CCE SYSTEMIC COMPENSATION DISCRIMINATION SURVEY

As you probably are aware, OFCCP has released a notice to rescind its Interpretive Standards for Systemic Compensation Discrimination and Voluntary Guidelines. In support of this notice, OFCCP has stated that most contractors are not using the current Guidelines, and that the Interpretive Standards 'significantly undermine OFCCP's ability to investigate and identify compensation discrimination'. OFCCP is accepting comments on its proposed rescission and the Center for Corporate Equality (CCE) will be providing some suggestions for OFCCP. Toward that end, CCE is conducting a brief survey of contractors to determine the extent to which contractors are using the current guidelines and whether contractors think having a set of standards is useful.

Thank you for participating in this survey on compensation discrimination analysis. Survey results are ANONYMOUS. CCE will likely use the aggregate results of this survey as part of a submission to comment on the proposed rescission of OFCCP Compensation Standards and Guidelines.

CLICK HERE TO TAKE THE SURVEY

TOM DOWD JOINS OFCCP AS DIRECTOR OF THE DIVISION OF PROGRAM OPERATIONS

Thomas M. Dowd joins OFCCP as Director of the Division of Program Operations where he will oversee the Functional Affirmative Action Program Unit and DPO’s three branches: Enforcement and Appeals, Field Liaison Operations and Technical Assistance, and Quality Assurance.

Tom has more than twenty years experience managing employment and training programs at the local, state, regional, and national levels. He joined the Department of Labor’s Employment and Training Administration in 1994 as Division Director for Indian and Native American Employment and Training Programs. He rose through the ranks at ETA serving as Associate Regional Administrator in the Rocky Mountain Region, Regional Administrator in the Mid-Atlantic, founding Director of the Business Relations Group, Deputy Assistant Secretary, and, most recently, Administrator for the agency. From 2006-2007, Tom was tapped by the Department of the Interior to help establish the newly created Bureau of Indian Education where he was responsible for managing an $800 million national Indian education system serving 48,000 students at 184 federally-funded schools in 23 states. Upon returning to ETA, Tom played an integral role in leading the agency’s strategic implementation of research, demonstration projects, evaluations of public workforce programs, and oversight of $4.5 billion in workforce programs and activities under the American Recovery and Reinvestment Act.

CLASS CERTIFICATION DENIED DESPITE PRIOR OFCCP AUDIT

by Art Gutman Ph.D., Professor, Florida Institute of Technology

The case is Randall v. Rolls Royce, decided on March 12, 2010. The facts of this case are hardly extraordinary. Two named plaintiffs at Rolls Royce sued for systemic sex discrimination under Title VII and unequal pay for equal work under the Equal Pay Act on behalf of a class size approximated at 537 women. District Court Judge Sarah Evans Baker of the Southern District of Indiana rejected class certification on failure to show commonality, typicality, and adequate representation. Essentially, the plaintiff’s expert did a regression analysis by aggregating men and women from five job classifications, each with four pay grades, and failed to consider important covariates, most notably distinct jobs with pay grades. The defendant’s expert included the covariates, and the rejection of class certification was based on his analysis.

Clearly, this happens a lot. One of the reasons we report this case is that Rolls Royce had previously entered into a sex discrimination settlement with the OFCCP based on a compliance evaluation. In commenting on the prior OFCCP audit, which the plaintiffs offered as evidence in the form of a press release, Judge Evans ruled:

Both the relevance and the admissibility of the press release is questionable in part because we do not know whether some, none, or all of the putative class members were actually employed by the Defendants' predecessor at the time of the OFCCP audit, let alone what compensation-setting polices were being followed by that company at the time. Moreover, the content of the press release does less to show the existence of discriminatory salaries at the start of the time period covered by the class definition than it does to suggest that any gender-based discrepancies may have been rectified by the nearly half million dollars in payments made by Defendants' predecessor as a result of the OFCCP compliance program. In any event, without greater detail as to what was involved in the audit and what the resulting agreement purported to cover, we can not assign any significance or weight to the press release.

Here are some other excerpts from the judge’s ruling, they are revealing.

