OFCCP Updates Guidance on Compensation Practices and Announces New AAP Verification Initiative

The Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) announced new directives, including new procedures for reviewing contractor compensation practices and a program to verify that contractors are in compliance with federal affirmative action program (AAP) requirements. These new directives are part of the Department’s efforts to maximize the effectiveness of compliance assistance outreach.

• Clear Guidance for Contractor Compensation Practices: The directive further clarifies and provides additional transparency to contractors about OFCCP’s approach to conducting compensation evaluations; supports compliance and compensation self-analyses by contractors under applicable law, and OFCCP regulations and practices; and improves compensation analysis consistency and efficiency during compliance evaluations. This new directive rescinds Directive 307 and its Obama-era procedures for reviewing contractor compensation systems and practices. OFCCP believes that fulsome guidance will better support contractors’ ability to conduct meaningful audits so that they can proactively identify and address issues with their compensation practices.
• Affirmative Action Program Verification Initiative: By law, federal contractors are required to take affirmative steps to ensure equal opportunity in their employment processes, including the development of an AAP within 120 days of the commencement of the contract, along with annual updates. OFCCP is charged with ensuring that federal contractors fulfill these requirements. The Government Accountability Office found in a 2016 report that “close to 85 percent of contractor establishments did not submit a written AAP within 30 days of receiving a scheduling letter.” The new OFCCP initiative establishes a program for verifying compliance by all contractors with AAP obligations.

OFCCP also announced an initiative establishing a recognition program for contractors with high-quality and high-performing compliance programs and initiatives.

For more information, contact Claiborne Guy at claiborne.guy@agc.org or 703-837-5382.