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Newsletter Issue 11

Practical Approaches
to Resolving EEO/AA Problems
Issue #11
OFCCP Retools Its Enforcement Programs
OFCCP in an effort to simplify the preparation of an affirmative action program actually made the preparation of this document a great deal more difficult. Effective June 16, 2006 OFCCP’s new regulations on compensation analysis became effective. Contractors with 500 or more employees must now perform a detailed regression analysis every year to be sure that there is no illegal discrimination in the company compensation program. Most people never heard of this analysis much less used it in testing the results of its compensation program. The regression analysis requires the use of a large database of information used by the company to determine the reasons why an employee is at the compensation level he now has. It becomes more complex when this analysis has to be done for all other jobs. The results reached will determine whether jobs with like salaries have qualifications that properly place them in that salary range.

Factors used in the regression analysis go far beyond those used in the past to substantiate the correct level of compensation for a specific employee. Other factors considered in a regression analysis will include information like the following:
  • Work experience provided by what employer
  • Education level
  • Training programs attended
  • Length of time an employee worked on special assignments
  • Years of work experience an employee has in a certain specialty
  • Employee’s performance rating over the past several years
  • What the entry level pay the employee received
  • Any other factors considered in setting compensation packages

Contractors with less than 500 employees are not obligated to perform the regression analysis but it is recommended that they use the system. If the decision is not to use the regression analysis, the contractor will have to use some acceptable system to make these compensation determinations that can be supported in the event the salaries are called into question.

Another major change in OFCCP enforcement efforts is the reintroduction of the EO Survey that was in use for several years. As you may recall, the Survey required the submission of employee data that included applicant flow, new hires, promotions, terminations compensation, etc. OFCCP will use this data to identify problem employers that can then be scheduled for audit. The agency will then rank the contractors based on the number and kind of adverse indicators revealed by the data presentation. The plan calls for scheduling contractors for audits starting with those with the highest score on the indicator scale.

In past newsletter issues we have discussed the new EEO-1 report form with the changes in its data requirements. Although it does not apply until the EEO-1 Report for 2007, it is prudent to start using the codes now so that the systems will be in place for the 2007 report.

The changes in the regulations are severe enough to call for a training program in the immediate future. We are looking at the first or second week in September. We will finalize a date and let you know as soon as it is decided.

Please remember that the information we use to prepare your AAPs comes from you. We try to schedule AAP preparation at intervals that allows us the given time required to do the job right. We would appreciate your efforts to get the data to us in a timely manner.

We appreciate your business. Call us if we can be of assistance to you.

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