OFCCP Ramps up Pay Equity Enforcement with Several Pay Discrimination Settlements

Pay equity enforcement is ramping up at the federal level, signaling to employers everywhere that the time to implement proactive diversity, equity, and inclusion (DEI) measures is now. 

Case in point: The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently reached a series of settlement agreements with five large organizations. As a result, AstraZeneca, IBM, Thomson Reuters, Serco, and Aecom Management Services will be paying big for claims alleging pay discrimination.

The OFCCP is responsible for enforcing equal opportunity laws in the federal contracting process. Under new leadership, the agency is bolstering efforts to combat pay discrimination head-on – the latest OFCCP director, Jenny R. Yang has made closing gender and race wage gaps a top priority. 

In a departure from past practice, the agency also announced earlier this year it will be leveraging EEO-1 Component 2 pay data to look for discriminatory practices. The move signals support of the Equal Employment Opportunity Commission’s decision to bring back pay data reporting requirements for employers.

Below we outline details from the recent settlements and how employers can navigate growing requirements with a data-driven approach.

The high price of pay discrimination

Each of the companies named in the OFCCP settlements were charged with failure to comply with Executive Order 11246, which protects individuals employed by federal contractors from employment discrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin. According to the OFCCP, these individuals make up one-fifth of the U.S. workforce.

Although not admitting liability, these settlements show, pay inequity comes at a steep cost for employers:

• Serco will pay $150,000 in back wages for alleged compensation discrimination against female IT employees
• For alleged racial hiring discrimination at a Virginia Beach location, Aecom Management Services owes $205,000 in back wages to affected employees
• IBM will shell out $350,000 in back wages interest for alleged gender-based pay discrimination at a Washington location
• Alleged gender and race-based pay discrimination at its New York headquarters will cost Thomson Reuters $550,000
• AstraZeneca will pay out a staggering $560,000 for alleged gender and race-based pay discrimination at a Delaware facility

Getting ahead of growing pay equity regulations

As equal pay regulations pick up speed globally, discrimination claims will continue to follow in situations where employers aren’t prepared. Employers can get ahead of growing legislation with proactive preparation and an authentic commitment to DEI.

Conducting a proactive pay equity audit at the intersection of race and gender/ethnicity with always-on analytics is one way to get started. Trusaic’s PayParity solution identifies pay disparities at the source and prevents them from being created in the first place. Promoting fair compensation practices helps position your organization as an equitable workplace, which in turn helps attract and retain top talent.

To learn more about how pay equity analytics and DEI software foster workplace equality, download our research report conducted by Harvard Business Review Analytic Services, Creating a Culture of Diversity, Equity, and Inclusion.