OFCCP (Really) New Developments &

1. OFCCP (Really) New Developments & Everything You Want to Know about Pay Equity But Are Afraid to Ask November 17, 2017 Mickey Silberman, Esq. msilberman@fortneyscott.com www.fortneyscott.com

2. About FortneyScott FortneyScott represents clients on workplace matters, including representation before federal enforcement agencies including the U.S. Department of Labor (“DOL”), the Equal Employment Opportunity Commission (“EEOC”) and state enforcement agencies. Our attorneys have significant experience advising and counseling clients on domestic and international workplace-related matters, including compliance programs, pay equity, equal employment and nondiscrimination obligations, wage and hour and prevailing wages, investigations of workplace claims and complaints, government contracting, and the development of strategies for avoiding or responding to workplace-related crises.

3. About Our AAP-OFCCP Practice Group • We work closely with employers across the country to prepare affirmative action plans and defend OFCCP Compliance Reviews • Our affirmative action and OFCCP defense practice group is comprised of expert attorneys who partner with statisticians and labor economists • Our comprehensive AAP-OFCCP expertise includes: • Preparing AAPs for employers in all industries and across the country; • Defending OFCCP compliance reviews; • Stepping in on “problem audits” in which OFCCP alleges systemic discrimination in hiring and compensation • Defending litigation brought by OFCCP against employers in the Southeast region and across the county

4. About Our Pay Equity Group • We work closely with employers across the country to address the full spectrum of pay equity issues • Our Pay Equity Group is comprised of expert attorneys who partner with statisticians and labor economists • Our comprehensive pay equity expertise includes: • Defending employers in agency enforcement proceedings and in litigation brought under Title VII, the Federal Equal Pay Act and state equal pay laws; • Conducting privileged, proactive pay analyses; • Helping clients identify and address unexplained pay disparities; and • Providing advice regarding the design and administration of pay systems to achieve pay equity and minimize liability

5. About Mickey Silberman, Esq. Mickey is Chair of the firm’s Affirmative Action & Pay Equity Group. He is recognized as a national expert on affirmative action, OFCCP, payequity and systemic pay discrimination. Mickey has worked closely with clients and a team of statisticians to prepare thousands of affirmative action plans and defend hundreds of audits during the past several years. He also oversees pay equity analyses both on a proactive basis and in response to EEOC and OFCCP pay investigations and private pay litigation. And he advises clients on pay system design and administration to identify and address subtle, often hidden, barriers to pay equity.

6. Lawyer’s Disclaimer The materials contained in this presentation were prepared by the law firm of Fortney & Scott, LLC for the participants’ reference in connection with education seminars. Attendees should consult with counsel before taking any actions and should not consider these materials or discussions to be legal or other advice.

7. OK, So What Shall We Talk About • Meet the New OFCCP Director . . . Maybe • The Merger? Dead. OFCCP is not Going Away • OFCCP Audits – not too many but deep and broad • Pay Equity is Here and its not Going Away • But Requests for Salary History . . . History • Putting the Pieces of the Pay Equity Puzzle Together • Conducting a Proactive Pay Analysis

8. Agenda • First, the Broader Pay Equity Context – What’s Happening and Why? • Pay Equity Enforcement Shifting to the States • California’s Fair Pay Act Has Grown, Again – What happened and What Should We Do? • The Challenge of Explaining the “Entire Wage Differential” • Requests for Pay History are . . . History • Upon request, applicants now get wage scales

9. Meet the New OFCCP Director….maybe? • Craig Leen • JD from Columbia Law School • City Attorney and chief legal officer for the City of Coral Gables since 2011 • Worked in the private sector for Morgan Lewis, Skadden, and Cleary. 5

10. Meet the New OFCCP Director….maybe? • Craig Leen • JD from Columbia Law School • City Attorney and chief legal officer for the City of Coral Gables since 2011 • Worked in the private sector for Morgan Lewis, Skadden, and Cleary. 5

