This blog continues the ongoing discussion of the implications of Directive 307 on proactive pay equity analyses. As discussed in an earlier blog (, deciding which racial/ethnic subgroups to compare in a pay equity analysis and at which unit of analysis can become difficult given the ambiguity of Directive 307. In the absence of clear direction from OFCCP on how to conduct proactive analyses, contractors should be thinking about whether their analysis strategies should be revised. Here are some strategies to consider.

Racial/Ethnic Subgroup Comparisons

One useful approach to deciding which racial/ethnic subgroups to analyze is to identify the highest paid group (making up a reasonable portion of the relevant workforce) for comparison to individual subgroups. This approach is consistent with the Uniform Guidelines on Employee Selection Procedures (UGESP) approach to conducting adverse impact analyses. Anecdotally, it also appears to be an approach OFCCP is following in some audits. It should be noted that Hispanics are an ethnic group, rather than a race, and comparisons of Hispanics to aggregated Non-Hispanics should be considered.

Pay Analysis Groups
With the publication of Directive 307, OFCCP is moving away from using similarly situated employee groupings (SSEGs) as the basis for pay equity analyses, and is proposing the use of broader “pay analysis groups.” Because this new pay grouping strategy is not defined for the contractor, it is important to use meaningful, standardized pay practices that can be conveyed to OFCCP to support grouping. Important elements to consider when developing groupings include, but are not limited to:
  • Clearly defined pay structures;
  • Accurate job titles, job groups and salary codes;
  • Documentation of factors used to make pay decisions, including exceptions falling outside the normal pay practices.
Although the contractor community is now faced with ambiguity regarding proactive analyses, defensible pay equity studies are still feasible. Having standardized and documented pay practices with clearly defined job information (e.g., title, grade, factors related to each, etc.) is the first step in a defensible analysis. In this situation, reasonable groupings can be developed and contractors know what factors should go into their regression equation. Want more? Read More Musings on Directive 307 for more on the potential implications of this Directive.
by Margaret Lentz, M.S., HR Analyst, Jana Garman, M.A., Associate Consultant, and Eric Dunleavy, Ph.D., Principal Consultant, DCI Consulting Group 

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