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More About Employment Audits
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Litigation Motivated Pay Audit
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In anticipation of potential litigation, a large retail company retained Welch to audit its pay practices, focusing primarily upon pay differences between male and female managers. We began by examining simple unadjusted comparisons which remove the effect of only the most basic of factors. This result mimicked what the client might have faced in an initial assessment by an adverse party. These data showed that females were paid 12.5% less than male employees in the same job and with the same number of years of experience.
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OFCCP Pay Audit
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Welch was hired by a telecommunications company to perform a preliminary pay analysis in anticipation of an impending OFCCP desk audit. The client provided the (12-factor) data often requested by the OFCCP at this stage of their investigation. We made our initial comparisons and noted that none of the female/male or minority/white pay differences were statistically significant. The female/male pay differential, 3.2%, favoring men, was marginally insignificant at 1.95 standard deviations. Differences of less than two standard deviations are typically not considered significant.
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