We Might be Paid Differently, But Are Our Jobs Really the Same?

Transcription

1 We Might be Paid Differently, But Are Our Jobs Really the Same? Mike Aamodt & Kayo Sady DCI Consulting Group, Inc. Seminar Presented at the Annual Meeting of the National Industry Liaison Group (NILG) Charlotte, North Carolina August 4, 2016

2 Topics Defining Comparators and Strategies for Comparison What Factors Do the Courts Consider? How Should Pay Analysis Groups be Created? Are There Tests for Similarity? 2

3 Strategies for Comparison

4 Appropriate Comparisons Equal Pay Act Equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions. Title VII Employees are similarly situated if they are similar with respect to the work they perform, their responsibility level, and the skills and qualifications involved in their positions. State Legislation e.g., California Fair Pay Act Substantially similar work, when viewed as a composite of skill, effort and responsibility, and performed under similar working conditions. 4

5 Two Main Similarity Components The Job Itself Duties performed Level of responsibility (e.g., judgment, supervision) Work conditions Market The Person in the Job Education and training Experience Skill and performance Prior salary Time of hire Red circled employees 5

6 Similarly Situated Strategies Structural Only group jobs that are similarly situated Consistent with Title VII reasoning and case law Analytical Place dissimilar jobs in the same PAG Use dummy/indicator codes to control for the areas of dissimilarity 6

7 A Continuum Of Pay Factors Duties performed Level of responsibility Work conditions Skills & Abilities Required Minimum Qualifications Compensation Policy Structural & System Factors People manager responsibility Number of direct reports Budget responsibility Department/function Parent v. acquired company Combination Factors Education and training Experience Skill and performance Prior salary Time of hire Red circled employees External/internal hire Employee/ Person Factors Analytical Approach All Factors Modeled Statistically Structural Approach Structural & System Factors Define Groupings Structural Approach Combination and Employee Factors Modeled Statistically 7

8 The Courts The Equal condition of the Equal Pay Act versus Similarly Situated under Title VII

9 Equal Pay Act v. Title VII Equal Pay Act Burden is on the employer for the affirmative defense Discriminatory intent not important Plaintiff must have at least one direct comparator Title VII Burden is on the plaintiff Discriminatory intent must be shown for disparate treatment Not for disparate impact Direct one-to-one comparator is not needed 9

10 Confusion Understandable EPA Equal work requiring substantially similar skill, effort and responsibilities, and Equal work defined by substantially similar The work was performed under similar working conditions. Title VII Similarly situated employees. How are substantially similar, similar, and similarly situated defined? 10

11 Example Case Warren v. Solo Cup Company (2008, 7 th Circuit) Brought under the EPA and Title VII Case involved differences in pay between tool crib attendants Individuals who track equipment using a computer system 11

12 Equal Pay Act - Prima Facie Case Warren v. Solo Cup Company (2008, 7 th Circuit) To establish a prima facie case of wage discrimination under the EPA, [Warren] must show, by a preponderance of the evidence, that: (1) higher wages were paid to a male employee, (2) for equal work requiring substantially similar skill, effort and responsibilities, and (3) the work was performed under similar working conditions. No proof of discriminatory intent is required. Akin to an Adverse Impact theory 12

13 Equal Pay Act Defense Burden Warren v. Solo Cup Company (2008) The statutory defenses kick in if the difference in pay is attributed to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex. 13

14 Title VII Prima Facie Case Warren v. Solo Cup Company (2008) The initial burden is on Warren to establish a prima facie case of discrimination. This requires Warren to show that (1) she is a member of a protected class; (2) she was performing her job to Solo's expectations; (3) she suffered an adverse employment action; and; (4) she was treated less favorably than similarly situated employees outside of the protected class. 14

15 Title VII Defense Burden Warren v. Solo Cup Company (2008) Defense burdens differ depending on whether the case is brought under: Disparate treatment Difference attributable to legitimate factors other than discrimination Disparate impact The factors comprising the facially neutral compensation system are job-related and consistent with business necessity 15

16 Title VII Ruling Warren v. Solo Cup Company (2008) Warren failed to establish a prima facie case because she is not similarly situated to Lorenz. An employee is similarly situated if the employee is comparable to the plaintiff in all material respects. In evaluating whether two employees are directly comparable, the court must look at all relevant factors, including whether the employees (i) held the same job description, (ii) were subject to the same standards, (iii) were subordinate to the same supervisor, and (iv) had comparable experience, education, and other qualifications provided the employer considered these latter factors in making the personnel decision. 16

