Minding the gap

September 4, 2011

Nearly five decades after the Equal Pay Act of 1963 was signed, women in the United States earn 78 cents on the dollar compared to men. Over a lifetime, the average working woman stands to lose nearly $380,000 because of the wage gap, federal labor officials estimate.

The first bill President Barack Obama signed in early 2009 — the Lilly Ledbetter Fair Pay Act, named after an Alabama woman whose pay discrimination case against Goodyear Tire went before the U.S. Supreme Court — extended the statute of limitations for workers bringing pay disparity cases against their employers. A second bill aimed at providing greater protections for workers who raise pay equality issues, the Paycheck Fairness Act, died in Congress last year but was reintroduced in April.

Now the administration appears to be zeroing in on the pay practices of government contractors, which employ nearly a quarter of the nation’s workforce and represent 200,000 businesses with contracts totaling $700 billion.

Since May, the arm of the Labor Department that oversees contractors’ compliance with anti-discrimination laws in employment (the Office of Federal Contract Compliance Programs, or OFCCP) has floated two initiatives that could make the government much more privy to how contractors pay their workers — including one that could require contractors to report detailed information about salaries, raises, bonuses and benefits.

The OFCCP says the efforts are to help regulators hone in on — and enforce against — pay discrimination on the basis of gender, race and other protected categories. Eliminating the gender pay gap would raise the standard of living for working families and reduce the number of children living in poverty, supporters say.


But contractors are crying foul, saying it’s the wrong time to burden companies with more recordkeeping duties when the government should be focusing on creating jobs.

Keeping count

In the Washington metropolitan region, women overall fared slightly better than women nationally, earning 80 cents for every dollar paid to men, though women locally in some ethnic groups trail in national comparisons.

Pay discrimination alone can’t be blamed for these wage differences. A 2009 wage disparity study done for the Labor Department found that differences in raw wages “may be almost entirely the result of the individual choices being made by both male and female workers.” A greater percentage of women work part time, leave the labor force to have children and choose lower-paying jobs in exchange for more flexible schedules — all of which contribute to the wage gap, the study found.

Currently, all federal contractors with at least 50 employees must file annual reports to the Equal Employment Opportunity Commission, breaking down the company’s workers by job category, gender and race or ethnicity. Those reports do not ask for pay data. Although federal anti-discrimination law already requires contractors to keep records on pay data, contractors don’t normally disclose the information unless they’re among the small percentage of companies — about 4,000 annually — that get audited by the OFCCP. One of the Labor Department proposals would tighten requirements for those contractors from providing a summary of total employees and compensation by pay grade or job title, to disclosing pay information for individual workers. That kind of employee-level data is typically used in litigating systemic pay discrimination cases against private sector businesses.

The second potential change, which was opened for public comment Aug. 10 — but has yet to be drafted into a formal proposal — would create a tool to collect pay data from contractors to “identify and analyze trends, federal contractors’ compensation practices and potential equal employment-related issues,” according to a notice the OFCCP published in the Federal Register on Aug. 10.

OFCCP Director Patricia Shiu said it’s too early to say what the tool would look like, what data it would require or which contractors it would apply to, as the office is currently seeking feedback on how to shape the effort. The 60-day window for public comment ends Oct. 11.

Shiu said the point isn’t to “play gotcha” with contractors, but to create a mechanism through which contractors can take a closer look at their compensation plans, promotion rates and who they’re hiring and firing.

“Seven-hundred billion taxpayer dollars go to contractors,” Shiu said. “You can’t use taxpayer dollars to discriminate. Being a contractor is a privilege, not a right, and you have to comply with the law.

“Most contractors comply with the law. Some don’t. We have to level the playing field.”

Contractors object to being singled out

Some observers say the push to spotlight equal pay is the administration’s attempt to revisit what it tried but failed to achieve through the Paycheck Fairness Act, which would have expanded existing equal pay laws. Shiu said that’s inaccurate, and that the president’s National Equal Pay Enforcement Task Force (which includes the EEOC, Labor Department, Justice Department and Office of Personnel Management) had been talking about proposals — including the tool to collect pay data from contractors — to combat pay disparities months before the vote on the Paycheck Fairness Act.

The Labor Department’s proposed changes are getting a cool reception from contractors.

“Contractors are subject to all of the same laws and regulations that other businesses face with regard to employment discrimination, and there is no evidence at all that there is any unique problem in this area with government contractors that would warrant uniquely singling them out for what will be an excessively costly and difficult reporting requirement,” said Stan Soloway, president and chief executive of the Professional Services Council, in a statement. The industry group represents 340 government contractors.

As of last week, eight comments have been filed regarding the data tool, including criticism from human resources representatives at the U.S. Army and companies that contract with the government.

“I’m all for equal pay but the government has no business collecting wage data from a contractor unless they are investigating a properly filed discrimination complaint of an employee of that contractor,” said Tom Nervig, human resources manager at Iowa-based NAI Electrical Contractors, in a comment submitted Aug. 15. “It’s just not right, especially for a privately held company. Secondly, wage data, in my mind, is a trade secret. If the government has my data then my competitor can get my data. That puts me at a competitive disadvantage.”

Even companies that don’t contract with the government should be watching how the OFCCP regulates the pay reporting practices of contractors, said Ilyse Schuman, a partner in the government affairs group at labor and employment law firm Littler Mendelson. The firm represents contractors before the OFCCP and has filed opposition on behalf of clients to the proposal for audited contractors to report individual employee pay. Littler also plans to file opposition to the data tool.

“Would they do it for private employers?” Schuman asked. “That’s not within OFCCP’s gambit but the DOL is looking at the issue of pay disparities outside the government contracting space. Nongovernment contractors should be attuned to what’s going on at the OFCCP if it’s an arbiter of things to come.”

Catherine Ho covers law and lobbying for Capital Business, which she joined in 2011. She was previously a reporter at the Daily Journal in Los Angeles, covering LA civil courts and labor and employment law.
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