How Serious are OFCCP Equal Pay Penalties? Very.

The Office of Federal Contractor Compliance Programs (OFCCP) just won a significant equal pay victory against WMS Solutions, LLC, a staffing company focusing on asbestos abatement. A News Release dated June 22, 2020, described the order, which requires WMS Solutions, LLC to pay $960,905 in back wages, damages, and interest based on discrimination and harassment claims.

The OFCCP is an agency within the Department of Labor responsible for enforcing federal equal employment opportunity laws (such as the Equal Pay Act) for contractors and subcontractors with federal contracts. As a condition of receipt of federal funds, contractors may be subject to an OFCCP audit, including a compensation analysis. In the case of WMS Solutions, LLC, a federal contractor, the OFCCP determined during a compliance audit that the staffing company had significant equal pay, discrimination, and harassment issues.

The OFCCP filed suit against WMS Solutions, LLC in 2015 in an administrative court, alleging that the company “hired Hispanic construction laborers, and then harassed and discriminated against them. It also allowed supervisors of other federal contractors to assault them physically, make racial slurs, and threaten them with deportation.” The suit also claimed that WMS Solutions, LLC discriminated against non-Hispanic job applicants, engaged in pay discrimination against female workers, and assigned fewer hours to Black, Caucasian and female workers. OFCCP v. WMS Solutions, LLC, DOJ ALJ, No. 2015-OFC-00009 (June 17, 2015).

In its recent decision, a judge within the U.S. Department of Labor’s Office of Administrative Law judges agreed with the OFCCP, finding that WMS Solutions, LLC engaged in discrimination in its hiring process, created a hostile working environment, and engaged in systematic pay discrimination. With respect to the equal pay violation, the judge concluded that WMS Solutions, LLC “steered female laborers to lower-paying job assignments, paid female laborers a lower hourly rate for the same work as male laborers, and assigned fewer hours of work to non-Hispanic laborers.“ Of the $960,905 that the company must pay, $179,907 must go to remedy pay discrimination. The remainder is to remedy systemic hiring discrimination. As part of this decision, WMS Solutions, LLC must also implement policy and practice changes, such as a zero-tolerance policy to discrimination and harassment, equal employment opportunity training, and anti-retaliation measures.

Federal contractors should consider a comprehensive pay equity audit to assess pay gaps and pay disparities in their compensation structures. Such an audit is an essential part of a cohesive pay equity strategy. A pay equity audit can be conducted under the attorney client privilege using a combination of gender pay gap software and expertise in pay equity regulations and statistical models. However the analysis is conducted, employers should keep in mind the Triangle of Trustsm: trust in data, trust in software and trust in regulatory expertise.

Not sure where to begin a pay equity audit? Let Trusaic provide your organization with a free Pay Gap Analysis, which can be conducted confidentially and under the attorney-client privilege.

Here is what you will get:

  • 1-hour consultation to our pay equity team comprised of regulatory compliance experts and data scientists
  • Answers to your pay equity questions
  • A pay gap analysis of your workforce
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How Serious are OFCCP Equal Pay Penalties? Very.
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How Serious are OFCCP Equal Pay Penalties? Very.
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A new order against a federal contractor requires payment of back wages, damages and interest in the sum of $960,905.
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Trusaic
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