Updated OFCCP Compensation Triggers

By Danielle Yokoi

There have been a lot of recent OFCCP developments within the past few years. A more recent development is the modification of the OFCCP’s compensation trigger analysis. Most contractors are familiar with the trigger analysis known as the “2/30/3.” The OFCCP has recently begun using a modified version; known as the “5/10/3.” This analysis has the same concept as the “2/30/3” but changes the thresholds. Below is a summary of each version.

OFCCP Red Flag Analysis 2/30/3:
· Test 1 determines whether a two percent (2%) difference in compensation exists between the protected group and the non-protected group in a given grouping (i.e. job title).
· Test 2 determines whether at least 30 protected employees are negatively impacted by the 2% difference.
· Test 3 determines whether at least 30 percent of the protected workforce is negatively impacted by the 2% difference.
· Test 4 determines whether the protected group is negatively impacted 3 times more than the non-protected group.

OFCCP Red Flag Analysis 5/10/3:
· Test 1 determines whether a five percent (5%) difference in compensation exists between the protected group and the non-protected group in a given grouping (i.e. job title).
· Test 2 determines whether at least 30 protected employees are negatively impacted by the 5% difference.
· Test 3 determines whether at least 10 percent of the protected workforce is negatively impacted by the 5% difference.
· Test 4 determines whether the protected group is negatively impacted 3 times more than the non-protected group.

Keep in mind this comparison should be done for Females vs. Males and Minorities vs. Non-Minorities. You will notice the only differences are the threshold of Test 1 and 3.

BCG recommends conducting this type of analysis before submitting compensation data to the OFCCP. With the introduction of the new trigger test the industry has seen an increase in the OFCCP’s requests for further compensation data (i.e., 12-factor data). This is evidence that the OFCCP is focusing their efforts on finding systemic compensation disparities within contractor community. That is not to say this is their only focus, because they are still focusing on finding selection rate disparities within hires, with a specific focus on low-lying fruit (aka high volume positions).

For more information please attend our Audit webinar on February 11th. Please register here: http://www.biddle.com/eeowebinars.stm