DIRECTIVE 307: A YEAR IN REVIEW

It has been more than a year since OFCCP rescinded its Compensation Standards and issued Directive 307. As a result of this protocol change, OFCCP adopted a new method for grouping individuals for the purposes of reviewing compensation data. These groups are called Pay Analysis Groups (PAGs), which is a group of employees (potentially from multiple job titles, units, categories and/or job groups) who are comparable for purposes of the contractor’s pay practices (Directive 307). DCI Consulting Group released many blog articles over the past year related to the impact of Directive 307 in compliance evaluations; such as the change in policies for evaluating compensation data, the effects on the unit of analysis for conducting pay analyses, issues related to performing subgroup analyses and other audit trends.

 

Some additional trends we are noticing in compliance evaluations since the release of Directive 307 are worth highlighting to contractors. First, OFCCP has been initially screening Item 11 compensation data at the job group or salary grade level rather than by job title. This initial screen allows OFCCP to manage audits and determine whether to proceed with a focused review of the compensation system. However, once OFCCP receives an employment roster with individualized employee data, the actual compensation analysis is being conducted at the job title level. Although Directive 307 alludes to large PAGs, we have not yet seen these types of groupings during the early stages of an audit.

 

A second trend we have noticed is the scheduling of compensation phone interviews to learn about the contractor’s overall compensation system. OFCCP will use these phone interviews to better understand the factors used to determine pay (e.g., skills, responsibility, market data, education, performance ratings) and the different types of pay (e.g., base, overtime, shift, commission, bonus).

 

Although Directive 307 will eventually result in some major changes in how OFCCP conducts business, many of these changes have yet to take place. OFCCP has a continued focus on fair pay in the workplace, as emphasized in the FY 2015 budget requests. OFCCP plans to hire ten FTE workers with the “expertise to conduct the complex data analyses necessary for evaluating pay practices” (FY 2015 Budget). DCI will keep you updated via blog releases on any staff additions or new compensation trends observed in audits.

 

by Keli Wilson, M.A., Senior Consultant, Vinaya Sakpal, M.A., Selection Intern, and Mike Aamodt, Ph.D., Principal Consultant, DCI Consulting Group

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