Where there is OFCCP Compensation Smoke, Class Action Attorneys See Fire

Transcription

1 Where there is OFCCP Compensation Smoke, Class Action Attorneys See Fire Alissa A. Horvitz Roffman Horvitz, PLC Agenda How does an OFCCP audit begin: compliance reviews What kinds of information has OFCCP sought What happens during an OFCCP onsite visit Review of OFCCP compensation settlements and enforcement actions Legal analytical framework for pay equity analyses outside the OFCCP context Other pay equity motivating forces Why are these actions becoming more attractive to class action attorneys 2 OFCCP Compliance Reviews How are employers selected? What data is submitted in response to the initial scheduling letter? How does OFCCP evaluate that initial data? What kinds of additional data fields does OFCCP seek during the information request phase of the audit? OFCCP interviews of high ranking compensation policy setters Employer databases 3 1

2 OFCCP Information Request (<2016) 1 of 10 Employee ID Number; First and last Name; Gender; Race/Ethnicity; EEO 1 category; Job Group; Annual base salary rate for full time employees; Annual base salary rate or hourly wage for part time and reduced scheduled employees; Total number of hours worked by full time employees, part time employees paid by hourly wage and reduced schedule employees; Hire date; 4 OFCCP Information Request (<2016) 2 of 10 Time in company; Job Title; Job Title Code; Job Title Code Key; Time in Position; Salary Grade; Salary Grade Entry Date; Time in Grade; Department; Division Code; 5 OFCCP Information Request (<2016) 3 of 10 Division Code Key; District Code; District Code Key; Organizational Unit; Work Location Code; Work Location Key; Bonus Pay (including profit sharing pay); Bonus Pay Eligibility, Y/N; Other compensation such as commission pay, consulting bonus, allowances, distributions, draws, origination credit, referral credit, supervision credit, productivity pay, shift differential pay, deferred pay (i.e., 401(k) retirement, etc.), non deferred compensation (stock based pay, etc.), fringe benefits (holiday pay) and any other form of compensation. Report each allowance in a separate data column and also add adjacent columns noting each employee s eligibility for each type of other pay with Y/N; Total earnings for current data and as of the two end of the year snapshots (*reported in Box 5 of Form W 2) or income (reported on Schedule K 1); 6 2

3 OFCCP Information Request (<2016) 4 of 10 Supplemental pay based on Project; Supplemental pay based on Project eligibility (Y/N); Results of three (3) last performance evaluations (in separate data columns for 2013, 2014, and 2015); Part time v full time status; Exempt versus non exempt status; Starting salary; Highest level of education; Specialty Degree (Y/N); Specific skills and competencies that influence pay as applicable; Certifications/License; 7 OFCCP Information Request (<2016) 5 of 10 Please describe the market based compensation system and provide the date of any salary adjustments made since 2013 based on the market system along with the employees affected. This can be done with a column in excel indicating those employees affected and the date of the salary adjustment made; Prior relevant experience outside the company in years, if available; Prior relevant experience within the company in years; Prior relevant experience with your affiliates in years, if available; Job Gamily; Job Family Levels/Line of business; Wage Code; Wage Code key; Prior Salary; Merit Increase; 8 OFCCP Information Request (<2016) 6 of 10 Merit Increase Eligibility (Y/N); ESOP amount; ESOP Eligibility (Y/N): Overtime, straight time; Overtime, straight time Eligibility (Y/N); Overtime, double; Overtime, double Eligibility (Y/N); Overtime premium; Overtime premium eligibility (Y/N); MIP Bonus; 9 3

