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Audits of Employment Practices

Welch Consulting regularly conducts statistical audits of employment practices, including hiring, pay, promotion, termination, performance evaluations and testing.  In each case, we help employers identify and potentially explain, or remediate, discrepancies that would otherwise be areas of concern.  For some companies, an audit is a one-time event, especially if connected to an OFCCP investigation or to litigation.  For others, follow-up studies are conducted every year or every few years to determine whether adjustments have been effective or whether any potential problems have arisen since the last study was conducted.  These follow-up studies may be voluntary or may be required pursuant to a prior settlement agreement or litigation outcome.

 

More About Audits of Employment Practices

Audits of Employment Practices Representative Engagements

Proactive Audits

Welch Consulting was hired by counsel for a food company to perform proactive statistical analyses of pay, promotion, and termination to assess the outcomes of their decision making processes and potential risk in class action litigation. The analyses examined differences in outcomes between men and women, between whites and minorities, and between younger and older workers.  A follow up study was done five years later to determine if any potential problems had arisen.  

Welch Consulting was hired by counsel for a medical services provider to perform statistical analyses of pay decisions at their facility. Our experts assisted in identifying relevant, business-related factors that legitimately cause differences in pay and then made comparisons between men and women and between whites and minorities after removing the effect of these non-discriminatory factors.  

Welch Consulting was hired by counsel for a regional health care provider to perform statistical analyses of pay differences between men and women and between whites and minorities. Analyses were initially performed to assist in an OFCCP desk audit, but several follow-up studies were done in subsequent years to examine pay equity and to determine the risk of litigation. 

Welch Consulting was hired by counsel for a financial services provider to perform statistical analyses of pay differences between men and women and between whites and minorities. Analyses were initially performed to assist in an OFCCP desk audit, but several follow-up studies were done in subsequent years to examine pay equity and to determine the risk of litigation. In addition, we performed analyses of hiring, terminations, and promotions that were included in the company’s AAP. 

Pre-Litigation Audits

Welch Consulting was hired by counsel for a national jewelry retailer with a large commissioned workforce to organize job history, payroll, application, and store data in anticipation of a gender discrimination class action lawsuit.  Our experts performed statistical analyses of pay and promotion decisions and these analyses were presented in mediation.  

Welch Consulting was hired by counsel for a large national discount retail company to organize job history, payroll, application, and store data in anticipation of a gender discrimination class action lawsuit. We performed statistical analyses of pay and promotion decisions. In addition, we selected and organized a random sample of application data and examined the impact of prior work careers as well as worker and store characteristics on current pay levels. 

Pre-RIF AnalysesWelch Consulting was hired by counsel for a large national electronics retailer to analyze differences in layoff rates between men and women, whites and minorities, and older and younger workers at the time of a mass reduction in force to assess the potential risk of future litigation. Results were produced in real-time to facilitate the process and so that recommendations could be made.  We assisted with similar analyses on subsequent layoff decisions that affected different sections of their workforce over a four-year period.

Welch Consulting was hired by counsel for an internet service provider to analyze differences in layoff rates between men and women, whites and minorities, and older and younger workers at the time of a series of mass reductions in force to assess the potential risk of future litigation. Results were produced in real-time to facilitate the process and so that recommendations could be made.  

OFCCP Related Audits

Welch Consulting was hired by counsel for a manufacturing company to organize and analyze applicant flow and hiring data in a gender-based failure-to-hire OFCCP desk audit. We combined applicant data with payroll figures and developed damages models that assisted our client in settlement negotiations. 

Welch Consulting was hired by counsel for a medical records company to organize and analyze complex applicant and hiring databases in response to an initial allegation of gender and race discrimination made by the OFCCP. We prepared analytical data for production to the OFCCP. We also performed a statistical analysis of hiring that took account of applicant’s prior job histories and job preferences. 

Welch Consulting was hired by counsel for a regional bank to statistically analyze compensation differences between men and women and between whites and minorities to assist the client with an OFCCP desk audit. Comparisons were made at several points in time to determine whether potential problems had appeared since the time of the initial audit and whether any salary adjustments were merited and necessary. Analyses were done in accordance with the current OFCCP compensation standards. 

Welch Consulting was hired by counsel for a large university with several medical facilities to statistically analyze compensation differences between men and women and between whites and minorities to assist in an OFCCP desk audit. The OFCCP’s analysis was narrowed down to a few key jobs and we helped to show that the pay differences in these jobs were not statistically important.

Case Insight: Audits of Employment Practices

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.  

Case Insight: Litigation Motivated Pay Audit

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.

Continuous communication with the client allowed us to improve our statistical models to account for additional factors relevant to the determination of pay and to make the comparisons more meaningful.  Using the preliminary data, Welch provided evidence that differences in the scope of employees’ assignments and the quality of their prior work history were important determinants of their pay and worth pursuing as factors that could potentially explain the initially observed pay gap.

The company then provided detailed data on employees’ assignments and we assisted the client in selecting and utilizing a random sample of applications from which we could obtain information about prior work histories.  We found, as the preliminary evidence suggested, that assignment and prior work information helped to explain a very significant fraction of the initial pay disparity.

Case Insight: OFCCP Pay Audit

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.

Although not problematic, the client felt uncomfortable with this marginally insignificant result and asked us to investigate further.  We examined female/male pay differences within each job and found that 96% of the overall pay disparity was attributable to the difference within a single job.  The employer reviewed the data for employees within the job and recalled that there as a restructuring a few years earlier.  Employees previously in a job in Grade 54 were outsourced, but offered continued employment, if they desired, at a different job in the lower paying Grade 52.  Their pay rates were frozen at a level above the maximum pay for the new grade.  Once we took account of this fact and made comparisons among similarly situated employees, the overall pay difference between women and men was reduced to 0.13% (favoring women) and 0.10 standard deviations, well below the two standard deviation benchmark used to determine statistical significance.

 

We have found that this technique, one of our diagnostic tools used to investigate and understand the data as well as validate our pay comparisons, often highlights forgotten details or imperfect data that impact and perhaps undermine the preliminary pay comparisons.