17 Title VII Ruling Continued Warren v. Solo Cup Company (2008) The fourth factor is the focus of this case: Warren and Lorenz have very different educational backgrounds, experiences, and qualifications. Warren has a high school diploma; Lorenz has a bachelor's and two master's degrees. Moreover, Lorenz's computer skills are superior to Warren's. Warren maintains Lorenz's advanced degrees and computer skills are irrelevant because the tool crib job description requires neither. But the tool crib job description is not conclusive on this question. Employers are permitted to compensate employees differently based on skills that are not specifically required in a given job description so long as the employer considers those skills when making the compensation decision. Lorenz and Warren are not materially comparable in education, experience, and computer aptitude, and Solo considered these differences when deciding to pay Lorenz a higher hourly rate. 17

18 The Level of Responsibility Must be Similar Kimberly Sims-Fingers V. City of Indianapolis (2007) EPA and Title VII claims focusing on a female (Sims-Fingers) and a male comparator (Robinson) Both were park managers (27 park managers) She was paid $34,374 and he was paid $35,000 Their parks His was 17 times larger than hers His park had a pool, game room, fitness center, playground, baseball diamond, and football field Hers did not 7 th Circuit ruled their jobs did not have the same levels of skill, effort, and responsibility (Title VII) 18

19 Not Similarly Situated (Title VII) Same Title Corporate attorney Professors in different colleges/departments Senior vice presidents Academic program director 19

20 Not Similarly Situated (Title VII) Different Titles Cleaner v. custodian Parts clerk v. maintenance coordinator Building maintenance engineer v. assistant building maintenance engineer Treasurer v. comptroller Bakery department v. produce department Senior buyer v. VP of procurement Clerical v. Physical plant Tech v. admin positions in a computer lab 20

21 Similarly Situated (Title VII) Different Titles Orderlies v. Nurses Aides Selector v. Packer Household Cleaner v. Cleaning Technician Veterans Service Officer v. Veterans Service Officer Associate Public Health Nurses v. Public Health Sanitarians Day Shift Inspector v. Night Shift Inspector 21

22 Similarly Situated and Context Proactive Analysis Audit Litigation 22

23 What to do in Annual Proactive Analyses?

24 Employment Groupings Ideally, compensation analyses would be done at the title level, but there are few organizations that have enough employees in the same title to conduct all analyses at the title level Prior to February 28, 2013, OFCCP grouped job titles by Similarly Situated Employee Groupings (SSEGs) SSEGs are based on similarities in job duties, responsibility levels, and skills and qualifications. This is consistent with Title VII, case law, and the EEOC Compliance Manual. 24

25 The Current State of Groupings OFCCP no longer considers SSEGs they have been replaced with Pay Analysis Groups (PAGs) This is a switch in strategy for controlling for similarity situated - structural strategy to a analytical strategy In the scheduling letter, OFCCP is asking for Job title EEO-1 category Job group What should a contractor do? Provide requested categories and wait? Provide contractor-developed PAGs? 25

26 Job Fragmentation Job Aggregation Job Title SSEG Salary Grade 26

27 Job Title Considerations Are they current? Do they have meaning? (e.g., analyst, manager) Do they cross grade or job group? Do they correspond with job codes? Is exempt status consistent for each employee within a title? 27

28 Analyzing by Title Advantages Comparing apples to apples May not be true if broad titles are used Used to mirror OFCCP audit Disadvantages Hundreds of cohorts to manually examine May not mirror OFCCP audit 28

29 Goals in Creating PAGs Narrow enough that similar jobs are kept together Broad enough to allow for sufficient sample sizes for statistical analysis Simplicity Easy to explain to employees and the OFCCP Consistent with how you compensation people and managers talk about comp 29

30 Job Title Job Family Broad Group Grade Fin Analyst I (10) Accountant I (9) Finance (19) HR Rep I (5) Benefits Rep I (6) HR (11) Admin (30) Exempt 1 (141) Mechanical Eng I (45) Electrical Eng I (35) Engineering (80) Electrician (21) HVAC Specialist (10) Maintenance (31) Technical (111) 30

31 Analysis Guidelines If PAGs are used, every employee will be in a PAG The size of the PAG will vary from 1 person to hundreds of people The size of the PAG determines the type of analysis Cohort Fewer than 3 men or 3 women Fisher s exact tests for small groups At least 3 men and 3 women Regression analysis for larger groups At least 30 employees in the PAG At least 5 men and 5 women 31

32 Our Recommendation Start at the job title Job titles meeting 30 and 5 rule are own PAG Be careful that jobs with the same title are actually the same job Others jobs can be Lumped together into one SSEG, or Broken into job families or functions If you have to cross grades Start with serial titles (Engineer I, Engineer II) Then group according to family or function Be sure to include either grade midpoint or a dummy-coded variable in your regression Including market midpoints in the regression (or computing CompaRatios) helps control for different titles in a PAG 32

33 What About State Legislation?

34 State Legislation Multiple states have passed recent updates/modifications to extant equal pay legislation (e.g., California, New York, Massachusetts, Maryland) The California Fair Pay Act (CFPA), in particular, may have substantively broadened the definition of who is similar enough for comparison Standards for comparison established under the EPA or Title VII may not apply in cases brought under the CFPA 34

