[Federal Register Volume 79, Number 153 (Friday, August 8, 2014)]
[Proposed Rules]
[Pages 46562-46606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-18557]



[[Page 46561]]

Vol. 79

Friday,

No. 153

August 8, 2014

Part IV





 Department of Labor





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Office of Federal Contract Compliance Programs





41 CFR Part 60-1





Government Contractors, Requirement To Report Summary Data on Employee 
Compensation; Proposed Rule

  Federal Register / Vol. 79 , No. 153 / Friday, August 8, 2014 / 
Proposed Rules  

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DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Part 60-1

RIN 1250-AA03


Government Contractors, Requirement To Report Summary Data on 
Employee Compensation

AGENCY: Office of Federal Contract Compliance Programs, Labor.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Office of Federal Contract Compliance Programs (OFCCP) 
proposes to amend one of its implementing regulations for Executive 
Order 11246, Equal Employment Opportunity, which sets forth the 
reporting obligations of Federal contractors and subcontractors. This 
notice of proposed rulemaking (NPRM) would amend the regulation by 
adding a requirement that certain Federal contractors and 
subcontractors supplement their Employer Information Report (EEO-1 
Report) with summary information on compensation paid to employees, as 
contained in the Form W-2 Wage and Tax Statement (W-2) forms, by sex, 
race, ethnicity, and specified job categories, as well as other 
relevant data points such as hours worked, and the number of employees. 
This summary compensation data collection from Federal contractors and 
subcontractors by OFCCP is a critical tool for eradicating compensation 
discrimination. It would enable OFCCP to direct its enforcement 
resources toward entities for which reported data suggest potential pay 
violations, and not toward entities for which there is no evidence of 
potential pay violations. It would also enhance two enforcement 
objectives: Greater voluntary compliance; and greater deterrence of 
noncompliant behaviors by contractors and subcontractors. OFCCP seeks 
to achieve these dual and complementary objectives while minimizing, to 
the extent feasible, the compliance burden borne by Federal contractors 
and subcontractors.

DATES: To be assured of consideration, comments must be received on or 
before November 6, 2014.

ADDRESSES: You may submit comments, identified by RIN number 1250-AA03, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Fax: (202) 693-1313 (for comments of six pages or less).
     Mail: Debra A. Carr, Director, Division of Policy and 
Program Development, Office of Federal Contract Compliance Programs, 
Room C-3325, 200 Constitution Avenue NW., Washington, DC 20210.
    Instructions: Please submit your comments by only one method. 
Receipt of submissions will not be acknowledged; however, the sender 
may request confirmation that a submission was received by telephoning 
OFCCP at (202) 693-0103 (voice) or (202) 693-1337 (TTY) (these are not 
toll-free numbers). All comments received by OFCCP, including any 
personal information provided, will be available for public inspection 
during normal business hours at Room C-3325, 200 Constitution Avenue 
NW., Washington, DC 20210, or via the Internet at www.regulations.gov. 
Upon request, individuals who require assistance viewing comments are 
provided appropriate aids such as readers or print magnifiers. Copies 
of this NPRM are available in the following formats: Large print, 
electronic file on computer disk, and audiotape. To schedule an 
appointment to review the comments and/or to obtain this NPRM in an 
alternate format, please contact OFCCP at the telephone numbers or 
address listed above.

FOR FURTHER INFORMATION CONTACT: Debra A. Carr, Director, Division of 
Policy and Program Development, Office of Federal Contract Compliance 
Programs, 200 Constitution Avenue NW., Room C-3325, Washington, DC 
20210. Telephone: (202) 693-0103 (voice) or (202) 693-1337 (TTY).

SUPPLEMENTARY INFORMATION:

Executive Summary

Purpose

    The OFCCP proposes to amend the regulation found at 41 CFR 60-1.7 
by adding a requirement that certain Federal contractors and 
subcontractors (hereinafter ``contractors'') submit additional, readily 
available data in a new ``Equal Pay Report.'' This report would require 
the submission of summary data on employee compensation by sex, race, 
ethnicity, specified job categories, and other relevant data points 
such as hours worked, and the number of employees. The OFCCP believes 
that collecting and strategically using this summary data would have a 
significant deterrent effect and impact on OFCCP's enforcement program. 
Voluntary compliance and self-assessments by Federal contractors are 
critical components of this NPRM given the vast number of 
establishments subject to OFCCP's jurisdiction in comparison to the 
agency's modest personnel and other resources. The agency estimates 
that, based solely on 2012 EEO-1 Report data, more than 116,000 
establishments are subject to its jurisdiction because they have at 
least 50 employees and a contract or subcontract in the amount of 
$50,000 or more. However, this NPRM proposes to cover a subset of these 
establishments. Informed by the aggregate industry-based data that 
OFCCP will make available to them, Federal contractors will have the 
opportunity to conduct meaningful self-assessments of their 
compensation practices and policies, and make any necessary pay 
adjustments or other compensation modifications prior to an OFCCP 
compliance evaluation. Specifically, this NPRM will enhance the quality 
and quantity of data OFCCP collects. This data, in addition to data 
collected from publicly available sources, such as the Bureau of Labor 
Statistics (BLS), are critical to developing a data-driven approach for 
identifying and focusing OFCCP's evaluations and resources on Federal 
contractors that have potentially discriminatory compensation 
differences when compared to an objective industry standard.
    This NPRM reflects extensive stakeholder input collected prior to 
and during a 2011 Advance Notice of Proposed Rulemaking, specific 
criteria stated in a Presidential Memorandum issued on April 8, 2014, 
and additional stakeholder input collected during listening sessions 
held following the release of the Presidential Memorandum (the 
Memorandum).\1\ In the Memorandum, President Barack Obama directed the 
U.S. Department of Labor (DOL) to develop a compensation data 
collection proposal that would: (1) Maximize the efficiency and 
effectiveness of the agency's enforcement and its ability to focus on 
more likely violators; (2) minimize, to the extent feasible, the burden 
on Federal contractors and subcontractors, especially small businesses 
and small nonprofit organizations; and (3) use the data collected to 
encourage greater voluntary compliance and to identify and analyze 
industry trends. The Memorandum also encouraged the Department to 
develop a proposal that relies on existing reporting requirements and 
frameworks to the extent feasible, and to consider available 
independent

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studies regarding the collection of compensation data.
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    \1\ Presidential Documents, Memorandum of April 8, 2014, 
``Advancing Pay Equality Through Compensation Data Collection,'' 
Memorandum for the Secretary of Labor, April 11, 2014 (79 FR 20751).
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    Data collection and analysis of data are likely to serve as a 
disincentive for noncompliance, and are, therefore, effective 
deterrents. One recent report found that deterring violations before 
they occur is one part of an ``overall enforcement policy.'' \2\ 
However, deterrence is not often ``incorporated as a central component 
of how investigations are targeted, conducted, and followed up on, or 
in the way that penalties are assessed and levied.'' \3\ Similarly, 
researchers have described deterrence as the ``second foundation of 
traditional enforcement'' with the potential to protect vulnerable 
workers and influence employers' behavior related to the broad goal of 
improving workplace compliance.\4\ Research in this area has found that 
deterrence can effectively inform how enforcement agencies select and 
conduct investigations.\5\
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    \2\ David Weil, Improving Workplace Conditions Through Strategic 
Enforcement, May 2010, at 2, available at http://www.dol.gov/whd/resources/strategicEnforcement.pdf (last accessed July 4, 2014).
    \3\ Id.
    \4\ Id. at 13.
    \5\ Id.
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    The disclosure of compensation data summarized at the industry 
level enables contractors and subcontractors to assess their 
compensation structure along with those of others in the same industry, 
and provide useful data to current and potential employees. Some of 
these employers will not want to be identified as having pay standards 
that are significantly lower or different from those of their industry 
peers, since this may encourage valuable employees to consider moving 
to other employers, or discourage applicants who see that higher paying 
jobs may be available elsewhere. Employers do not want to be known as 
one of the lowest paying members of their industry, and may voluntarily 
change their pay structure.
    OFCCP, through this NPRM, seeks to imbed deterrence into its 
existing three-prong enforcement framework which consists of: (1) 
Conducting compliance evaluations and complaint investigations, and 
obtaining remedies for victims of discrimination; (2) Issuing policy, 
technical assistance, and subregulatory guidance that is legally sound 
and effective; and (3) Strategically developing relationships and 
sharing information with contractors and workers about their respective 
rights and legal obligations.
    In order to integrate deterrence into the first of the three 
prongs, that is, its compliance evaluations process, OFCCP will collect 
and analyze contractor summary compensation data to establish objective 
industry standards for identifying potential discrimination in employee 
compensation.\6\ OFCCP will use these standards to determine which 
contractors it will prioritize and schedule for compliance evaluations. 
This prioritization will be based on the amount of difference or 
variance between a contractor's pay standards when compared to the 
appropriate industry standards. By requiring contractors and 
subcontractors to report the data, OFCCP believes that some of these 
employers will voluntarily change their employment policies and 
practices. When coupling this collection of data with its proposed use, 
that is, using it to establish and make public objective industry 
standards that can indicate whether a contractor or subcontractor is at 
higher risk for possible compensation violations, OFCCP believes that 
more contractors will voluntarily change their policies and 
practices.\7\ These contractors will rightfully assume that OFCCP is 
strengthening its enforcement in the area of compensation 
discrimination; therefore, they will likely take voluntary measures to 
ensure that they are in compliance should they be scheduled for an 
OFCCP compliance evaluation.
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    \6\ A contractor's compensation practices, standing, or position 
relative to the ``objective industry standards'' do not constitute a 
violation of OFCCP's laws or regulations, and no violation, sanction 
or penalty is imposed based on a contractor's ability to meet or 
exceed the standard. This standard is a tool OFCCP may use to inform 
and refine its scheduling process for compliance evaluations.
    \7\ Mark A. Cohen, Empirical Research on the Deterrent Effect of 
Environmental Monitoring and Enforcement, 30 ELR 10245, 10247-10250 
(2000) (finding that empirical studies demonstrate the effectiveness 
of government activities such as enforcement and compliance 
monitoring have a deterrent effect; a general deterrent effect 
exists when the regulated believe that they have a higher 
probability of being monitored; monitoring the behavior of regulated 
entities based on assessed noncompliance risk level has a deterrent 
effect); Executive Office of the President, Office of Drug Control 
Policy, Measuring the Deterrent Effect of Enforcement Operations on 
Drug Smuggling, 1991-1999, (August 2001), available at https://www.ncjrs.gov/ondcppubs/publications/pdf/measure_deter_effct.pdf 
(last accessed June 23, 2014) (a deterrent effect exists with 
increased penalties and targeted enforcement operations); Diane Del 
Guercio, Elizabeth R. Odders-White & Mark J. Ready, The Deterrence 
Effect of SEC Enforcement Intensity on Illegal Insider Trading, 
(Sept. 2013) (providing direct evidence that aggressive enforcement 
deters illegal activity).
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    Integration of deterrence into the second prong of OFCCP's 
enforcement policy comes through not only the proposals in this NPRM 
but also through OFCCP's ongoing commitment to providing the 
contractors' human resources (HR) and compliance officials with access 
to technical assistance materials and training that supports compliance 
with OFCCP's regulations. It has been OFCCP's experience that HR and 
compliance officials often drive compliance within an organization, as 
they are often the sponsor or champion for compliance within the 
company. As such, training them and supporting their compliance work is 
critically important to greater deterrence and voluntary compliance.
    Finally, as to the third prong of OFCCP's enforcement framework, 
routinely sharing aggregate compensation data at the industry and/or 
labor market level with contractors should drive some additional 
portion of the contractor community to engage in voluntary self-
assessments of their compensation practices and make needed 
corrections.\8\ OFCCP plans to share summary industry standards 
information with the public annually, as soon as practicable. Moreover, 
OFCCP plans to provide training and technical assistance to contractors 
that explain the standards and how contractors could use them to 
conduct self-assessments of their compensation practices and 
differences.\9\
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    \8\ Mark A. Cohen, Empirical Research on the Deterrent Effect of 
Environmental Monitoring and Enforcement, 30 ELR 10245, 10250 (2000) 
(sharing information is an important enforcement tool because it can 
change firm behavior; information disclosure has an important 
deterrent effect).
    \9\ These voluntary assessments should not be confused with and 
do not take the place of the assessments required of contractors' 
affirmative action programs under OFCCP's regulations.
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    Consistent with this overall view of transparency, a 2010 study 
found that the Wage and Hour Division (WHD) of the U.S. Department of 
Labor could potentially increase its deterrence effects by being more 
transparent about its enforcement activities.\10\ More specifically, 
the report concludes that greater transparency about investigation 
activities underway or the targeting of certain geographic areas by 
WHD, and information about closed investigations ``potentially increase 
deterrence effects not only among employer networks, but also through 
spreading the word to workers in a local area.'' \11\ Consequently, 
OFCCP anticipates that by making publicly available the industry 
standards used to prioritize contractors for enforcement actions, and 
its overall emphasis on compensation

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discrimination enforcement, the agency will also see positive 
deterrence effects.
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    \10\ David Weil, Improving Workplace Conditions Through 
Strategic Enforcement, May 2010, at 83, available at http://www.dol.gov/whd/resources/strategicEnforcement.pdf (last accessed 
July 4, 2014) (among the study recommendations were making 
investigation activities in a geographic area more transparent, and 
increasing public access to data on closed case investigations or 
industry initiatives to create a deterrent effect).
    \11\ Id.
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    Yet another possible deterrence effect exists when OFCCP generally 
exercises its enforcement authority. When OFCCP finds and remedies 
violations during a scheduled compliance evaluation, because the 
contractor has not voluntarily changed its behavior, a preventive 
deterrent effect is the result. When OFCCP finds and remedies 
violations by contractors, they may be prohibited from, and thus 
prevented from, continuing their discriminatory practices. This 
enforcement approach is tantamount to ``preventive'' deterrence because 
the expectation is that at least some of these violators are prevented 
from continuing their unlawful conduct for some period.
    Deterrence, unlike enforcement actions, is proactive in nature. As 
such, it can prevent jobs from being denied or lost, prevent workers 
from being unfairly compensated, and prevent individuals and their 
families from being placed in financial jeopardy due to employment 
discrimination. This NPRM is one means of enabling OFCCP to collect the 
data it needs to strategically prioritize compliance evaluations, and 
share that data, as appropriate, to support voluntary changes in 
contractor employment behaviors.\12\ Collecting this readily available 
compensation information will permit OFCCP to identify and prioritize 
contractors and subcontractors that are likely to have possible 
compensation violations, and strategically deploy its enforcement 
resources to investigate those contractors. In an era of increased 
demand for productivity with dwindling resources, this enhanced data 
collection will inure to the benefit of both OFCCP and compliant 
Federal contractors and subcontractors.
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    \12\ Archon Fung, Mary Graham & David Weil, Full Disclosure: The 
Perils and Promise of Transparency, Cambridge University Press 
(2007).
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Legal Authority

    Originally issued in 1965, and amended several times in the 
intervening years, the purpose of Executive Order 11246 is twofold. 
First, the Executive Order prohibits employment discrimination on the 
basis of race, color, religion, sex, sexual orientation, and gender 
identity and national origin against employees and applicants by 
covered Federal contractors and subcontractors.\13\ Second, it requires 
that each covered Federal contractor and subcontractor take affirmative 
action to ensure equal opportunity in employment. The nondiscrimination 
and affirmative action obligations of Federal contractors cover all 
aspects of employment, including rates of pay and other compensation.
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    \13\ On July 21, 2014, the President signed Executive Order 
13672 amending Executive Order 11246 to include nondiscrimination 
based on sexual orientation and gender identity. This Order requires 
that a regulation be prepared within 90 days of the date of the 
Order. Though the new Executive Order is effective immediately, the 
protections apply to contracts entered into on or after the 
effective date of the new DOL regulation.
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    The requirements in Executive Order 11246 generally apply to any 
business or organization that: (1) Holds a single Federal contract, 
subcontract, or Federally assisted construction contract in excess of 
$10,000; (2) has Federal contracts or subcontracts with a combined 
total exceeding $10,000 in any 12-month period; or (3) holds Government 
bills of lading, serves as a depository of Federal funds, or is an 
issuing and paying agency for U.S. savings bonds and notes in any 
amount. Pursuant to the Executive Order, the award of a Federal 
contract comes with a number of responsibilities. Section 202 of the 
Executive Order requires every contractor to agree to: (1) Comply with 
all provisions of the Executive Order and the rules, regulations, and 
relevant orders of the Secretary of Labor; (2) provide all information 
and reports required by the Executive Order and implementing rules, 
regulations, and orders; and (3) provide access to its books, records, 
and accounts to the Secretary of Labor for the purpose of investigation 
to ascertain compliance with such rules, regulations, and orders. Under 
Section 203 of the Executive Order, the Secretary of Labor has broad 
authority to require compliance reports from contractors that contain 
such information regarding their practices, employment policies, 
programs, and employment statistics, in such form as the Secretary of 
Labor may prescribe. Likewise, the implementing regulations at 41 CFR 
60-1.12(a) provide that the Director of OFCCP may require a contractor 
to keep employment or other records, including records on compensation 
and other rates of pay by race and gender, and must supply this 
information to OFCCP upon request. A contractor in violation of the 
Executive Order may have its contracts canceled, suspended, terminated, 
or may be subject to debarment.

Major Proposed Provisions in the NPRM

    The regulation at 41 CFR 60-1.7 sets forth the existing requirement 
that certain Federal contractors and subcontractors submit an annual 
Employer Information Report EEO-1 (EEO-1 Report), a standard Federal 
report on workforce demographics that is jointly promulgated by OFCCP 
and the Equal Employment Opportunity Commission (EEOC). The NPRM 
proposes the following major provisions:
     Amending the regulation at 41 CFR 60-1.7 by adding a 
requirement that employers who file EEO-1 Reports, have more than 100 
employees, and a contract, subcontract, or purchase order amounting to 
$50,000 or more that covers a period of at least 30 days, including 
modifications, submit two columns of additional information to the EEO-
1 Report in a new Equal Pay Report to OFCCP.\14\ The report requires 
the submission of summary data on employee compensation by sex, race, 
ethnicity, specified job categories, and other relevant data points 
such as hours worked, and the number of employees.
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    \14\ Any reference to contractor obligations under the proposed 
rule described in this NPRM also apply to first tier nonconstruction 
subcontractors and construction subcontractors that satisfy the 
employee and contract size coverage criteria in the proposed rule.
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     Requiring that covered Federal contractors and 
subcontractors electronically submit the proposed Equal Pay Report 
using a web-based data tool. OFCCP will establish a process for 
requesting an exemption to the electronic filing requirement.
     Requiring contract bidders to make a representation 
related to whether they currently hold a Federal contract or 
subcontract that requires them to file the proposed Equal Pay Report 
and, if so, whether they filed the report for the most recent reporting 
period.
     Extending existing agency sanctions to Federal contractors 
and subcontractors for the failure to file timely, complete, and 
accurate Equal Pay Reports, and the representation of compliance.
    OFCCP is also interested in amending the regulation to 41 CFR 60-
1.7 by adding a requirement that employers who file the Department of 
Education's Integrated Postsecondary Education Data System (IPEDS) 
report, have more than 100 employees, and have a contract, subcontract, 
or purchase order amounting to $50,000 or more that covers a period of 
at least 30 days, including modifications, also file OFCCP's proposed 
Equal Pay Report. OFCCP is particularly interested in comments related 
to the need to collect additional compensation data from postsecondary 
academic institutions in light of the scope of their existing reporting 
obligations with the U.S. Department of Education. Consequently, 
information relevant to the feasibility of

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using IPEDS data to satisfy the objectives of this NPRM is particularly 
helpful on the issue of the scope of coverage.
    OFCCP proposes sharing summary industry standards information with 
the public annually, as soon as practicable. Moreover, OFCCP plans to 
provide training and technical assistance to contractors that explain 
the standards and how contractors could use them to conduct their self-
assessments. This information could reflect the industry and/or labor 
market, or some other relevant aggregate grouping of the data received 
by OFCCP.\15\ The published data will be made available to support and 
encourage genuine, in-depth, contractor self-assessments of their 
compensation policies and practices. OFCCP believes that the 
publication of data for contractors to use would significantly promote 
deterrence and voluntary compliance with their obligations under 
Executive Order 11246. The advancement of the societal goals of 
nondiscrimination in the workplace, and closing the pay gap, are the 
by-products of deterrence and compliance. Therefore, OFCCP is 
interested in comments on the cost to contractors of conducting these 
self-assessments of the data provided pursuant to the Equal Pay Report 
against published industry standards. These voluntary compensation 
difference assessments are not substitutions for mandatory assessments 
required by other provisions in Part 60.
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    \15\ The data could be made available at industry, labor market 
or other grouping levels based on OFCCP's assessment of the actual 
data it receives, and whether or not external data sources are used.
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Costs, Benefits and Transfers

    The table below displays the estimated costs associated with the 
implementation of this NPRM. OFCCP estimates that the proposed cost of 
the NPRM is $684 per contractor establishment or $2,176 per contractor 
company.

                   Table 1--Cost of the Proposed Rule
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           Frequency                   Description        Estimated cost
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One-Time Burden................  Regulatory                  $33,591,233
                                  familiarization,
                                  modifications to
                                  contractor personnel
                                  tracking systems, and
                                  changes to the
                                  contractor's bidder
                                  representation process.
Annual Recurring Burden........  Contractors completing       12,654,414
                                  the proposed report
                                  and contractors
                                  requesting exemption
                                  from electronic filing.
Annual Operations and            The cost of filing the            4,542
 Maintenance Costs.               exemption request.
Cost to the Government.........  The cost of additional        3,759,696
                                  staffing and updating
                                  information systems.
                                                         ---------------
    Total Cost of the Proposed                                50,009,885
     Rule.
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    Note that the first-year cost of the proposed rule is $46,250,189, 
which includes the one-time burden, annual recurring, and annual 
operations and maintenance costs.The goals of the proposed rule are:
     Increasing contractor self-assessment of compensation 
policies and practices, and expanding voluntary compliance with OFCCP's 
regulations, to advance OFCCP's mission of ensuring nondiscrimination 
in employment and decreasing the pay gap between males and females and 
between people on the basis of race.
     Providing probative compliance information, including data 
on industry and/or labor market standards, to promote industry-wide 
deterrence within the Federal contractor community and lead to modified 
compliance behavior in the compensation arena.
     Making data-driven enforcement decisions that support the 
efficient use of limited enforcement resources. OFCCP will 
strategically deploy its resources to focus on conducting compliance 
evaluations of contractors that are more likely to have compensation 
discrimination violations.
     Shifting, to the maximum extent possible, compliance 
evaluation costs from contractors that are likely to be in compliance 
with OFCCP's existing regulations prohibiting pay discrimination to 
contractors that are more likely not to be in compliance.
     Contributing to the stability of working Americans by 
helping minimize the pay gap and promoting broad societal policy 
objectives of nondiscrimination and equal pay. Providing workers 
victimized by discrimination the opportunity to obtain the best 
possible remedies and relief. OFCCP anticipates increasing its capacity 
to identify more violations and obtain prompt remedies through a 
better-informed scheduling process for the estimated 4,000 compliance 
evaluations it conducts annually.
    Social science research also suggests that anti-discrimination law 
has broad social benefits. Workers who are capable of successfully 
enforcing their rights and obtaining redress experience these benefits, 
as do the workforce and the country's economy as a whole. In general, 
discrimination is incompatible with an efficient labor market. 
Discrimination interferes with the ability of workers to find jobs that 
match their skills and abilities and to secure wages that are 
consistent with a well-functioning marketplace.\16\ Discrimination also 
harms employers, by artificially restricting the pool of available 
talent, by diluting the critical reward structure that relates 
compensation to actual job performance, and by adding unnecessary 
costs. For example, employers may prefer to select certain categories 
of workers based on bias and end up with less qualified or able 
employees.\17\ Discriminatory decisions are thought to be the result of 
functioning with limited information. This lack of information may 
drive employers to use group-based characteristics as shortcuts in 
making decisions, or as statistical proxies for other qualifications. 
Both can lead to inefficient outcomes.\18\ Favoritism or limited 
information can result in pay disparities when it causes employers to 
reward certain categories of employees based on bias rather than merit. 
Discrimination may reflect market

[[Page 46566]]

failure, where collusion or other anti-discriminatory practices allow 
majority group members to shift the costs of discrimination to minority 
group members.\19\
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    \16\ Shelley J. Lundberg & Richard Starz, Private Discrimination 
and Social Intervention in Competitive Labor Markets, 73 Am. Econ. 
Rev. 340 (1983); Dennis J. Aigner & Glen G. Cain, Statistical 
Theories of Discrimination in Labor Markets, 30 Indus. and Labor 
Relations Rev. 175 (1977).
    \17\ Gary Becker, ``The Economics of Discrimination'' (1957).
    \18\ Marianne Bertrand & Sendhil Mullainathan, Are Emily and 
Brendan More Employable Than Lakisha and Jamal? A Field Experiment 
on Labor Market Discrimination, 94 Am. Econ. Rev. 991 (2004); Ian 
Ayres & Peter Siegelman, Race and Gender Discrimination in 
Bargaining for a New Car, 85(3) Am. Econ. Rev. (1995); Stewart 
Schwab, Statistical Discrimination, 76 Am. Econ. Rev. 228 (1986).
    \19\ Kenneth J. Arrow, What Has Economics to Say about Racial 
Discrimination? 12 The Journal of Economic J. Econ. Perspectives 91 
(1998).
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    Consequently, effective anti-discrimination enforcement can promote 
economic efficiency and growth. For example, a number of scholars have 
documented the benefits of the civil rights movement and the adoption 
of Title VII of the Civil Rights Act of 1964 on the economic prospects 
of workers and the larger economy.\20\ One recent study estimated that 
improved workforce participation by women and minorities, including 
through adoption of civil rights laws and changing social norms, 
accounts for 15-20 percent of aggregate wage growth between 1960 and 
2008.\21\
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    \20\ J. Hoult Verkerke, ``Free to Search,'' 105 Harvard Law 
Review Harv. L. Rev. 2080 (1992); James J. Heckman & Brook S. 
Payner, ``Determining the Impact of Federal Anti-Discrimination 
Policy on the Economic Status of Blacks: A Study of South 
Carolina,'' 79 American Economic Review Am. Econ. Rev. 138 (1989).
    \21\ C. Hsieh et. al., The Allocation of Talent and U.S. 
Economic Growth, NBER Working Paper (2013).
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Background

