On September 1, 2021, the Office of Federal Contract Compliance Programs (OFCCP), the Department of Labor sub-agency charged with enforcing affirmative action and non-discrimination requirements imposed on federal contractors by way of Executive Order 11246, announced that it was reversing its prior position regarding the use of EEO-1 compensation data collected by the Equal Employment Opportunity Commission for calendar years 2018 and 2019 (the so-called "Component 2").1
Specifically, OFCCP announced that effective immediately, it is rescinding its prior policy under which the agency would not "request, accept, or use EEO-1 Component 2 data." The prior policy was based on OFCCP's belief that it would not find significant utility in the data, "given limited resources and [the data's] aggregated nature."
Reversing course, OFCCP now indicates that it has determined that the prior non-use policy was "premature and counter to the agency's interests in ensuring pay equity." The agency claims that its prior decision to not use Component 2 data was premature because, at that time, OFCCP had little information about the response rate of the collection, how the data was submitted and assembled, or the completeness of the data. Nor did the agency have the opportunity to review and analyze the data.
OFCCP's announcement states that it will use information gathered in the prior Component 2 data collection to assess its utility for providing insight into pay disparities across industries and occupations, with the stated purpose of "strengthening Federal efforts to combat pay discrimination." Specifically, the agency indicates that it will evaluate the data's utility, "because the joint collection and analysis of compensation data could improve OFCCP's ability to efficiently and effectively investigate potential pay discrimination." OFCCP's position is that compensation data, in conjunction with other available information, such as labor market survey data, could help OFCCP identify neutral criteria to select contractors for compliance evaluations.
Given the aggregated nature of the data, it is likely to be of limited use in proving pay discrimination, which usually involves a very close examination of the work and compensation of a specific individual vis-à-vis others. That said, OFCCP's 180-degree turn provides yet another example of the aggressive stance the Biden administration has taken (and is expected to continue to take) with respect to issues of pay equity, and its willingness to use the carrot of federal contracting to regulate private-sector employers that do business with the federal government.
Possibly the most significant consequence of this decision is that it may have the potential to expose contractor pay data to public disclosure through FOIA requests. While an individual employer's Component 2 data that has been provided to the EEOC is clearly protected from further disclosure by the EEOC, the FOIA protections that apply to EEO-1 data that is in OFCCP's possession has been a subject of prior litigation.
Littler's WPI will apprise of relevant developments as they occur.
Footnote
1 By way of background, in 2016 the EEOC published a final rule requiring employers to report certain compensation data of their workforce sorted by race, sex, ethnicity, salary range, and job category. In 2017, the agency announced that it was suspending this effort and would not move forward with this collection. Ultimately, a federal district court ruled that the agency's suspension of the collection was unlawful, and required the EEOC to collect pay data for calendar years 2018 and 2019. That collection was completed in early 2020.
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