Rolls-Royce conducts annual reviews of every individual employee's performance, in part to determine whether the employee's performance merits a raise. As part of the evaluation process, employees are assigned a Performance Development Review ("PDR") score by their manager. This score governs the amount of a merit increase the employee will receive. In addition to this annual review process, managers at Rolls-Royce have discretion to award various types of adjustments to an employee's base salary, such as an "equity adjustment" to modify salary to make it commensurate with the market and reflective of the scope of the employee's job duties. Managers can also make a critical skills adjustment ("CSA") for top performing employees who have skills critical to the business and are top performers. [the plaintiff expert’s]' report omits any consideration of these additional discretionary compensation tools in terms of gender; rather, it addresses only the base salary differentials comparing the two genders.

[the plaintiff expert] has reached his conclusions regarding the common gender effect on annual salaries within the defined class based on a regression analysis, which takes into account certain individual neutral factors (independent variables) such as seniority, time-in-grade, performance ratings, personnel area and education level. Defendants take issue with the way in which [the plaintiff expert] defines certain of those independent variables. Nevertheless, based on the neutral factors as he defines them, [the plaintiff expert] concludes that the salaries of men are typically somewhere between 4.27% to 5.84% higher during the time period of 2004 through 2007 throughout the various salary grades.

In addition to challenging the manner in which [the plaintiff expert] defines some independent factors, Defendants also take issue with [the plaintiff expert's] failure to include other neutral factors. Defendants contend that there are additional factors which are clearly significant and must be included in comparing salaries, such as the particular jobs held within a pay grade or an employee's experience in a particular job. They also contend that the interactions between and among these variables are crucial and must be incorporated into any statistical analysis which attempts to explain the reasons for particular salary differences.

Additionally, in one of the footnotes, Judge Evans makes the following distinction between adverse impact and pattern or practice claims as it relates to intentional discrimination:

Plaintiffs assert a disparate impact claim in addition to a pattern and practice claim. Both claims include the assertion of systemic discrimination. However, most courts, including this one, view a pattern and practice claim to require a showing of intentional discrimination (proof of which may include evidence of disparate impact), whereas a disparate impact claim involves identifiable facially neutral policies which, when applied, lead to discriminatory results. See Mozee v. American Commercial Marine Service Co., 940 F.2d 1036, 1051 (7th Cir. 1991); see also 1 Charles A. Sullivan & Lauren M. Walter, Employment Discrimination Law and Practice § 3.04(E) (4th ed. 2009).

The bottom line here is that the plaintiff’s expert relied on a simple analysis failing to control for critical covariates (on independent variables).

Interestingly enough, both the appropriateness of employee grouping structures and of multiple regression analyses were critical factors in this Title VII case. These factors are described in detail in the OFCCP systemic compensation discrimination Standards published in 2006. These Standards are currently in the process of being rescinded, and will likely be replaced by more general Title VII standards. Having said that, it is hard to imagine a Title VII systemic compensation case where these two factors would not be probative (assuming reasonable sample size).

EEOC REPORTS RECORD HIGH OF NEARLY 100,000 PRIVATE SECTOR CLAIMS IN FY 2010

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In a press release on 1/11/11, the EEOC reported a record number of discrimination claims in the private sector for FY 2010, which ended on September 30, 2010. The actual number was 99,923, which was roughly a 7% increase over FY 2009. A summary of these charges for the last seven years across major classifications can be found here. Included among the classifications, are first-time claims under the Genetic Information Nondiscrimination Act of 2008 (GINA). Inspection of the table reveals that for the most part, there were no dramatic changes in the percentage of claims per classification. Most of the percentage changes were less than 1%, with the lone exceptions being for age claims (down 1.1%) and ADA claims (up 2.2%). An important point to note is that the percentages do not add up to 100% for the various statutes because many of the individual claims contain multiple charges.

There were several additional points highlighted by the EEOC, most notably:

• The mediation program ended the year with a record 9,370 resolutions, 10 percent more than FY 2009 levels, and more than $142 million in monetary benefits;


• The EEOC also expanded its reach to underserved communities by providing educational training, and public outreach events to approximately 250,000 persons;


• The agency continued its concerted effort to build a strong national systemic enforcement program. At the end of the fiscal year, 465 systemic investigations, involving more than 2,000 charges, were being undertaken;


• The EEOC resolved a total of 7,213 requests for hearings in the federal sector, securing more than $63 million in relief for parties who requested hearings. The agency also resolved more than 4,600 federal sector appeals -- 400 more than in FY 2009.