    The OFCCP is a civil rights and worker protection agency that 
enforces one Executive Order and two laws that prohibit employment 
discrimination and require affirmative action by companies doing 
business with the Federal Government.\22\ Specifically, Federal 
contractors must engage in affirmative action and provide equal 
employment opportunity without regard to race, color, religion, sex, 
national origin, disability, or status as a protected veteran. The 
Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA), as 
amended, prohibits employment discrimination against certain protected 
veterans. Section 503 of the Rehabilitation Act of 1973 (section 503), 
as amended, prohibits employment discrimination against individuals 
with disabilities. Executive Order 11246, as amended, prohibits 
employment discrimination on the basis of race, religion, color, 
national origin, sex, sexual orientation, and gender identity.\23\ 
Compensation discrimination is one form of discrimination prohibited by 
the Executive Order.
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    \22\ Executive Order 11246, Sept. 24, 1965, 30 FR 12319, 12935, 
3 CFR, 1964-1965, as amended; Section 503 of the Rehabilitation Act 
of 1973, as amended, 29 U.S.C. 793, (section 503); and the Vietnam 
Era Veterans' Readjustment Assistance Act of 1974, as amended, 38 
U.S.C. 4212 (VEVRAA).
    \23\ On July 21, 2014, the President signed Executive Order 
13672 amending Executive Order 11246 to include nondiscrimination 
based on sexual orientation and gender identity. This Order requires 
that a regulation be prepared within 90 days of the date of the 
Order. Though the new Executive Order is effective immediately, the 
protections apply to contracts entered into on or after the 
effective date of the new DOL regulation.
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    Although laws protecting workers from pay discrimination have been 
in effect for more than 50 years, pay discrimination still exists. Pay 
discrimination is a real problem that continues to plague American 
working families. For example, looking at annual earnings reveals large 
gaps, where women working full-time earn approximately 77 cents on the 
dollar compared with men.\24\ According to the latest BLS data, the 
weekly median earnings of women are about 82 percent of that for 
men.\25\ While research has found that many factors contribute to the 
wage gap, such as occupational preferences, pay discrimination remains 
a significant problem for the working poor and the middle class.
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    \24\ U.S. Bureau of the Census, Income, Poverty and Health 
Insurance Coverage in the United States, Current Population Reports 
2012 (Sept. 2013), available at http://www.census.gov/prod/2013pubs/p60-245.pdf.
    \25\ Bureau of Labor Statistics, U.S. Department of Labor, 
Current Population Survey, Labor Force Statistics from Current 
Population Survey, available at http://www.bls.gov/cps/earnings.htm#demographics; Updated quarterly CPS earnings figures by 
demographics by quarter for sex through the end of 2013 available at 
http://www.bls.gov/news.release/wkyeng.t01.htm. Based on Current 
Population Survey data, in 2012, among married women who worked 
full-time, median weekly earnings were $751. Among married men who 
worked full time, median weekly earnings were $981. Among married 
men and women in 2012, weekly earnings for fathers and mothers with 
children under age 6 were $935 and $765, respectively. Weekly 
earnings for married men with no children under age 18 were $973, 
compared with $748 for married women with no children under age 18. 
Bureau of Labor Statistics, U.S. Department of Labor, The Editor's 
Desk, Median weekly earnings by sex, marital status, and presence 
and age of own children under 18 in 2012, available at http://www.bls.gov/opub/ted/2013/ted_20131203.htm (last accessed March 28, 
2014).
---------------------------------------------------------------------------

    Research also reveals a wage gap amongst various racial groups. At 
the end of 2013, median weekly earnings for African-American men 
working at full-time jobs were $646 per week, only 72.1 percent of the 
median for white men ($896).\26\ Further, a study based on the hiring 
pattern of workers in the state of New Jersey found that African 
Americans, when re-entering the job market after periods of 
unemployment, are offered lower wages when compared to their white 
counterparts.\27\ The study showed that the pay gap between these 
groups is typically 30 percent.\28\ Controlling for various factors 
such as skills and previous earnings, the study found that up to a 
third of this pay gap could be attributed to racial discrimination in 
the labor market.\29\ Similarly, a study based on National Longitudinal 
Survey data, found that the pay gap between African Americans and 
whites continues to exist, even after controlling for abilities and 
schooling choices.\30\
---------------------------------------------------------------------------

    \26\ Bureau of Labor Statistics, Usual Weekly Earnings of Wage 
and Salary Workers, Fourth Quarter 2013, available at http://www.bls.gov/news.release/pdf/wkyeng.pdf, January 22, 2014 (last 
accessed March 28, 2014).
    \27\ Roland G. Fryer Jr. et al., Racial Disparities in Job 
Finding and Offered Wages (2013), at 27, available at, http://scholar.harvard.edu/files/fryer/files/racial_disparities_in_job_finding_and_offered_wages.pdf (last accessed April 29, 2014).
    \28\ Id. at 29.
    \29\ Id.
    \30\ Sergio Urzua, Racial Labor Market Gaps: The Role of 
Abilities and Schooling Choices, 43.4 J. Hum. Resources, 919, 919-
971.
---------------------------------------------------------------------------

    For Hispanic men, the wage gap is approximately 67 cents when 
compared to non-Hispanic white men.\31\ Many of the studies analyzing 
pay disparities for the Hispanic populations focus on differences in 
education and age as compared to white workers.\32\ However, even after 
analyzing the effect of these factors, these studies showed that these 
factors do not entirely account for the pay gap for Hispanics.\33\
---------------------------------------------------------------------------

    \31\ Additional calculations by race and sex based on 2012 
Person Income Table PINC-10. Wage and Salary Workers--People 15 
Years Old and Over, by Total Wage and Salary Income in 2012, Work 
Experience in 2012, Race, Hispanic Origin, and Sex, available at 
https://www.census.gov/hhes/www/cpstables/032013/perinc/pinc10_000.htm (comparison of median wage for workers working 50 or more 
weeks); Bureau of Labor Statistics 2012 CPS data, available at 
http://www.bls.gov/cps/earnings.htm#demographics (last accessed on 
March 28, 2014).
    \32\ Richard Fry & B. Lindsay Lowell, The Wage Structure of 
Latino-Origin Groups across Generations, 45 Indus. Relations 2 
(2006); Abelardo Rodriguez & Stephen Devadoss, Wage Gap between 
White Non-Latinos and Latinos by Nativity and Gender in the Pacific 
Northwest, U.S.A., 4 Journal of Management and Sustainability 1 
(2014).
    \33\ Id.
---------------------------------------------------------------------------

    The wage gap is significantly greater for many women of color. BLS 
data reveals that African-American women make approximately 68 cents, 
Latinas make approximately 59 cents, and Asian-American women make 
approximately 87 cents for every dollar earned by a non-Hispanic white 
man.\34\ Comparable figures, based on Census data, are 64 cents for 
African-American women, 56 cents for Latinas, and 86 cents for Asian-
American women.\35\

[[Page 46567]]

Women of color also earn less than men within their racial and ethnic 
groups.\36\
---------------------------------------------------------------------------

    \34\ Current Population Survey, Earnings by Demographics 2012, 
available at http://www.bls.gov/cps/earnings.htm#demographics (last 
accessed March 28, 2014
    \35\ Additional calculations by race and sex based on 2012 
Person Income Table PINC-10. Wage and Salary Workers--People 15 
Years Old and Over, by Total Wage and Salary Income in 2012, Work 
Experience in 2012, Race, Hispanic Origin, and Sex, available at 
https://www.census.gov/hhes/www/cpstables/032013/perinc/pinc10_000.htm (comparison of median wage for workers working 50 or more 
weeks); Bureau of Labor Statistics 2012 CPS data, available at 
http://www.bls.gov/cps/earnings.htm#demographics (last accessed on 
March 28, 2014).
    \36\ According to 2013 CPS usual weekly earnings data, African-
American women earn 88 cents on the dollar compared with African-
American men, Hispanic women earn 80 cents on the dollar compared 
with Hispanic men, AAPI women earn 75 cents on the dollar compared 
with AAPI men, and white women earn 74 cents on the dollar compared 
with white men. Calculated by the DOL Chief Economist Office from 
CPS ORG Annual Averages.
---------------------------------------------------------------------------

    Regardless of how it is measured, over time, the significance of 
the differences in compensation for women and men becomes increasingly 
evident. According to one analysis by the Department of Labor, a 
typical 25-year-old woman working full-time would have already earned 
$5,000 less over the course of her working career than a typical 25-
year old man.\37\ If that earnings gap is not corrected, by age 65, she 
will have lost hundreds of thousands of dollars over her working 
years.\38\ Decades of research shows this wage gap remains even after 
accounting for factors like the type of work people do, and 
qualifications such as education and experience.\39\ Moreover, while 
some women may work fewer hours or take time out of the workforce 
because of family responsibilities, there is research suggesting that 
discrimination and not just choices can lead to women with children 
earning less.\40\ At the current rate of progress, researchers estimate 
it will take until 2057 to close the gender pay gap.\41\
---------------------------------------------------------------------------

    \37\ Calculated by the Department of Labor based on CPS usual 
weekly earnings of wage and salary workers by sex. The cumulative 
lost earnings compare the difference in median earnings for full 
time workers who worked 52 weeks out of the year.
    \38\ White House Council on Women and Girls, The Key to an 
Economy Built to Last (April 2012), available at http://www.whitehouse.gov/sites/default/files/email-files/womens_report_final_for_print.pdf.
    \39\ A March 2011 White House report entitled Women in America: 
Indicators of Social and Economic Well-Being, found that while 
earnings for women and men typically increase with higher levels of 
education, male-female pay gap persists at all levels of education 
for full-time workers (35 or more hours per week), according to 2009 
BLS wage data. Potentially nondiscriminatory factors can explain 
some of the gender wage differences. See, e.g., June Elliot O'Neill, 
The Gender Gap in Wages, Circa 2000, Am. Econ. Rev. (May 2003). Even 
so, after controlling for differences in skills and job 
characteristics, women still earn less than men. Explaining Trends 
in the Gender Wage Gap, A Report by the Council of Economic Advisers 
(June 1998). Ultimately, the research literature still finds an 
unexplained gap exists even after accounting for potential 
explanations, and finds that the narrowing of the pay gap for women 
has slowed since the 1980s. Joyce P. Jacobsen, The Economics of 
Gender 44 (2007); Francine D. Blau & Lawrence M. Kahn, The U.S. 
gender pay gap in the 1990s: Slowing convergence, 60 Industrial and 
Labor Relations Review 45 (2006).
    \40\ Shelley J. Correll, Stephen Benard, & In Paik, ``Getting a 
Job: Is There a Motherhood Penalty?,'' 112 American Journal of 
Sociology 1297 (2007).
    \41\ Institute for Women's Policy Research, At Current Pace of 
Progress, Wage Gap for Women Expected to Close in 2057 (April 2013), 
available at http://www.iwpr.org/publications/pubs/at-current-pace-of-progress-wage-gap-for-women-expected-to-close-in-2057.
---------------------------------------------------------------------------

    Although occupational segregation is an important contributing 
factor to the gender pay gap,\42\ women earn less than men even within 
occupations. In a recent study of newly trained doctors, after 
considering the effects of specialty, practice setting, work hours and 
other factors, the gender pay gap was nearly $17,000 in 2008.\43\ 
Catalyst, a nonprofit organization working for more gender-inclusive 
workplaces, reviewed 2011 government data showing a gender pay gap for 
women lawyers,\44\ and that data confirms that the gap exists for a 
range of professional and technical occupations.\45\ A study by the 
Institute for Women's Policy Research, based on information from BLS, 
found that women frequently earn less than men within the same 
occupation.\46\ Despite differences in the types of jobs women and men 
typically perform, women earn less than men in occupations commonly 
filled by men such as managers, software developers, and CEOs. Women 
even earn less than men in those occupations commonly filled by women 
such as teachers, nurses, and receptionists. In a recent review of 2010 
Census data, Bloomberg identified a particularly large pay gap in the 
financial sector.\47\
---------------------------------------------------------------------------

    \42\ White House Equal Pay Task Force, Fifty Years After the 
Equal Pay Act (June 2013), available at http://www.whitehouse.gov/sites/default/files/equalpay/equal_pay_task_force_progress_report_june_2013_new.pdf.
    \43\ Anthony T. LoSasso, et al, The $16,819 Pay Gap For Newly 
Trained Physicians: The Unexplained Trend of Men Earning More Than 
Women, 30 Health Affairs 193 (2011), available at http://content.healthaffairs.org/content/30/2/193.abstract.
    \44\ Catalyst Inc., Women in Law in the U.S. (March 2013), 
available at http://www.catalyst.org/knowledge/women-law-us (last 
accessed on April 24, 2014).
    \45\ Bureau of Labor Statistics, Median weekly earnings of full-
time wage and salary workers by detailed occupation and sex (2013), 
available at http://www.bls.gov/cps/cpsaat39.pdf.
    \46\ Ariane Hegewisch, Claudia Williams, & Vanessa Harbin, The 
Gender Wage Gap by Occupation (2012), available at http://www.iwpr.org/publications/pubs/the-gender-wage-gap-by-occupation-1/.
    \47\ Bloomberg L.P., Wall Street Jobs Show Largest Gender Gap in 
Pay (2014), available at http://www.bloomberg.com/video/88496286-wall-street-jobs-show-largest-gender-gap-in-pay.html (last accessed 
on April 24, 2014).
---------------------------------------------------------------------------

    While occupational differences explain some of the gender wage gap, 
discrimination and other barriers play a role.\48\ The significant 
underrepresentation of women in the highly compensated science, 
technology, engineering, and mathematics fields is one of many factors 
that can explain the overall average gender pay gap. However, a 
Department of Commerce study found that, after using statistical 
methods to account for workers' age, educational attainment, and region 
of residence, women who successfully enter these fields still earn less 
than their male counterparts.\49\ Further, research has identified 
perceived hostility and fewer promotional opportunities for women as 
important reasons for female underrepresentation.\50\ As the Council of 
Economic Advisors explained in a 2013 report issued by the White House 
Equal Pay Task Force: ``While occupational segregation is sometimes 
described as a simple matter of women's choices, historical patterns of 
exclusion and discrimination paint a more complex picture . . . 
occupational segregation may be due [in part] to discrimination that 
can take several forms, including outright refusal to hire, severe 
harassment of women in non-traditional jobs, or policies and practices 
that screen qualified women out of positions but are not job-related.'' 
\51\
---------------------------------------------------------------------------

    \48\ Francine D. Blau & Lawrence M. Kahn, The U.S. gender pay 
gap in the 1990s: Slowing convergence, 60 Industrial and Labor 
Relations Review 45 (2006) (estimate occupational differences may 
account for about half of the gender wage gap; the extent to which 
occupational differences reflect choice or potential discrimination 
is not addressed by this analysis).
    \49\ U.S. Department of Commerce, Economics and Statistics 
Administration. Women in STEM: A Gender Gap to Innovation (August 
2011).
    \50\ Weinberger, Catherine J. An Economist's Perspective on 
Women in the IT Workforce. Encyclopedia of Gender and Information 
Technology (2006); Hunt, J., Why do Women Leave Science and 
Engineering? NBER Working Paper (2010).
    \51\ White House Equal Pay Task Force, Fifty Years After the 
Equal Pay Act (June 2013), available at http://www.whitehouse.gov/sites/default/files/equalpay/equal_pay_task_force_progress_report_june_2013_new.pdf.
---------------------------------------------------------------------------

    Fewer dollars for workers and their families means a real loss of 
economic security, at a time when no family can afford to be earning 
less. Historically, data show that women are generally poorer than men. 
The poverty rates for unmarried female head of households with children 
are significantly higher than most poverty rates. Looking as far back 
as 1966, poverty rates for unmarried female head of households with 
children have been consistently two to three times higher than the

[[Page 46568]]

overall male and female poverty rates.\52\ In 2009, 28 percent of 
unmarried working women with children had incomes below the poverty 
threshold compared to 6 percent for male workers.\53\ According to one 
report, average annual earnings for women between 2009 and 2011 could 
have increased from $36,129 to $42,380 (or by 17 percent) annually if 
the wage gap had been closed.\54\ This increase, in turn, could have 
reduced the poverty rate for working women by almost 50 percent.\55\ 
Examining mean annual earnings, mean family income, and poverty rates 
from 2009 through 2011, the data on poverty rates for working single 
mothers, working single women living alone, and working married women 
demonstrate that closing the pay gap for these groups could also reduce 
their poverty rates. After pay adjustments, working single mother 
poverty rates would have decreased by 13.7 percent, the rate for the 
working single women living alone group would have dropped by 6.4 
percent, and working married women poverty rates would have decreased 
by 1.3 percent.\56\ It is, therefore, very likely that eliminating or 
significantly reducing the wage gap will have an overall positive 
impact on the poverty rates and financial stability of these groups of 
women and their families.
---------------------------------------------------------------------------

    \52\ U.S. Department of Commerce, Economic and Statistics 
Administration, and the Executive Office of the President, Office of 
Management and Budget, for the White House Council on Women and 
Girls, Women in American: Indicators of Social and Economic Well-
Being, March 2011 available at http://www.whitehouse.gov/administration/eop/cwg/data-on-women (last accessed on March 28, 
2014).
    \53\ Id. at 14.
    \54\ Heidi Hartman, Ph.D., Jeffrey Hayes, Ph.D., & Jennifer 
Clark, How Equal Pay for Working Women Would Reduce Poverty and Grow 
the American Economy, Briefing Paper IWPR #C411, Institute for 
Women's Policy Research, January 2014. The calculations are based on 
Current Population Survey Annual Social and Economic supplements, 
2010-2012, for calendar years 2009-2011. The dollar valuations are 
in 2012 dollars.
    \55\ Id.
    \56\ Id.
---------------------------------------------------------------------------

    As research suggests, because discrimination is one of the factors 
contributing to the pay gap, improving the ability of Federal civil 
rights enforcement agencies such as OFCCP to identify and remedy pay 
discrimination is a critical element of a broader strategy for closing 
that gap--particularly in light of its substantial social cost. To 
advance that goal, in 2010, President Obama convened the National Equal 
Pay Task Force (the Task Force), which includes the Department of 
Labor, Department of Justice, the EEOC and the Office of Personnel 
Management, to provide a coordinated Federal response to pay 
discrimination. In its ``Recommendations and Action Plan,'' the Task 
Force developed a number of recommendations to address the persistent 
challenges to enforcement of Federal laws prohibiting compensation 
discrimination.\57\
---------------------------------------------------------------------------

    \57\ See National Equal Pay Enforcement Task Force Report, 
available at http://www.whitehouse.gov/sites/default/files/rss_viewer/equal_pay_task_force.pdf (last visited March 25, 2014).
---------------------------------------------------------------------------

    In addition to deterring unlawful behavior and incentivizing the 
adoption of compensation policies and procedures, better and more 
comprehensive compensation data can substantially improve enforcement 
of anti-pay discrimination laws. Indeed, a key Task Force 
recommendation is that the Federal Government collect data on the 
private workforce to better understand the scope of the pay gap, and 
focus enforcement resources on employers that are more likely to be out 
of compliance with Federal laws prohibiting wage discrimination. The 
Task Force noted that the ``lack of data makes identifying wage 
discrimination difficult and undercuts enforcement efforts.'' \58\ The 
Task Force recommendations urge OFCCP to devise a strategy to collect 
compensation data from Federal contractors and subcontractors, where 
feasible, in a manner that minimizes the burden on employers.\59\
---------------------------------------------------------------------------

    \58\ Id.
    \59\ Id.
---------------------------------------------------------------------------

    Identifying and remedying compensation discrimination has been 
integral to OFCCP's mission for many years. OFCCP primarily enforces 
contractors' compliance with Executive Order 11246, including its 
prohibition on compensation discrimination, by conducting compliance 
evaluations of Federal contractors and subcontractors each year. These 
compliance evaluations analyze workforce data, employment practices, 
and records that OFCCP requires contractors and subcontractors to keep 
and produce upon request. These recordkeeping requirements specifically 
include information on compensation such as wages, salaries, 
commissions, and bonuses.\60\ As part of a compliance evaluation, OFCCP 
may request and review compensation data from specific contractor 
establishments, including, as appropriate, detailed compensation data 
on individual employees, and investigate contractor pay practices, even 
without a specific discrimination complaint.
---------------------------------------------------------------------------

    \60\ 41 CFR 60-1.12. In addition, OFCCP uses a Scheduling Letter 
and Itemized Listing to request records and information for the desk 
audit portion of its compliance evaluations. Authorization of a 
revised Scheduling Letter and Itemized Listing is pending with the 
Office of Budget and Management (OMB) as an information collection 
request under OMB Control Number 1250-0003.
---------------------------------------------------------------------------

    In searching for pay discrimination violations, OFCCP is limited to 
the data provided by the nearly 4,000 contractors and subcontractors it 
evaluates annually. This cohort is a small fraction of the more than 
116,000 establishments that are estimated to fall under OFCCP's 
jurisdiction.\61\ In the absence of a comprehensive, accurate database 
that captures all Federal contractors and subcontractors, the agency 
must develop its own list of contractors and subcontractors for 
compliance evaluations, using a neutral selection process. OFCCP 
develops this list by using multiple sources of information such as 
Federal acquisition and procurement databases, EEO-1 reports, Dun & 
Bradstreet (D&B) data, and the U.S. Census Bureau tabulations. 
Statistical thresholds such as industry type and employee counts of 
Federal contractor establishments are also used. The list may be 
further refined by applying a number of neutral factors such as 
contract expiration date and contract value on the number of 
establishments per contractor that will be scheduled in any one cycle.
---------------------------------------------------------------------------

    \61\ The estimate of 116,000 establishments is based on the 
number of ``Yes'' answers to Question 3 on the 2012 EEO-1 Report to 
whether they have at least 50 employees and a contract or 
subcontract in the amount of $50,000 or more. OFCCP's proposed new 
reporting requirement will only effect a subset of this 116,000 
establishment population; Specifically, those with more than 100 
employees and contractor or subcontracts in the amount of $50,000 or 
more. In other rulemakings, OFCCP is using an estimate of 500,000 
establishments because those proposed rules apply to all covered 
establishments and not just those filing EEO-1 reports with more 
than 100 employees as proposed in this NPRM. This 500,000 estimate 
is used elsewhere is based on the General Services Administration's 
(GSA) System for Acquisition Management (SAM) database that includes 
grants as well as contracts that would not be covered by OFCCP 
because they do not meet the minimum contract value of $10,000 for 
OFCCP jurisdiction.
---------------------------------------------------------------------------

    Despite the labor-intensive development of the scheduling list, 
OFCCP is currently unable to determine the true likelihood of 
compliance with OFCCP's regulations, including the prohibition against 
compensation discrimination found in Executive Order 11246. The Equal 
Pay Report data will allow OFCCP to assess a broad array of 
compensation-related employment practices, such as differences in 
promotion, initial placement or job assignment, and pay. The pay 
practices would not just include salary but incentives or other 
earnings opportunities. OFCCP can use the representation data in EEO-1 
reports to identify potential hiring or

[[Page 46569]]

affirmative action violations, but cannot provide insight into 
potential compensation violations.
    There are voluntary compliance and enforcement benefits associated 
with collecting more data. For example, contractors could benefit from 
the potential cost savings. OFCCP currently estimates that a 
significant proportion of the establishments it evaluates annually are 
compliant with the nondiscrimination requirements of Executive Order 
11246. Thus, some contractors and subcontractors may incur less burden 
hours and costs in preparing for and undergoing evaluations. If a 
contractor's compensation differences are within an acceptable range, 
when compared to the industry standard, OFCCP would not likely 
prioritize it for a compliance evaluation. Developing a data-driven 
scheduling process for compliance evaluations is more efficient and 
will likely reduce compliance costs for some contractors.
    The collection of the data will allow OFCCP to conduct analysis and 
establish objective industry standards that it will make available to 
contractors and others. Contractors are encouraged to use this 
information to conduct self-assessments by comparing their pay to the 
industry standards, identifying indicators of potential issues, 
examining their pay practices to determine if problems or potential 
violations actually exists, and taking voluntarily steps to make needed 
corrections. Moreover, OFCCP will offer training and other assistance 
on the use of the standards for self-assessments.

Who Must File the Equal Pay Report

    Contractors that are required to file EEO-1 reports, have more than 
100 employees, have a contract, subcontract, or purchase order 
amounting to $50,000 or more that covers a period of at least 30 days, 
including modifications, would file the Equal Pay Report. This 
generally includes:
     Private employers that:
    [cir] Are prime contractors or first tier subcontractors, and have 
a contract, subcontract, or purchase order amounting to $50,000 or 
more; \62\ or
---------------------------------------------------------------------------

    \62\ A construction subcontractor at any tier must file the EEO-
1 Report annually if it has a contract or subcontract of $50,000 or 
more.
---------------------------------------------------------------------------

    [cir] serve as a depository of Government funds in any amount, or
    [cir] is a financial institution that is an issuing and paying 
agent for U.S. Savings Bonds and Notes.
     Private employers that are not covered by the exemption 
under 41 CFR 60-1.5.
    Single establishment employers file one EEO-1 Report for their 
single location. Multi-establishment employers with several locations 
file additional EEO-1 reports; one for the headquarters location, a 
report for each establishment with more than 50 employees, and a report 
for each establishment with fewer than 50 employees or an Establishment 
List providing the name and locations of each of these locations with 
fewer than 50 employees. However, EEO-1 filers with 100 or fewer 
employees are exempt from the OFCCP filing requirement. Multi-
establishment employers must also file a Consolidated Report that 
consolidates all of the employment data submitted for their various 
establishments and their headquarters. OFCCP evaluates contractors by 
establishment. This NPRM would require that each establishment, 
including the headquarters location, file a single Equal Pay Report. 
Unlike in EEO-1 reporting, no headquarters Consolidated Report is 
required.
    OFCCP is considering requiring institutions of higher education to 
file the Equal Pay Report if they are required to file IPEDS reports 
with the Department of Education, have a contract, subcontract, or 
purchase order amounting to $50,000 or more that covers a period of at 
least 30 days, including modifications, and have more than 100 
employees.\63\ The IPEDS reports collect data on faculty and staff by 
race and ethnicity using eight designations and by gender.\64\ However, 
the IPEDS system collects limited data on compensation by demographics. 
IPEDS requires reporting of base pay for faculty positions, excluding 
medical school faculty, only by sex.\65\ Requiring institutions of 
higher education to file the Equal Pay Report would expand compensation 
data collection to staff and all faculty positions, significantly 
increasing the number of workers covered by the report. In addition, 
using the Equal Pay Report framework would allow cross tabulation by 
race, and would go beyond reporting base pay. Key considerations for 
applying the data collection requirement to institutions of higher 
education include whether to use the IPEDS occupational categories, 
which differ from the EEO-1 job categories, and how to account for work 
hours.\66\
---------------------------------------------------------------------------

    \63\ National Center for Education Statistics, U.S. Department 
of Education, Institute of Education Sciences, https://surveys.nces.ed.gov/ipeds/ (last accessed June 19, 2014).
    \64\ The designations for race and ethnicity are Hispanic/
Latino, American Indian or Alaska Native, Asian, Black or African 
American, White, Two or More Races. Race/ethnicity and gender data 
are collected on students and completers of covered institutions; 
OFCCP is not seeking student and completers data.
    \65\ National Center for Education Statistics, U.S. Department 
of Education, Institute of Education Sciences, https://surveys.nces.ed.gov/IPEDS/VisInstructions.aspx?survey=1&id=30043&show=all#chunk_1612 (last 
accessed July 24, 2014).
    \66\ IPEDS uses categories aligned with the 2010 Standard 
Occupation Codes, https://surveys.nces.ed.gov/IPEDS/VisInstructions.aspx?survey=1&id=30043&show=all#chunk_1596 (last 
accessed July 24, 2014), and limits reporting on salary to full time 
workers, based on contract length (9, 10, 11 or 12 months), https://surveys.nces.ed.gov/IPEDS/VisInstructions.aspx?survey=1&id=30043&show=all#chunk_1612 (last 
accessed July 24, 2014).
---------------------------------------------------------------------------

