemployers

Recommendations

e

•

CompensationStandards

GovernOFCCP CompensationAudits

“DefinitiveInterpretation” ofExecutiveOrder11246

– Cannotbemodifiedwithoutnoticeandcomment

– SubjecttojudicialreviewunderAPA

VoluntarySelf-AuditGuidelines

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Incentiveforcontractorstoconductself-auditsusin methodsrecommendedbyOFCCP

Canbechanedwithoutnoticeandcomment procedures

Summary ofCompensationStandards

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SimilarlySituatedEmployeeGroupins

ultipleReressionAnalysis“RA”

eitimatefactorsincludedinthe RA

Anecdotalevidence

OFCCP s investiationprocesses



“SSEGs”

Similarly SituatedEmployeeGroupings   SSEGs 

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•



ility

Similarwor Positionsinvolvinsimilarsillsualificationsandresponsib levels – Sillsandualificationsinvolvedinpositionnotparticulart incumbentemployees Additionalfactors – Departmentorotherbusinessunit • udetconstraints –Employmentstatusepart-timevsfull-time – Compensationstatusesalariedhourlycommissioned PreferenceforSSEGs ofemployeesandofeachcomparator roup –everroupdissimilaremployeestoreachpreference





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ltipleRegressionAnalysis  R A



OFCCP preferenceforRA bySSEG – i llusea“pooled” reressiontomeetobjectiveofcoverin ofemployeesunderreview •Pooledreressionnotpreferredorintendedforwidespreaduse – OFCCP willtestifinteractiontermsarereuired “Chow est ” – i llonlyincludestatisticallysinificantinteractionterms • Severalinteractionsmayonlybestatisticallysinificantin combination

wostandarddeviationthresholdforstatisticalsinificance

Includeleitimatefactorswhichinfluencecompensation

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egitimateFactorsnfluencingCompensation

OFCCP willinvestiatetodeterminefactorsoncase -by-casebasis

Factorsneednotbeovertlyconsideredinacompensationdecision – udetconstraints – Employer scompensationpolicies – OFCCP willtestforastatistically-sinificantcorrelationbetween compensationandthefactor

opresumptionthatafactorwithintheemployer  scontrolis“tainted” bydiscrimination – Correlationbetweenfactorandprotectedclassificationisnotenouh toestablishmustbeindependentproof

egitimateFactorsnfluencingCompensation --Eamples

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Education – Relevanceofdereetocurrentposition Experience ocation Performance Productivity Sinificantleavesofabsence Employmentwithpredecessorcompany