11. Craig Leen, City Attorney

12. Predictions for OFCCP UnderPresident Trump • No Merger • Decreased Budget • OFCCP will do more with less • OFCCP Will Close Some District Offices • Continued Focus on Pay Equity • ACM Replaces ACE • Comp Standards (or something similar) Replace Directive 307 • Safe Harbor Provision? 6

13. Predictions for OFCCP UnderPresident Trump (cont.) • Contract Compliance Certification Program • Currently within the regulations at 60-2.31 (Program Summary) • Regional Centers of Excellence • Tech and Financial Industry • Full Review of OFCCP's Sole Reliance on Statistical Significance to "Prove“ Discrimination 6

14. Program Summary • 41 CFR 60-2.31 • The affirmative action program must be summarized and updated annually. The program summary must be prepared in a format which will be prescribed by the Deputy Assistant Secretary and published in the Federal Register as a notice before becoming effective. Contractors and subcontractors must submit the program summary to OFCCP each year on the anniversary date of the affirmative action program 7

15. FY2017 • Focus on the Tech and Financial Sector • Increase in audits of higher education • Continued focus on compensation, hiring and steering • Compensation enforcement • What is a repeated measures model? • OFCCP is combining multiple compensation snapshots • It’s all tainted! • OFCCP refusing to include legitimate non-discriminatory compensation factors. • Hiring enforcement • Data aggregation • What is the temporal scope of an audit?

16. Sample Compensation Data Request • What are the temporal scope and confidentiality concerns with this request? • Provide compensation data for all employees at this establishment as of the following snapshot dates: • 01/01/2014 • 01/01/2015 • 01/01/2016 • 01/01/2017 • Data to include the employee last name, employee first name, personal telephone number, personal address, personal email address,…….

17. Agenda • What does a Trump presidency mean for federal contractors? • Strategies for federal contractors dealing with OFCCP • Impact on recent Executive Orders/Rules • Awareness about “equal pay” has arrived • EEO-1 pay data reporting • Growing wave of aggressive state pay laws • Conducting a Pay Equity analysis

18. First, the GoodNews • Democratic OFCCPs are more passionate about, but less efficient and effective at,enforcement • More ambitious/aggressive about novel theories ofdiscrimination • – pay (Directive 307), demanding and analyzing allexpressions of interest, deep dives in almost everyaudit • Republican OFCCPs tend to be more businesslike which typically means more effectiveenforcement • A “law enforcement” agency that enforces existing law;doesn’t try to make newlaw • “Active Case Management” vs. Active CaseEnforcement 17

19. Total OFCCP Compliance EvaluationsDuring BushAdministration 4,923 4,325 4,015 2,120 2005 2006 2007 2008

20. Total OFCCP Compliance Evaluations During ObamaAdministration 4,100 3,802 2,603 1,695 2013 2014 2015 2016

21. What is Likely to Remain/Renew in the New OFCCP? • Hiring adverse impact will stay “bread &butter” • But on “applicants, not expressions ofinterest • Veterans • Individuals withdisabilities • Outreach and recruitment of minorities and females • Possible adoption of GAO recommendations – annual submission of report onAAPs

22. Pay EquityEnforcement • OFCCP took a radical approach to analyzing pay – Directive307 • Most likely that pay will remain a focus forOFCCP • But will return to analyzing pay in more traditional ways as interpreted under 50 years of Title VII caselaw • “similarly situated” = jobtitles • Along with statistics, anecdotal evidencerequired

23. Setting the Stage – The “Pay Gap” For every $1.00 paid to a man, how much is paid to. .. Academics, comp experts, women’s and civil rights groups and others are using new, aggressive tools to “attack the gap”

24. In Trump Era, Pay Equity Focus Shifting to States and Big Cities

25. The Trump Administration & The States • Trump says he supports equal pay for women • Despite that, many states and big cities are passing a “patchwork” of aggressive equal pay laws that differ and often contradict each other • In the past 18 months Massachusetts, New York, Maryland, Delaware, Puerto Rico, Oregon, New York City, Philadelphia and San Francisco • California was first in 2015 and has expanded its fair pay law each year since