    OFCCP's proposed report harmonizes in many ways with the format of 
the EEO-1 Report. It also proposes to rely on existing IRS compensation 
reporting by using W-2 earnings as the source of compensation data. 
OFCCP believes that the Federal contractors and subcontractors that are 
required to submit the IPEDS reports are still highly likely to have 
the W-2 earnings information, business processes and information 
technology (IT) systems in place that could store and generate the 
specific information OFCCP is proposing to obtain through the Equal Pay 
Report. Accordingly, OFCCP is interested in comments on the following 
issues concerning a potential reporting requirement for postsecondary 
academic institutions:
     The proposal in the NPRM and any alternatives, including 
the feasibility of using a single Equal Pay Report format for all 
covered Federal contractors and how that could be implemented should 
postsecondary academic institutions (i.e., IPEDS filers meeting the 
proposed Equal Pay Report thresholds) be covered by the Equal Pay 
Report requirements,
     the cost and benefits, both qualitative and quantitative, 
of covering postsecondary academic institutions but deferring their 
reporting obligation for some period of time, and the estimated cost to 
these institutions for reporting their data using EEO-1 job categories, 
and
     the estimated number of IPEDS filers that could be covered 
by the proposed Equal Pay Report.\67\
---------------------------------------------------------------------------

    \67\ The OFCCP notes that it has not found a reliable source for 
the number of IPEDS filers that meet the more than 100 employee 
threshold covered by the Equal Pay Report.
---------------------------------------------------------------------------

What, When and How To File the Equal Pay Report

    Using the Equal Pay Report, OFCCP proposes to collect three pieces 
of information related to calculating aggregate W-2 earnings for each 
group of workers within the EEO-1 job categories:
     The total number of workers within a specific EEO-1 job 
category by race, ethnicity and sex;

[[Page 46570]]

     total W-2 earnings defined as the total individual W-2 
earnings for all workers in the job category by race, ethnicity, and 
sex; and
     total hours worked defined as the total number of hours 
worked for all workers in the job category by race, ethnicity and sex.
    This Equal Pay Report itself would annually require the submission 
of summary employee compensation data, by sex, race, ethnicity, and 
specified job categories from Federal contractors, as well as other 
relevant data points that would include hours worked and number of 
employees. In an effort to harmonize the Equal Pay Report with the 
existing EEO-1 reporting requirement, the Equal Pay Report includes the 
same workforce demographic data (e.g., the identical seven race and 
ethnicity categories, sex, and company identification information),\68\ 
the same ten EEO-1 job categories,\69\ the same exemptions, and the 
same definition of ``employee.'' \70\ As with the EEO-1 Report, both 
full-time and part-time employees would be included in the Equal Pay 
Report, and Federal contractors and subcontractors would have to 
represent that they are in compliance with their reporting 
obligation.\71\ Electronic submission of the report is being required, 
and OFCCP is proposing to create a hardship exemption for contractors 
unable to perform electronic submission. Similar provisions exist for 
EEO-1 reporting.
---------------------------------------------------------------------------

    \68\ The seven race and ethnicity designations in the EEO-1 
Report are Hispanic/Latino, White (non-Hispanic), Black or African 
American, Native Hawaiian or Other Pacific Islander, Asian, American 
Indian or Alaska Native, and Two or More Races. See Equal Employment 
Opportunity, Employer Information Report EEO-1, Section D: 
Employment Data.
    \69\ Id. The ten job categories are: Executive/Senior Level 
Officials and Managers, First/Mid-Level Officials and Managers, 
Professionals, Technicians, Sales Workers, Administrative Support 
Workers, Craft Workers, Operatives, Laborers and Helpers, and 
Service Workers.
    \70\ The term ``employee'' on the EEO-1 report is defined as 
``any individual on the payroll of an employer who is an employee 
for purposes of the employers withholding of Social Security taxes 
except insurance sales agents who are considered to be employees for 
such purposes solely because of the provisions of 26 U.S.C. 
3121(d)(3)(B) (the Internal Revenue Service Code). Leased employees 
are included in this definition. Leased Employee means a permanent 
employee provided by an employment agency for a fee to an outside 
company for which the employment agency handles all personnel tasks 
including payroll, staffing, benefit payments and compliance 
reporting. The employment agency shall, therefore, include leased 
employees in its EEO-1 report. The term employee SHALL NOT include 
persons who are hired on a casual basis for a specified time, or for 
the duration of a specified job (for example, persons at a 
construction site whose employment relationship is expected to 
terminate with the end of the employees work at the site); persons 
temporarily employed in any industry other than construction, such 
as temporary office workers, mariners, stevedores, lumber yard 
workers, etc., who are hired through a hiring hall or other referral 
arrangement, through an employee contractor or agent, or by some 
individual hiring arrangement, or persons (EXCEPT leased employees) 
on the payroll of an employment agency who are referred by such 
agency for work to be performed on the premises of another employer 
under that employers direction and control. Equal Employment 
Opportunity Commission, Equal Employment Opportunity, Standard Form 
100, Employer Information Report EEO-1, Instruction Booklet.
    \71\ Id.
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    There are, however, some differences between the EEO-1 and the 
proposed Equal Pay Report. The EEO-1 uses a ``snapshot'' approach that 
requires employers to include in their report only those employees from 
one pay period between the months of July and September of the current 
survey year. The proposed Equal Pay Report, however, covers a full 
calendar year from January 1 through December 31. The Equal Pay Report 
includes summary compensation data using total W-2 earnings paid as of 
the end of each calendar year for each worker who was included in the 
contractor's EEO-1 report for that year. The use of summary W-2 
earnings data for the calendar year aligns with the period covered 
under a contractor's W-2 filings. Workers no longer employed as of 
December 31 would still be included in the report. The EEO-1 Report 
does not collect summary or individual employee compensation data. 
While OFCCP proposes a report filing window of January 1 to March 31 of 
the following year in order to obtain W-2 compensation data for the 
full year, the EEO-1 Report requires filing and certification by 
September 30.\72\ OFCCP seeks public comment on this proposal, 
including:
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    \72\ The proposed reporting period and report filing window 
discussed here for the Equal Pay Report are not specified in the 
text of the proposed regulation. Instead, these details will be in 
the ICR authorizing the collection and reporting of data using the 
report.
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     The January 1 through December 31 reporting period, the 
March 31 filing deadline, and any additional cost resulting from these 
dates not aligning with the EEO-1 reporting dates, and
     the amount of additional cost contractors could incur from 
the proposed requirement for contractors to include on their Equal Pay 
Report the employees reported on their EEO-1 Report.
    Collecting summary data from contractors as described here should 
contribute to minimizing the burden and cost of reporting incurred by 
Federal contractors and subcontractors. OFCCP is also seeking to reduce 
the burden associated with retrieving that data by using the same 
definition of compensation that is used to report W-2 earnings to the 
Internal Revenue Service (IRS). Thus, the expectation is that Federal 
contractors will not incur burden and cost related to collecting and 
producing new or different compensation data.
    Contractors would be required to keep their Equal Pay Reports for a 
period of not less than two years from the date of the making of the 
report. However, if the contractor has fewer than 150 employees or does 
not have a contract of at least $150,000, this retention period is one 
year.
    They would also have to make a representation related to whether 
they are currently a Federal contractor or subcontractor, and whether 
that they filed the report with OFCCP from the most recent reporting 
period when bidding on a Federal contract or subcontract. OFCCP 
proposes to apply sanctions in 60-1.4(a) and (b) and 60-1.27 to a 
failure to file a timely, complete and accurate Equal Pay Report and 
make the appropriate representations.

Confidentiality of the Equal Pay Report Data

    The Freedom of Information Act, to the maximum extent that the 
information is exempt, would protect the information reported by 
contractors, including the summary compensation data. It is the 
practice of OFCCP not to release contractor data where (1) The 
contractor is still in business, and (2) the contractor indicates, and 
through the Department of Labor's review process it is determined, that 
the data are confidential and sensitive and that the release of data 
would subject the contractor to commercial harm. In the NPRM, OFCCP 
proposes creating the authority to publish aggregate information based 
on compensation data collected from the Equal Pay Report, such as 
ranges or averages by industry, labor market, or other groupings, but 
only in such a way as not to reveal any particular establishment's or 
individual employee's data. OFCCP proposes that it would analyze the 
information collected on the Equal Pay Reports and, along with other 
available data, develop objective industry-based standards for 
compensation differences, and prioritize contractors and subcontractors 
for evaluation whose summary data show discrepancies that indicate 
possible compensation violations.

Additional Information

    Bidders on Federal contracts and subcontracts will be required to 
state whether they currently have a Federal

[[Page 46571]]

contract or subcontract that requires them to create affirmative action 
programs, and file EEO-1 and Equal Pay Reports. If so, the contractor 
or subcontractor must state whether it has prepared the affirmative 
action programs; filed the EEO-1 Report(s) for the most recent 
reporting period with the Joint Reporting Committee; and whether it 
filed an Equal Pay Report for the most recent reporting period with 
OFCCP.
    The NPRM also proposes making technical amendments to Sec.  60-1.7, 
as explained in the Section-by-Section Analysis. Those amendments would 
conform other related recordkeeping provisions in Sec.  60-1.7 to the 
proposed new reporting requirement, as well as update them to reflect 
current agency practice.
    In addition, to ensure that the costs and burdens of this rule are 
minimized to the extent feasible, OFCCP requests public comment on an 
alternative reporting framework. This alternative would utilize a 
single report that would fulfill contractors' reporting obligations 
under this rule and the EEO-1. This single report would collect all the 
information currently included on the EEO-1, as well as summary 
compensation information and other appropriate data elements for the 
purposes of meeting the objectives of this rule. OFCCP would coordinate 
with EEOC on how the single report could be collected, which agency 
would collect the single report, and the timing of the collection. 
OFCCP invites public comment on:
     The feasibility of this alternative framework,
     the possible content and design of the single report, and 
how the report could meet the needs of both OFCCP and EEOC,
     the degree to which using a single report could both 
minimize burden and effectively meet the objectives of this rule, and
     the possible administrative, procurement and other 
modifications needed to implement a single report alternative.

Calculation of Objective and Reliable Standards for Assessing 
Contractor Pay Gaps

    OFCCP proposes using the data it collects in the Equal Pay Report, 
in conjunction with other information available through existing 
resources such as labor market survey data, to generate reliable and 
objective industry standards for assessing individual contractor 
compensation data and conducting contractor self-assessments. After 
receiving the Equal Pay Reports from covered contractors, OFCCP 
proposes to aggregate each contractor's summary data with those of peer 
employers by industry to construct the objective industry standards. 
Labor market data would also be used to create the objective industry 
standard. As proposed, these standards would include the total number 
of employees in each EEO-1 occupational category from all the Equal Pay 
Reports submitted by contractors in a particular industry group, as 
well as the industry group's total W-2 pay and total hours worked, and 
the mean hourly wage calculated as total W-2 pay divided by total hours 
worked. This information would be determined separately by race and 
gender. OFCCP proposes to compare each contractor's summary statistics 
to the relevant objective industry standard. OFCCP is more likely to 
prioritize contractors for compliance evaluations with pay gaps that 
are greater than the standard.
    Because OFCCP anticipates that Equal Pay Report data may have fewer 
observations in certain industries or job categories, and because it is 
self-reported data on contractors only, considering information 
available in these other data sources may inform and improve the 
analysis of reported contractor compensation data by providing a larger 
economic context. OFCCP is interested in related comments such as:
     The use objective industry standards and using contractor 
pay gaps that are greater than the standards to focus or prioritize 
contractors for compliance evaluations,
     the feasibility of using external data along with the 
Equal Pay Report data to develop the objective industry standards,\73\
---------------------------------------------------------------------------

    \73\ The actual Equal Pay Report and instructions will be 
published in an Information Collection Request (ICR). OFCCP 
encourages comments on the proposed report.
---------------------------------------------------------------------------

     the potential benefits and limitations of using 
supplementary external data sets for this purpose, and
     the existence of other potentially useful supplemental 
data sources, in addition to ACS and BLS data.
    Using just Equal Pay Report data alone has the benefit of focusing 
specifically on the pay gap among Federal contractors, which may or may 
not be different from employers generally. It is simpler to use Equal 
Pay Report data alone and the calculations would be easier to 
understand. However, contractors operate in a larger labor market and 
industry environment, and using supplemental data sources allows 
consideration of these broader trends. The potential benefits of using 
supplemental general labor market data is that they are typically based 
on well-understood samples from large populations of firms and are 
developed in a general survey context. This makes the data less prone 
to non-response bias that may occur when collecting pay data to enforce 
an anti-discrimination legal mandate. In addition, by using this data, 
OFCCP can likely determine the extent to which the pay practices of 
Federal contractors demonstrate important differences when compared to 
the pay practices of all employers generally. OFCCP cannot glean this 
information when only looking at Equal Pay Report data.
    Incorporating supplemental data sources supports OFCCP's ability to 
refine its contractor pay gap standards to use for comparison 
purposes.\74\ For example, the agency could develop better standards 
for specific industries using North American Industry Classification 
System (NAICS) codes and the Equal Pay Report's job, sex, race and 
ethnicity categories.\75\ Where feasible and appropriate, OFCCP could 
also refine the standards by geographic locations such as state, 
Metropolitan Statistical Area (MSA),\76\ and by contractor size.\77\ 
OFCCP would use these standards to prioritize contractors for 
scheduling compliance evaluations; these standards would also be made 
publicly available to support contractor voluntary compliance.
---------------------------------------------------------------------------

    \74\ The regulations enforcing VEVRAA also use a related but 
distinct concept of developing a benchmark linked to external labor 
market data, a different approach to measurement and calculation 
than the one discussed here.
    \75\ In some cases, sample size considerations and data 
limitations may require aggregating race categories for calculating 
metrics or for making selections. Where possible, the agency 
proposes to maintain separate measures for each race/ethnicity 
grouping in the Equal Pay Report.
    \76\ Because the pay gap is a ratio, and because some industries 
are also correlated to specific geographic areas, it may be less 
necessary to have location-specific metrics. Sample size 
considerations, as explained below, may also affect the ability to 
calculate metrics at all possible levels of analysis. However, to 
the extent local labor market characteristics, such as the race/
ethnicity distributions in different parts of the country, may 
affect the pay gap, it may be important to assess the role of 
geographic location when constructing measures and/or making 
selections or conducting voluntary compliance.
    \77\ OFCCP would review the data submitted by contractors to 
determine whether there are enough actual differences in the 
reported pay gap by contactor size, after accounting for industry 
and job category, to justify separate measures.
---------------------------------------------------------------------------

    OFCCP anticipates that the Equal Pay Reports for some contractors 
will contain sparse cells because certain combinations of job category 
and demographics will have only a few workers. Certain EEO-1 job 
category

[[Page 46572]]

groupings summarized by race or ethnicity and gender may be much 
smaller than others, especially when further subdivided by industry or 
other variables. Small cell sizes may arise on the current EEO-1 
Report, or the proposed Equal Pay Report for a variety of reasons: 
Sales workers or craft workers may be less prevalent in certain 
industries, some geographic regions may have fewer members of specific 
racial or ethnic groups than others, and smaller contractors will 
generally report summary data on behalf of fewer workers in each group. 
This is an unavoidable reality when studying aggregate wage data of the 
kind OFCCP intends to collect.
    OFCCP plans to address these potential issues when calculating 
measures. For example, OFCCP may calculate and report national metrics 
for some industries, or metrics by region instead of MSA or state. In 
addition to aggregating where appropriate and necessary, OFCCP would 
likely exclude extremely sparse cells from the metric calculation 
altogether due to reliability and validity concerns. As a result, for 
certain job categories in certain industry groups, the agency may not 
report a metric where the data are insufficient.

Use of the Equal Pay Report Data and the Metrics To Select Contractors 
for Evaluation

    For purposes of selecting contractors for compliance evaluations 
using the Equal Pay Report data, OFCCP proposes to focus primarily on a 
strategy that ranks contractors against the objective standards, and 
then prioritizes compliance evaluations of those contractors and 
subcontractors who have larger race or gender pay gaps than what is 
typically reported in the industry as measured by the objective 
industry standard described in the section above. Those contractors and 
subcontractors who report patterns with the greatest deviation from the 
applicable standard would have the highest likelihood of selection for 
further investigation under this approach. Under its usual compliance 
evaluation procedures, the agency would then examine their detailed 
compensation data and practices to make a determination about the 
contractors' actual compliance. OFCCP specifically proposes comparing 
average pay differences across contractors who are in the same industry 
within EEO-1 job categories. While EEO-1 categories are far too broad 
to identify pay discrimination at the individual employer level with 
precision, they are practical and useful for setting enforcement 
priorities by comparing across employers based on summary data. As 
explained further in this section, the agency also plans to consider 
how other data sources may provide information on firm or employee 
characteristics that would help refine and improve OFCCP's ability to 
use Equal Pay Report data to rank contractors and prioritize compliance 
evaluations.
    Under the approach proposed by OFCCP, using an objective industry 
standard, the goal is not simply to identify absolute differences in 
pay, which may be explained in any particular case by a variety of 
legitimate factors. Rather, it is to identify contractors with pay 
differences that substantially depart from the objective industry 
standard, reducing the likelihood that legitimate factors explain all 
of the difference. The most straightforward approach to analyzing 
earnings data would be to simply compare the earnings of, for example, 
female and male professional employees within a reporting establishment 
and select those with the largest differences in average compensation 
for compliance evaluations. Thus, an establishment where female 
professionals earn on average 75 percent of what male professionals 
earn may be reviewed, and those where women earned 90 percent of what 
men earned may not. This procedure might be labeled a ``simple ratio'' 
analysis. In contrast, setting an industry standard using the kind of 
metrics described above compares the wage ratios for men and women in 
each establishment to the typical ratio within an industry group or 
other peer establishments. Under this approach, an establishment where 
the average female professional earns 75 percent as much as her male 
co-worker might not be selected for an OFCCP compliance evaluation if 
the ratios for women in similar firms average 60 percent. These basic 
principles also would apply when analyzing race or ethnicity-based 
differences.
    By using an objective industry standard as the measure against 
which a contractor's pay gap is assessed, OFCCP should be able to 
account for some of the potential effects of employee qualifications 
and other potentially nondiscriminatory explanations for observed wage 
gaps. For example, if female professionals as a group are favoring 
particular types of jobs, or coming to particular jobs with more 
education or less full-time work experience on average than similar 
men, those differences should be reasonably similar among peer 
employers within the same industry and/or labor market. They might 
result in an overall average gender-based pay difference within the 
EEO-1 category of ``professionals'' for all employers in that peer 
group.
    Although EEO-1 categories involve a mix of jobs and workers, the 
average differences in pay by race and sex across employers are still 
valuable because the Equal Pay Report will generate similar and 
comparable data by peer employers. With rare exceptions, OFCCP 
anticipates that systematic gender- or race-based differences will 
merit further investigation. Using a contractor's Equal Pay Report data 
against the objective industry standard further focuses these 
differences to contractors most worthy of further investigation and 
will inform the development of OFCCP's scheduling list.
    For the group of contractors scheduled for a compliance evaluation, 
OFCCP would then conduct a desk audit of the contractor's data and 
records, and may make a request for more detailed data to evaluate the 
precise mix of jobs, workers and pay practices and draw an accurate 
conclusion about potential violations. That a contractor departs from 
the metric or has an absolute pay gap of a particular size is not 
sufficient evidence to find a pay discrimination violation. Equal Pay 
Report data would only be a basis to select contractors for a deeper 
assessment of potential discrimination in their compensation systems 
and practices based on the pay disparities observed in their reported 
data.
    The agency also considered collecting information that would allow 
for calculation of variance. Variance is useful because it takes into 
account cell size (i.e., how many individuals are used in the 
calculation of the mean for a group) as well as the spread or 
differences in salary data among the persons in the group. However, 
providing enough information to calculate a variance would go beyond 
the total number of employees and total W-2 earnings and hours worked 
by group, and would increase the burden by requiring contractors and 
subcontractors to calculate and report additional metrics from their 
individual level data. The public is welcome to comment on these issues 
and approaches.
    OFCCP plans to share information on industry standards publicly 
annually, as soon as practicable. OFCCP would post the standards on the 
agency's Web site. Training courses and technical assistance materials 
will be available in the form of technical assistance guides, web-based 
training courses, frequently asked questions (FAQs), directives and 
other policy statements, and through OFCCP's Customer Service Unit

[[Page 46573]]

responding to telephone and email questions and general inquiries. 
These courses and materials would explain the industry standards and 
how contractors could use them for self-assessment purposes. By 
providing access to this policy and technical assistance information, 
OFCCP is educating contractors and, thereby, likely deterring future 
violations. These tools should allow contractors to determine if a 
``deeper dive'' is needed into their pay practices, and if problems are 
identified, to voluntarily correct them.
    OFCCP seeks comment on this approach, including comments on:
     How contractors would use the objective industry standards 
that are based on aggregate compensation data to assess their 
compensation practices and/or disparities; and
     data challenges contractors could face.
    In using Equal Pay Report data as part of its process for selecting 
contractors for review, OFCCP must address a number of important 
practical and operational considerations such as resource constraints, 
data limitations, and enforcing contractor compliance with a broad 
range of employment practices and affirmative action requirements 
related to sex, race, ethnicity, disability, and status as a protected 
veteran. In requesting comment on the potential application and use of 
Equal Pay Report data to its overall scheduling practice, the agency 
retains the discretion to consider these comments in light of the 
agency's operational and enforcement priorities.
    Consistent with the Fourth Amendment standard of neutrality, OFCCP 
will continue to apply a variety of criteria to its decisions to select 
contractors for review that go beyond the scope of the Equal Pay Report 
data.

Pre-Rulemaking Process--ANPRM

    Prior to developing this proposed rule, OFCCP solicited significant 
stakeholder input on the design and operation of a potential 
compensation data collection tool in an Advance Notice of Proposed 
Rulemaking (ANPRM) published on August 10, 2011 (76 FR 49398). The 
ANPRM stated OFCCP was considering requesting contractor compensation 
data, and asked for responses to fifteen specific questions about 
categories of data or potential applications of a data collection tool. 
The ANPRM also invited general comments on the design or approach of 
such a tool.
    OFCCP received a substantial response to the ANPRM. Over 7,800 
organizations and individuals submitted comments, highlighting the 
significance of the issue and the strong public interest in a potential 
compensation report. More than 7,000 comments were form letters 
organized by women's rights groups advocating generally for a broad 
data collection tool, and several hundred more were statements of 
general support for taking greater steps to address equal pay issues. 
In addition, a broad range of stakeholders submitted substantive 
comments on both OFCCP's overall concept of collecting contractor 
compensation data and on the specific issues raised in the ANPRM.
    The comments submitted in response to the ANPRM raised significant 
issues. These include a set of overarching issues regarding the scope 
and purpose of data collection, the potential benefits to workers and 
contractors, potential burden and cost, and legal questions about 
OFCCP's authority to collect and use compensation data. In addition, 
the comments discussed specific points regarding who should provide 
data, what types of compensation data OFCCP should collect, what 
workers should be included and how to group them, what kinds of factors 
might be collected, and analytic techniques. Comments also addressed 
specific implementation issues, such as the agency's experience using 
the Equal Opportunity (EO) Survey, coordination with the EEOC and its 
research into compensation data collection, OFCCP's technical capacity 
to manage and analyze data, and IT and electronic filing requirements. 
OFCCP considered the ANPRM comments in developing this proposed rule. 
General comments about the proposal to collect compensation data are 
discussed below, while comments that address specific aspects of the 
proposed rule and the proposed Equal Pay Report are discussed in the 
Section-by-Section Analysis.
    OFCCP is aware that the EEOC is still considering the collection of 
compensation data, and that EEOC previously convened an expert panel of 
the National Research Council (NRC) of the National Academies (NAS) to 
advise on its data collection from all covered employers. The NRC 
report made several recommendations, including that EEOC prepare a 
comprehensive plan for using earnings data and that an independent 
contractor conduct a pilot of the proposed data collection plan.\78\ 
Recently, EEOC prepared a Statement of Work (SOW) for its pilot study 
on how compensation earnings data could be collected from employers on 
EEOC's survey collection systems (e.g., EEO-1, EEO-4, and EEO-5 survey 
reports). The pilot study, among other things, seeks to identify and 
make recommendations on the definition of pay, the best summary measure 
of central tendency and dispersion for annual earnings, and the best 
statistical tests for analyzing annual earnings data using existing 
EEOC survey reports. It will also assess the cost for the data 
collection. This timing of the pilot study is incompatible with 
direction provided to DOL in the Presidential Memorandum issued in 
April 2014 directing proposed rulemaking within 120 days.
---------------------------------------------------------------------------

    \78\ National Research Council of the National Academies, 
Committee on National Statistics, Collecting Compensation Data from 
Employers (2013), at 2-3, available at http://www.nap.edu/openbook.php?record_id=13496 (``Collecting Compensation Data''). 
The EEOC invited the panel to make recommendations to assist it with 
formulating its regulations on methods for measuring and collecting 
pay information.
---------------------------------------------------------------------------

    However, OFCCP looks forward to continuing to work with EEOC on pay 
data collection, including sharing information resulting from this 
proposed rule and engaging with EEOC on the results of its pilot 
project once it is completed. Informed in part by its examination of 
the NRC report, OFCCP studied its data collection process and 
identified a collection tool that it believes is suitable for its 
investigations and related policies and procedures. Indeed, OFCCP has 
addressed certain specific recommendations of that panel in its 
proposal and invited comments on other recommendations.
    Finally, OFCCP intends to coordinate with EEOC on this data 
collection proposal. OFCCP has also consulted with the Department of 
Labor Agency Task Force members, including the Women's Bureau and the 
Wage and Hour Division, as well as the other Federal agencies on the 
Task Force.

General Comments

    Contractors and contractor organizations, human resource 
information systems vendors, and law firms and consultants who assist 
Federal contractors with compliance, provided a diverse set of 
perspectives on the issues in the ANPRM. Many raised concerns about the 
potential burden of OFCCP's efforts to collect certain types of 
compensation data and asked for more clarity about the purpose of the 
compensation data collection tool. They were also interested in how the 
tool supported OFCCP's mission. While some were adamantly opposed to a 
data collection of any type or scale, even stating that OFCCP should 
withdraw or abandon the proposal, others requested a more specific 
proposal in order to determine whether

[[Page 46574]]

OFCCP's proposal was appropriate. Still others favored certain specific 
elements or strategies discussed in the ANPRM or recommended ways to 
design the tool that matched existing contractor practices and IT 
systems.
    Women's rights, civil rights and worker protection organizations 
strongly supported a compensation data collection tool. They generally 
encouraged the agency to collect data in as specific a form as 
possible. Many also encouraged OFCCP to go beyond the confines of 
compensation practices and collect data on hiring, promotion and 
termination such as OFCCP's former Equal Opportunity (EO) Survey. These 
commenters repeatedly highlighted the importance of closing the pay 
gap, and reiterated their concern that OFCCP has sufficient tools and 
data to support its worker protection mission. Noting the barriers that 
workers face in trying to obtain compensation in their workplace, 
OFCCP's role in identifying and addressing compensation discrimination 
is critical.

