Since OFCCP’s compensation Directive 307, federal contractors are experiencing more intense scrutiny of their compensation systems during OFCCP compliance reviews. A recent trend among compliance officers across regions is to ask contractors to re-submit their Item 11 compensation data, after an original audit submission, by job group. This request discounts the original Item 11 submission a contractor has provided, which was typically prepared according to the specifications outlined in the scheduling letter.

This has left contractors confused about the language found in the OMB-approved scheduling letter, which states that contractors should submit their Item 11 compensation data by, “either salary range, rate, grade, or level” and to “present the data in the manner most consistent with your compensation system.” The OMB-approved scheduling letter does NOT ask contractors to submit their Item 11 compensation data by job group, nor is job group even one of the several options listed as an example.

Job group is typically only used by federal contractors for affirmative action plan development, and takes into account jobs that have similar wage, content, and opportunity. Although wage is only one component of job group formation, job groups are typically not used by contractors to establish compensation structure or policy. It would not be uncommon for a contractor to have jobs such as Information Security Director in the same job group as a Human Resources Director. Most compensation professionals would argue that the pay for these two example jobs do not rely on the same factors. Although it may be appropriate to group these two jobs together for affirmative action purposes, comparing the two jobs for compensation equity purposes would be inappropriate.

The more important issue is that OFCCP compliance officers are completely disregarding the contractor’s pay groupings in most situations. Contractors typically submit Item 11 data according to the principles outlined in the scheduling letter: in a manner that is consistent with their pay systems. In fact, many contractors place a great deal of thought and effort in creating pay groups for Item 11 submission that accurately reflect their compensation structure. In many cases, the item 11 submission takes into account job title, which is typically how people are paid in organizations -- by the job being performed.

by Joanna Colosimo, M.A., Senior Consultant, DCI Consulting Group

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