OFCCP Releases Final “Discrimination on the Basis of Sex” Regulations to OMB for Review and Approval

On October 29^th, 2015 OFCCP sent its final Discrimination on the Basis of Sex regulations to OMB’s Office Information and Regulatory Affairs (OIRA) for review and approval.  (Note:  This does not mean that they are final.  All this means is that OFCCP is done with the regulations and has sent a draft to OMB for approval.)  According to OFCCP’s Unified Agenda, this regulation is scheduled to be released in final form in December of 2015 so it appears that OFCCP is right on schedule.   Until OMB approves the regulations, the contractor community will not know the specifics behind the regulations.

Although total speculation, I have an educated hunch that the OFCCP may incorporate language into these regulations that is very similar to what was recently passed in California.  As many of you know, the state just passed the California Fair Pay Act (CFPA) that significantly expanded that state’s Equal Pay Act law.  More specifically, the CFPA expands the EPA as follows:

• The CFPA removed the “within any establishment” requirement so that a complainant does not have to compare his/her salary to a cohort within the same establishment.  Essentially wage discrimination claims can be made across establishment.
• The definition of “substantially similar work” significantly broadens the definition of pay discrimination in comparison to the EPAs definition of equal work.
• The affirmative defense of “a differential based on any other factor than sex” has been changed to a “A bona fide factor other than sex” that has to be “job related with respect to the position in question, and is consistent with a business necessity.”  It appears that California has adopted a Uniform Guidelines standard of validation when it comes to pay factors.  The language used in the CFPA is the same as the language used in the aborted federal Paycheck Fairness Act and, in my opinion, goes well beyond “any factor other than sex.”  Furthermore, the factor other than sex defense is the one commonly used in the EPA.
• The one or more factors relied upon must account for the entire wage differential.

Some may be asking how OFCCP can legally expand the language of the proposed regulations to incorporate language in the CFPA when it was not proposed during the notice and comment phase.  Simple!  They can if enough commenters suggested to OFCCP that, although the proposal is good, it can be made better by expanding the language to include similar language to what is in the final CFPA.  So, did any of the commenters do that?  They sure did!  Here is just an example of many made by the National Women’s Law Center:

There are three ways that the equal pay portion of the NPRM can be strengthened. First, we recommend explaining that factors other than sex must be job related and consistent with business necessity. The factor also must actually account for the entire difference in pay. As the EEOC has made clear, “a very slight difference in experience would not justify a significant compensation disparity.”49 And even if the factor met this test, a higher salary would not be appropriate if the employer was unaware of the factor when setting pay or if the employer did not consistently rely on the factor.

If my hunch is correct, and only time will tell, the new Sex Discrimination regulations would have a much greater impact on contractors than originally thought.  In fact, this could be the most significant regulation in well over a decade.

By Dave Cohen, President, DCI Consulting Group