Scope and Purpose of the Data Collection

    Many of the ANPRM comments focused on the scope of the data 
collection, and expressing several concerns. These included concerns 
that OFCCP would collect too much data, and that it would be too 
difficult, costly or time consuming to comply with the new reporting 
requirement, or that OFCCP would only collect minimal data that would 
not be useful or relevant to its goal of addressing pay discrimination. 
In general, most of these comments assumed that the purpose of a data 
collection effort was directed at identifying specific evidence of a 
pay discrimination violation--which would in fact require reporting at 
a highly detailed level. Instead, OFCCP proposes to use the information 
from the Equal Pay Report primarily as neutral criteria to prioritize 
how it selects contractors and subcontractors for a compliance 
evaluation. Under these circumstances, OFCCP can rely on summary data 
without needing more detailed reporting. After OFCCP selects 
contractors and subcontractors and schedules them for regular 
compliance evaluations, the agency would then request the additional 
more detailed data and information necessary to make a complete 
assessment of whether a violation exists.
    Many contractors and their representatives raised specific concerns 
about the burden of collecting different categories of data. They noted 
that certain types of information, like factors that can explain 
compensation for individual workers, are not consistently maintained in 
human resources databases or even in electronic form at all. Some 
raised similar objections to providing data on certain elements of 
compensation. Many also expressed substantial concerns about the 
collection of individual employee pay records, in terms of both burden, 
and privacy and confidentiality issues. The agency has carefully 
considered all of these concerns in developing this proposal to 
minimize burden, focus on the most readily available information, and 
ensure the maximum potential confidentiality protection would apply to 
the information.
    While some objections concerned OFCCP collecting too much data, 
others expressed alarm that OFCCP might collect too little data. Almost 
all of the commenters who addressed substantive issues stated that, for 
a compensation data collection tool to have any utility, it must 
collect information at a sufficiently detailed level. A large number of 
these commenters argued that comparing contractors was not a one-size-
fits-all exercise, or that an apples-to-apples comparison could not be 
used given the many employee-level and firm level differences in 
practices and factors that affect compensation. Commenters raised 
concerns about aggregating elements of compensation, aggregating 
workers with different job titles, aggregating across locations, and 
many other efforts to compare compensation differences that might 
incorporate different potential causal mechanisms. Several commenters 
suggested that contractors be afforded discretion to determine what 
type of compensation information they would submit. Similarly, 
contractors wanted discretion to determine how they would aggregate or 
disaggregate information. Both comments aimed to reduce burden or to 
compensate for factors that may affect compensation data.
    Notably, although contractors, their representatives, and the civil 
and workers' rights commenters often disagreed about aspects of this 
endeavor, they largely agreed on this point. Most commenters questioned 
whether OFCCP could get an accurate picture of pay discrimination 
without gathering information at a substantial level of detail. 
Nevertheless, while contractors and employer organizations viewed this 
problem as fatal to the endeavor, pointing out the complexity and 
burden of detailed data collection, advocates for workers viewed it as 
both necessary and feasible. OFCCP agrees that establishing pay 
discrimination can be complex and nuanced, and would potentially 
require substantial data and other information. That is why the agency 
is not seeking to establish pay discrimination violations through a 
general reporting requirement. Determinations as to whether a 
contractor has violated the Executive Order may depend not only on data 
analysis, including individual compensation records, but also on the 
specific facts of the case. In order for the proposed report on 
compensation to be an effective tool, the data collected must be 
uniform and easy to compare. Allowing contractors to choose the type of 
data to submit, or having contractors submit a large number of unique 
job groupings or compensation types or explanatory factors, would 
prevent the tool from serving its intended purpose.
    Indeed, data collected under the proposed Equal Pay Report would 
not be the only data that OFCCP uses to evaluate contractor pay 
practices. If OFCCP selects a contractor for a compliance evaluation, 
or is investigating a complaint, that review would cover compensation 
data beyond what is in the contractor's Equal Pay Report and would 
involve a more specific and detailed data request. To assess individual 
contractor pay practices, OFCCP can request significant detail during 
compliance evaluations about types of compensation, detailed job 
groupings, factors affecting pay, and other specific information--
including analyzing individual employee--level compensation records. 
OFCCP compensation investigations address a broad range of practices 
and categories of compensation, and generally cover a broad set of 
workers. Specific investigations may rely on more detailed job category 
information, and consider potential explanatory factors like experience 
or education. In general, OFCCP will conduct an analysis relevant to 
the contractor's specific industry, workforce and practices, based on 
the available facts and data. OFCCP will also investigate hiring, 
promotion and other employment practices. Any final determination of a 
violation will be based on a factually sound, analytically rigorous, 
and legally appropriate assessment. Summary data provides a preliminary 
look at potential compensation disparities, allowing OFCCP to conduct 
more detailed compliance evaluations much more efficiently.
    Notably, one commenter who focused on OFCCP's goal of using the 
data collection to prioritize contractors for further evaluation also 
proposed that OFCCP collect data in a manner very similar to the Equal 
Pay Report framework proposed in this NPRM. This commenter, a law firm 
with substantial

[[Page 46575]]

experience representing contractors in OFCCP compliance evaluations, 
stated that OFCCP should only collect a simple level of data sufficient 
to identify disparities and not attempt to collect enough information 
to draw conclusions about discrimination--because of burden and cost. 
OFCCP's proposal is consistent with this approach, as it is limited to 
summary data, and will be used for prioritizing contractors and 
subcontractors for evaluation, rather than making ultimate 
determinations of compliance.
    A final set of issues regarding the overall scope and design of a 
compensation data collection tool concerned other ways OFCCP might use 
these data. For example, in the ANPRM, OFCCP discussed industry trend 
analysis and research. Some commenters suggested that such activities 
were outside of OFCCP's mission or authority. OFCCP does not intend to 
collect this data in order to conduct general compensation analysis 
unrelated to potential scheduling and enforcement, or simply to conduct 
its own independent peer-reviewed research. For example, OFCCP intends 
to analyze compensation data at an industry level in order to compare 
peer employers, and may use it to conduct research and analysis 
regarding how well certain aspects of the data used for scheduling 
ultimately predict the likelihood of violation. In addition, OFCCP 
intends to disclose certain aggregate data in order to assist 
contractors and subcontractors seeking to compare their own pay 
practices against others using the kind of industry-based standards 
described below. OFCCP does not contemplate any other specific use or 
release of this data.

Potential Benefits to Workers

    A number of the commenters discussed how the collection and use of 
compensation data could confer broad benefits on workers and 
contractors. Many addressed the significant social problem of the pay 
gap, highlighting the importance that OFCCP have adequate enforcement 
tools to ensure that Federal contractors and subcontractors do not 
discriminate in pay.
    In particular, women's and civil rights organizations noted that 
the prevalence of pay secrecy policies makes OFCCP's ability to obtain 
and review compensation data even more important. Workers find it 
extremely difficult to get information on pay practices or determine if 
they are being paid less because of pay discrimination. On April 8, 
2014, President Obama issued Executive Order 13665, prohibiting 
discrimination by Federal contractors against employees and job 
applicants who inquire about, discuss, or disclose wages.\79\ This 
Executive Order complements the proposed data collections by improving 
the overall transparency of contractor pay practices.
---------------------------------------------------------------------------

    \79\ Executive Order 13665, Non-Retaliation for Disclosure of 
Compensation Information, 79 FR 20749 (April 11, 2014).
---------------------------------------------------------------------------

    First, OFCCP agrees that collecting compensation data from Federal 
contractors can improve OFCCP's ability to enforce laws that prohibit 
contractor pay discrimination. This includes protecting contractor 
employees and their families from experiencing the negative effects of 
pay discrimination that can significantly reduce lifetime earnings, and 
improving OFCCP's ability to identify employees who were victims of 
discrimination and ensure they receive the remedies they deserve.
    Second, because workers often do not know about pay discrimination 
and therefore cannot act to address it on their own behalf, improving 
OFCCP enforcement is important. Almost half of all workers report that 
they are prohibited from or strongly discouraged from discussing their 
own compensation with workplace colleagues.\80\ In a compliance 
evaluation, OFCCP can request and review workforce data directly, and 
the agency may find problems of which workers are unaware.
---------------------------------------------------------------------------

    \80\ Institute for Women's Policy Research, Pay Secrecy and Wage 
Discrimination, (June 2011), available at http://www.iwpr.org/publications/pubs/pay-secrecy-and-wage-discrimination.
---------------------------------------------------------------------------

    A single OFCCP systemic investigation can resolve claims on behalf 
of a large group of workers. This benefits workers in the class 
directly, through back pay and reforms to pay practices that can 
improve pay equity over the long term. By collecting compensation data, 
OFCCP expects to increase both the number of pay discrimination cases 
it pursues and the proportion of systemic investigations. This would 
increase the credible deterrent effect of OFCCP enforcement--conferring 
benefits on workers at many other establishments by encouraging greater 
voluntary compliance.
    Indeed, OFCCP expects that contractors and subcontractors are more 
likely to conduct the required self-analysis and correct existing 
problems if they regularly report their compensation data to OFCCP, and 
if they have access to the compliance assistance mechanisms OFCCP seeks 
to provide through Equal Pay Report data. In other words, OFCCP's 
impact is broader than only the establishments it investigates, but 
includes establishments it does not evaluate, ultimately further 
reducing the number of workers underpaid due to discrimination.

Equal Opportunity Survey

    In 2000, OFCCP sought to collect data on compensation and other 
employment practices from Federal contractors through a mechanism known 
as the Equal Opportunity Survey.\81\ Field tests of the survey 
instrument supported the conclusion that general survey data collection 
on employment practices from Federal contractors was feasible and that 
there would not be substantial non-response issues. In 2006, OFCCP 
rescinded the Equal Opportunity Survey in light of conflicting data on 
its effectiveness.\82\ A number of commenters suggested that aspects of 
the Equal Opportunity Survey should serve as a model for OFCCP, like 
collecting data on a broad range of employment practices. Others stated 
that the Equal Opportunity Survey demonstrates OFCCP cannot and should 
not attempt to collect regular summary data from contractors, 
questioning the Equal Opportunity Survey's ultimate predictive power. 
OFCCP extensively reviewed the agency's experience with the Equal 
Opportunity Survey and identified some areas that might be considered 
in the development and design of the proposed Equal Pay Report. 
Notably, OFCCP never fully implemented the survey and never deployed a 
clear strategy or sufficient resources to analyze and apply the data 
for enforcement purposes.
---------------------------------------------------------------------------

    \81\ 65 FR 68022, 68046 (November 13, 2000).
    \82\ See 76 FR 49398, 49399 (August 10, 2011).
---------------------------------------------------------------------------

    OFCCP applied the lessons learned from the Equal Opportunity 
Survey, developed a plan for analyzing the data, and its compensation 
enforcement initiative will benefit from infrastructure improvements. 
In particular, OFCCP developed a careful plan for analyzing the data 
and using it to schedule compliance evaluations as described in this 
NPRM and related ICR. OFCCP also envisions periodically assessing its 
use of Equal Pay Report data to select contractors and subcontractors 
that are likely violators. Moreover, OFCCP is simplifying its approach 
by focusing on compensation data, unlike the Equal Opportunity Survey, 
which attempted to collect, track and use data on a variety of 
employment practices.

EEOC and the National Research Council Report

    The EEOC is also exploring compensation data collection, through a

[[Page 46576]]

different, complementary process to OFCCP's NPRM. EEOC commissioned an 
expert panel of the NRC of the National Academies to review options for 
collecting compensation data from employers. A number of commenters 
expressed concern that OFCCP and EEOC were not coordinating and 
intended to propose conflicting or overlapping reporting requirements. 
Over the past five years OFCCP and EEOC, both member agencies of the 
National Equal Pay Task Force, have discussed the importance of pay 
data collection and the approaches both agencies might take. OFCCP and 
EEOC will continue to coordinate on both this NPRM and the results of 
the EEOC's pilot study in order to minimize unnecessary burden, 
duplication, and inconsistency.
    OFCCP provided information to EEOC's panel, and reviewed and 
analyzed the final report submitted to the EEOC.\83\ As explained 
below, in a number of places the NPRM incorporates or discusses certain 
elements of the NRC report about the EEOC. The NPRM also reflects 
serious consideration of the panel's recommendations that might be 
applicable to the proposed OFCCP data collection.
---------------------------------------------------------------------------

    \83\ National Research Council of the National Academies, 
Committee on National Statistics, Collecting Compensation Data from 
Employers (2013), available at http://www.nap.edu/openbook.php?record_id=13496 (``Collecting Compensation Data'').
---------------------------------------------------------------------------

    First, this NPRM addresses the recommendation that Federal agencies 
state a clear plan for collection and use of pay data. Indeed, this 
document explains OFCCP's plan in detail, both in terms of the proposed 
scope of the data collection and the proposed use of data to engender 
greater voluntary compliance and to support improved efficiency in 
enforcement. The agency seeks comments on both of these points. This 
NPRM specifically tracks the panel's summary data option, which 
proposes collecting compensation data summarized by the EEO-1 job 
categories and demographic categories.\84\ The NPRM also details how 
OFCCP intends to protect the confidentiality of information submitted 
by contractors in light of the report's discussion about 
confidentiality.
---------------------------------------------------------------------------

    \84\ Id. at 60.
---------------------------------------------------------------------------

    OFCCP's approach to data collection as described in this NPRM may 
be contrasted to the NRC's recommendations in two ways: (1) Defining 
the appropriate measure of compensation, and (2) the necessity of 
conducting an external formal pilot study of the data collection 
proposal prior to engaging in rulemaking. The NRC recommended using the 
definition of compensation found in the Occupational Employment 
Statistics Survey (OES) by BLS. The panel stated that this would be the 
easiest measure for employers to generate data out of current 
recordkeeping systems.\85\ As set forth in the Section-by-Section 
analysis below, OFCCP believes that the OES definition of wages is not 
an appropriate measure of compensation for our data collection because 
it is narrower in scope than W-2 earnings and is likely to be more 
burdensome to provide.
---------------------------------------------------------------------------

    \85\ Id. at 58.
---------------------------------------------------------------------------

    W-2 earnings account for a broad range of pay elements such as 
bonuses, overtime, awards, allowances and reimbursements, and 
commissions.\86\ By contrast, the OES definition excludes common pay 
elements such as overtime and other forms of premium pay.\87\ Using the 
OES definition would limit OFCCP's ability to analyze pay disparities 
with respect to these common pay elements. In addition, employers 
generally report OES wages in terms of the number of employees they 
have within specified hourly or annual wage bands or ranges, rather 
than the actual wages paid to each employee. This means that the OES 
approach is untested in the context of reporting actual wage rates. 
Thus, OFCCP has concluded that the OES approach is less favorable than 
using W-2 earnings, with or without hours worked. OFCCP requests 
comments on which approach could impose the least burden on contractors 
given the capacity of existing electronic payroll records and other 
HRIS systems. OFCCP welcomes comments on:
---------------------------------------------------------------------------

    \86\ Internal Revenue Service, ``Wages, Salaries, and Other 
Earnings,'' http://www.irs.gov/publications/p17/ch05.html (last 
accessed May 30, 2014).
    \87\ The measure of compensation used in the OES includes 
factors such as the base rate of pay, cost of living allowances, 
commissions, production bonuses, and tips. The W-2 earnings include 
these factors, but accounts for additional forms of compensation 
such as overtime, shift differential pay, and other bonuses. Compare 
Bureau of Labor Statistics, ``Occupational Employment and Wages--May 
2013,'' at 7, available at http://www.bls.gov/news.release/pdf/ocwage.pdf, with Internal Revenue Service, ``Employee 
Compensation,'' http://www.irs.gov/publications/p525/ar02.html#en_US_2013_publink1000229086.
---------------------------------------------------------------------------

     The cost of providing W-2 earnings data, and
     the cost of providing compensation data using the OES 
definition.
    The NRC report also recommends conducting an independent external 
pilot study on the Equal Pay Report to test the collection instrument 
and the use of the data.\88\ The Presidential Memorandum envisions that 
OFCCP will propose a rule in August 2014 on a compensation data tool. 
It is a reality, however, that EEOC's pilot study is following a 
different timeline. This does not prevent the two agencies from 
coordinating and collaborating on the compensation tool in the future. 
With respect to the NRC's recommendation that OFCCP conduct its own 
pilot project, OFCCP considered this recommendation and determined that 
the agency has already engaged in such a process with its Equal 
Opportunity Survey. The OFCCP studied that survey closely, identified 
and addressed many of the issues a pilot would uncover. While 
conducting a pilot would provide information regarding the Equal Pay 
Report's effectiveness, and identify ways to improve the collection, 
the cost and burden of conducting a pilot may well outweigh any 
potential benefit. All of the categories of information are already in 
use, well understood, and are relatively simple to collect. The field-
testing of the Equal Opportunity Survey points to the general 
feasibility of compensation data collection, and the report calls for 
data that most covered Federal contractors and subcontractors should 
already maintain.
---------------------------------------------------------------------------

    \88\ National Research Council of the National Academies, 
Committee on National Statistics, Collecting Compensation Data from 
Employers (2013), at 87, available at http://www.nap.edu/openbook.php?record_id=13496 (``Collecting Compensation Data'').
---------------------------------------------------------------------------

    The OFCCP notes that its prior experiences with the Equal 
Opportunity Survey have informed this NRPM. As a result of the 2000 
Equal Opportunity Survey and recent stakeholder listening sessions, 
OFCCP is aware that requesting a broad array of information related to 
multiple contractor employment practices, as the Equal Opportunity 
Survey did, creates challenges for contractors and the agency. 
Consequently, the proposed Equal Pay Report is much narrower in scope. 
OFCCP requests public comment on:
     The advantages and disadvantages of piloting the Equal Pay 
Report,
     the extent its prior work with the Equal Opportunity 
Survey satisfies the purposes of a pilot, and,
     the design of a pilot of the Equal Pay Report.
    The OFCCP, mindful of the NRC's recommendations directed to the 
EEOC on protecting the confidentiality of contractor pay data,\89\ 
believes these concerns are addressed in the NPRM.
---------------------------------------------------------------------------

    \89\ Id. at 5, 77. Recommendation number five in the report was 
for the agencies to ``consider whether the protections, now insured 
through the mechanism of interagency memoranda-of-understanding, 
should be incorporated in legislation.'' (emphasis added). 
Recommendation number six is expressly directed to EEOC and states: 
``The U.S. Equal Employment Opportunity Commission should seek 
legislation that would increase the ability of the agency to protect 
confidential data. The legislation should specifically authorize 
data-sharing agreements with other agencies with legislative 
authority to enforce antidiscrimination laws and should extend Title 
VII penalties to nonagency employees.''

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[[Page 46577]]

    Finally, OFCCP addresses ANPRM comments on its coordination with 
the EEOC's process for considering compensation data collection. The 
OFCCP concluded that developing a general data collection requirement 
for Federal contractors only, as in the proposed rule, is unlikely to 
conflict with any specific data collection requirement that EEOC may 
decide to propose in the future from a broader group of employers, 
especially if EEOC is proposing using its existing EEO-1 Report format 
to collect its compensation data. Further, the Presidential Memorandum 
directed the proposal of a rule by DOL in August 2014 while the EEOC 
process is likely to take 18 to 24 months to complete once a contract 
is awarded for its pilot study. To the extent the EEOC ultimately 
determines it will collect compensation data from employers, the 
flexibility built into the proposed rule would allow OFCCP to modify 
its data collection as needed to harmonize it with any EEOC approach. 
Indeed, OFCCP's proposed Equal Pay Report and collection of 
compensation data from contractors is also likely to assist the EEOC in 
its determination of whether and how to collect compensation data from 
a broader set of employers in the future.

OFCCP's Legal Authority To Collect and Use Compensation Data

    A few questions arose in the comments to the ANPRM regarding legal 
issues, mostly involving whether OFCCP may collect data and use it for 
analysis by industry, across multiple facilities, and/or to develop a 
subset of contractors and subcontractors to prioritize for compliance 
evaluations. These commenters assert, incorrectly, that the Fourth 
Amendment of the U.S. Constitution requires that OFCCP use a ``random'' 
selection procedure to identify the contractors and subcontractors that 
will undergo a compliance evaluation. While selection procedures are 
outside the scope of the proposed rule, they are part of the purpose 
for developing the proposed Equal Pay Report. For this reason, OFCCP 
would like to address in this preamble several comments that 
incorrectly state the requirements of the Fourth Amendment.
    First, when OFCCP requests that a contractor submit data for OFCCP 
to review off-site during the desk audit stage of a compliance 
evaluation, the Fourth Amendment only requires that the disclosure 
sought be reasonable.\90\ A request is reasonable if it is 
``sufficiently limited in scope, relevant in purpose, and specific in 
directive so that compliance will not be unreasonably burdensome.'' 
\91\
---------------------------------------------------------------------------

    \90\ United Space Alliance, LLC v. Solis, 824 F. Supp. 2d 68, 91 
(D.D.C. 2011) (citing United States v. Morton Salt Co., 338 U.S. 
632, 652-53 (1950)).
    \91\ United Space Alliance, 824 F. Supp. 2d at 91 (quoting 
Oklahoma Press Publishing Co. v. Walling, 327 U.S. 186 (1946)); Bank 
of America v. Solis, Case 1:09-CV-02009-EGS-DAR, 2011 WL 7394512 
(D.D.C. Dec. 13, 2011).
---------------------------------------------------------------------------

    When OFCCP selects contractors and subcontractors for on-site 
compliance reviews, which are administrative searches for purposes of 
the Fourth Amendment, it need not do so ``at random.'' Rather, to 
satisfy the requirements of the Fourth Amendment, contractors and 
subcontractors may be selected for on-site compliance evaluation based 
on: (1) Specific evidence of an existing violation; (2) reasonable 
legislative or administrative standards that have been met with respect 
to that particular contractor; or (3) an administrative plan containing 
specific neutral criteria.\92\ Examples of acceptable neutral criteria 
include, among other factors, a contractor's geographical location, 
history of violations, number of employees, and work in a specific 
industry. The requirement that selection be based on specific neutral 
criteria is simply meant to ensure that selections are not ``the 
product of the unreviewed discretion of the enforcement officer.'' \93\ 
If OFCCP were to include in its administrative contractor selection 
plan for on-site compliance reviews criteria that are based on 
information obtained from the proposed Equal Pay Report, then the 
agency would do so in a manner that comports with the requirements of 
the Fourth Amendment.
---------------------------------------------------------------------------

    \92\ United States v. Mississippi Power & Light Co., 638 F.2d 
899, 907 (5th Cir. 1981); Beverly Enterprises, Inc. v. Herman, 130 
F. Supp. 2d 1, 14-15 (D.D.C. 2000); Marshall v. Barlow's, Inc., 436 
U.S. 307, 320-21 (1978).
    \93\ Mississippi Power & Light Co., 638 F.2d at 907-8.
---------------------------------------------------------------------------

    Finally, it is worth observing that identification as a potential 
violator based on data from the proposed Equal Pay Report would not 
itself result in any sanction or adverse action against the contractor; 
the contractor would be prioritized for a compliance evaluation, a 
procedure which any Federal contractor is already subject to under the 
Executive Order.

Section-By-Section Analysis

Sec.  60-1.7 Reports and other required information

Sec.  60-1.7(a)(1) EEO-1 Report

    Existing Sec.  60-1.7(a)(1) identifies contractors that are 
required to file the EEO-1 Report jointly promulgated by EEOC and 
OFCCP. Generally, Sec.  60-1.7(a) requires a contractor to annually 
file an EEO-1 Report if the contractor has 50 employees and is either: 
(1) A prime contractor or first tier subcontractor with a contract or 
subcontract of $50,000 or more; or (2) serves as a fund depository or 
issuing and paying agent of U.S. savings bonds in any amount. Existing 
Sec.  60-1.7(a)(1) also provides that a construction subcontractor at 
any tier must file the EEO-1 Report annually if it has a contract or 
subcontract of $50,000 or more. OFCCP proposes changing the title of 
existing Sec.  60-1.7(a) from ``Requirements for Contractors and 
Subcontractors'' to ``EEO-1 Report.'' Since the current language of 
Sec.  60-1.7(a)(1) addresses EEO-1 Report filing, the proposed new 
title is more precise. In addition, OFCCP proposes eliminating the 
reference in Sec.  60-1.7(a)(1) to ``Plans for Progress'' because the 
program no longer exists. The proposed Sec.  60-1.7(a) also includes 
technical changes to subparagraph numbers to add a new Sec.  60-
1.7(a)(2) and additional subheadings for clarity.
    Currently, Sec.  60-1.7(a)(2) addresses the EEO-1 reporting 
obligations of a new contractor. Section 60-1.7(a)(2) provides that 
each ``person'' required to file an EEO-1 Report under Sec.  60-
1.7(a)(1) must do so within 30 days after receiving a contract or 
subcontract, unless the ``person'' submitted an EEO-1 Report within the 
previous 12 months. The report is filed with the contracting agency or 
administering agency. After the initial filing, the new contractor will 
file annually as required under Sec.  60-1.7(a)(1). In addition, Sec.  
60-1.7(a)(2) identifies the Deputy Assistant Secretary as having the 
authority to change or extend the time for filing the report. OFCCP 
also proposes renumbering this paragraph to Sec.  60-1.7(a)(3), 
deleting the references to ``person'' and replacing them with ``prime 
contractor and subcontractor.'' Consistent with this change, OFCCP is 
proposing deleting the words ``to him'' in relation to who is awarded a 
contract or subcontract. OFCCP is also proposing deleting the provision 
in Sec.  60-1.7(a)(2) which states that subsequent reports shall be 
submitted at such intervals as the Deputy Assistant Secretary may 
require, in order to conform the

[[Page 46578]]

regulatory provision to the longstanding agency practice of requiring 
only the annual filings. Finally, OFCCP proposes deleting the language 
in the existing regulation regarding extension requests. The 
instructions for making extension requests, which are currently set 
forth on EEOC's Web site, direct EEO-1 Report filers to send an email 
request for an extension to EEOC before the filing deadline.

Sec.  60-1.7(b) Equal Pay Report

    Existing Sec.  60-1.7(b) addresses the certification requirements 
for bidders or prospective contractors. Each ``bidder or prospective 
prime contractor and proposed subcontractor'' must state, either in the 
bid or in writing at contract negotiations, whether it has an 
affirmative action program for each of its establishments, whether it 
held a contract or subcontract covered by the equal opportunity clause, 
and whether it filed all required reports, including the EEO-1 Report. 
The proposed rule would renumber Sec.  60-1.7(b), making it a new Sec.  
60-1.7(d) and renaming the paragraph to ``Requirements for bidders or 
prospective contractors--(1) Certification and representation of 
compliance with the requirements of Executive Order 11246 and its 
implementing regulations.'' OFCCP proposes a new Sec.  60-1.7(b) 
establishing a requirement that contractors and subcontractors complete 
and submit a report on employee compensation. The report proposed in 
Sec.  60-1.7(b)(1), called the Equal Pay Report, requires contractors 
to provide summary data on the compensation paid employees by sex, 
race, ethnicity, specified job categories, and other relevant data 
points such as hours worked, and the number of employees. Contractors 
and subcontractors must submit this report in the format and manner 
required by OFCCP, and must retain a copy of the submitted report in 
accordance with the record retention provisions in Sec.  60-1.12.
    As proposed, contractors and subcontractors must report summary 
compensation data; no individual employee data is required. Reporting 
summary data limits the amount of information contractors and 
subcontractors must collect and report to the agency on a regular 
basis. While OFCCP will still consider individual employee compensation 
data during compliance evaluations or complaint investigations related 
to a contractor's pay practices, aggregate data is adequate for the 
purpose of establishing objective industry compensation standards 
against which individual contractors can be measured. While micro data, 
rather than aggregate data collected from all contractors, could 
arguably improve the identification of potential violators, collecting 
this data would likely create considerable cost and burden for 
contractors. Collecting aggregate data should also address concerns 
about the possible release of individual compensation data. OFCCP's 
decision to collect aggregate data reduces the likelihood that an 
individual employee's information would be inadvertently disclosed, and 
data reported in the aggregate makes it more difficult to identify the 
amount paid to any particular individual. Moreover, OFCCP does not 
intend to publicly release the underlying data contractors and 
subcontractors submit on their Equal Pay Reports. The agency will 
protect the confidentiality of data submitted through the Equal Pay 
Report to the maximum extent permitted by law, and plans to design a 
web-based portal for reporting and maintaining compensation information 
that conforms with applicable government IT security standards. 
Finally, on the issues of confidentiality and security, the information 
will be accessible to a small group of agency employees who need to 
know the information, and the data will not be widely circulated. These 
measures should reasonably ensure the security and confidentiality of 
the aggregate data.
    The proposed rule collects only information on compensation, and 
not any other employment practices. This distinguishes it from the 
former Equal Opportunity Survey. In the agency's view, information on 
other employment practices adds complexity without necessarily 
conferring sufficient benefit. To the extent differences in promotions, 
hiring into higher paying jobs, or other practices contribute to race 
or gender-based pay disparities, examining average pay differences can 
help identify those effects. One common way to identify discriminatory 
promotion patterns is by first observing underlying compensation 
differences across jobs, then testing to see if discrimination in 
promotion rates explains the lower earnings. Further, while OFCCP has 
identified categories of widely available and comparable data sources 
relevant to analyzing compensation, the agency has not identified 
analogous data sources that contractors and subcontractors generally 
maintain on other employment practices in simple, comparable, 
externally verifiable formats. OFCCP will continue its careful review 
of information on hiring, promotion, termination and other employment 
practices through its existing compliance evaluation procedures.

