On February 2, President Obama released his fiscal year 2016 budget proposal.  The proposed budget includes nearly $113.7 million in annual appropriations to the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”).  This proposed budget is $7.2 million more than OFCCP’s current $106.5 million funding level, representing an increase of approximately 7 percent.

The Administration stated that this additional funding will be utilized to combat what it calls “systemic pay discrimination” and develop an improved enforcement case management database system.  In its FY2016 congressional budget justification, the OFCCP outlined its enforcement priorities and initiatives for FY2016, including:

• Completing close to 4,000 supply and service compliance evaluations and 450 construction contractor reviews (the same levels as FY2015);
• Continuing to focus on “systemic pay discrimination to help narrow the persistent pay gap based on sex and race,” and hiring ten new “specialized staff with expertise in conducting the complex data analyses necessary for evaluating pay practices”;
• Concluding its rulemaking and implementing new regulations regarding pay disclosures, sex discrimination, and collection of compensation data; and
• Targeting discrimination in the construction industry.

The President’s budget reflects the Administration’s intention to continue to use the OFCCP as part of its efforts to address what it views as the “pay gap” between men and women.  Government contractors should expect to see the OFCCP focus heavily on pay disparity issues in its audits.  To prepare for such scrutiny, contractors should conduct a pre-audit of its compensation structure, policies and programs.  Ideally, such an audit should be conducted at the direction of counsel to permit the contractor to assert privilege over the process and results.