26. The California Fair Pay Act - What Does It Say and What Do We do?

27. The California Fair Pay Act – Overview • With its latest expansion, the law continues to • Makes it easier to bring and win pay discrimination claims • Expands the protected groups under the law • Expands who may be compared with whom to demonstrate unexplained pay differences • Requires employers to explain the “entire wage differential” • New! Bans requesting applicants’ salary history • New! Requires employers to provide to applicants the “pay scale” for a position upon request

28. Who Can Bring Claims Under CFPA? • When CFPA became law in 2016, it protected only against pay discrimination based on gender • In 2017 it was expanded to include protection based on race and ethnicity • This is quickly leading to a growing wave of claims based on specific race & gender claims, for example • Hispanic Females v. Asian Males • Black Males vs. White Females • Black Females vs. Hispanic Females • All Females vs. All Males

29. Who Is Compared with Whom? • The law formerly said only compare “equal work” • Big change to employees performing “substantially similar work” when . . . • Viewed as a composite of skill, effort and responsibility • Employees need not be in the same job title or job description to be doing “substantially similar work” • Think about dozens of software engineers across many job titles doing “substantially similar” work, thus all may be compared • This allows plaintiffs to combine across job titles and get to big numbers – and “big numbers are bad numbers”

30. Ok, If There’s a Pay Difference, How Can An Employer Explain It? • If employees demonstrate there is a pay disparity between individuals or classes of employees, the employer can defend by • Offering bona-fide job-related factors such as • Merit, seniority, quality of quantity of production, education, training and experience • In a critical change to the law, the employer must be able to explain the “entire wage differential” • Attorneys’ fees for prevailing plaintiffs – now let’s think about that in connection with having to explain the “entire wage differential” • The robust California Plaintiff’s bar is jumping in

31. Asking for Salary History Is . . . History

32. Bans on Salary History –The Newest Tool to “Attack the Gap” • Employers traditionally ask for and have taken pay history into account when making offers and setting starting pay • This may be a “facially neutral” practice but women making less before will typically wind up making less in their new jobs • The growing belief is that this practice perpetuates the “pay gap” from employer to employer

33. Jurisdictions That Have Passed or Proposed Bans on Salary History • Passed Salary HistoryBan • California • Delaware • Massachusetts • PuertoRico • New YorkCity • Philadelphia • SanFrancisco • Oregon Proposed Salary HistoryBan • Pennsylvania • RhodeIsland • Texas • Vermont • Virginia • Illinois– passedlegislature • DC • Georgia • Iowa • Maine • Maryland • New York • North Carolina • Washington • Wisconsin • Los Angeles

34. The New CFPA Ban on Salary History – What Does It Say? • Employers may not seek salary history from applicants or rely on it to determine starting pay offer • This applies to third-party recruiters acting on employers’ behalf • Exception – if an applicant voluntarily and without prompting discloses his or her salary history, the employer can rely on it to determine salary • But the law is explicit that employers may not rely on salary history as the sole basis for explaining pay differences among employees • Becomes effective January 1, 2018

35. Applicants’ Request for Wage Scales • In the first law of its kind, California will require employers to provide the “wage scale” for the position to applicants upon request • The law does not define “wage scale” – so how should an employer define it? • If there are existing salary grade, band or market reference points, can consider providing any of those • Can provide the actual wage range for the position among incumbent employees • In deciding how to define it, consider who can use this information and how it can be shared by applicants

36. So What Should Employers Do? • Now – eliminate requests for applicants’ pay history • Now – consider options and develop approach to providing wage scales for all positions, when requested • Soon – conduct privileged, proactive pay equity analysis to identify unexplained disparities • For unexplained disparities, plan for incremental adjustments over a few pay cycles • Avoid lump sum or off-cycle adjustments • Soon – consider changes to pay system design and administration to avoid unexplained disparities

37. Questions?

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