OFCCP Reaches Pay Discrimination Settlement w Federal Contractor

In March 2017 the Office of Federal Contract Compliance (OFCCP) entered into a conciliation agreement with Land O’ Lakes to settle allegations of compensation discrimination against female Livestock Production Specialists that arose from a compliance evaluation initiated in May 2009. These positions are responsible for selling feed and related products, and OFCCP alleges that the disparity in pay was caused by discriminatory duty assignments, sales incentive pay programs, and pay increases that negatively affected females.

As part of the conciliation agreement, Land O’ Lakes agreed to pay $42,000 in back pay and interest to 14 female class members. Land O’ Lakes also agreed to complete a regression analysis of compensation data as of December 31, 2016, for individuals in the Livestock Production Specialist title. This analysis must be completed within sixty days of the conciliation agreement’s effective date, and the company must use the specific methodology laid out in the agreement. The methodology outlined states that the company will analyze total compensation using months in the job, other months at Land O’ Lakes, sex, and state as the controls. If the results show a significant disparity adverse to females, Land O’ Lakes agreed to adjust the compensation of current female Livestock Production Specialists in an amount equal to the pay difference attributable to sex indicated by the regression model.

Land O’ Lakes also committed to completing a study to evaluate whether promotion decisions, performance evaluations, work assignments, training opportunities, and opportunities to transfer are having a disproportionately negative effect on the compensation of females. If negative effects are found, the company agreed to eliminate any practices that are causing this, and revise related policies. The conciliation agreement also requires that Land O’ Lakes implement guidelines for determining the starting salaries of employees in the Livestock Production Specialist position. The agreement states that starting salaries can be influenced by factors such as employees’ certifications, previous experience, or the salaries of similarly situated peers within the company. Importantly, the agreement expressly provides that an employee’s prior salary should not be the sole factor considered.

This settlement is important for contractors to be aware of due to the extreme length of time between the start of the compliance evaluation, the notice of violation, and the eventual conciliation agreement. Contractors should be aware that audits can last for many years, and should take this into consideration when developing an audit management strategy and dedicating resources throughout the process. Contractors should also note that while the amount of back pay being provided to class members is relatively small, the agreement also brings into play the compensation of current employees in that title, as well as other personnel practices such as work assignments, performance evaluations, and training. This potentially increases the financial impact to Land O’ Lakes, and contractors should keep this in mind when assessing the risk involved in an audit situation.