OFCCP proposes rules, equal pay form for federal contractors

The Office of Federal Contract Compliance Programs (OFCCP) is proposing changes to current rules that implement Executive Order 11246, Equal Employment Opportunity, which set forth the reporting obligations of federal contractors and subcontractors. OFCCP would amend the current regulations by adding a requirement that certain federal contractors and subcontractors supplement their Employer Information Report (EEO–1 Report) with summary information on compensation paid to employees, as contained in the Form W–2 Wage and Tax Statements, by sex, race, ethnicity, and specified job categories, as well as other relevant data points such as hours worked, and the number of employees. The proposed form and corresponding instructions, which were submitted for OMB approval on August 8, 2014, are reproduced in this Report Letter on pages 13—23 and are posted on the OMB’s RegInfo.gov website at: http://www.reginfo.gov/public/do/PRAViewIC?ref_nbr=201407-1250-001&icID=212555

Per the usual practice, the proposed regulatory revisions requiring the new report and the proposed report form itself have been submitted to the OMB separately, but have the same control number, which is RIN 1250–AA03. The supportive statement for the proposed report form provides additional insight into the OFCCP’s proposal.

Proposed reporting requirements

Current regulations require that all employers in the private sector with 100 or more employees, and some federal contractors with 50 or more employees, annually file the EEO-1 Report with the Joint Reporting Committee (a joint committee consisting of the EEOC and the OFCCP). The OFCCP’s proposal would revise its regulations at 41 CFR Part 60-1, which set forth the reporting obligations of covered federal contractors and subcontractors under Executive Order (EO) 11246. Specifically, the proposal would amend the regulation at 41 CFR 60-1.7 to require that:

• employers that file EEO-1 Reports, have more than 100 employees, and a contract, subcontract, or purchase order amounting to $50,000 or more that covers a period of at least 30 days, including modifications, submit two columns of additional information to the EEO-1 Report in a new Equal Pay Report to the OFCCP. Covered employers would submit the following three pieces of information: (1) the total number of workers within a specific EEO-1 job category by race, ethnicity and sex; (2) total W-2 wages defined as the total individual W-2 wages for all workers in the job category by race, ethnicity and sex; and (3) total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity and sex.

• covered federal contractors and subcontractors electronically submit the proposed Equal Pay Report using a web-based data tool. The OFCCP states that the web-based portal for reporting and maintaining compensation information will be designed to so that it “conforms with applicable
government IT security standards.”

• contract bidders make a representation related to whether they currently hold a federal contract or subcontract that requires them to file the proposed Equal Pay Report and, if so, whether they filed the report for the most recent reporting period.

The proposal would also extend existing agency sanctions to federal contractors and subcontractors for the failure to file timely, complete, and accurate Equal Pay Reports, and the representation of compliance.

Recordkeeping requirements

The recordkeeping requirements for the proposed form would be commensurate with the existing OFCCP recordkeeping requirements at 41 CFR 60-1.12(a). Accordingly, each covered contractor would be required to retain its Equal Pay Report for a minimum of two years. However, if the contractor has fewer than 150 employees or does not have a contract of at least $150,000, the record retention period is a minimum of one year.

IPEDS report

The OFCCP is also interested in amending the regulation at 41 CFR 60-1.7 by adding a requirement that employers that file the Department of Education’s Integrated Postsecondary Education Data System (IPEDS) report, have more than 100 employees, and have a contract, subcontract, or purchase order amounting to $50,000 or more that covers a period of at least 30 days, including modifications, also file the OFCCP’s proposed Equal Pay Report. Thus, the OFCCP is particularly interested in comments related to the need to collect additional compensation data from postsecondary academic institutions in light of the scope of their existing reporting obligations with the U.S. Department of Education.

Release of data

Under the proposed regulatory revisions, the OFCCP would release aggregate summary data on the race and gender pay gap by industry and EEO-1 category to the public annually as soon as practicable. In the supporting statement for the proposed form, the OFCCP explicitly seeks permission “to publish aggregate compensation data collected by the Equal Pay Report as statistical tables at the industry level.” This data will enable contractors to review their pay data using the same metrics as the OFCCP and take voluntary compliance measures, the agency asserts.

Confidentiality concerns

The supporting statement notes that: “Respondents are informed that no express assurance of confidentiality is provided, and OFCCP recognizes that contractors that submit the required information may view it as extremely sensitive information.”

The agency states it will protect the confidentiality of the Equal Pay Report data to the maximum extent permitted under existing law. Specifically, the OFCCP will evaluate all information pursuant to the public inspection and disclosure provisions of the Freedom of Information Act (FOIA; 5 U.S.C. Section 552), and the Department of Labor’s (DOL) implementing regulations at 29 CFR Part 70. The Equal Pay Report includes information that DOL regulations provide that a contractor affected by a FOIA disclosure request be notified in writing and no decision to disclose information is made until the contractor has an opportunity to submit objections to the release of the information.

In addition, the OFCCP points out that the Equal Pay Report collects summarized data and does not require contractors to provide individual employee-level data in this report. Although the OFCCP may publish aggregate information (e.g., benchmarks) based on data collected in the report, the publication will be in such a manner that it does not reveal specific contractor data, the OFCCP maintains.

Burden

The OFCCP estimates that the proposed new reporting requirement may affect 21,251 federal contractors. This estimate includes 21,224 contractor companies or 67,578 contractor establishments that filed EEO-1 Reports and an estimate of 27 postsecondary educational institutions that filed IPEDS reports.

Exemption from web-based filing requirement

Based on the Equal Employment Opportunity Commission’s (EEOC) estimates of its online filing of the EEO-1 Report, the OFCCP estimates that 99 percent of contractors will file their Equal Pay Report using the web-based data tool. Yet, the OFCCP recognizes that some contractor establishments do not have automated HRIS or payroll systems or may have systems that would be incompatible with OFCCP’s web-based data tool. Thus, the proposed regulations would require contractors that cannot file using the web-based data tool to annually request a hardship exemption from OFCCP’s director. The request for exemption would be a one-page letter to the director, acknowledging the obligation to submit the report, explaining why the report cannot be submitted electronically and requesting exemption for that year’s filing. The OFCCP estimates that about 676 contractor establishments will request a hardship exemption to the electronic filing requirement. (79 FR 46,562, August 8, 2014.)
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