News and Information

OFCCP Clarifies Approach to Federal Contractor Compensation Evaluations

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently issued Directive 2018-05, Analysis of Contractor Compensation Practices During a Compliance Evaluation. The directive clarifies OFCCP’s approach to compensation evaluations to help contractors perform self-audits and ideally come into full compliance in advance of a compliance review or enforcement matter. Key areas of clarification include:

• the use of statistical and other evidence, such as anecdotal evidence drawn from the review of documents and interviews with managers and workers.
• pay analysis groupings (PAGs): OFCCP’s objective is to use PAGs that mirror a contractor’s compensation system, assuming the PAGs are reasonable, supported by compensation policies, and of sufficient size to conduct meaningful analysis.
• statistical methodology and modeling, and control variables.

This directive supercedes Directive 2013-03 (also known as Directive 307).

See the OFCCP website for a list of FAQs about Directive 2018-05, which applies to all OFCCP compliance evaluations scheduled on or after August 24, 2018.