Pennsylvania Litigation Blog

Clients who are federal contractors and subcontractors should take note of a recent settlement between the Office of Federal Contract Compliance Programs (OFCCP) and pharmaceutical giant AstraZeneca. The settlement is significant because it marks the first administrative complaint of sex discrimination filed by the OFCCP based on compensation.

 

The complaint, filed on May 6, 2010, alleged that AstraZeneca paid female Level III Pharmaceutical Sales Specialists at its office in Wayne, Pennsylvania significantly less per year than its male Level III Pharmaceutical Sales Specialists at the same location. The Complaint alleged that the salary disparity remained after adjusting for differences in legitimate pay-determining factors. On average, the salaries of female sales specialists were $1700 less than their male counterparts. The OFCCP demanded the Company pay lost wages, interest and front pay, and that it make adjustments to females’ salary, fringe benefits and seniority.

 

As part of the settlement, AstraZeneca will pay $250,000 to 124 women. The company also agreed to work with the OFCCP to conduct statistical analysis of the base pay of other individuals employed as sales specialists at locations in other states. The company agreed that if the analysis showed female employees were underpaid, the company would adjust their salaries.

 

The settlement follows what appears to be a renewed focus on the OFCCP to target compensation disparities in the contractor community. The OFCCP further is poised to issue new standards for evaluating compensation data. Indeed, on January 3, 2011, the OFCCP published a Notice of Proposed Rescission of its Compensation Standards. This Notice followed an unpublished written directive of the OFCCP issued strictly internally in December of 2010 that outlines the use of a “2 or 2” test for analyzing compensation data. Under this test, the OFCCP will look for discrepancies of 2% or $2,000 and, where such discrepancies exist, will require certain additional data to analyze whether a discriminatory pay practice exists.

 

It is critically import that government contractors and subcontractors conduct annual audits of their compensation practices and self correct where discrepancies are found. Our employment law group regularly assists contractors in auditing compensation data for OFCCP compliance. If you would like our assistance please contact Jennifer L. Craighead at 717-399-1523 or any member of our employment law group.