For the third time in the last 10 years, the Office of Federal Contract Compliance Programs (OFCCP) has revamped its guidance on compensation investigation and enforcement by issuing Directive 2018-05 and publishing frequently asked questions (FAQs) on the new directive.

This internal agency directive, while not having the force of law that a court holding or regulation would have, does provide federal contractors with some information on how OFCCP may evaluate their compensation in OFCCP audits. This directive will apply to compliance evaluations scheduled on or after August 24, 2018, and may be used by OFCCP in earlier, open cases to the extent it doesn’t conflict with prior guidance or procedure.

On Which Pay Cases Will OFCCP Focus?

In the directive, OFCCP offers general guidance on the legal theories under which it will pursue compensation discrimination and how those align with program priorities. Stating that compensation disparities can be created through inequities in monetary compensation, inequitable training or advancement opportunities, and assignment/placement differences, OFCCP reiterated its reliance on statistical analyses reflecting a statistically significant difference of two standard deviations or more as well as non-statistical (or anecdotal) evidence of discrimination. (Anecdotal evidence could be testimony regarding biased statements or remarks, examples of differential treatment, testimony about individuals who were given misleading or contradictory information about employment or compensation practices, etc.)

Signaling a potential shift in agency practice, however, the directive notes that “OFCCP will be less likely to pursue a matter where the statistical data are not corroborated by non-statistical evidence of discrimination unless the statistical evidence is exceptionally strong.” (OFCCP does not define the phrase “exceptionally strong.”) Moreover, a footnote explains that OFCCP may pursue a case without anecdotal evidence if the agency detects patterns of discrimination over several years or at multiple contractor establishments. Finally, OFCCP may conduct comparative analyses of small groups of similarly-situated employees to determine if pay differences due to discrimination exist.

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