Definition and Measure of Employee Compensation

    Elements of compensation can vary substantially depending on the 
types of workers and industries. Consequently, the earlier ANPRM asked 
several questions designed to elicit feedback on how to measure 
compensation. In general, responses addressed three strategies: (1) 
Base pay, (2) total compensation disaggregated into separate elements 
like base pay, bonuses, overtime or commissions, and (3) total 
compensation aggregated into a single amount. Contractors and 
representatives of the business community stated a preference for base 
pay as a measure. These commenters noted that base pay is the most 
common and comparable element of compensation across employees. They 
were concerned that aggregating multiple forms of compensation would 
not allow for the consideration of the different factors that go into 
explaining base pay. These factors may or may not be the same for 
explaining bonuses, overtime or other compensation elements.
    On the other hand, employee groups, civil rights and worker 
advocacy organizations generally favored total compensation 
disaggregated into separate pay elements. These commenters believed 
that this strategy is best for addressing discrimination in 
compensation that does not result from base pay but from other earnings 
sources such as bonuses, overtime, and commissions. There were few 
comments on the third strategy, total compensation aggregated into a 
single amount.
    After considering the comments submitted in response to the ANPRM 
regarding the best way to measure compensation for purposes of a 
compensation data collection tool, a definition of compensation is set 
forth in the proposed Equal Pay Report. In the Equal Pay Report, OFCCP 
proposes using aggregate compensation based on W-2 earnings along with 
one or more other relevant data points. One relevant data element is 
the number of hours worked. OFCCP proposes calculating hours worked as 
follows:
     For salaried workers, contractors should provide actual 
hours of work if the contractor records actual hours. This is required 
for nonexempt employees but is not required for exempt employees. If 
contractors do not have actual hours worked data, they may default to 
2080 for full-time and 1040 for part-time.

[[Page 46579]]

     For hourly workers, actual hours of work.
     Reported hours may also be adjusted for part year work 
using date of hire or dates of leave as well, but this is not 
specifically required.
    OFCCP proposes collecting aggregate measures of hours worked so 
that the aggregate measures of W-2 earnings can better account for 
potential differences in work hours over the reporting period. Total 
compensation data, that is, total W-2 earnings and hours worked, 
provides some insight into the effect that all contractor pay practices 
may be having on compensation by gender, race and ethnicity. OFCCP is 
also proposing to collect the total number of workers and the total 
aggregate compensation for each group of workers as defined by EEO-1 
job category, sex, race and ethnicity.
    OFCCP, by using this strategy, is striking an appropriate balance 
between minimizing contractor reporting burden and ensuring that the 
proposed report includes information on non-base pay elements. By 
limiting compensation reporting to W-2 earnings, and using existing 
EEO-1 job categories, contractors are not required to develop or 
significantly alter payroll and human resources systems. This is the 
case because existing contractor systems currently gather and report W-
2 earnings data, and use EEO-1 job categories for required EEO-1 
reporting. OFCCP similarly believes that existing contractor systems 
record the number of hours worked by employees or maintain sufficient 
information to report the requested data.
    Though we are proposing the use of aggregate compensation based on 
W-2 earnings, and one or more relevant data points, we did examine the 
usefulness of the Occupational Employment Statistics Survey (OES) 
definition as a measure of employee compensation. The OES is a 
semiannual mail survey and participation is not compulsory, and it does 
not collect data by gender, race, and ethnicity.\94\ It uses 800 
detailed occupations based on the Office of Management and Budget's 
Standard Occupational Classification (SOC) system, and collects wage 
data from private-sector employers and reports it using 12 intervals or 
pay bands. The number of employees in each pay band is reported. The 
definition for wages includes a base rate of pay, cost-of-living 
allowances, guaranteed pay, hazardous-duty pay, incentive pay including 
commissions and production bonuses, and tips. The definition excludes 
overtime pay, severance pay, shift differentials, nonproduction 
bonuses, employer costs for supplementary benefits, and tuition 
reimbursements. The agency believes that the W-2 earnings are most 
appropriate for setting objective industry standards because all 
contractors must annually report W-2 earnings to the IRS. This 
compulsory reporting by all contractors provides a form of external 
validity and accountability that may improve the accuracy of the Equal 
Pay Report measures. Because the current OES survey relies on pay 12 
intervals or bands, the survey sheds little light on the validity of 
requiring employers to report specific wage rates using that definition 
or the potential burden. To simply report the number of workers in a 
range, the employer may not need to calculate each worker's hourly rate 
with precision. Indeed, following the strict definition of how to 
calculate the rate--which involves selecting certain individual 
compensation elements but not others, compiling them and then 
incorporating hours--appears more burdensome than simply reporting W-2 
earnings. In the absence of any reference to specific evidence or data 
in the report, it is not clear how and why the NRC determined that 
using the OES pay definition is the least burdensome measure.\95\
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    \94\ National Research Council of the National Academies, 
Committee on National Statistics, Collecting Compensation Data from 
Employers (2013), available at http://www.nap.edu/openbook.php?record_id=13496 (``Collecting Compensation Data''). 
The survey estimates are based on a sample of about 1.2 million 
establishments grouped into six semiannual panels over a 3-year 
period. Each year, forms are mailed to two panels of approximately 
200,000 establishments, one panel in May and the other in November.
    \95\ OES samples about 400,000 establishments a year (out of a 
total of 6.8 million), http://www.bls.gov/oes/2013/may/oes_tec.htm. 
This means an establishment may only participate in the survey once 
over the course of several years. One would not necessarily expect 
employers to have regularly established systems to generate this 
specific measure if it is only requested once every five to ten 
years.
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    A concern regarding aggregate W-2 earnings is the potential 
inaccuracies when comparing part-time and full-time employees, and 
employees who have worked only part of the year. OFCCP proposes to 
address this issue by also collecting total hours worked for each group 
of employees whose compensation is being summarized. The Fair Labor 
Standards Act (FLSA) requires employers to keep records of actual hours 
worked for all non-exempt employees, whether hourly or salaried.\96\
---------------------------------------------------------------------------

    \96\ Department of Labor, Fact Sheet #21: Recordkeeping 
Requirements under the Fair Labor Standards Act (FLSA), http://www.dol.gov/whd/regs/compliance/whdfs21.htm.
---------------------------------------------------------------------------

    New IRS reporting requirements for the Affordable Care Act (ACA) 
mandate that employers report the number of employees working at least 
30 hours per week making it necessary that employers track hours, \97\ 
although the ACA does allow employers to use certain default 
assumptions for salaried workers.\98\ This new requirement covers 
employers who are close, though not identical, in size to the proposed 
Equal Pay Report coverage standard.\99\ For this reason, OFCCP believes 
many contractors will be able to provide actual hours worked even for 
exempt employees. However, OFCCP also proposes to allow contractors to 
report either actual hours worked or to apply default assumptions about 
work hours for those employees who are exempt from the FLSA. Comments 
on the following are particularly useful:
---------------------------------------------------------------------------

    \97\ This refers to the general requirement in the statute that 
certain employers covered by the mandate report the number of full-
time employees defined as 30 or more hours per week elsewhere in the 
ACA. See 26 U.S.C. 6056(a) and (b)(2); Cornell University Law 
School, Law Information Institute, http://www.law.cornell.edu/uscode/text/26/6056 (last accessed July 28, 2014).
    \98\ This refers to the U.S. Department of the Treasury's 
regulation on how to determine hours of service and status as a 
full-time employee for purposes of section 4980H, which includes the 
ability to use default assumptions. See 26 CFR 54.4980H-3; http://www.ecfr.gov/cgi-bin/text-idx?SID=03889366cda34926fa90ba8c324777e4&node=26:17.0.1.1.5.0.1.43&rgn=div8.
    \99\ The employer shared responsibility provisions apply to 
employers that employed (for at least 121 days of the preceding 
calendar year) at least 50 full-time, nonseasonal employees or a 
combination of full-time and part-time, nonseasonal employees that 
equals at least 50. 26 U.S.C. 4980H(c)(2). A full-time employee is 
an individual employed on average for at least 30 hours per week, 26 
U.S.C. 4980H(c)(4)(A), or 130 hours per calendar month, 26 CFR 
54.4980H-1(a)(21)(ii).
---------------------------------------------------------------------------

     The definition of compensation and what data sources are 
available;
     the advantages and disadvantages of using the OES to 
define compensation;
     the statistical and analytical value associated with 
collecting hours worked, and the cost of collecting hours worked;
     the number of employees for the purpose of creating an 
objective industry standard against which contractors would be measured 
and prioritized for review; and
     the usefulness of applying existing standards for 
calculating worker hours and full-time or part-time status found in the 
FLSA, the ACA, or other existing Federal regulations.
    OFCCP is not proposing that contractors provide data on ``factors'' 
that affect compensation. Such factors are elements that might explain 
differences in compensation. In analyzing compensation for potential 
discrimination, it is common to include

[[Page 46580]]

information about factors such as experience, education, or other 
differences among workers that might affect their compensation. 
Commenters to the ANPRM strongly agreed that factors are significant 
and important to explaining differences in compensation. Generally, 
commenters from the business community stated that analyzing 
compensation without accounting for highly detailed factors yielded 
inaccurate results. They also acknowledged that collecting data on 
these factors would be too burdensome and complex. In particular, they 
stated that many employers do not keep all relevant factors in 
electronic form or in the same database. Other commenters, most 
employee groups and civil rights organizations, stated that collecting 
data on factors was both extremely important and quite feasible. OFCCP 
determined that the potential burden of collecting and analyzing 
factors generally outweighs any potential benefit.
    Employers, including Federal contractors, vary widely in both the 
factors they use to determine compensation, and in how and whether they 
maintain that data in electronic form. Collecting information on 
factors would be much more expensive and time-consuming for both 
contractors and the agency. Finally, data at this level of detail would 
be extremely difficult for OFCCP to analyze meaningfully without 
extensive and time-consuming work devoted to deciphering and 
understanding the coding choices of each contractor, and cleaning and 
recoding many potentially inconsistent data fields. OFCCP's proposed 
methodology, to some extent, takes into account the particular 
compensation factors that may explain some or all of an overall pay gap 
reported by a particular contractor. This is so because the information 
reported by contractors within an industry, using the Equal Pay Report, 
will be used to develop the objective industry standard. It is assumed 
that the compensation factors within an industry may not vary widely, 
though some differences are still likely to exist. Individual 
contractors in an industry will be compared to the objective industry 
standard and the amount of difference between the two will help 
prioritize contractors for compliance evaluations. It is during the 
scheduled compliance evaluation, however, that OFCCP can meaningfully 
analyze a contractor's particular compensation practice, scheme, and 
philosophy, including the particular factors used to set compensation 
levels.

Job Categories for Reporting Compensation Information

    Many substantive comments addressed how to group workers for 
purposes of reporting compensation information. Generally, commenters 
addressed four possible approaches: (1) Grouping by job title, (2) 
grouping by AAP job group, (3) grouping by EEO-1 job category, and (4) 
deferring to the contractor's choice of grouping among multiple 
options. There was no clear consensus from the comments.
    Proposed Sec.  60-1.7(b)(1) provides that data must be provided by 
``specified job categories'' without identifying those categories; the 
Equal Pay Report will specify the job categories, as well as several 
other data points relevant to developing the objective industry 
standard. In the report, OFCCP is proposing to use the existing ten 
EEO-1 job categories and subcategories for contractors who already 
report using the EEO-1 form. The EEO-1 job categories have been used 
for many years and are clearly defined. Any contractor that is or was 
previously covered by the EEO-1 reporting requirement is already 
required to categorize their employees into these categories on an 
annual basis. Therefore, using the EEO-1 job categories will remove the 
step of categorizing employees for purposes of completing the Equal Pay 
Report. The EEO-1 categories are, therefore, the least burdensome and 
least confusing means of categorizing employees.
    Unlike job titles and AAP job groups, which are defined by each 
contractor and not standardized across all contractors, contractors 
must consistently maintain their EEO-1 job categories. This creates 
clear comparability across contractors. A job grouping system is 
necessary for the Equal Pay Report to fulfill its intended purpose; 
without compensation data defined by uniform job groupings, contractor 
compensation practices towards similar groups of employees could not be 
easily compared to identify anomalies. These comparisons will not be 
used to determine violations, and any distortion caused by nuances not 
recognized by the grouping system can be clarified during a compliance 
evaluation.
    A substantial number of ANPRM commenters argued against the use of 
EEO-1 job categories because they fail to reflect elements such as 
differences in skill, experience, education, and other factors 
potentially affecting pay. Comparing employers in similar industries 
will help minimize these differences. However, any job grouping system 
used will necessarily involve creating groups containing non-identical 
positions, with unique factors that may affect pay. In addition, 
comparing workers only within narrowly defined job groupings can 
obscure patterns of pay disparity that transcend jobs, and that may be 
caused by discrimination in promotion, job assignment or other glass 
ceiling or channeling practices. Broader groupings allow OFCCP to 
consider larger patterns of pay disparity that may transcend specific 
positions, levels or units. Notably, the National Academies panel 
recommended EEO-1 job categories for reporting of summary data, because 
of their broad applicability, the experience of enforcement agencies 
with their use, and their clarity and simplicity.\100\
---------------------------------------------------------------------------

    \100\ ``Collecting Compensation Data'' at 60.
---------------------------------------------------------------------------

    However, as the comments to the ANPRM demonstrate, there is a 
variety of potential approaches to grouping data. For the reasons 
stated, OFCCP is proposing the use of the EEO-1 job categories for the 
Equal Pay Report but is interested in comments on the extent to which 
other possible job or occupation groupings are sufficiently universal 
that they could be used when developing objective industry compensation 
standards.

Sec.  60-1.7(b)(2) Who Must File the Equal Pay Report

    The ANPRM asked a series of questions related to the issue of which 
contractors should be required to provide compensation data via a data 
collection instrument. In response, some commenters made additional 
suggestions regarding who should be included or excluded. In general, 
these comments addressed applying the data collection requirement to 
all contractors, to prior violators only, to supply and service 
contractors only versus including construction contractors, to small 
businesses, to bidders or new contractors, and addressed whether and 
how multi-establishment contractors would report.
    Proposed Sec.  60-1.7(b)(2) identifies the contractors and 
subcontractors that must submit the Equal Pay Report. Proposed Sec.  
60-1.7(b)(2) states that the contractors and subcontractors that are 
required under Sec.  60-1.7(a)(1) to file EEO-1 Reports with the Joint 
Reporting Committee must complete and file the proposed Equal Pay 
Report if they also more than 100 employees and their contract or 
subcontract covers a period of at least 30 days, including 
modifications. Generally, this covers prime contractors and first tier 
subcontractors that are private employers and are large enough to be

[[Page 46581]]

subject to the requirement to prepare an affirmative action program.
    Some commenters suggested that the reporting requirement should be 
applied exclusively to contractors and subcontractors previously 
identified as violators by the OFCCP. This limitation, they assert, 
would avoid imposing an additional burden on contractors and 
subcontractors who have not previously committed violations. The 
primary purpose of the proposed Equal Pay Report is to refine the 
agency's neutral selection of contractors and subcontractors by 
focusing on those that are most likely to be in violation of OFCCP's 
regulations. In particular, the Equal Pay Report provides OFCCP with a 
reasonable and practical means of prioritizing likely violators for 
compliance evaluations. For the report to perform its primary function, 
it must collect data from a large pool of contractors and 
subcontractors without regard to violation history. Additionally, to 
the extent that OFCCP seeks to use this data to make predictions about 
the likelihood of finding a violation, it is important to collect data 
from compliant contractors and subcontractors to provide comparisons. 
Therefore, collection of data regardless of prior violation history is 
essential to the benefits that this tool will confer.
    Construction contractors and subcontractors are not specifically 
identified in the proposed rule, but they would be required to complete 
and file the proposed Equal Pay Report if they are required under Sec.  
60-1.7(a)(1) to file EEO-1 Reports, and meet the contract value and 
employee thresholds proposed in this NPRM. Many construction 
contractors and subcontractors do not meet the standards for filing 
EEO-1 Reports, either because of the number of employees or the short 
duration of employment.\101\ OFCCP seeks comments on:
---------------------------------------------------------------------------

    \101\ 2011 Census data suggests that over 90% of companies in 
the construction sector have less than 50 employees. United States 
Census Bureau, Statistics of U.S. Businesses--NAICS Sectors (2011), 
available at http://www.census.gov/econ/susb/.
---------------------------------------------------------------------------

     The potential burdens for construction contractors and 
subcontractors, including comments on the feasibility of data 
collection,
     the sophistication of current payroll and HR systems, and
     the potential concerns regarding communication between 
prime and subcontractors about the proposed reporting 
requirements.\102\
---------------------------------------------------------------------------

    \102\ Note that there are some construction contractors also 
covered by this proposal (those who fall within the requirements for 
filing an EEO-1 Report). This would not, however, include Federally 
assisted construction contractors. OFCCP intends to analyze Equal 
Pay Report data by industry; therefore, construction contractors 
will only be compared with other construction contractors. Selection 
of construction contractors for compliance evaluations uses a 
different process than scheduling of Supply and Service contractors.
---------------------------------------------------------------------------

    Numerous commenters expressed concern that the reporting 
requirement would impose an undue burden on smaller contractors and 
subcontractors, damage their ability to compete, or serve as a 
disincentive to becoming a Federal contractor. A small number requested 
an exemption from the requirement by means of raising the 
jurisdictional threshold. A few others argued that it would be better 
to design two sets of questions, one for smaller contractors and 
subcontractors and one for larger contractors and subcontractors. OFCCP 
used a two-tiered approach for addressing these concerns.
    First, the existing EEO-1 reporting requirements apply to 
contractors who are private employers with 50 or more employees and 
satisfy other specified jurisdictional thresholds.\103\ Existing 
Federal regulations already require that these contractors create 
affirmative action programs, which include requirements to analyze 
compensation and provide compensation data to OFCCP upon request, as 
well as to file EEO-1 Reports using the employee classifications and 
job categories that would apply under this proposed rule. With the 
Equal Pay Report, OFCCP will continue to exempt contractors with fewer 
than 50 employees and will have similar jurisdictional thresholds as 
the EEO-1.\104\ Further, by eliminating many of the most burdensome 
categories of data, OFCCP has made it easier for small businesses to 
comply.
---------------------------------------------------------------------------

    \103\ This includes being prime or first tier subcontractors 
with 50 or more employees who hold a Federal contract that is valued 
in excess of $50,000 or a company that serves as a depository of 
Government funds in any amount.
    \104\ OFCCP welcomes comment on the appropriate jurisdictional 
thresholds applicable to contractors covered by the proposed rule 
who are not private employers.
---------------------------------------------------------------------------

    Second, after examining small contractor considerations created in 
existing regulations and the rationale behind them, OFCCP is proposing 
to exempt even more small contractors. Contractors with 100 or fewer 
employees are excluded from this new reporting obligation. For example, 
in the regulations on equal employment opportunities and affirmative 
action for individuals with disabilities, OFCCP allows contractors with 
100 or fewer employees to apply the aspirational utilization goal to 
their entire workforce rather the their job groups. By excluding 
contractors with 100 or fewer employees, OFCCP is further reducing the 
cost and burden on Federal contractors.

Sec.  60-1.7(b)(3) How, When, and Where To File the Equal Pay Report

    Proposed Sec.  60-1.7(b)(3) addresses the procedures for complying 
with the requirement to report on summary compensation data. The 
proposal would not specify a particular deadline for filing the 
proposed report; proposed Sec.  60-1.7(b)(3)(i) states that the report 
must be filed by the date specified in the report. As noted earlier, 
OFCCP is proposing a January 1 through December 31 reporting period, 
and a report filing window of January 1 to March 31 of the following 
year. This window gives contractors one full quarter to compile the 
year-end earnings information in the format necessary for the Equal Pay 
Report. The December 31 date makes it easier to calculate summary W-2 
earnings, as they are being simultaneously compiled for tax reporting 
purposes on an annual basis.
    OFCCP considered other alternatives as well, including adopting the 
EEO-1 reporting period and filing dates. OFCCP determined that the EEO-
1 dates do not give the agency a full calendar year's data, and 
contractors use different snapshots or payroll periods for EEO-1 
reporting. Since OFCCP is proposing to collect annual W-2 earnings, 
contractors would be required to submit that information separately 
after having already filed the EEO-1 report and an interim Equal Pay 
Report in September. In lieu of an interim September filing date, which 
would possibly create additional burden, OFCCP considered delaying the 
report submission date until the following January. Under both 
approaches, OFCCP saw potential data issues and a likely increase in 
contractor burden.
    Finally, OFCCP considered requiring contractors to report less 
frequently than annually. Requiring less frequent reporting would 
result in cost savings to contractors related to preparing and 
submitting an Equal Pay Report, and the amount of savings would depend 
on how frequently the contractor would be required to report. However, 
OFCCP determined that this could result in it setting objective 
industry standards that are based on stale or outdated data. This would 
compromise the integrity of OFCCP's enforcement program. For example, 
if there are long time lags, possibly delays of two or more years, 
between when a contractor submits data to OFCCP and when OFCCP uses the 
data to select contractors for review, important changes in the 
underlying data could have occurred. Since these data changes would not 
be reflected in

[[Page 46582]]

the data used by OFCCP to set the industry standard, it is possible 
that some contractors would be prioritized for compliance evaluations 
that might not have been otherwise scheduled. Currently, based on the 
proposed annual reporting, data reported in 2015 is for 2014. By the 
time the 2014 data are reviewed, edited, cleaned and verified, it could 
be another 10 months older before it can be used for the purpose for 
which it was intended. Less frequent reporting could also undermine the 
robustness of the data available for analysis by OFCCP. OFCCP requests 
public comment on how less frequent reporting could be done in a manner 
to address OFCCP's concern that it could be relying on stale or 
outdated data by collecting data in alternating years.
    The proposed rule would require contractors to file the reports 
electronically. Proposed Sec.  60-1.7(b)(3)(ii) provides that 
contractors and subcontractors must submit the Equal Pay Report 
electronically through OFCCP's web-based filing system by the specified 
filing deadline, unless a hardship exemption has been granted under 
subparagraph (3)(iii). Proposed Sec.  60-1.7(b)(3)(iii) would provide 
that the Director may grant a hardship exemption from the electronic 
filing requirement where he or she concludes that electronic filing 
would impose an undue hardship on the contractor or subcontractor. 
Proposed Sec.  60-1.7(b)(3)(iii) would require contractors and 
subcontractors to submit a written request for a hardship exemption and 
indicates that the eligibility criteria and application procedures will 
be available on the OFCCP Web site. Based on the number of electronic 
filings of EEO-1 reports, OFCCP expects that hardship exemptions would 
be granted only in exceptional circumstances. Examples include 
unexpected technical difficulties that prevent a contractor or 
subcontractor from electronically submitting the Equal Pay Report by 
the filing deadline and, in the very rare instances, when a 
contractor's payroll and human resources systems or other necessary 
systems are not automated. Contractors granted a hardship exemption 
would be required to submit the Equal Pay Report in the format 
specified in the notification granting the exemption, which, in some 
cases, could be a paper version of the report.
    Several commenters addressed certain technical issues regarding how 
OFCCP might receive and maintain the data. Some contractor 
representatives requested the ability to upload their data directly to 
the agency; others expressed concern about OFCCP's capacity to 
safeguard confidential compensation data and its IT capacity. OFCCP 
will receive and maintain the compensation data using a secure IT 
system that fully complies with all applicable Federal Government 
security requirements and specifications. This will minimize the 
possibility of a security breach or hacking. The web portal will be 
password protected and information will be encrypted. Contractors will 
use the portal to key in their data directly or upload their own 
spreadsheets using standard formats. To make filing as easy as 
possible, OFCCP also proposes to provide a tool similar to that used by 
the state of New Mexico that would automate the few simple calculations 
necessary to file the report.\105\ The New Mexico tool is an XML 
template that users can download, populate with their individual 
employee data and then generate the required summary information. A 
second template allows users to upload only the summary data back to 
the state agency, leaving the individual data in the possession of the 
user. New Mexico's experience using this approach has been very 
positive.\106\
---------------------------------------------------------------------------

    \105\ New Mexico General Services Department, New Mexico Pay 
Equity Initiative, available at http://www.generalservices.state.nm.us/statepurchasing/Pay_Equity.aspx 
(last accessed April 24, 2014).
    \106\ Institute for Women's Policy Research, The New Mexico Pay 
Equity Initiative in State Contracting, (May 2011), available at 
http://www.iwpr.org/publications/pubs/the-new-mexico-pay-equity-initiative-in-state-contracting (last visited April 24, 2014).
---------------------------------------------------------------------------

    The agency anticipates that some contractors will choose to modify 
their existing HRIS or payroll databases to generate the report on a 
regular basis. OFCCP is particularly interested in comments on:
     The important IT changes to existing HRIS or payroll 
systems, OFCCP system security concerns, system compatibility issues; 
contractor IT implementation timeframes; and
     the criteria for exemptions from the electronic filing 
requirement.

