Understanding Item 19's "Other Compensation"
By: Suzanne Keys, SPHR, SHRM-SCP
Office of Federal Contract Compliance Programs' (OFCCP) revised Scheduling Letter has been creating quite the buzz throughout the federal contractor community, especially because of Item 19-the request for compensation data. In fact, Item 19's "Other Compensation" submission requirements has been throwing many contractors for a loop. They want to know what exactly OFCCP wants when it asks contractors to provide "Other Compensation" for each employee at the establishment under review. Sure OFCCP tells us it is things like bonuses, incentives, commissions, etc., but what about all those other factors that go into an employee's total compensation package? Things like medical premium contributions, mileage reimbursements, or even the free coffee in the employee breakroom. If you attempted to provide OFCCP with all these itemized compensation data points for all your employees, you would never be able to produce a timely submission. So what do you submit, and what will OFCCP do with the information?
Berkshire recommends starting with the basics. First, you should identify what types of "Other Compensation" you provide to employees at the location under review. Next, ask yourself, what compensation information do I have readily available in my HRIS that can easily be extracted and added to my roster? This exercise should help you determine the potential breadth of your response and allow you to identify the compensation data points you can gather and submit to the agency within the initial 30-day time period.
Of those items you have readily available, examine how each type of other compensation is distributed to employees before you submit the data to OFCCP. You want to have a thorough understanding of how each type of "Other Compensation" is awarded before you provide that data to the agency. For instance, if your review reveals everyone in the company is given the same bonus when a profitably goal is met, you can feel confident you will be able to explain how you awarded this "Other Compensation" to all employees should OFCCP ask.
What about overtime pay? Is overtime offered to all employees when it becomes available? Is the decision then left up to the employee to choose if they will work or not? If yes, you know that you will be able to provide legitimate, nondiscriminatory reasons for any differences in overtime payments between protected groups.
Carefully consider how you present merit increases and any other compensation that is already reflected in the employee's annual wage rate. "Other Compensation" means any compensation beyond the employee's base salary. Things that are probably already included in each employee's wage rate include geographical pay differences and merit increases received in the prior 12-month period. As a result, you will want to consider how to present this data to OFCCP in a way that is easily understandable.
Give extra consideration to any compensation that could be tainted before submitting it to OFCCP. For example, providing bonuses to call-center employees who meet their call quota for the year seems like a fair and equitable practice. However, take an extra hard look at your call-center's employment practices before you submit this data. How do you determine which call- center employees get which calls? Are females getting the tougher calls that take longer to complete? Are minorities being assigned fewer calls? These are the types of questions OFCCP may ask if it sees significant disparities in bonuses based on race or gender. You want to know the answers to these questions before OFCCP asks. In these cases, simply analyzing how much you are paying your employees may not be beneficial. Some simple impact ratio analyses would help you to determine if there are discrepancies in your pay or call assignment.
Berkshire recommends taking an individualized approach in your audit submissions, as how you pay your employees in one location may be different in another location. Keep the submission simple and don't create extra work for yourself. You can always reach out to Berkshire Associates for audit support at 800.882.8904 or firstname.lastname@example.org.
To learn more about OFCCP's Item 19 read the following article, "Compensation Compliance: What You Need to Know about Item 19."