4 OFCCP Information Request (<2016) 7 of 10 MIP Bonus Eligibility (Y/N); PMIP Payment; PMIP Payment Eligibility (Y/N); BDIP Payment BDIP Payment Eligibility (Y/N); Retention bonus; Retention bonus Eligibility (Y/N); Sign on payment; Sign on payment Eligibility (Y/N); Spot Award; 10 OFCCP Information Request (<2016) 8 of 10 Spot Award Eligibility (Y/N); Shift Differential; Shift Differential Eligibility (Y/N); Internal Equity; External Industry Market Value; and H1B Visa (Y/N) The OFCCP s information request did not end there. We also request the following information to be included in the database with [bullets] 7 16 above: Please describe the unit performance factor and how it affects an individual bonus; Please describe the personal performance factor and how it affects an individual bonus; Please provide documentation detailing actual performance goals to be achieved for payout (company level, unit level, individual level); 11 OFCCP Information Request (<2016) 9 of 10 How are individual goals set and approved; How is individual goal performance evaluated, reviewed, and approved? How is the final award determined, reviewed, and approved? (including any formulas for unit performance factor and personal performance factor); What is the Official company Plan Name of the compensation system during the review periods? Please provide a copy of any formal Plan document as approved by the Board of Directors; Please provide documentation on the minimum non zero award amount for meeting minimum performance goals in the company; Please provide all documentation on the maximum award amount for meeting maximum performance goals in the company; Please provide any information and documentation on how any adjustments that might be made to the award (or have been made), e.g., pro ration for time in plan; Please provide a list of any recent mergers or acquisitions and an indication of which employees came from such mergers or acquisitions; Please provide any documentation on legacy incentive programs; 12 4

5 OFCCP Information Request (<2016) 10 of 10 Please provide any documentation on self audit during the prior AAP year; Please provide any documentation on H1B employees related to pay; Please provide any documentation explaining overtime (straight time), overtime (double), overtime (premium), bonus MIP, BDIP payment, and PMIP payment. Please include in your submission copies of any written compensation guidelines and policies used as of [date] to explain the compensation system as well as the performance evaluation system. We also request a data dictionary or legend defining all fields included in the data. For example, please provide a full explanation of all codes such as Department Codes, Unit Codes, etc. Provide any relevant compensation policies (i.e., compensation philosophy, salary bands, incentive/bonus policy, and ESOP plans). We also request copies of the latest self audit/pay equity studies and salary surveys. 13 OFCCP Onsite visits Interviews with decision makers Interviews with employees What has been the timeline for OFCCP to resolve compliance reviews What may be the future timeline for OFCCP to resolve compliance reviews Limitations period Release issues 14 OFCCP Compensation Settlements and Enforcement Actions B&H Foto & Electronics Corp. $2,466,820.49, distributed across 144 Hispanics International Paper Inc. (steering) $347,642.20, distributed across 82 females Land O Lakes: $42,000 distributed to 14 female Livestock Production Specialists Sodixo, Inc. (steering) $95,000 distributed across 103 female class members in service worker positions Unifirst (steering) $75,000, distributed across 17 female class members 15 5

6 OFCCP Compensation Settlements and Enforcement Actions AmeriPrise Financial $128,000, distributed to 20 Black Unlicensed Service Professionals State Street $5,000,000 distributed across 305 females in SVP, MD and VP positions and 15 Black VPs Humana $2,500,000 distributed across 77 Female Applications Consultants, 391 Female Consultants, 146 Female Manager and 130 Female Project Managers JP Morgan Chase sued (allegations of pay discrimination against 93 females) Oracle sued (allegations of pay discrimination against 1387 females) Good sued (Functional AAP wide allegations of pay discrimination) 16 OFCCP s Analytical Framework Bush Administration 2006 Standards and Guidance Obama Administration Directive 307 Pay Analysis Group: 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. A PAG may be limited to a single job or title, or may include multiple distinct units or categories of workers. Similarly Situated Employees: relevant factors include tasks performed, skills, effort, level of responsibility, working conditions, job difficulty, minimum qualifications and other objective factors. Bloomberg BNA story on Directive 307 updates Future of employer privileged self audits 17 Legal Framework Federal Laws Title VII Lily Ledbetter Fair Pay Act of 2009 Equal Pay Act State Laws (how does the law impact the grouping the employer uses to evaluate pay) California Massachusetts (safe harbor; privilege) New York New Jersey Oregon Washington Shareholder initiatives Foreign pay disclosure initiatives impacting US operations 18 6

7 Employer databases Skill Effort Responsibility Working conditions Education Not prior salary Compensation structure 19 So why are OFCCP compliance reviews becoming more attractive to class action attorneys? 20 Thank you. Alissa A. Horvitz Member Attorney Roffman Horvitz, PLC 8260 Greensboro Drive, Suite 550 McLean, Virginia