September 10, 2021
The U.S. Labor Department’s Office of Federal Contract Compliance Programs announced it will reevaluate using 2019 worker pay data broken down by race, sex, ethnicity, and job group (“EEO-1 Component 2 data”) to augment its enforcement efforts and process for selecting federal contractors for audit.
Background: In 2019, OFCCP announced that it would not request, accept, or use EEO-1 Component 2 compensation data that employers submitted that year for the agency's federal contracting audits.
The 2019 decision was “premature and counter to the agency’s interests in ensuring pay equity,” OFCCP argues in a recent notice in the Federal Register. “The joint (EEOC and OFCCP) collection and analysis of compensation data could improve OFCCP’s ability to efficiently and effectively investigate potential pay discrimination. Also, analyzing compensation data in conjunction with other available information, such as labor market survey data, could help OFCCP identify neutral criteria to select contractors for compliance evaluations.”
Public disclosure risk: Although the EEOC is required to keep the Component 2 data confidential, once transmitted to OFCCP, the Component 2 data may be released to the public using a Freedom of Information Act request.
Outlook: The move may signal that OFCCP is coordinating with EEOC on reinstating the Component 2 requirement, which EEOC opted not to renew in 2019. It is worth noting that OFCCP already receives detailed contractor compliance data to assess pay equity in standard compliance evaluations.