OFCCP to use Component 2 pay data after all

Contractors’ comp data will soon be in the OFCCP’s hands.

After initially reassuring contractors that it would not “request, accept, or use” Component 2 pay data, the Office of Federal Contract Compliance Programs has reversed course. 

My colleague Robin Shea reported extensively on the EEO-1 Component 2 pay data saga. If you need a refresher, see her summary

After the nightmare was over, though, the OFCCP announced in November 2019 that it would not “request, accept, or use Component 2 data, as it does not expect to find significant utility in the data given limited resources and its aggregated nature.” The Agency’s 2019 notice further stated as follows:

OFCCP has reviewed the parameters of the EEO–1 Component 2 data collection and has determined that it does not find Component 2 data necessary to accomplish its mission to ensure federal contractors are not engaged in unlawful pay discrimination. This data is collected in a format that is highly aggregated. Although the data could potentially inform OFCCP’s scheduling process for compliance evaluations, it is too broad to provide much utility to OFCCP. The data is not collected at a level of detail that would enable OFCCP to make comparisons among similarly situated employees as required by the Title VII standards that OFCCP applies in administering and enforcing Executive Order 11246. OFCCP receives up-to-date, employee level pay data from contractors that are selected for compliance evaluations. This data enables OFCCP to identify disparities in pay that may violate Executive Order 11246 by comparing the pay of employees who are similarly situated under the contractors’ pay practices. Therefore, OFCCP does not need the EEO–1 Component 2 pay data for that purpose.

Today, the OFCCP retracted this statement. The Agency now states that its prior decision, issued during the Trump Administration, was premature because the Agency had “little information” on the response rate, how the data were submitted and assembled, or whether the data were complete. The Biden OFCCP now asserts that there are “substantial reasons” (which are not outlined) to believe that the Component 2 pay data will be useful.

Going forward, contractors can expect the OFCCP to rely on the compensation data to identify contractors to be selected for compliance evaluations. The Notice does not describe exactly what the OFCCP will do with the information, but the Agency “plans to analyze the Component 2 data collection to assess its utility for providing insight into pay disparities across industries and occupations and strengthen Federal efforts to combat pay discrimination.”

A number of significant questions are left unanswered:

  • How compensation information from 2018 and 2019 will be relevant to evaluating contractors today.
  • Why the concerns raised by the Trump OFCCP in 2019 about the data are no longer valid.
  • How the Biden OFCCP will respond to requests under the Freedom of Information Act seeking contractors’ sensitive and proprietary compensation information.

Hopefully, the Agency will comply with the Trump era Transparency and Certainty Directives and keep contractors informed on this important topic.

Our Affirmative Action Alert blog focuses on the latest news and topics affecting federal contractors and subcontractors and their compliance with affirmative action and other employment-related laws and regulations.  With breaking news, quick updates, and headlines on the Office of Federal Contract Compliance Programs and affirmative action issues, this blog is a great resource for in-house counsel, HR managers, and other compliance professionals.  Our blog is a companion to Constangy’s Affirmative Action newsletters, which address significant legislative, regulatory, and administrative proposals and changes.  Subscribe to both to stay current on these important topics!


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