Sec.  60-1.7(b)(4) Protecting Information Provided to OFCCP in the 
Equal Pay Report

    Proposed Sec.  60-1.7(b)(4) is modeled, in part, after the 
confidentiality provision that was included in the repealed Equal 
Opportunity Survey regulation. This provision explains the information 
protections applicable to the proposed Equal Pay Report. OFCCP will 
protect the raw summary compensation data reported by contractors and 
subcontractors from disclosure to the maximum extent permitted by law. 
EEO-1 reports are not publicly available. This section specifies that 
OFCCP will treat information submitted for the report as confidential 
to the maximum extent permitted under the Freedom of Information Act 
(FOIA). It also states that, consistent with current agency practice, 
OFCCP will not publicly disclose information that could cause 
commercial harm to contractors and subcontractors who are still in 
business. In addition to what is specified in the proposal, the agency 
will put internal safeguards in place that include, but may not be 
limited to, providing limited staff access to the data, establishing 
staff protocols for ensuring the security of files and data, providing 
staff training on data security and any penalties and sanctions that 
may apply for wrongful disclosure of the data, and ensuring that 
OFCCP's IT systems meet applicable Federal Government security 
standards. Lastly, Sec.  60-1.7(b)(4) states that OFCCP may publish 
aggregate information based on compensation data collected under this 
section, such as ranges or averages by industry, labor market or other 
groupings, but only in such a way that it does not reveal any employee 
specific data.
    Several commenters voiced confidentiality concerns about a 
compensation data collection tool. Some commenters assumed that a 
compensation data collection instrument would require contractors to 
provide specific compensation information regarding individual 
employees at specific establishments. These commenters characterize 
individualized compensation data as ``especially sensitive and 
confidential'' and maintain that disclosure of an organization's 
individualized compensation information would be ``devastating'' and 
that it could ``decrease the contractor's competitive advantage or even 
threaten its business model.'' OFCCP believes that the concerns 
expressed by these commenters have been sufficiently mitigated by the 
proposal to collect summary data on employee compensation, rather than 
individualized compensation data, but seeks comments on other ways to 
address the concern.
    Some commenters expressed concern that the data submitted to OFCCP 
could be requested under FOIA. They argue that FOIA and the 
Department's FOIA disclosure policy and procedures at 29 CFR part 70 do 
not provide adequate protections against disclosure. To address 
concerns about disclosure of confidential compensation data, proposed 
Sec.  60-1.7(b)(4) would provide,

[[Page 46583]]

as did the repealed Equal Opportunity Survey regulation, that ``OFCCP 
will treat information contained in the Equal Pay Report as 
confidential to the maximum extent the information is exempt from 
public disclosure under the Freedom of Information Act.''
    Exemption 4 of the FOIA protects ``trade secrets and commercial or 
financial information obtained from a person [that is] privileged or 
confidential.'' If information falls within FOIA Exemption 4, the Trade 
Secrets Act, 18 U.S.C. 1905, also generally protects it. The Trade 
Secrets Act makes it a criminal offense for an officer or employee of 
the United States to disclose information relating to the trade secrets 
or confidential business information, including ``confidential 
statistical data,'' of any person, firm, partnership, corporation or 
association ``to any extent not authorized by law.'' Thus, because the 
information contained in the proposed Equal Pay Report generally falls 
within Exemption 4 and is protected by the Trade Secrets Act, OFCCP 
would not have discretion to release that information.
    OFCCP's current practice is not to release data where the 
contractor still is in business and where the contractor or 
subcontractor asserts, and through the Department of Labor review 
process it is determined, that the data are confidential and that 
disclosure would subject the contractor to commercial harm. Moreover, 
the Department's FOIA regulations at 29 CFR 70.26 provide that business 
information will be disclosed under FOIA only in accordance with the 
procedures set forth in the regulation. The procedures instruct the 
submitter of business information to designate by appropriate markings 
either at the time of submission, or at a reasonable time thereafter, 
any portion of a submission that it considers to be protected from 
disclosure under Exemption 4. The regulations require OFCCP to notify 
the submitter on a case-by-case basis whenever a FOIA request is made 
for information the submitter has designated protected from disclosure 
or when OFCCP believes the information requested under FOIA may be 
protected from disclosure under Exemption 4. This notification gives 
contractors the opportunity to object to the disclosure of any data 
they consider confidential.
    OFCCP currently collects compensation information during the course 
of its compliance evaluations, and the agency is not aware of any 
instance in which compensation data were disclosed without the consent 
of the contractor or subcontractor. It has always been OFCCP's policy 
not to release data that is determined to be confidential or has the 
potential to subject the contractor to commercial harm if disclosed, 
and this policy will be applied to the proposed Equal Pay Report as 
well.

Section 60-1.7(c) Additional Information

    Existing Sec.  60-1.7(a)(3) provides that the Deputy Assistant 
Secretary or the applicant, on their motions, may require a contractor 
or subcontractor to keep employment or other records and to furnish, in 
the form requested, within reasonable limits, such additional 
information about its employment practices as the Deputy Assistant 
Secretary or the applicant deems necessary for the administration of 
the Order. The proposed rule would include this provision in a new 
Sec.  60-1.7(c), with one minor change. In proposed Sec.  60-1.7(c) the 
title ``Director'' replaces ``Deputy Assistant Secretary.'' The 
proposed rule would include a reference to the applicability of the 
existing record retention provision found in 41 CFR 60-1.12; 
specifically, that each contractor shall retain its Equal Pay Report 
for a period of not less than two years from the date of the making of 
the report.

Section 60-1.7(d) Requirements for Bidders or Prospective Contractors

    Section 60-1.7(b) of the existing regulations addresses the 
certifications concerning compliance with the requirements of Executive 
Order 11246 that bidders and prospective contractors must submit with 
their bids. The existing regulations require the bidder or prospective 
contractor to state in writing: (1) Whether it has developed an 
affirmative action program pursuant to part 60-2; (2) whether it has 
participated in a previous contract subject to the Executive Order's 
equal opportunity clause; and (3) whether it has filed with the Joint 
Reporting Committee, the Deputy Assistant Secretary, or the EEOC all 
reports due under applicable filing requirements. The proposed rule 
would revise and move the existing Sec.  60-1.7(b) to a new Sec.  60-
1.7(d), and clarify that only bidders who currently hold Federal 
contracts or subcontracts must make a representation related to whether 
they are currently a Federal contractor or subcontractor and whether 
they filed the Equal Pay Report for the most recent filing period.
    The NPRM proposes to delete the reference to part 60-2 from the 
paragraph's title and the paragraph itself. Instead, proposed Sec.  60-
1.7(d) would generally refer to Executive Order 11246 and the 
implementing regulations, making clear that the representation 
provisions apply to construction contractors as well as to supply and 
service contractors. Proposed Sec.  60-1.7(d) would specifically 
require the contractor to state whether it is currently a Federal 
contractor required to create affirmative action programs and file EEO-
1 Reports and Equal Pay Reports. If so, the contractor must state 
whether it has created an affirmative action program; filed the EEO-1 
Report(s) for the most recent reporting period with the Joint Reporting 
Committee; and whether it has filed an Equal Pay Report for the most 
recent reporting period with OFCCP.
    Several commenters provided views on the requirement to report 
compensation and whether it could or should apply to bidders and 
prospective contractors. Some suggested that OFCCP lacks the authority 
to collect data from bidders and that it raised the potential for 
unnecessary burdens or the risk of disclosure of sensitive compensation 
data to competitors. Under the proposed rule, the Equal Pay Report 
would be treated like current requirements to file EEO-1 Reports and 
prepare affirmative action programs. The proposed rule requires 
prospective contractors to make a representation as to whether they 
have complied with all requisite reporting as part of the bidding pre-
award process, including the proposed Equal Pay Report if they 
currently are Federal contractors or subcontractors.
    Existing Sec.  60-1.7(b)(2) provides that the bidder or prospective 
contractor shall be required to submit such information as the Deputy 
Assistant Secretary requests prior to the award of the contract or 
subcontract. This provision is renumbered to proposed Sec.  60-
1.7(d)(2) without substantive changes. It does, however, add the title 
``Additional information'' and changes ``Deputy Assistant Secretary'' 
to ``Director.''

Section 60-1.7(e) Sanctions for Failure To File Required Reports, and 
Certifications and Representations

    Section 60-1.7(e) provides sanctions for the failure to file 
required reports, and certifications and representations. OFCCP 
proposes to set forth the provision regarding sanctions in a separate 
paragraph because it would apply to the failure to file the EEO-1 
Report, the proposed Equal Pay Report, and any other report requested 
by the Director. Existing Sec.  60-1.7(a)(4) addresses the sanctions 
under Executive Order 11246 for a contractor's failure to file timely, 
complete, and accurate reports. Proposed Sec.  60-1.7(e) restates

[[Page 46584]]

the provision found in existing Sec.  60-1.7(a)(4) of the regulations, 
but proposes several revisions. The revisions include extending 
sanctions for the failure to file a complete and accurate report to the 
filing of the Equal Pay Report, and deleting the reference to the 
imposition of sanctions on the prime and subcontractors by the Deputy 
Assistant Secretary. This deleted text is replaced with language noting 
that a failure to file violates Executive Order 11246 and is subject to 
sanctions under the Equal Opportunity Clause and specifically sections 
of OFCCP's regulations. To improve readability, OFCCP proposes adding 
the title ``Sanctions for failure to file required reports and 
certifications and representations.''

Section 60-1.7(f) Use of Reports

    Existing Sec.  60-1.7(c) states that the reports filed pursuant to 
this section shall be used only in connection with the administration 
of Executive Order 11246, the Civil Rights Act of 1964, or in 
furtherance of the purposes of the Order and the Act. Proposed Sec.  
60-1.7(f) sets forth the provision found in existing Sec.  60-1.7(c) 
with several minor non-substantive changes. Specifically, in proposed 
Sec.  60-1.7(f) ``Executive Order 11246'' is used instead of ``the 
order,'' the second use of the term ``the order'' is capitalized, and 
``the Act'' is substituted for ``said Act.''

Regulatory Procedures

Executive Order 12866 (Regulatory Planning and Review) and Executive 
Order 13563 (Improving Regulation and Regulatory Review)

    Executive Order 13563 directs agencies to propose or adopt a 
regulation only upon a reasoned determination that its benefits justify 
its costs; tailor the regulation to impose the least burden on society, 
consistent with obtaining the regulatory objectives; and in choosing 
among alternative regulatory approaches, select those approaches that 
maximize net benefits. Executive Order 13563 recognizes that some 
benefits are difficult to quantify and provides that, where appropriate 
and permitted by law, agencies may consider and discuss qualitatively 
values that are difficult or impossible to quantify, including equity, 
human dignity, fairness, and distributive impacts.
    Executive Order 13563 also requires agencies to periodically review 
existing rules to determine if they should be modified, streamlined, 
expanded, or repealed so as to make the agency's regulatory program 
more effective or less burdensome in achieving the regulatory 
objectives. OFCCP plans to retrospectively review this rule at an 
appropriate time after it is finalized. OFCCP requests public comment 
on how the effectiveness of this rule could be evaluated, and what data 
and methods would be needed to do so.
    This proposed rule has been designated a ``significant regulatory 
action'' although not economically significant, under section 3(f) of 
Executive Order 12866. The NPRM is not economically significant, as it 
will not have an annual effect on the economy of $100 million or more. 
The Office of Management and Budget has reviewed the NPRM.
    The proposed regulatory changes are have been developed to enhance 
OFCCP's efficiency and effectiveness in enforcing laws that prohibit 
compensation discrimination by Federal contractors and subcontractors. 
More specifically, the regulatory goals include:
     Increasing contractor self-assessment of its compensation 
policies and practices, and expanding voluntary compliance with OFCCP's 
regulations so as to advance OFCCP's mission of ensuring 
nondiscrimination in employment and decreasing the pay gap between 
males and females and between races.
     Providing probative compliance information, including data 
on industry and/or labor market standards to promote industry-wide 
deterrence within the Federal contractor community and lead to modified 
compliance behavior in the compensation arena.
     Making data-driven enforcement decisions that support the 
efficient use of limited enforcement resources. OFCCP will 
strategically deploy its resources to focus on conducting compliance 
evaluations of contractors that are more likely to have compensation 
discrimination violations.
     Shifting, to the maximum extent possible, compliance 
evaluation costs from contractors that are likely to be in compliance 
with prohibitions on pay discrimination to contractors that are more 
likely not to be in compliance.
     Contributing to the stability of working Americans by 
helping minimize the pay gap and promoting broad societal policy 
objectives of nondiscrimination and equal pay.
     Providing workers victimized by discrimination the 
opportunity to obtain the best possible remedies and relief. OFCCP 
anticipates increasing its capacity to identify more violations and 
obtain prompt remedies through a better-informed scheduling process for 
the estimated 4,000 compliance evaluations it conducts annually.

The Need for the Regulation

    The specific proposal is to publish aggregate data gathered through 
the Equal Pay Report by industry, labor market, or other groupings to 
facilitate voluntary compliance efforts by Federal contractors and 
subcontractors. The data OFCCP proposes to collect would allow 
contractors and subcontractors to evaluate their performance against 
their peers and make determinations about how to focus their own self-
assessments, thereby potentially promoting voluntary compliance and 
potentially avoiding the costs incurred during a compliance evaluation 
and/or litigation. This data sharing would also likely have both 
deterrent and preventive effects. In addition to gains in deterrent 
effects and voluntary compliance, OFCCP anticipates positive effects in 
enforcement. OFCCP's current ability to use data to find pay 
discrimination violations is limited to those contractors and 
subcontractors it evaluates, which is a small portion of the contractor 
universe. The increased availability of data should enable OFCCP to 
focus and allocate enforcement resources. Workers often do not know 
that they may be victims of pay discrimination; thus, this rule may be 
viewed as addressing an informational market failure. In other words, 
the NPRM could provide greater transparency on contractor compensation 
practices. This proposed data collection should provide OFCCP with the 
ability to focus its enforcement activities and, therefore, is a 
significant step forward in addressing the pay gap.

Background

    Research conducted by The Institute for Women's Policy Research 
(IWPR) concluded that the poverty rate for working women could be 
reduced by half if women were paid the same as comparable men. The 
paper determined that nearly 60 percent (59.3 percent) of women could 
earn more if working women were paid the same as men of the same age 
with similar education and hours of work.\107\ The poverty rate for all 
working women could be cut in half, falling to 3.9 percent from 8.1 
percent.\108\ The high poverty rate for working single mothers could 
fall by nearly half, from 28.7 percent to 15 percent.\109\ For the 14.3 
million single

[[Page 46585]]

women living on their own, equal pay could mean a significant drop in 
poverty from 11.0 percent to 4.6 percent.\110\
---------------------------------------------------------------------------

    \107\ Heidi Hartman, Ph.D., Jeffrey Hayes, Ph.D., & Jennifer 
Clark, How Equal Pay for Working Women Would Reduce Poverty and Grow 
the American Economy, Briefing Paper IWPR #C411, Institute for 
Women's Policy Research, January 2014.
    \108\ Id.
    \109\ Id.
    \110\ Id.
---------------------------------------------------------------------------

    These statistics are intended to provide general information about 
the potential impacts of eliminating pay differentials among men and 
women, including pay differentials not attributed to discrimination. In 
addition, the IWPR statistics include all employers and all employees 
in the U.S., whereas this proposed rule would apply to only a subset of 
such employers and employees. Therefore, the potential impact of this 
rule would be much smaller than the impact of eliminating pay 
differentials among all working men and women.
    Discrimination, occupational segregation, and other factors 
contribute to creating and maintaining a gap in earnings and keeping a 
significant percentage of women in poverty. It is worth noting, 
however, that some research has established that women earn less than 
men regardless of the field or occupation.\111\ This research also 
suggests that persistent pay discrimination for women translates into 
lower wages and family income in families with a working woman. The 
gender pay gap may also affect the economy as a whole. In 2012, some 
researchers estimate that the U.S. economy could have produced 
additional income of $447.6 billion (equal to 2.9 percent of 2012 GDP) 
if women received equal pay.\112\
---------------------------------------------------------------------------

    \111\ Ariane Hegewisch et al., Separate and Not Equal? Gender 
Segregation in the Labor Market and the Gender Wage Gap, Briefing 
Paper IWPR #C377, Institute for Women's Policy Research (2010).
    \112\ Id.
---------------------------------------------------------------------------

    OFCCP worked with several other Federal agencies on the National 
Equal Pay Task Force to identify the persistent challenges to equal pay 
enforcement and develop an action plan to implement recommendations to 
resolve those challenges. OFCCP also consulted a number of sources in 
order to assess the need for the proposed rulemaking. For instance, 
OFCCP reviewed national statistics on earnings by gender produced by 
BLS and the U.S. Census Bureau. Those statistics show persistent pay 
gaps for female and minority workers.\113\ These well-documented 
earnings differences based on race and sex have not been fully 
explained by nondiscriminatory factors including differences in worker 
qualifications such as education and experience, occupational 
preferences, work schedules or other similar factors.\114\ Thus, some 
of the remaining unexplained portion of the pay gap may be attributable 
to discrimination.
---------------------------------------------------------------------------

    \113\ According to the latest Bureau of Labor Statistics (BLS) 
data, the weekly median earnings of women are about 82 percent of 
that for men. Bureau of Labor Statistics, U.S. Department of Labor, 
Current Population Survey, Labor Force Statistics from Current 
Population Survey, available at http://www.bls.gov/cps/earnings.htm#demographics; Updated quarterly CPS earnings figures by 
demographics by quarter for sex through the end of 2013 available at 
http://www.bls.gov/news.release/wkyeng.t01.htm. Looking at annual 
earnings reveals even larger gaps--women working full time earn 
approximately 77 cents on the dollar compared with men. U.S. Bureau 
of the Census, Income, Poverty and Health Insurance Coverage in the 
United States, Current Population Reports 2011 (Sept. 2012), 
available at http://www.census.gov/prod/2012pubs/p60-243.pdf. BLS 
data reveals that African-American women make approximately 68 
cents, Latinas make approximately 59 cents, and Asian-American women 
make approximately 87 cents for every dollar earned by a non-
Hispanic white man. OFCCP acknowledges that these statistics do not 
account for nondiscriminatory factors that may explain some of the 
differential.
    \114\ Women in America: Indicators of Social and Economic Well-
Being (2011) (male-female pay gap persists at all levels of 
education for those working 35 or more hours per week), according to 
2009 BLS wage data.
---------------------------------------------------------------------------

    Currently, OFCCP lacks sufficient, reliable data to assess the 
gender- or race-based pay gap experienced by employees of Federal 
contractors or subcontractors, including how much of the potential pay 
gap is attributable to pay discrimination instead of nondiscriminatory 
factors, and how many contractors are violating the pay discrimination 
laws OFCCP enforces. This proposed Equal Pay Report is a step toward 
collecting useful data upon which OFCCP can make data-driven 
enforcement decisions.

Discussion of Impacts

    In this section, OFCCP presents a summary of the estimated costs 
associated with the new requirements in Sec.  60-1.7. Comments are 
welcome on every aspect of the cost and burden calculations including, 
but not limited to, the amount of time contractors would spend on 
complying with the proposals in this NPRM, including those related to 
IT (e.g., HRIS and payroll) system changes, data collection, 
recordkeeping and reporting, and any alternatives. The estimated labor 
cost to contractors and subcontractors is based on BLS data in the 
publication ``Employer Costs for Employee Compensation'' issued in 
December 2013, which lists total compensation for management, 
professional, and related occupations as $51.58 per hour and 
administrative support at $24.23 per hour.\115\ Except where otherwise 
noted, OFCCP estimates that 25 percent of the contractor burden hours 
and associated costs are related to the review and oversight of the 
submission of the Equal Pay Report. These activities will likely be 
performed at the management level. OFCCP also estimates that 75 percent 
of the burden hours and associated costs are related to activities such 
as compiling the data and completing the report. These activities will 
likely be performed at the administrative level. OFCCP based these time 
estimates on the most appropriate value of this person's time 
performing the task or function.
---------------------------------------------------------------------------

    \115\ Bureau of Labor Statistics, Civilian workers, by major 
occupational and industry group, available at http://www.bls.gov/news.release/ecec.t01.htm (last accessed March 28, 2014).
---------------------------------------------------------------------------

    Prime contractors and first tier subcontractors with a contract, 
subcontract, or purchase order amounting to $50,000 or more that covers 
a period of at least 30 days, including modifications, with more than 
100 employees, and that are required to file an EEO-1 Report will be 
required to file the proposed new Equal Pay Report. OFCCP believes that 
the proposed new provisions may affect 21,251 Federal contractors. This 
estimate includes 21,224 contractor companies or 67,578 contractor 
establishments that filed EEO-1 Reports.\116\ OFCCP is also interested 
in amending the regulation to 41 CFR 60-1.7 by adding a requirement 
that employers who file the Department of Education's Integrated 
Postsecondary Education Data System (IPEDS) report, have more than 100 
employees, and have a contract, subcontract, or purchase order 
amounting to $50,000 or more that covers a period of at least 30 days, 
including modifications, also file OFCCP's proposed Equal Pay Report. 
Therefore, we identified and included 27 postsecondary educational 
institutions that filed IPEDs reports in this estimate. OFCCP based the 
number of postsecondary educational institutions included in this NPRM 
on the average number of compliance evaluations conducted of 
postsecondary institutions over a four-year period from 2010 through 
2013.
---------------------------------------------------------------------------

    \116\ Estimates based on number of contractors and contractor 
establishments with at least 50 employees who filed EEO-1 reports 
for 2012 and answered ``Yes'' to Question 3.
---------------------------------------------------------------------------

Cost of Regulatory Familiarization

    OFCCP acknowledges that 5 CFR 1320.3(b)(1)(i) requires agencies to 
include in the burden analysis for new information collection 
requirements the estimated time it takes for contractors and 
subcontractors to review and understand the instructions for 
compliance. In order to minimize the burden, OFCCP will publish 
compliance assistance materials including, but not

[[Page 46586]]

limited to fact sheets and ``Frequently Asked Questions.'' OFCCP will 
also host webinars for the contractor community that will describe the 
new requirements and conduct listening sessions to identify any 
specific challenges contractors believe they face, or may face, when 
complying with the requirements.
    OFCCP estimates that it will take a minimum of 1 hour to have a 
management professional at each establishment either read compliance 
assistance materials provided by OFCCP or participate in an OFCCP 
webinar to learn more about the new requirements. The estimated cost of 
this burden is based on data from the BLS in the publication ``Employer 
Costs for Employee Compensation'' (December 2013) which lists total 
compensation for management professionals at $51.58. Therefore, the 
estimated burden for rule familiarization is 67,605 hours (67,605 
contractor establishments \117\ x 1 hour = 67,605 hours). We calculate 
the total estimated cost as $3,487,066 (67,605 hours x $51.58/hour = 
$3,487,066) or $52 per establishment.
---------------------------------------------------------------------------

    \117\ In determining the number of establishments, OFCCP used 
the 67,578 EEO-1 filers with more than 100 employees and added the 
27 postsecondary educational institutions.
---------------------------------------------------------------------------

Cost of Proposed Provisions

    The NPRM proposes requiring contractors and subcontractors to 
compile, complete and submit summary compensation data using the 
proposed Equal Pay Report. Coverage and exemptions for the proposed 
report would track those that already apply to contractors and 
subcontractors when filing the existing EEO-1 Report. In addition, 
contractors would have to: Meet the Equal Pay Report thresholds on the 
number of employees, and (1) have a contract, subcontract, or purchase 
order amounting to $50,000 or more that covers a period of at least 30 
days, including modifications; or (2) serve as a depository of 
Government funds in any amount; or (3) be a financial institution that 
is an issuing or paying agency of the U.S. savings bonds and savings 
notes. The reporting requirement would include construction 
subcontractors below the first tier that perform work at the 
construction site if they meet the requirements of criteria specified 
in proposed Sec.  60-1.7(a)(1).
    Federal contractors and subcontractors would be required to submit 
summary data by sex, race, ethnicity, job categories, and other 
relevant data points such as hours worked. In order to file the 
proposed report, OFCCP would provide a secure, easy-to-use, flexible 
web-based interface that permits them to either directly key in data or 
upload the data using a variety of standard formats. OFCCP proposes to 
provide detailed instructions on the completion and submission of the 
proposed Equal Pay Report. The NPRM contemplates that OFCCP would also 
provide a formatted XML template that could be downloaded and used to 
help automate the limited calculations necessary to file the reports 
from a spreadsheet of the contractor's current employee data exported 
from its HRIS and/or payroll system. Common payroll software packages 
and services could be programmed and/or integrated, as necessary, to 
generate this report for uploading. For contractors and subcontractors 
that may be unable to submit the report electronically, OFCCP proposes 
providing a hardship exemption that would allow for an alternate filing 
method for the report. The hardship request must be submitted, in 
writing, to the Director of OFCCP. The new requirements are limited to 
Sec.  60-1.7. The NPRM proposes amending Sec.  60-1.7(b) to mandate 
that contractors and subcontractors required to submit the EEO-1 Report 
provide data on employee compensation using the Equal Pay Report. In 
addition, OFCCP is considering covering postsecondary academic 
institutions that file the IPEDS report with the Department of 
Education and is seeking comment on that addition to the reporting 
requirement. More specifically, existing Sec.  60-1.7(b) provisions on 
certification requirements for bidders would be placed in a new 
subsection, Sec.  60-1.7(d).
    Proposed Sec.  60-1.7(b)(1) describes the requirements of the new 
report. The Equal Pay Report, promulgated by OFCCP, requires 
contractors and subcontractors to provide summary data on the 
compensation paid to employees by sex, race, ethnicity, specified job 
categories, and other relevant data points such as hours worked, and 
the number of employees. Contractors must submit the Equal Pay Report 
in the format and manner required by OFCCP.
    As noted above, contractors would also be asked to submit hours 
worked. OFCCP proposes using the well-established EEO-1 job categories, 
with consideration of alternatives for postsecondary academic 
institutions. Based on the experience of the Joint Reporting Committee 
with electronic filing of the EEO-1 Report, OFCCP believes that 99 
percent of its contractor and subcontractor establishments or 66,929 
will complete the proposed form online and 1 percent or 676 will 
complete the proposed form manually. To complete the proposed report 
contractor establishments will need to identify, collect, summarize, 
and analyze demographic information and compensation data from their 
HRIS and payroll system.\118\ OFCCP estimates contractor and 
subcontractor establishments with automated systems will take 6 hours 
to generate the report data using their IT and/or HRIS systems, conduct 
the analysis, review the analysis, complete the online report form, 
review the report, submit it to OFCCP online, and save a copy of the 
report. Thus, OFCCP estimates that the burden for completing the 
proposed form online will be 401,574 hours (66,929 contractor 
establishments x 6 hours = 401,574).
---------------------------------------------------------------------------

    \118\ OFCCP accounts for contractor system changes under its 
discussion of Initial Capital and Start-up Costs below.
---------------------------------------------------------------------------

    Contractors and subcontractors that do not complete the proposed 
form online will gather the same information, conduct the same analyses 
and then manually complete the proposed report. OFCCP estimates it will 
take these establishments 8 hours on average to complete these tasks, 
including saving a copy of the report. OFCCP estimates that the burden 
for those establishments will be 5,408 hours (676 contractor 
establishments x 8 hours = 5,408 hours). OFCCP seeks public comments on 
the accuracy of its estimates of the amount of time contractors would 
spend completing and submitting the Equal Pay Report (estimates of 
initial capital costs from modifying computer systems are provided 
below).
    OFCCP estimates that the combined burden hours for completing the 
proposed report are 406,982 hours (401,574 hours + 5,408 hours = 
406,982 hours). The cost for this provision is approximately 
$12,643,913 ((401,574 hours x 0.25 x $51.58) + (401,574 hours x 0.75 x 
$24.23) + (5,408 x 0.25 x $51.58) + (5,408 x 0.75 x $24.23)) or $187 
per establishment ($12,643,913/67,605 contractor establishments).
    Proposed Sec.  60-1.7(b)(2) identifies who must file an Equal Pay 
Report. Proposed Sec.  60-1.7(b)(2) states that contractors who must 
file the EEO-1 must also file the proposed OFCCP report. Should OFCCP 
determine that postsecondary academic institutions are to be covered by 
the new requirement they would be incorporated into proposed Sec.  60-
1.7(b)(2). Therefore, there is no new burden for this provision.
    Proposed Sec.  60-1.7(b)(3) describes the procedures established 
for complying with the requirement to report on summary compensation 
data. The

[[Page 46587]]

NPRM does not propose specifying a particular deadline for filing the 
proposed report; proposed Sec.  60-1.7(b)(3)(i) specifically states 
that the report must be filed by the date specified in the report. 
OFCCP is proposing a filing window of between January 1 and March 31 in 
an accompanying ICR. The proposed rule would require contractors and 
subcontractors to file the reports electronically. Proposed Sec.  60-
1.7(b)(3)(ii) provides that contractors must submit the Equal Pay 
Report electronically through OFCCP's web-based filing system by the 
specified filing deadline, unless a hardship exemption has been granted 
under subparagraph (3)(iii). Proposed Sec.  60-1.7(b)(3)(iii) provides 
that the Director of OFCCP may grant a hardship exemption from the 
electronic filing requirement where he or she concludes that electronic 
filing would impose an undue hardship on the contractor. Proposed Sec.  
60-1.7(b)(3)(iii) also requires contractors and subcontractors to 
submit a written request for a hardship exemption and indicates that 
the eligibility criteria and application procedures will be available 
on the OFCCP Web site. OFCCP estimates that 1 percent of contractor 
establishments or 676 contractor establishments will request a hardship 
exemption to the electronic filing requirement. OFCCP estimates it will 
take a contractor establishment 30 minutes to prepare, write, and send 
the exemption request. Therefore, OFCCP estimates the burden of this 
provision to be 338 hours (676 contractor establishments x 0.5 hours = 
338 hours). The cost for this provision is approximately $10,501 ((338 
hours x 0.25 x $51.58) + (338 hours x 0.75 x $24,23)) or about $0.16 
per establishment.\119\ OFCCP requests comments on its estimate of the 
cost for preparing and submitting exemption requests.
---------------------------------------------------------------------------

    \119\ $0.16 = ($10,501/67,605)
---------------------------------------------------------------------------

    Proposed Sec.  60-1.7(b)(4) would apply existing agency procedures 
on confidentiality of records and information to the Equal Pay Report. 
It also provides OFCCP the ability to publish aggregate compensation 
data, such as pay ranges or averages, by industry, labor market or 
other groupings, obtained because the submission of Equal Pay Reports. 
This provision does not create any new burden because it is an existing 
provision.
    Proposed Sec.  60-1.7(e) would apply sanctions under existing Sec.  
60-1.7(a)(4) to the failure to file a complete and accurate Equal Pay 
Report or representation, and makes minor changes for clarity and 
readability. As this is an existing requirement, there is no new burden 
for this provision.
    Proposed Sec.  60-1.7(d) would require Federal contractors and 
subcontractors, that are bidders or prospective prime contractors on a 
new contract or subcontract, to make two representations: (1) Make a 
representation or provide a written statement that they are currently a 
contractor or subcontractor; and (2) make a representation that the 
contractor or subcontractor submitted the required Equal Pay Report for 
the prior reporting period. OFCCP recognizes that bidders and 
prospective prime contractors register and make their representations 
and certifications in the General Services Administration's System for 
Award Management (SAM). Thus, the representation will be an additional 
check box added into the SAM system. OFCCP has included this burden in 
its discussion of initial capital and start-up costs, below.
    Proposed 1.7(c) would require contractor establishments that file 
the proposed Equal Pay Report to maintain their records. For example, 
contractors would maintain compensation data, hours worked, and 
demographic information in accordance with OFCCP's current 
recordkeeping provisions at 41 CFR 60-1.12. Section 60-1.12(a) requires 
contractors to preserve any personnel or employment record made or kept 
for a period of not less than two years. However, if the contractor has 
fewer than 150 employees or does not have a contract of at least 
$150,000, this retention period is one year. Maintaining records is an 
existing obligation under OFCCP regulations. Any additional burden 
associated with preserving copies of the Equal Pay Report is included 
as stated above.

