Labor Department May Ease up on Federal Contractor Pay Discrimination Investigations

Labor Department May Ease up on Federal Contractor Pay Discrimination Investigations

Last month, Bloomberg BNA’s Ben Penn and Porter Wells reported that the US Department of Labor was planning to relax a policy put in place by the Obama administration to vigorously enforce regulations prohibiting gender pay discrimination by organizations that contract with the federal government. The department was said to be issuing new guidance to supplant a 2013 directive that had given the Office of Federal Contract Compliance a mandate to audit federal contractors for salary bias and make its own determinations as to whether workers were employed in identical or comparable roles for that purpose.

The OFCCP had used that directive to force substantial settlements from several large employers over alleged pay discrimination, and it has been at the center of the ongoing dispute between the Labor Department and Google over pay discrepancies the office has said indicate widespread discrimination (Google vigorously denies this and claims to have no statistically significant gender pay gap at all).

The new guidance, Penn and Wells explained, would “allow businesses to shape the random Labor Department audits by determining which workers investigators should be comparing for possible pay bias” instead. This change would be in keeping with Labor Secretary Alexander Acosta’s approach of assuming good faith on the part of businesses and allowing them to admit and correct compliance issues without fault rather than pursuing investigations and lawsuits. After these plans came to light, however, the department may be backtracking, Allen Smith reports at SHRM. Mickey Silberman, an attorney with Fortney & Scott in Denver, tells Smith that the OFCCP, Labor Department, and various stakeholders are now discussing the proposed changes.

Acosta’s pro-business approach has drawn controversy in other matters, such as the department’s relaunch of the Payroll Audit Independent Determination (PAID) program, which allows employers to self-report potential overtime and minimum wage violations under the Fair Labor Standards Act and resolve them without litigation or damages. Several state attorneys general have objected to the revival of this program, saying that it gives employers an incentive to break the law, as those who commit wage theft “are, in effect, getting an unlawful, interest-free loan from their employees.”

These attorneys, representing California, Connecticut, Delaware, Illinois, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Washington state, and Washington, DC, told Acosta they would not refrain from pursuing wage and hour investigations and suits on the basis of state and local laws. Their warning may give employers in these states second thoughts about participating in the PAID program, as admitting wage and hour violations to the Labor Department would not protect them against state-level legal action.