CLASSIC EXAMPLE OF SEX-PLUS DISCRIMINATION

by Art Gutman Ph.D., Professor, Florida Institute of Technology

In a settlement announced by the EEOC with Denver Hotel Management Co., the company agreed to a $105,000 settlement for failure to promote Renate Rivelli for sex-plus discrimination in promotion. The landmark case in sex-plus discrimination is the Supreme Court’s ruling in Phillips v. Martin Marietta (1971) [400 US 542]. In the Phillip’s case, Martin Marietta’s manufacturing workforce was 80% female. Therefore the company felt safe in excluding from hire mothers of preschool children on grounds that they are more likely than other women to be tardy or miss days of work. However, the Supreme Court struck down the policy because it did not apply the same principle to fathers of preschoolers. Thus, the violation was sex plus parenthood. There have been few such cases in recent years, so the Denver Hotel case should serve as a reminder of what sex-plus discrimination is.

In the Denver Hotel case, Rivelli was denied a promotion to assistant human resource director, allegedly in favor of a less qualified and less experienced employee. Rivelli was passed over because of her role as a mother of young children. According to the EEOC, she was told she could not relocate or work the required 50-60 hour workweek because she “had a full-time job at home with her children.” The EEOC filed the complaint because the company never asked if she would be willing to relocate or work extra hours. As part of the agreement, Rivelli was placed on paid administrative leave, with benefits from December 6, 2010 through August 28, 2011.

Although rare in recent times, it is easy to fall prey to this violation. For example, a few years ago, I was consulting with a local police department on the interviewing process for hiring new officers. One of the panelists asked a female applicant how her husband and children felt about her wanting to be a cop. The problem here is that none of the panelists asked the parallel question of male applicants in relation to their wives and children.

OFCCP PUBLISHES NOTICE PROPOSING TO RESCIND COMPENSATION STANDARDS AND VOLUNTARY GUIDELINES

by Fred Satterwhite, Senior Consultant, DCI Consulting Group

Today's Federal Register includes OFCCP's notice proposing to rescind two guidance documents originally published in 2006 that addressed compensation discrimination, commonly referred to as the "Standards" and "Voluntary Guidelines." The Standards described the agency's methodology for investigating and identifying systemic compensation discrimination during a compliance evaluation, and the Voluntary Guidelines described the methodology that federal contractors could use to conduct proactive analyses of their compensation systems in order to comply with OFCCP regulations.

In the notice, OFCCP states that the Standards "have limited OFCCP's ability to effectively investigate, analyze and identify compensation discrimination," and the Voluntary Guidelines "are largely unused by the Federal Government contracting community and have not been an effective enforcement strategy."

In the "Background" section of the notice, OFCCP affirms that "compensation discrimination may occur on an individual basis, or systemically," arguing that the Standards- by focusing on the systemic context- limited the agency's ability to identify problems in a contractor's compensation practices. OFCCP argues that the Standards are too "rigid" and do not allow the agency to tailor its investigative and analytical procedures to the facts of a specific case. OFCCP also states that, since 2006, "contractors have rarely utilized the analytical procedures outlined in the Voluntary Guidelines when analyzing their compensation practices under section 60-2.17(b)(3)."

According to the "Proposal" section of the notice, OFCCP "believes it is unnecessary to issue new Federal Register notices articulating its interpretations of Title VII principles related to compensation discrimination," indicating that future compensation investigation procedures will instead be issued "in the same manner as procedures for investigating other forms of discrimination, for example through the FCCM, directives and staff guidance materials." The agency states that it will "provide any needed compliance assistance on section 60-2.17(b)(3) through various means, including webinars and the website distribution of Frequently Asked Questions as appropriate," rather than publishing new notices in the Federal Register.

OFCCP also makes it clear that "once rescinded, nothing in the Standards or Voluntary Guidelines or their preambles could be relied upon as a statement of OFCCP's interpretation of Title VII principles or OFCCP regulations."

Public comments on the proposal may be submitted through the Federal eRulemaking Portal site on or before March 4, 2011.