                                  Table 2--Contractor Proposed New Requirements
----------------------------------------------------------------------------------------------------------------
              Estimated one-time burden
----------------------------------------------------------------------------------------------------------------
                       Section                                       0Burden hours              0Estimated costs
----------------------------------------------------------------------------------------------------------------
Regulatory Familiarization..........................                        67,605                    $3,487,066
60-1.7(b)(1) (modify IT system(s) for the Equal Pay                        637,530                    30,104,167
 Report)............................................
60-1.7(d) (representation of compliance with this                                0                             0
 requirement).......................................
Total One-Time Burden                                                      705,135                    33,591,233
----------------------------------------------------------------------------------------------------------------
              Estimated recurring costs
----------------------------------------------------------------------------------------------------------------
                       Section                                Burden hours                      Costs
----------------------------------------------------------------------------------------------------------------
60-1.7(b)(1) (complete compensation report).........                       406,982                   $12,643,913
60-1.7(b)(2) (who must file)........................                             0                             0
60-1.7(b)(3)(i) (when to file)......................                             0                             0
60-1.7(b)(3)(ii) (electronic filing)................                             0                             0
60-1.7(b)(3)(iii) (electronic exemption)............                           338                        10,501
60-1.7(b)(4) (publication of aggregate compensation                              0                             0
 data)..............................................
60-1.7(e) (sanctions)...............................                             0                             0
60-1.7(d) (representation of filing)................                             0                             0
60-1.7(d)(2) (recordkeeping requirement)............                             0                             0
Operations and Maintenance..........................                             0                         4,542
                                                     -----------------------------------------------------------
    Total Recurring Burden..........................                       407,320                    12,654,414
                                                     -----------------------------------------------------------
    Total Cost of the Proposed Rule.................                     1,112,455                    46,250,189
----------------------------------------------------------------------------------------------------------------


[[Page 46588]]

    Note that the burden estimates for modifying IT systems is at the 
high end of the start-up cost range. The possible range for start-up 
cost is a low of $29,802,431 (assuming that 99 percent of companies 
make IT system changes) and an estimated high of $30,104,167 (assuming 
that 100 percent (or 21,251) of companies make system changes.

Initial Capital or Start-up Costs

Section 60-1.7(b)(1) Equal Pay Report

    In order to estimate the start-up costs for the proposed Equal Pay 
Report, OFCCP considered what contractors would be required to do in 
order to extract required data from existing HRIS and payroll systems. 
Because contractors and subcontractors must already maintain 
information on their employees by race, ethnicity, sex and EEO-1 job 
category, and must already have a system to assign employees and jobs 
to these categories and record it; it is unnecessary to modify the 
existing databases to capture new information for this report. However, 
contractors may keep that demographic information in a database 
different from the one used to record payroll (W-2) and hours worked 
information, and may need to develop standard queries and reporting 
formats to extract and merge the data each year for the Equal Pay 
Report. In addition, contractors and subcontractors may need to write 
additional code or undertake other programming to summarize the data 
for entry into the proposed Equal Pay Report.
    The minimum cost for modifying HRIS and payroll systems is based on 
the estimate that 99 percent of contractors utilize some type of 
electronic system. Based on information from IT professionals, OFCCP 
estimates it would take contractors on average 30 hours for an IT 
professional to write code, develop the queries, create a standard 
report that matches the employee demographic and job information to 
their W-2 earnings and hours worked, and summarize and enter the data 
totals for each job group/demographic combination in the proposed 
report. This includes time reviewing the rule itself and the forms and 
instructions, developing the requested change or work order, 
establishing a development schedule, confirming the scope and 
specifications of the work to be completed, working on specific system 
changes, testing the changes, resolving problems, conducting quality 
assurance, and implementing the final changes. The estimated costs for 
these modifications are based on the BLS data in the publication, 
``Employer Costs for Employee Compensation'' (December 2013), which 
lists total compensation for professional and related occupations at a 
rate of $47.22 per hour. Therefore, the minimum capital and start-up 
costs estimated for Federal contractor companies is 631,140 hours 
(21,038 contractor companies x 30 hours = 631,140). We calculate the 
total minimum estimated start-up costs as $29,802,431 (631,140 x $47.22 
per hour = $29,802,431). This represents an estimated cost of $1,417 
per company ($29,802,431 start-up cost/21.038 contractor companies = 
$1,417). OFCCP seeks public comments on the accuracy of its estimate of 
the average cost of modifying HRIS and payroll systems in response to 
this proposed rule.
    Assuming all contractor companies utilize HRIS and payroll systems 
and that they all have to make similar system changes, the estimated 
burden for modifying these systems is 637,530 (21,251 contractor 
companies x 30 hours = 637,530). We calculate the total costs as 
$30,104,167 (637,530 hours x $47.22 per hour = $30,104,167) or $1,417 
per contractor company ($30,104,167/21,251 contractor companies). 
Assuming that all contractor companies utilize electronic HRIS and 
payroll systems may be an overestimation of costs because there may be 
some contractor companies that do not have electronic systems.

Section 60-1.7(d)(1)(iv) Requirements for Bidders or Prospective Prime 
Contractors

    The General Services Administration maintains SAM, which 
consolidated eight Federal procurement systems and the catalog of 
Federal domestic assistance into one database. Companies that want to 
do business with the Federal government are required to register in 
SAM, and bidders including prime contractors are required to make 
representations regarding their compliance with a variety of 
requirements including OFCCP's current requirements. Contractors 
complete this representation process by responding to four questions. 
The contractor has only to check or mark the response in the 
appropriate check box. Thus, to comply with the proposed requirements, 
bidders and prospective prime contractors will check one additional box 
when registering and make their representation in SAM. OFCCP believes 
that there is no significant burden associated with responding to one 
additional question in the SAM registration process. Thus, OFCCP 
estimates that there is no additional burden associated with this 
representation.
    Though OFCCP seeks comments on all aspects of its calculation of 
burden and costs, the agency specifically seeks comments on the burden 
associated with the representation process Sec.  60-1.7(d)(1)(v), 
including matters related to the use of the SAM system.

            Table 3--Total Initial Capital or Start-up Costs
------------------------------------------------------------------------
                         Section                               Costs
------------------------------------------------------------------------
60-1.7(b)(1) (Equal Pay Report).........................     $30,104,167
60-1.7(d)(1)(v) Bidders or Prospective Contractors                     0
 Representation.........................................
                                                         ---------------
Total...................................................     $30,104,167
------------------------------------------------------------------------

    Note that the start-up cost estimate of $30,104,167 is at the high 
end of the start-up cost range. The possible range for start-up cost is 
a low of $29,802,431 (assuming that 99 percent of companies make IT 
system changes) and an estimated high of $30,104,167 (assuming that 100 
percent (or 21,251) of companies make system changes).

Operations and Maintenance Costs

Section 60-1.7(b)(1) Equal Pay Report

    OFCCP estimates that contractors will incur some operations and 
maintenance costs in addition to the initial capital or start-up costs 
calculated above. The contractor must annually report to OFCCP summary 
data on the compensation paid to employees by sex, race, and ethnicity 
within specified job categories using a web-based online filing system. 
OFCCP estimates that 67,605 contractor establishments will respond 
annually and 99 percent of them will do so electronically. Contractors 
using the web-based filing system will not incur copying and mailing 
costs. However, to account for the estimated 1 percent of contractors 
filing without using the web-based filing system for some reason (i.e. 
no access, compatibility, etc.), OFCCP is estimating their printing, 
copying and mailing costs. The estimated cost for printing and copying 
would be $216 (676 contractor establishments x 4 pages x $0.08 per page 
= $216). OFCCP estimates that the contractor will submit the report by 
registered mail and further estimates the cost to be $3,887 (676 
contractor establishments x $5.75 = $3,887). The total estimated 
operations and maintenance cost for the Equal Pay Report is $4,103.

[[Page 46589]]

Section 60-1.7(b)(3)(iii) Hardship Exemption

    OFCCP recognizes that some contractor establishments do not have 
automated HRIS or payroll systems or may have systems that would be 
incompatible with OFCCP's web-based online filing system. Contractors 
facing this challenge must annually request from OFCCP a hardship 
exemption to the electronic filing requirement. The request for 
exemption would be a one-page letter to the Director, OFCCP 
acknowledging the obligation to submit the report, explaining why the 
report cannot be submitted electronically and requesting exemption for 
that year's filing. OFCCP estimates that 1 percent of its contractor 
establishment universe or 676 contractor establishments will request a 
hardship exemption to the electronic filing requirement. Therefore, 
OFCCP estimates that the cost for printing and copying the one page 
letter would be $108 (676 contractor establishments x 2 pages x $0.08 = 
$108). In addition, OFCCP estimates the mailing cost would be $331 (676 
contractor establishments x 1 letter x $0.49 per letter = $331). The 
total estimated operations and maintenance cost for the hardship 
exemption would be $439 ($108 + 331).

60-1.7(d)(1)(v) Bidders or Prospective Contractors Certifications and 
Representations

    The expectation is that bidders and prospective prime contractors 
will include in their bid proposals the modified language indicating 
whether the bidder or prospective prime contractor filed the proposed 
Equal Pay Report for the most recent reporting period. This provision 
is a small part of a larger bid proposal sent to contracting agencies. 
Therefore, OFCCP does not assume any of the printing, copying or 
mailing costs associated with this provision.

             Table 4--Total Operations and Maintenance Costs
------------------------------------------------------------------------
                         Section                               Costs
------------------------------------------------------------------------
60-1.7(b)(1) Equal Pay Report (copying and mailing).....          $4,103
60-1.7(b)(3)(iii) Hardship Exemption (copying and                    439
 mailing)...............................................
60-1.7(d)(1)(v) Bidders or Prospective Prime Contractors               0
 Representation.........................................
                                                         ---------------
    Total...............................................           4,542
------------------------------------------------------------------------

Cost Estimates for Government

    OFCCP estimates that implementing the proposed Equal Pay Report 
will increase the costs related to staffing and improving current case 
management and information systems. In terms of staffing, OFCCP 
anticipates hiring four full-time positions at its national office. 
These staff members will be involved in providing technical assistance 
to contractors completing the forms, managing the content of the online 
portal, reviewing exemption requests, and analyzing data. OFCCP 
estimates the staffing costs to be $359,696.\120\
---------------------------------------------------------------------------

    \120\ OFCCP anticipates filing these positions in its 
headquarters office at the GS-13 salary level. This salary estimate 
is based on the Office of Personnel Management's salary range for a 
GS-13, Step 1 position located in the Washington-Baltimore-Northern 
Virginia area in 2014; the estimate includes locality pay.
---------------------------------------------------------------------------

    Additionally, as a part of an ongoing effort by DOL to enhance 
services provided to Federal contractors, OFCCP anticipates that it 
will be upgrading its existing IT system, including its case management 
system and support for the Web-based features for the online submission 
of the Equal Pay Report. OFCCP anticipates that these upgrades will 
cost $3.4 million. Therefore, OFCCP estimates the cost to the Federal 
Government to be $3.8 million.

------------------------------------------------------------------------
                          Item                            Estimated cost
------------------------------------------------------------------------
Additional Staffing.....................................        $359,696
Updating Information Systems............................       3,400,000
                                                         ---------------
    Total...............................................       3,759,696
------------------------------------------------------------------------

Transfer Payments to Workers Who Have Experienced Pay Discrimination

    There are two ways in which this rule could have transfer effects: 
(1) The rule allows OFCCP to find more violations and recover payments 
for the violators' employees, and (2) contractors voluntarily increase 
transfers to certain employees, potentially to reduce their probability 
of being subject to a compliance evaluation or enforcement action by 
OFCCP. This includes, for example, changes in behavior during 
compliance monitoring that may be put into place as a part of the 
remedy for violations found through enforcement actions.
    In order to develop an estimate of transfers that may result from 
this proposed rule, OFCCP notes that approximately 4,000 Federal 
contractor establishments, of a total of 500,000 (or 1 in 125 
establishments) are audited each year. OFCCP anticipates that it will 
conduct approximately the same number of audits under this rule as it 
has in the past. In 2013, OFCCP recovered approximately $1.2 million 
for 965 workers. Estimating the amount of rule-induced future 
recoveries using only the 2013 data is problematic for several reasons. 
First, these calculations would be based on only one year's set of data 
and, as such, appear unreliable for establishing future projections. 
Also, collecting sufficient historical data could be challenging 
because monetary recoveries were not always calculated and reported 
using the same methodology. To address this challenge, the agency is 
refining and standardizing its data collection and reporting, including 
information on recoveries. Second, the recovery number is based on 
compliance evaluations conducted using a scheduling process that did 
not include prioritization to increase the likelihood of identifying 
violators and violations. This process was neither highly effective nor 
efficient. The use of the Equal Pay Report to set objective industry 
standards against which contractors' pay practices can be compared to 
determine the likelihood that a violation exists may increase monetary 
recoveries. However, these recoveries could be reduced, in part, by the 
potential for contractors to voluntarily increase the amount of 
transfers to certain employees. It could be further off-set by 
contractors who cease discriminatory practices as a part of 
participating in compliance monitoring or other activities related to 
remedying violations found during an OFCCP enforcement action.
    OFCCP does not currently have sufficient information to reliably 
estimate the potential transfer payments from this rule, and requests 
public comment on data and methods to do so. Rule-induced transfers 
from OFCCP enforcement actions or voluntary actions by contractors most 
likely represent a transfer of value to underpaid employees from 
employers (e.g., if additional wages are paid out of profits) or 
taxpayers (if contractor fees increase due to the need to pay higher 
wages to employees) or other employees.

Analysis of Rulemaking Alternatives

    OFCCP considered a range of regulatory alternatives that would 
better enable the agency to encourage greater voluntary compliance and 
effectively enforce its laws prohibiting compensation discrimination. 
In addition to the approach proposed in the NPRM, OFCCP considered two 
alternative approaches. First, OFCCP considered requiring contractors 
to submit individual compensation data for each employee and factors 
that

[[Page 46590]]

explain compensation for each employee. Second, OFCCP considered 
relying solely on the current regulations with no changes. Each of 
these alternatives is discussed in further detail below. OFCCP seeks 
comments from stakeholders on the analysis of the proposal in the NPRM, 
as well as each alternative and variation, including OFCCP's assessment 
of the cost and benefits.

Alternative 1--Collecting Individual Compensation Data

    OFCCP also considered collecting individual compensation data. 
Collecting individual compensation data would provide clearer 
information about potentially discriminatory compensation practices, 
both systemic and individualized. This would lead to a better-informed 
assessment of contractors' compliance with Executive Order 11246.
    OFCCP ultimately determined that it would be burdensome and costly 
to require contractors to submit individual compensation data. 
Selecting aggregate data would permit easy analysis of comparability 
data across contractors. It would also allow OFCCP to devote the time 
to conduct a more detailed analysis where it is more likely to matter. 
Collecting aggregate data would also avoid many potential privacy or 
other concerns about protecting confidential employee salary data.

Alternative 2--Prioritization Models Relying Solely on Existing 
Compliance Evaluation Data

    OFCCP also considered the alternative of developing a database for 
scheduling based on the individual compensation data the agency has 
collected from a number of Federal contractors over the last several 
years during regular compliance evaluations. When the agency schedules 
contractors for review, it requests preliminary summary data on 
compensation, in the form of average pay by sex and race within case-
specific groupings determined by the contractor. Based on the initial 
analysis of this summary data, OFCCP can then request individual data 
showing the compensation paid to each worker, their demographics, and 
data on factors such as tenure or performance ratings.
    The benefits of this approach are reduced burden and potential 
additional precision in assessing the reasons for contractor 
disparities. Because the alternative relies on existing data, it 
imposes no new data collection burden. Further, these individual data 
files are more comprehensive than the summary data in the Equal Pay 
Report, because they include individual pay records and factors. This 
would allow the agency to conduct more statistical tests and perform a 
more nuanced assessment of potential explanations for pay disparities. 
The agency could attempt to use this information, along with violation 
history, to determine what a ``profile'' of a potential violator looks 
like. OFCCP would then attempt to prioritize similar firms for a 
compliance evaluation.
    However, there are a host of both practical and technical problems 
with this alternative. In the first place, once OFCCP determined the 
size and type of pay differences that may be linked to a potential 
violation, it would have to use data other than compensation to build 
the ``profile.'' Because there is no existing source of data on 
compensation by demographics for specific contractors, OFCCP could not 
select contractors with similar pay practices for review. Instead, the 
agency would have to use indirect markers such as industry, employer 
size, or basic EEO-1 demographics to make selections. This increases 
the likelihood of selecting contractors whose pay practices are 
actually in compliance.
    Further, the agency requests individual data on a subset of the 
approximately 4,000 cases it schedules for review each year; these data 
are not necessarily representative of all contractors. This means the 
profile would be based on a highly limited and potentially biased 
sample of contractor pay data. The number of available records may vary 
widely by industry, geographic location, employer size or type of job. 
This means OFCCP could not use these data to develop comprehensive and 
objective measures of the contractor pay gap by industry.
    Finally, this approach is not consistent with the Presidential 
Memorandum. The Memorandum directs the agency to collect new summary 
data that would increase the efficiency and effectiveness of its 
enforcement and support voluntary compliance. Using existing data is 
not a new data collection, it is less likely than the Equal Pay Report 
to improve the agency's ability to focus on potential violators, and it 
would not allow OFCCP to calculate the objective industry measures to 
support deterrence and voluntary compliance.
    Moreover, OFCCP believes the current regulations have negative 
effects as well. For example, the current regulations do not provide 
OFCCP a systematic means for evaluating contractors with the greatest 
potential to be violating anti-pay discrimination laws. Therefore, 
under the current regulations, OFCCP is as likely to conduct compliance 
evaluations of contractors with no leading indicators showing potential 
for violating anti-pay discrimination laws as it is of contractors 
whose summary compensation data show a greater potential for violating 
such laws. The current regulations, therefore, impose compliance review 
costs on compliant contractors and subcontractors.

Regulatory Flexibility Act/Initial Regulatory Flexibility Analysis

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq., 
establishes ``as a principle of regulatory issuance that agencies shall 
endeavor, consistent with the objectives of the rule and applicable 
statutes, to fit regulatory and informational requirements to the scale 
of the business organizations and governmental jurisdictions subject to 
regulation.'' Public Law 96-354. To achieve that principle, the Act 
requires agencies promulgating proposed rules to prepare an initial 
regulatory flexibility analysis (IRFA) and to develop alternatives 
whenever possible, when drafting regulations that will have a 
significant impact on a substantial number of small entities. The Act 
requires the consideration for the impact of a proposed regulation on a 
wide-range of small entities including small businesses, not-for-profit 
organizations, and small governmental jurisdictions.
    Agencies must perform a review to determine whether a proposal or 
final rule would have a significant economic impact on a substantial 
number of small entities.\121\ If the determination is that it would, 
then the agency must prepare a regulatory flexibility analysis as 
described in the RFA.\122\
---------------------------------------------------------------------------

    \121\ See 5 U.S.C. 603.
    \122\ Id.
---------------------------------------------------------------------------

    However if an agency determines that a proposed or final rule is 
not expected to have a significant economic impact on a substantial 
number of small entities, section 605(b) of the RFA provides that the 
head of the agency may so certify and a regulatory flexibility analysis 
is not required. See 5 U.S.C. 605. The certification must include a 
clear statement providing the factual basis and reasoning for this 
determination.
    OFCCP designed its initial regulatory flexibility analysis to aid 
stakeholders in understanding the small entity impacts of the proposed 
rule and to obtain additional information on the small entity impacts. 
OFCCP seeks comments on the following estimates, including the number 
of small entities affected by the NPRM, the compliance cost estimates, 
and whether alternatives exist

[[Page 46591]]

that will reduce burden on small entities while still remaining 
consistent with the objective of the Presidential Memorandum.

Why OFCCP Is Considering Action

    OFCCP is publishing this proposed regulation to implement the 
requirements of the April 8, 2014 Presidential Memorandum, ``Advancing 
Pay Equality Through Compensation Data Collection.'' The Presidential 
Memorandum directs the Secretary of Labor to develop a rule that 
requires Federal contractors and subcontractors to submit summary data 
on the compensation paid to employees.

Objectives of and Legal Basis for Rule

    This proposed rule will provide guidance on the type of data 
covered Federal contractors and subcontractors are required to provide 
and specific information on providing the data. As discussed in the 
preamble, Section 202 of Executive Order 11246 requires Federal 
contractors to agree to comply with all provisions of the Executive 
Order and the rules, regulations, and relevant orders of the Secretary 
of Labor. Section 203 of Executive Order 11246 grants the Secretary of 
Labor broad authority to require compliance reports from contractors 
and subcontractors.

Compliance Requirements of the Proposed Rule, Including Reporting and 
Recordkeeping

    As explained in this proposed rule, the purpose of this NPRM is to 
amend the regulations implementing Executive Order 11246 to add a 
requirement that Federal contractors and subcontractors report annually 
summary information on the compensation paid to employees by sex, race, 
ethnicity, and specified job categories. The requirements in Executive 
Order 11246 generally apply to any business or organization that (1) 
holds a single Federal contract, subcontract, or Federally assisted 
construction contract in excess of $10,000; (2) has Federal contracts 
or subcontracts that have a combined total in excess of $10,000 in any 
12-month period; or (3) holds Government bills of lading, serves as a 
depository of Federal funds, or is an issuing and paying agency for 
U.S. savings bonds and notes in any amount.
    This NPRM contains provisions that if adopted could impose 
compliance requirements on contractors. The general requirements with 
which contractors must comply are set forth in 41 CFR 60-1.7. Annually, 
covered Federal contractors must electronically submit an Equal Pay 
Report to OFCCP. Contractors who are unable to submit the report 
electronically may ask for an exemption in order to submit the report 
in another approved format. OFCCP's proposed new requirements cover 
prime contractors and first tier subcontractors that are required to 
file an EEO-1 Report, have more than 100 employees, and a contract, 
subcontract, or purchase order amounting to $50,000 or more. Such 
compliance requirements are fully described above in other portions of 
this preamble. The following section analyzes the cost of complying 
with this NPRM.

