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$11.9 million in remedies collected: don’t overlook ofccp transparency rules

Recently, it’s been a priority in the United States for the OFCCP to increase protection for those who feel affected by the gender gap. This includes an expansion of transparency – it’s now officially illegal for companies to discriminate against employees who talk about it in the workplace.

Now, organizations have to meet the mandates of Executive Order 13665 to help combat gender pay discrimination in the workplace – are you ready?

The rule was signed by President Barack Obama in April 2014 and targets those organizations that still have pay secrecy policies, as well as those who discriminate against the employees who discuss and ask questions about their compensation.

The OFCCP is particularly sensitive to the challenges woman and people of color have faced in the workplace:

OFCCP Director Patricia A. Shiu in a Sept. 10 statement said the final rule means that pay secrecy practices “will no longer facilitate the pay discrimination that is too often perpetrated against women and people of color in the workplace.”

“Indeed, forward thinking companies that have embraced greater transparency find that it benefits them and their workforce by helping them attract and retain talented workers,” she said. “And research suggests these approaches have a substantially positive impact on society, workers, the workforce, and the economy as a whole.”

The Department of Labor (DOL) and supporters of the new law are confident that it will indeed combat discrimination and be successful, but there are some management attorneys that aren’t so sure. They feel it’s possible that the rule could just widen the complaint platform, but not actually have that large of an effect at the negotiation table.

The OFCCP collected over $11.9 million in financial remedies from federal contractors in the fiscal year (FY) 2014. Over 80 percent of those remedies were for cases of hiring discrimination. These large fines can easily be avoided with a few workplace best practices.

Let’s take a look at what the new law actually requires of talent acquisition leadership.

Put the new rule somewhere visible, and in the handbook.

Executive Order 13665 directs you to make sure your employees know about the rule, and this includes putting the information in places where they know to look – their employee handbook.

You’re required by the OFCCP to incorporate a detailed non-discrimination provision into your existing employee handbook and policy manuals, as well as a visible area in the workplace.

As an extra measure, consider directly communicating the new rule to your employees via an email blast, newsletter update or flyer. Any type of regular communication you have with your team is a great opportunity to communicate new laws and information.

Include the data in your EEO-1 Report.

You also have to let the federal government you’re being compliant – you’ll now have to include your pay data in your Employer Information Report (EEO-1) Report in order to meet the transparency requirements set down by Executive Order 13665.

This action was announced on Jan 29th, and brings together the efforts of the OFCCP and the Equal Employment Opportunity Commission (EEOC), and requires all private employers and federal contractors to report this information.

Filing this information on your EEO-1 report helps you stay transparent to both your employees and these two main governing bodies, but also forces you to take a look at your salaries yourself.

You might be discriminating in pay without knowing you’re doing so, or you may be more equal than you think. Either way, filing this report immediately will provide visibility from every angle.

If you don’t already have one, set up a system for employees to file complaints.

A big part of the Executive Order is that employees should no longer feel shame or discrimination for asking questions about their salaries, or for voicing formal complaints about discriminatory practices.

If you haven’t done so already, educate your employees on how to file complaints with the OFCCP if they believe their employer discriminated against them for discussing, inquiring about or disclosing compensation information.

The rule doesn’t only favor the employee’s point of view. There are two defenses built into the rule that allow employers to defend themselves in these cases – one is based on your legitimate workplace rules, and the other is based on the essential functions of an employee’s job.

While it may seem counterproductive to teach your employees how to complain about you, education on the matter will expedite the process of OFCCP compliance.

Prep your agencies when it comes to nondiscriminatory pay messaging.

You’re not the only one talking about your pay policies – your agencies are on the ground floor of your candidate pool for managerial and executive positions, talking to talent for some of your most business-critical positions.

It’s important to remind agencies of your discrimination policies, educate them on employee compensation transparency and discuss the important of this messaging and OFCCP compliance in your initial call with them.

We recommend approaching this in a short conversation during your agency kickoff call, where you discuss the parameters of your open role with all of your agencies at the same time, so they all get the same message and have the opportunity to have your questions answered.

Avoiding OFCCP complaints and supporting workplace transparency for employees is a huge goal for most organizations. Ensuring your OFCCP compliance both in-house and with your third party agencies will pave the way for both, making both current employees and candidates excited about working for you.

*We’ve summarized some of our thoughts about the new OFCCP transparency requirements here, but you should always seek legal counsel regarding government regulations before any implementation or action.

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