35 California Fair Pay Act Language An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates: (1) The wage differential is based upon one or more of the following factors: (A) A seniority system. (B) A merit system. (C) A system that measures earnings by quantity or quality of production. (D) A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. TAKEAWAYS Substantially similar work defined as a composite of work characteristics may allow broader groupings than Equal work defined as substantially similar work characteristics Once groupings are established, justification for regression pay factors may rise to a validation standard if shown to have protected class subgroup differences 35

36 Strategies for Establishing Substantially Similar Work

37 Options for Grouping Under a Broad Standard Take a general PAG construction approach Annual proactive analysis will align with state-based analysis Take a job evaluation approach State-based analysis likely unique Take a job analysis approach State-based analysis likely unique 37

38 Determining Substantially Similar Work Job evaluation? Factors Points Electrical Engineer HR Generalist Educa5on (200 points possible) High school educa6on or less 40 Two years of college 80 Bachelor's degree Master's Degree Ph.D. 200 Responsibility (300 points possible) Makes no decisions 75 Makes decision for self Makes decision for 1-5 employees Makes decisions for more than 5 employees 300 Effort (physical) (90 points possible) LiNs no heavy objects LiNs objects between 25 and 100 pounds LiNs objects more than 100 pounds 90 Composite Score Market Median $75,000 $55,000 PROS: 1. Job evaluation methodologies are well understood 2. Inherent in the methodology is establishment of a composite score/value CONS: 1. The specific factors that drive overall composite scores may be very different 2. Market rates for the jobs may be very different 38

39 Determining Substantially Similar Work Job analysis? Establishing critical job factors, such as skill, effort, responsibility, and work conditions is the purview of job analysis research There are publicly available and robust job analysis databases that offer opportunities for investigating similarity between jobs without requiring expensive and time-consuming local job analyses The Department of Labor s O*NET program is the nation s primary source of occupational information containing information on thousands of jobs and hundreds of standardized and occupation-specific descriptors for each job There are established methods in the I-O psychology research literature for demonstrating job similarity We apply these regularly when conducting validity transport studies 39

40 The O*NET 40

41 The O*NET Importance ratings for each of the standardized descriptors 41

42 How Can the O*NET be Used? Map workforce job codes to O*NET codes Analyze the O*NET job analysis data for relevant codes Identify clusters of jobs that have substantially similar work based on the analysis Conduct an EEO pay analysis based on the clusters DOL Informa5on Company Informa5on Census Code O*NET Code O*NET Job Name Job Code Job Title Chief Execu6ves Chief Sustainability Officers General and Opera6ons Managers Adver6sing and Promo6ons Managers Marke6ng Managers Sales Managers Public Rela6ons and Fundraising Managers Administra6ve Services Managers Computer and Informa6on Systems Managers Treasurers and Controllers Financial Managers, Branch or Department Industrial Produc6on Managers Quality Control Systems Managers 42

43 How Can the O*NET be Used? For company jobs mapped to O*NET codes within the same census code, substantially similar work is established via similarity of O*NET job analysis ratings of: Skills Effort Responsibility Work Conditions 43

44 How Can the O*NET be Used? OVERALL DECISION: SIMILAR SIMILARITY METRICS WITH THRESHOLDS Overlap Sta6s6c Correla6on Devia6on Sta6s6c DECISION RULES FOR SIMILARITY: (1) If any one metric in RED, then other metrics must be in DARK GREEN (2) If any one metric in YELLOW, the other metrics must be GREEN. (3) If any two metrics in YELLOW, then third metric must be in DARK GREEN. OVERALL SIMILARITY Overlap Sta6s6c Correla6on Devia6on Sta6s6c Overall and domain similarity evaluations are available via interpretation of three different similarity metrics SKILLS SIMILAR SKILLS SIMILARITY Overlap Sta6s6c Correla6on Devia6on Sta6s6c EFFORT SIMILAR EFFORT SIMILARITY Overlap Sta6s6c Correla6on Devia6on Sta6s6c RESPONSIBILITY SIMILAR RESPONSIBILITY SIMILARITY Overlap Sta6s6c Correla6on Devia6on Sta6s6c WORK CONDITIONS SIMILAR WORK CONDITIONS SIMILARITY Overlap Sta6s6c Correla6on Devia6on Sta6s6c 44

45 How Can the O*NET be Used? Difference Threshold Delta 0-10 Delta Greater than 30 point Importance Difference Skill1 Skill2 Job1 Job2 Skill3 Skill4 Skill5 Skill6 Skill7 Skill8 Skill9 Skill10 Evaluations of similarity between individual standardized descriptors within domain also available large gaps in Importance ratings indicate dissimilarity Skill11 Skill12 Skill13 Skill14 Skill15 Skill16 45

46 QUESTIONS 46