Calculating Impact of the Proposed Rule on Small Business Firms

    OFCCP must determine the compliance cost of this proposed rule on 
small contractor firms, and whether these costs will be significant for 
a substantial number of small contractor firms (i.e., small business 
firms that enter into contracts with the Federal Government), and 
whether these costs will be significant for a substantial number of 
small contractor firms. If the estimated compliance costs for affected 
small contractor firms are less than three percent of small contractor 
firms' revenues, OFCCP considers it appropriate to conclude that this 
proposed rule will not have a significant economic impact on the small 
contractor firms. OFCCP has chosen three percent as its significance 
criterion. However, using this benchmark as an indicator of significant 
impact may overstate the impact of this proposed rule because the costs 
associated with efficient enforcement of the prohibitions against 
compensation discrimination are expected to be mitigated by societal 
benefits. These benefits include supporting working women and 
strengthening working families but are difficult to quantify; the 
benefits are discussed more fully in the preamble of this NPRM.
    The data sources used in the analysis of small business impact are 
the Small Business Administration's (SBA) Table of Small Business Size 
Standards \123\ and the U.S. Census Bureau's Statistics of U.S. 
Businesses (SUSB).\124\ Since Federal contractors are not limited to 
specific industries, OFCCP assessed the impact of this NPRM across 19 
NAICS codes.\125\ Because data limitations do not allow OFCCP to 
determine which of the Federal contractors within these industries are 
small firms, OFCCP assumes that these small firms are not significantly 
different from the small Federal contractors that they will be directly 
affected by the proposed rule.
---------------------------------------------------------------------------

    \123\ United States Small Business Administration, Firm Size 
Data, http://www.sba.gov/advocacy/849/12162#susb, (last accessed 
June 9, 2014).
    \124\ United States Census Bureau, Latest SUSB Annual Data, 
http://www.census.gov/econ/susb/ (last accessed June 9, 2014).
    \125\ Agriculture, Forestry, Fishing, and Hunting Industry 
(North American Industry Classification System (NAICS) 11, Mining 
NAICS 21, Utilities NAICS 22, Construction NAICS 23, Manufacturing, 
NAICS 31-33, Wholesale Trade NAICS 42, Retail Trade NAICS 44-45, 
Transportation and Warehousing NAICS 48-49, Information NAICS 51, 
Finance and Insurance NAICS 52, Real Estate and Rental and Leasing 
NAICS 53, Professional, Scientific, and Technical Services NAICS 54, 
Management of Companies and Enterprises NAICS 55, Administrative and 
Support and Waste Management and Remediation Services NAICS 56, 
Educational Services NAICS 61, Healthcare and Social Assistance 
NAICS 62, Arts, Entertainment, and Recreation NAICS 71, 
Accommodation and Food Services NAICS 72, Other Services NAICS 81.
---------------------------------------------------------------------------

    OFCCP used the following steps to estimate the cost of the proposed 
rule per small contractor firm as measured by a percentage of the total 
annual receipts. First, OFCCP used Census SUSB data that disaggregates 
industry information by firm size in order to perform a robust analysis 
of the impact on small contractor firms. OFCCP applied the SBA small 
business size standards to the SUSB data to determine the number of 
small firms in the affected industries. Then OFCCP used receipts data 
from the SUSB to calculate the cost per firm as a percent of total 
receipts by dividing the estimated annual cost per firm by the average 
annual receipts per firm. OFCCP applies this methodology to each of the 
industries and displays the results in the summary tables below (see 
Tables 5-23).
    In the NAICS industry groupings of mining (NAICS code 21), 
utilities (NAICS code 22), Manufacturing (NAICS codes 31-33), and 
Wholesale Trade (NAICS code 42), the increase in the cost of compliance 
resulting from the NPRM is de minimis relative to revenue at small 
contractor firms in these industries no matter their size. All of these 
industries had an annual cost per firm as a percent of receipts of 3.0 
percent or less. For instance, the manufacturing industry cost is 
estimated to range from 0.0 percent for firms that have average annual 
receipts of approximately $985 million to 0.54 percent for firms that 
have average annual receipts of under $403,338. In the NAICS industry 
groupings of Agriculture, Forestry, Fishing, and Hunting Industry 
(NAICS code 11), Construction (NAICS code 23), Retail Trade (NAICS 
codes 44-45), Transportation and Warehousing (NAICS codes 48-49), 
Information (NAICS code 51), Finance and Insurance (NAICS code 52), 
Real Estate and Rental and Leasing (NAICS code 53),

[[Page 46592]]

Professional, Scientific, and Technical Services (NAICS code 54), 
Management of Companies and Enterprises (NAICS code 55), Administrative 
and Support and Waste Management and Remediation Services (NAICS code 
56), Educational Services (NAICS code 61), Healthcare and Social 
Assistance (NAICS code 62), Arts, Entertainment, and Recreation (NAICS 
code 71), Accommodation and Food Services (NAICS code 72), and Other 
Services(NAICS code 81) the increase in the cost of compliance 
resulting from the NPRM is de minimis in all but the smallest of size 
categories when compared to the average annual revenue. Examining the 
areas where the impact of cost is above 3 percent, OFCCP determined 
that those contractor companies or firms do not meet the requirement 
for filing EEO-1 reports because on average these small firms do not 
have 50 or more employees. For example, OFCCP estimates the industry 
cost for the arts, entertainment, and recreation industry at 4.6 
percent for firms that have average annual receipts of $47,301. Looking 
at the data, these same small firms have an average of 1.6 employees. 
Thus, these firms would not be subject to the requirements of 41 CFR 
60-1.7(a) to file an EEO-1 Report because they do not have 50 or more 
employees. Based on OFCCP's analysis,, those firms that are impacted 
are not among those expected to submit the Equal Pay Report because 
they do not meet the threshold requirement for completing an EEO-1 
Report. This is so even though the increase in the cost of compliance 
resulting from this NPRM appears to have an impact on the smallest of 
firms in 15 of the 19 NAICS industry groups. OFCCP seeks data and 
feedback from small firms on the factors and assumptions used in this 
analysis, such as the data sources, small business industries, NAICS 
codes and size standards, and the annual costs per firm as a percent of 
receipts. OFCCP seeks information on which data sources it could use to 
estimate the number of small Federal subcontractors. OFCCP also seeks 
information about the potential compliance cost estimates, such as any 
differences in compliance costs for small businesses as compared to 
larger businesses and any compliance costs that may not have been 
included in this analysis.

Estimating the Number of Small Businesses Affected by the Rulemaking

    OFCCP now sets forth its estimate of the number of small contractor 
firms actually affected by the proposed rule. OFCCP determined the 
number of small regulated entities that would be subject to this NPRM 
by using the FY 2012 EEO-1 data and the identified universe of IPEDS 
filers within OFCCP's jurisdiction. Of the 21,251 contractor firms that 
would be required to file the proposed report, OFCCP estimates that 
20,232 employ between 101 and 500 employees. Thus, OFCCP estimates that 
the number of small contractor firms affected by this regulation is 
20,232. OFCCP believes that this NPRM will not have a significant 
economic effect on a substantial number of small businesses affected. 
OFCCP invites the public to provide information related to this data 
limitation, and any data on small contractors.

Relevant Federal Rules Duplicating, Overlapping, or Conflicting With 
the Rule

    OFCCP is not aware of any relevant Federal rules that conflict with 
this NPRM.

Alternatives to the Proposed Rule

    As described above, OFCCP is requesting input on a number of 
alternatives regarding the collection and submission of the 
compensation information.

Differing Compliance and Reporting Requirements for Small Entities

    This NPRM applies to Federal contractors with more than 100 
employees, a contract, subcontract, or purchase order amounting to 
$50,000 or more that covers a period of at least 30 days, including 
modifications, and that file an EEO-1 Report. Contractor companies that 
do not have more than 100 employees are not required to comply with 
this NPRM.

Clarification, Consolidation, and Simplification of Compliance and 
Reporting Requirements for Small Entities

    OFCCP drafted this NPRM to state in a clear way the compliance 
requirements for all contractors subject to this proposed regulation. 
The recordkeeping and reporting requirements imposed by this proposed 
rule are necessary for OFCCP to determine contractor compliance with 
Executive Order 11246 in the area of compensation practices.

Use of Performance Rather Than Design Standards

    OFCCP drafted this NPRM to ensure compliance with the Equal Pay 
Report requirements by providing clear guidelines. Under the proposed 
rule, contractors may achieve compliance through a variety of means. 
OFCCP makes available a variety of resources to contractors for 
understanding their obligations and achieving compliance.

Exemption From Coverage of the Rule for Small Entities

    Small contractor companies that do not meet the threshold of more 
than 100 employees and a contract, subcontract, or purchase order 
amounting to $50,000 or more are exempt from this requirement.

Cost per Firm as a Percent of Total Receipts

    See the industry charts below.

[[Page 46593]]

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[[Page 46602]]


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BILLING CODE 4510-45-C

[[Page 46603]]

Paperwork Reduction Act

    Effective Date: 180 days from the date of publication of the final 
rule.
    Compliance Date: Affected parties do not have to comply with the 
new information collection request until the Department publishes a 
Notice in the Federal Register stating that the Office of Management 
and Budget (OMB) has approved these information collection requirements 
under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et 
seq., or until this rule otherwise takes effect, whichever is later.
    Under the PRA, no agency may conduct or sponsor, and no person is 
required to respond to, a collection of information unless the agency 
has obtained a valid OMB Control Number. OFCCP will submit the proposed 
collections of information contained in this proposed rulemaking to OMB 
for review in accordance with the PRA.
    The proposed rule would amend the existing regulation at 41 CFR 60-
1.7, which addresses reporting obligations of Federal contractors, by 
adding a requirement that contractors and subcontractors submit summary 
data on the compensation paid to employees aggregated by sex, race, 
ethnicity, job categories, and other relevant data points in the 
proposed Equal Pay Report. These other data points could include, for 
example, the number of hours worked and the number of employees. The 
proposed rule would require contractors to submit the Equal Pay Report 
electronically unless the Director granted a contractor a hardship 
exemption from the electronic filing requirement. Further, the proposed 
rule would require contractors to certify compliance with their 
reporting obligations under the regulations implementing Executive 
Order 11246 when bidding on contracts.
    The collection of information contained in the existing regulations 
implementing Executive Order 11246, with the exception of those related 
to complaint procedures, are currently approved under OMB Control No. 
1250-0003 (Recordkeeping and Reporting Requirements-Supply and Service) 
and OMB Control No. 1250-0001 (Construction Recordkeeping and 
Reporting).

Number of Respondents

    As described above, covered contractors and subcontractors with 
more than 100 employees, a contract, subcontract, or purchase order 
amounting to $50,000 or more that covers a period of at least 30 days, 
including modifications, and that are required to file an EEO-1 Report 
would also be required to submit the proposed Equal Pay Report. Thus, 
based on the 2012 EEO-1 data, OFCCP estimates that 67,605 contractor 
establishments would submit an Equal Pay Report in the first year of 
the rule's effect.

Information Collections

    OFCCP's proposed information collection request includes the burden 
hours and costs for conducting the activities outlined in proposed 
section 60-1.7(b). This information collection package will request 
approval of a standard form entitled ``Equal Pay Report.''
    Proposed section 60-1.7(b)(1) through (3)(ii) would require 
contractors to submit to OFCCP on an annual basis a report summarizing 
compensation paid to employees aggregated by gender, race, ethnicity, 
and job categories. OFCCP estimates that 99 percent of contractors will 
file the proposed report using the Web-based application and that 1 
percent will obtain a hardship exemption to file the report in another 
manner. The estimated burden hours for contractors using the Web-based 
application is 401,574 (66,929 x 6 hours = 401,574). The estimated 
burden hours for those not using the Web-based application is 5,408 
(676 x 8 hours = 5,408). The estimated total burden for this provision 
is 406,982 hours, which accounts for those contractors who use a Web-
based application to file the report and those granted a hardship 
exemption from electronic filing.
    Section 60-1.7(b)(3)(iii) proposes to require contractors that 
cannot file using the Web-based application to request a hardship 
exemption from OFCCP's Director. Contractors that request such an 
exemption must write to the Director acknowledging the responsibility, 
explaining their circumstances and requesting the exemption. OFCCP 
estimates it would take a contractor 30 minutes to prepare the request, 
including the time required to print, copy and send the document. The 
estimated total burden for this provision is 338 (676 x 0.5 hours = 
338).
    Section 60-1.7(c) requires contractors to maintain the records 
related to its submission of the proposed Equal Pay Report. OFCCP 
believes this recordkeeping requirement is within the requirements of 
section 60-1.12(a) and the burden is included in OMB Control Numbers 
1250-0001 and 1250-0003.

Summary of Costs

    OFCCP estimates the cost to contractors based on BLS data in the 
publication ``Employer Costs for Employee Compensation'' (December 
2013), which lists total compensation for management, professional, and 
related occupations as $51.58 per hour and administrative support as 
$24.23 per hour. OFCCP estimates that 25 percent of the burden will be 
management, professional, and related occupations and 75 percent will 
be administrative support.
    The total estimated cost for contractors to either fill out the 
proposed Equal Pay Report through the Web-based application or request 
a hardship extension and complete it using another manner, is listed in 
Table 24 below.

                  Table 24--Summary of Recurring Costs
------------------------------------------------------------------------
        Proposed requirement                Hours             Cost
------------------------------------------------------------------------
Reporting:
    Section 60-1.7(b) Equal Pay                406,982       $12,643,913
     Report.........................
    Section 60-1.7(b)(3)(iii)                      338            10,501
     Hardship Exemption Request.....
                                     -----------------------------------
        Total Reporting Burden......  ................       $12,654,414
Recordkeeping:
    Section 60-1.7..................               * 0                 0
                                     -----------------------------------
        Total Recordkeeping Burden..                 0  ................
                                     -----------------------------------
            Total Cost..............           407,320       $12,654,414
------------------------------------------------------------------------
* An existing requirement.


[[Page 46604]]

Public Comments

    The Department seeks comments on the information collection 
requirements contained in this proposed rule. Commenters may send their 
views to the Department in the same way as all other comments (e.g., 
through the www.regulations.gov Web site). While much of the 
information provided to OMB in support of the information collection 
request appears in the preamble, a copy of this Information Collection 
Request, with applicable supporting documentation--including a 
description of the likely respondents, proposed frequency of response, 
and estimated total burden may be obtained free of charge from the 
RegInfo.gov Web site at http://www.reginfo.gov/public/do/PRAViewICR?ref_nbr= [INSERTICRREFERENCENUMBER] (this link will only 
become active on the day following publication of this notice) or by 
sending a written request to the mail address shown in the ADDRESSES 
section at the beginning of this preamble. In addition to having an 
opportunity to file comments with the Department, comments about the 
paperwork implications of the proposed regulations may be addressed to 
the OMB. Comments to the OMB should be directed to: Office of 
Information and Regulatory Affairs, Attention OMB Desk Officer for the 
Office of Federal Contract Compliance, Office of Management and Budget, 
Room 10235, Washington, DC 20503; Telephone: 202-395-7316/Fax: 202-395-
6974 (these are not toll-free numbers). You can submit comments to OMB 
by email at [email protected]. The OMB will consider all 
written comments that agency receives within 30 days of publication of 
this proposed rule. As previously indicated, written comments directed 
to the Department may be submitted within 30 days of publication of 
this notice.
    The OMB and the Department are particularly interested in comments 
that:
     Evaluate whether the proposed collections of information 
are necessary for the proper performance of the functions of the 
agency, including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of IT (e.g., permitting electronic submission 
of responses).

Description of Proposed Report and Instructions

    This NPRM proposes specific changes to OFCCP's existing regulation 
at Sec.  60-1.7 that would make the benefits previously discussed 
possible. These changes include a proposed new reporting requirement 
for two categories of covered contractors and subcontractors; 
specifically, prime contractors and first tier subcontractors that are 
required to file EEO-1 Reports, and meet the jurisdictional threshold 
of having more than 100 employees and a contract, subcontract, or 
purchase order amounting to $50,000 or more that covers a period of at 
least 30 days, including modifications. This Equal Pay Report would 
annually require contractors to submit summary compensation data, by 
sex, race, ethnicity, specified job categories, as well as other 
relevant data points. These points might include items such as hours 
worked and the number of employees. The report, as currently proposed, 
would seek summary W-2 earnings data. For the report, OFCCP is 
proposing a January 1 through December 31 reporting period, and a 
report filing window of January 1 to March 31 of the following year. 
However, OFCCP does not specify the use of W-2 data and the reporting 
dates in the text of the proposed new regulation. Instead, these 
details will be in the ICR authorizing the collection and the reporting 
of data using the report. Electronic submission of the report is being 
required; however, OFCCP is proposing to create a hardship exemption 
for those who are unable to perform electronic submission. Contractors 
and subcontractors would be required to keep their Equal Pay Reports 
for a period of not less than two years from the date of the making of 
each report. They would also have to certify that they filed the report 
with OFCCP from the most recent reporting period when bidding on a 
Federal contract or subcontract. OFCCP proposes to apply sanctions in 
60-1.4(a) and (b) and 60-1.27 to a failure to file a timely, complete 
and accurate Equal Pay Report and make the appropriate certifications. 
The information provided on the report would be protected by the 
Freedom of Information Act to the maximum extent that the information 
is exempt. It is the practice of OFCCP not to release contractor data 
where (1) the contractor is still in business, and (2) the contractor 
indicates, and through the Department of Labor's review process it is 
determined, that the data are confidential and sensitive and that the 
release of data would subject the contractor to commercial harm. In the 
NPRM, OFCCP proposes creating the authority to publish aggregate 
information based on compensation data collected from the Equal Pay 
Report, such as ranges or averages by industry, labor market, or other 
groupings, but only in such a way as not to reveal any particular 
establishment's or individual employee's data. OFCCP proposes that it 
would analyze the information collected on the Equal Pay Reports and, 
along with other available data, develop industry-based standards for 
compensation differences, and prioritize contractors and subcontractors 
for evaluation whose summary data show discrepancies that indicate 
possible compensation violations.
    Reports are completed at the individual establishment level, with 
headquarters completing an individual report as well. Consolidated 
reports are not required.

Sample Format

    A copy of the sample format of the report form and the instructions 
are provided with the ICR for the purposes of public comment, however, 
the form itself will not be codified in the regulatory text, but rather 
through finalization of the process associated with the Paperwork 
Reduction Act. This three-page report seeks specific information for 
Federal contractors and subcontractors. Page one of the report requires 
the contractor and subcontractor establishment to provide identifying 
information such as location and address, EEO-1 Unit and company 
numbers, Dun & Bradstreet identifier, and NAICS code(s). Page two of 
the report is for entering compensation data for all male employees 
summarized by race, ethnicity, specified job category, and other 
relevant data points such as the hours worked, and the number of 
employees in each specified job category. Page three of the report is 
for entering the compensation data for all female employees summarized 
by race, ethnicity, specified job categories, and other relevant data 
points such as the hours worked, and the number of employees in each 
specified job category. The instructions for completing and submitting 
the report, as well as definitions, are in a separate document or 
attachment.
    These paperwork burden estimates are summarized as follows:
    Type of Review: New collection.

[[Page 46605]]

    Agency: Office of Federal Contract Compliance Programs, Department 
of Labor.
    Title: Equal Pay Report.
    OMB ICR Reference Number: 1250-AA03.
    Affected Public: Business or other for-profit; individuals.
    Estimated Number of Annual Responses: 67,605.
    Frequency of Response: Annually.
    Estimated Total Annual Burden Hours: 407,320.
    Estimated Total Initial and Other Costs: $46,250,189.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule as defined by Section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996. This rule 
will not result in an annual effect on the economy of $100 million or 
more; a major increase in costs or prices; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of the United States-based companies to 
compete with foreign-based companies in domestic and export markets.

Unfunded Mandates Reform Act of 1995

    For purposes of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532, this proposed rule does not include any Federal mandate that may 
result in excess of $100 million in expenditures by state, local, and 
tribal governments in the aggregate or by the private sector.

Executive Order 13132 (Federalism)

    OFCCP has reviewed this proposed rule in accordance with Executive 
Order 13132 regarding Federalism, and has determined that it does not 
have ``Federalism implications.'' This rule will not ``have substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''

Executive Order 13175 (Consultation and Coordination With Indian Tribal 
Governments)

    This proposed rule does not have tribal implications under 
Executive Order 13175 that requires a tribal summary impact statement. 
The proposed rule does not have substantial direct effects on one or 
more Indian tribes, on the relationship between the Federal Government 
and Indian tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.

Effects on Families

    The undersigned hereby certifies that the proposed rule would not 
adversely affect the well-being of families, as discussed under section 
654 of the Treasury and General Government Appropriations Act, 1999.

Executive Order 13045 (Protection of Children)

    This proposed rule would have no environmental health risk or 
safety risk that may disproportionately affect children.

Environmental Impact Assessment

    A review of this proposed rule in accordance with the requirements 
of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 
et seq.; the regulations of the Council on Environmental Quality, 40 
CFR 1500 et seq.; and DOL NEPA procedures, 29 CFR part 11, indicates 
the proposed rule would not have a significant impact on the quality of 
the human environment. There is, thus, no corresponding environmental 
assessment or an environmental impact statement.

Executive Order 13211 (Energy Supply)

    This proposed rule is not subject to Executive Order 13211. It will 
not have a significant adverse effect on the supply, distribution, or 
use of energy.

Executive Order 12630 (Constitutionally Protected Property Rights)

    This proposed rule is not subject to Executive Order 12630 because 
it does not involve implementation of a policy that has takings 
implications or that could impose limitations on private property use.

Executive Order 12988 (Civil Justice Reform Analysis)

    This proposed rule was drafted and reviewed in accordance with 
Executive Order 12988 and will not unduly burden the Federal court 
system. The proposed rule was: (1) Reviewed to eliminate drafting 
errors and ambiguities; (2) written to minimize litigation; and (3) 
written to provide a clear legal standard for affected conduct and to 
promote burden reduction.

List of Subjects in 41 CFR Part 60-1

    Civil rights, Employment, Equal employment opportunity, Government 
contracts, Government procurement, Investigations, Labor, and Reporting 
and recordkeeping requirements.

Patricia A. Shiu,
Director, Office of Federal Contract Compliance Programs.

    For the reasons set forth in the preamble, OFCCP proposes to amend 
part 60-1 of Title 41 of the Code of Federal Regulations as follows:

PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS

0
1. The authority citation for part 60-1 continues to read as follows:

    Authority:  Section 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-
1965 Comp., p. 399, as amended by E.O. 11375, 32 FR 14303, 3 CFR, 
1966-1970 Comp., p. 684, E.O. 12086, 43 FR 46501, 3 CFR, 1978 Comp., 
p. 230 and E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258.

0
2. Section 60-1.7 is revised to read as follows:


Sec.  60-1.7  Reports and other required information.

    (a) EEO-1 Report. (1) Each prime contractor and subcontractor shall 
file annually, on or before September 30, complete and accurate reports 
on Standard Form 100 (EEO-1) promulgated jointly by the Office of 
Federal Contract Compliance Programs and the Equal Employment 
Opportunity Commission (EEOC), or such form as may hereafter be 
promulgated in its place, if such prime contractor or subcontractor--
    (i) Is not exempt from the provisions of these regulations in 
accordance with Sec.  60-1.5;
    (ii) Has 50 or more employees;
    (iii) Is a prime contractor or first tier subcontractor; and
    (iv) Has a contract, subcontract or purchase order amounting to 
$50,000 or more or serves as a depository of Government funds in any 
amount, or is a financial institution which is an issuing and paying 
agent for U.S. savings bonds and savings notes:
    (2) Provided, That any subcontractor below the first tier that 
performs construction work at the site of construction shall be 
required to file such a report if it meets the requirements of criteria 
specified in paragraph (a)(1) of this section.
    (3) Each contractor required under paragraph (a)(1) of this section 
to file the EEO-1 Report(s) must submit a copy of its most recently 
filed report(s) to the contracting or administering agency within 30 
days after the award of a contract, unless the contractor has submitted 
its EEO-1 Report(s) to the contracting or administering agency

[[Page 46606]]

within 12 months preceding the date of the award.
    (b) Equal Pay Report. (1) The Equal Pay Report, promulgated by 
OFCCP, requires contractors and subcontractors with more than 100 
employees to provide summary data on the compensation paid to employees 
by sex, race, ethnicity, specified job categories, and other relevant 
data points. Contractors must submit the Equal Pay Report in the format 
and manner required by OFCCP.
    (2) Who must file the Equal Pay Report. The Equal Pay Report must 
be filed by each prime contractor and first tier subcontractor that is 
required under paragraph (a)(1) of this section to file the EEO-1 
Report(s) with the Joint Reporting Committee that has more than 100 
employees, and a contract, subcontract, or purchase order amounting to 
$50,000 or more that covers a period of at least 30 days, including 
modifications.
    (3) How, when, and where to file the Equal Pay Report. (i) The 
Equal Pay Report must be filed by the date specified in the report.
    (ii) Each contractor must submit the Equal Pay Report 
electronically through OFCCP's web-based filing system by the specified 
filing deadline, unless the contractor has been granted a hardship 
exemption under paragraph (b)(3)(iii) of this section.
    (iii) The Director may grant a hardship exemption from the 
requirement to submit the Equal Pay Report electronically where he or 
she concludes that electronic filing would impose an undue hardship on 
the contractor. Requests for hardship exemptions are only considered 
upon the written request of the contractor. The eligibility criteria 
and application procedures for the hardship exemption are available on 
the OFCCP Web site. A contractor granted a hardship exemption must 
submit the Equal Pay Report in the format specified in the notification 
granting the exemption.
    (4) Confidentiality of the Equal Pay Report. (i) OFCCP will treat 
information contained in the Equal Pay Report as confidential to the 
maximum extent the information is exempt from public disclosure under 
the Freedom of Information Act, 5 U.S.C. 552. It is the practice of 
OFCCP not to release contractor data where:
    (A) The contractor is still in business; and
    (B) The contractor indicates, and through the Department of Labor's 
review process it is determined, that the data are confidential and 
sensitive and that the release of data would subject the contractor to 
commercial harm.
    (ii) OFCCP may publish aggregate information based on compensation 
data collected from the Equal Pay Report, such as ranges or averages by 
industry, labor market, or other groupings, but only in such a way as 
not to reveal any particular establishment's or individual employee's 
data.
    (c) Additional information. The Director or the applicant, on their 
motions, may require a contractor to keep employment or other records 
and to furnish, in the form requested, within reasonable limits, such 
additional information about its employment practices as the Director 
or the applicant deems necessary for the administration of the Order. 
In accordance with the existing obligations in 41 CFR 60-1.12(a), each 
contractor shall retain its Equal Pay Report for a period of not less 
than two years from the date of the making of the report. However, if 
the contractor has fewer than 150 employees or does not have a contract 
of at least $150,000, this retention period is one year.
    (d) Requirements for bidders or prospective contractors--(1) 
Certifications and representations of compliance with the requirements 
of Executive Order 11246 and its implementing regulations. Each agency 
shall require each bidder or prospective prime contractor and proposed 
subcontractor, where appropriate, to represent by a statement in the 
bid or in writing at the outset of negotiations for the contract:
    (i) Whether it has participated in any previous contract or 
subcontract subject to the Equal Opportunity Clause in Sec.  60-1.4(a);
    (ii) Whether it is currently required to develop affirmative action 
programs as prescribed under the regulations in this chapter and to 
file reports set forth in this section;
    (iii) And, if so, whether it developed the affirmative action 
programs;
    (iv) Whether it has filed with the Joint Reporting Committee all 
reports due under the applicable filing requirement; and
    (v) Whether it currently holds a Federal contract or subcontract 
that requires the filing of an Equal Pay Report(s) with OFCCP, and 
whether it filed an Equal Pay Report with OFCCP for the most recent 
reporting period, as prescribed by paragraph (b) of this section.
    (2) Additional information. A bidder or prospective prime 
contractor or proposed subcontractor shall be required to submit such 
information as the Director requests prior to the award of the contract 
or subcontract. When a determination is made to award the contract or 
subcontract to a specific contractor, that contractor shall be 
required, prior to award, or after the award, or both, to furnish such 
other information as the applicant or the Director requests.
    (e) Sanctions for failure to file required reports, and 
certifications and representations. Failure to file timely, complete 
and accurate reports, and certifications and representations as 
required under this section constitutes a violation of Executive Order 
11246 and its implementing regulations that may subject the contractor 
to the sanctions identified in paragraph (6) of the Equal Opportunity 
clause in Sec. Sec.  60-1.4(a) and (b) and 60-1.27.
    (f) Use of reports. Reports filed pursuant to this section shall be 
used only in connection with the administration of Executive Order 
11246, the Civil Rights Act of 1964, or in furtherance of the purposes 
of the Order and the Act.

[FR Doc. 2014-18557 Filed 8-6-14; 8:45 am]
BILLING CODE 4510-45-P