New Policy Directive on Pay Discrimination

 Released by SHRM Governmental Affairs.

Public Policy Update

Breaking News

New Policy Directive on Pay Discrimination
Effective Thursday, Feb. 28, 2013, the Office of Federal Contract Compliance Programs (OFCCP) rescinded both its “Voluntary Guidelines” and “Compensation Standards,” which were first issued in 2006 for federal contractors. In addition, OFCCP has put in place Policy Directive 307, which replaces all previous directives on pay discrimination and describes OFCCP’s current philosophy on review of federal contractor pay systems and practices.

Under this new directive, federal contractors can no longer rely on the standard analytical criteria laid out in the Compensation Standards. Instead, the new directive provides that the analytical method to be used is case-specific. As the directive states, “This case-by-case approach to compensation discrimination includes the use of a range of investigative and analytical tools.” OFCCP will investigate and remedy instances of compensation discrimination regardless of whether individual workers have reported being underpaid. In addition, OFCCP will investigate possible systemic, small group and individual compensation discrimination.

When OFCCP proposed rescinding the “Voluntary Guidelines” and “Compensation Standards” in March of 2011, SHRM submitted comprehensive comments stressing that “a contractor has the right to know the standards by which it is being judged.”

The directive appears to be a step back from clearly identified standards. Instead, it allows for broad investigations of all compensation system and practices. OFCCP may also “examine policies and practices that unfairly limit a group’s opportunity to earn higher pay, such as ‘glass ceiling’ issues, and access to overtime hours, pay increases, incentive compensation, and higher commission or desired sales territories.”

OFCCP’s actions are part of a larger Obama Administration focus on pay discrimination and pay equity. In addition to the president specifically mentioning these issues in both the State of the Union and the Inaugural Address, the Equal Employment Opportunity Commission (EEOC) has identified “pay equity” as one of its six priorities under its new Strategic Enforcement Plan.

For questions or more information on the OFCCP’s policy decision, please contact Nancy Hammer, SHRM’s Government Affairs Policy Counsel, at or 703-535-6030.

Round Two of Sequestration Negotiations
Barring a last-minute Washington miracle, as seen earlier this year with the passage of the American Taxpayer Relief Act (ATRA) of 2012, sequestration continues to loom over the U.S. economy. With the fiscal year 2012 budget deficit reaching $1.6 trillion and the U.S. national debt at more than $16 trillion, tax reform and efforts to lower the deficit are a priority for the White House and Congress. Unless a bipartisan agreement is reached to avert the legally mandated “sequestration” — an across-the-board set of budget cuts totaling $1.2 trillion over 10 years from defense and nondefense spending, we’ll begin to see major budget cuts. These cuts are expected to have significant effect on all sectors of the economy, in particular defense, security and transportation. It is expected that these budget cuts will result in hundreds of thousands of lost jobs.

In preparation for the impending sequestration, federal agencies have begun to implement the cuts. Various departments have already implemented pre-emptive hiring freezes and have begun to pinpoint ways to save.

As the deadline approaches, President Obama is meeting with congressional leaders to continue negotiations. Republicans appear to be firm in their opposition to the prospect of further increases in tax revenue as a solution, which the president has proposed as part of his desired “balanced” approach to reducing the deficit and averting sequestration. This suggests that a deal continues to be a long way off.

Sequestration is meant to reduce federal spending and primarily consists of mandating automatic, across-the-board spending cuts for federally funded programs in order to meet national budget goals, and discretionary caps that limit future federal spending.

The Budget Control Act (BCA) of 2011 mandated sequestration starting Jan. 2, 2013, if Congress could not reduce the federal deficit by $1.2 trillion-$1.5 trillion over a 10-year period. To avoid the Jan. 2, 2013, deadline, Congress passed the American Taxpayer Relief Act (ATRA) of 2012 on Dec. 31, 2012, which modified sequestration to start on March 1, 2013, if Congress cannot negotiate a way to avoid it.

For questions or more information on the congressional sequestration negotiations, please contact Michael Layman, SHRM’s Senior Associate, Government Relations, at or 703-535-6058.

Join us for a live streaming discussion at the 2013 Employment Law & Legislative Conference
Interested in learning more about these topics? Access live and on-demand broadcasts from the sold-out Employment Law & Legislative Conference. You’ll hear from industry leaders covering hot-topic issues including the sequestration, equal pay, immigration reform and much more. Online participants will be provided the opportunity to participate in exclusive Q&A panels immediately afterwards. Learn More


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