January 27, 2020

January 27, 2020

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OFCCP Issues Pay Analysis Grouping Opinion Letter

In just its second Opinion Letter, OFCCP has [somewhat] tackled the issue of Pay Analysis Groups (PAGs).  Issued two months after the inaugural Opinion Letter which addressed the issue of Pell Grants, Director Craig Leen’s second letter touches upon the more controversial topic of compensation.

In the July 22, 2019 letter, Director Leen answers the question of whether contractors can work with the Agency to establish acceptable pay analysis groups in advance of an audit.  While Leen does say contractors can proactively submit their pay groups to the Agency, he acknowledges OFCCP is

unable to conclusively agree that it will rely upon specific, predetermined PAGs in all future compliance evaluations[.]

Essentially, Director Leen says OFCCP can work with contractors to evaluate and review the pay groupings and perhaps give feedback, but for purposes of an audit, it

must conduct its analyses based on the contractor’s pay systems, functions, and workforce organization as they exist or existed during the period under review[.]

Because things can change, Director Leen states ” OFCCP will need to make a new determination as to whether the PAGs are appropriate” if there has been a material change to a contractor’s compensation system at the time of an audit.

Despite this, Director Leen reiterates that “submission of a PAG structure to OFCCP for review and feedback better serves OFCCP’s objective of eliminating pay discrimination through both enforcement and proactive, self-auditing compliance” and “furthers OFCCP’s ability to ‘work collaboratively with the contractor'” as is embodied in Directive 2018-05, which replaced the Agency’s previous compensation Directive.

Director Leen reminds contractors that if they wish to submit PAGs to the Agency for review and feedback,

the submission should include sufficient data for OFCCP to determine if the aggregation is similar to what would be available in a compliance review.

Without further detail, it is unclear exactly what data would need to be submitted.  The letter directs contractors to OFCCP’s Director of Enforcement for assistance.  Bob LaJeunesse, is currently listed as the Acting Director of Enforcement.

Jackson Lewis P.C. © 2020


About this Author

Laura Mitchell, Jackson Lewis, Management Representation lawyer, Contractual Drafting Attorney

Laura A. Mitchell is a Principal in the Denver, Colorado, office of Jackson Lewis P.C. She represents management exclusively in all areas of employment law, focusing on affirmative action and government contractor compliance.

Ms. Mitchell is a Principal in the firm’s Affirmative Action and OFCCP Defense practice group, representing government and non-government contractors in Office of Federal Contract Compliance Programs (OFCCP) matters, preparing for and defending OFCCP audits, and counseling employers on issues stemming...