US Department of Labor announces pay equity audit directive for federal contractors to identify barriers to equal pay
WASHINGTON – Today, as the nation observes Equal Pay Day – the day through which U.S. women typically must work to be paid the same wages men received in 2021 – the U.S. Department of Labor’s Office of Federal Contract Compliance Programs issued a new directive to promote greater contractor attention concerning the proactive and effective use of pay equity audits to identify barriers to equal pay in their pay-setting and employment practices.
“The Office of Federal Contract Compliance Programs’ directive on pay equity audits is an important measure that will help employers address and prevent pay inequality,” said Office of Federal Contract Compliance Programs Director Jenny R. Yang.
“OFCCP is redoubling its efforts to remove barriers to pay equity, and ensuring contractors are complying with their obligation to conduct comprehensive pay equity audits,” Yang added.
OFCCP’s directive also makes clear that if the agency identifies concerns about the contractor’s compensation practices during a compliance evaluation, it may request the contractor’s pay equity audit to verify the contractor’s compliance with its obligation to conduct an annual in-depth analysis of its compensation practices.
Almost 60 years after the passage of the Equal Pay Act of 1963, the Civil Rights Act of 1964 and Executive Order 11246 in 1965, significant gender pay gaps persist. Women who work full-time, year-round in the U.S. typically are paid only 83 cents for every dollar paid to men. The wage gap is even more pronounced for women of color.
As the nation makes critical infrastructure investments, federal contractors have an important role to play in taking proactive action to develop fair pay practices and conduct an annual pay equity audit to identify and correct inequities. OFCCP is committed to working with the contractor community to tackle longstanding pay inequality through unbiased pay setting practices, greater proactive analysis of compensation systems, and transparency in pay equity audits.
The directive aligns with the Executive Order on Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency signed today by President Biden. The Executive Order directs the Federal Acquisition Regulatory Council, in consultation with the Department of Labor, to consider proposing rules limiting or prohibiting federal contractors from seeking and considering information about job applicants’ and employees’ existing or past compensation when making employment decisions.