Client Alert – August 12, 2014

On August 8, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) published a Notice of Proposed Rulemaking (“NPRM”) in the Federal Register regarding the collection of employee compensation data from federal contractors. The NPRM covers federal contractors and subcontractors with more than 100 employees and requires covered contractors and subcontractors to submit an “Equal Pay Report” each year to the OFCCP. The NPRM is the result of a Presidential Memorandum signed by President Obama on April 8, 2014, that instructed the Secretary of Labor to propose a rule within 120 days to require federal contractors and subcontractors to submit summary data on the compensation paid to their employees.

The Equal Pay Report set forth in the NPRM will require covered contractors to provide summary information on employee compensation, specifically:

(1) the total number of workers within a specific EEO-1 job category by race, ethnicity, and sex;

(2) the total individual W-2 wages for all workers in the specific EEO-1 job category by race, ethnicity, and sex; and

(3) the total hours worked by all workers in the specific EEO-1 job category by race, ethnicity, and sex.

This information will be submitted electronically through an online portal, with a reporting period from January 1st through December 31st. The OFCCP will not collect compensation information on individual employees, and the OFCCP will protect the confidentiality of the compensation information collected “to the maximum extent permitted under existing law.” The collection of this payroll data is intended to allow the OFCCP to determine which federal contractors’ information indicates potential compensation violations and direct its review efforts towards these contractors. The OFCCP will also publish aggregate industry-based data on the race and gender pay gaps in order to allow federal contractors and subcontractors to make voluntary changes to their compensation practices.

The deadline for submitting comments on the NPRM is November 6, 2014. The NPRM may be found here. If you have any questions about these issues, please contact your Labor and Employment counsel at Smith, Gambrell & Russell, LLP.