Federal Contractors: Beware of OFCCP’s New Compensation Audit Procedures

On Feb. 26, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced that effective Feb. 28, 2013, there are significant changes in how the OFCCP addresses compensation in compliance audits and enforcement proceedings.  These changes effectively open virtually every federal contractor’s actions, policies and practices that affect compensation to scrutiny, review and possible challenge by OFCCP. The announced changes include the following:

1. OFCCP will formally rescind the “Voluntary Guidelines” and “Compensation Standards” issued by OFCCP in 2006.  OFCCP has criticized these documents as improperly limiting OFCCP’s ability to conduct full investigations of compensation matters; and
2. The OFCCP has issued new guidance, effective on Feb. 28, 2013, specifying the procedures that OFCCP’s investigators will follow to review federal contractors’ systems and practices for paying workers.  The guidance is included in the newly-issued OFCCP Policy Directive 307.

This marks a significant change and expansion in OFCCP’s approach to compensation.  As a result, federal contractors can expect a much more intensive review of all systems and practices relating to compensation during OFCCP audits that commence on and after Feb. 28.  Federal contractors should undertake immediate steps to ensure that they fully understand the breadth and scope of these new changes, and to assess the possible impact on their organization. Editor's note:  This article was provided by the law firm of FortneyScott.  FortneyScott is a Washington, D.C.-based law firm counseling and advising clients on the full spectrum of workplace-related matters.  FortneyScott is a frequent speaker and sponsor of AGC training events for HR professionals in the construction industry.