ACC-Charlotte April Meeting New Pay Equity Laws Presented by Liz S. Washko. 2018, Ogletree, Deakins, Nash, Smoak & Stewart, P.C. ogletree.com
Agenda Overview of applicable laws Recent legal developments Best practices to protect your company
Pay Equity In The News: Hollywood and sports figures High profile lawsuits against: Tech companies Healthcare Higher education Banking and Finance Manufacturing
Public Relations Companies publishing salaries pay scales and audit results Investor requests for reports on pay equity (Former) White House Equal Pay Pledge Over 100 companies signed by December 2016
Federal and State Laws
Equal Pay Act Equal wages to men and women who perform jobs that: Require equal skill, effort, and responsibility; and Are performed within the same establishment under similar working conditions. Pay differentials permitted based on: A bona fide seniority system, merit system, incentive system (quality or quantity of production) or any other factor other than sex
Title VII of the Civil Rights Act Unlawful to discriminate against employees in connection with compensation based on protected characteristics including gender and race Female employee paid less than a similarly situated male employee without a legitimate explanation for the pay difference Applies to race, national origin, etc.
Increased State/Local Activity States have enacted new legislation California Delaware Maryland Massachusetts New York Oregon Washington Cities/counties Albany County, NY New York City Philadelphia San Francisco Other states/cities considering pay equity legislation
State Developments Key Points State laws create potential for differing standards for determining pay equity Protected classes race/ethnicity; gender identity Equal work v. substantially similar work Continued applicability of same establishment Justifications for pay differences Salary history bans Confidentiality issues
EO 13665 Promoting Pay Transparency OFCCP Final Rule in effect January 11, 2016 Prohibits discrimination against those who inquire about, discuss, or disclose their own compensation or the compensation of other employees or applicants Contractors must post a pay transparency policy notice
Increased Risks for Employers EEOC/Agency Charges Increased charge activity Expansive investigations Increased litigation activity EEOC as plaintiff Increased private litigation Individual claims of pay discrimination Potential class actions Internal complaints Increased awareness - media and social media
Factors Contributing to Risk Lack of meaningful standards or guidelines Noncompliance with standards/guidelines Unfettered discretion and subjective decision-making No training for decision-makers Failure to articulate or document the reasons for decisions Failure to communicate criteria
Best Practices for Prevention and Protection
Take Action Clean-up data HRIS system Audit data to identify pay disparities and weaknesses and make corrections Review and analyze policies, procedures, and processes
HRIS Data Basis for any analysis: Needed for internal analyses/audits Requested by EEOC/plaintiffs/experts Garbage in/garbage out
HRIS Data Common Issues Inaccurate/inconsistent data Job titles Missing gender/race of some employees Inaccurate information Missing useful data Education/experience Time in job Performance ratings
Purposes of a Pay Audit Identify potential pay disparities within appropriate job classifications Determine whether there are legitimate explanations for disparities Take steps to correct the disparities
Pay Audit Considerations Conduct audit under privilege Identify appropriate comparator groups Understand pay decisions What types of pay decisions are there starting pay, merit increases, adjustments, other compensation What factors are relied on to make pay decisions
Pay Audit Considerations Have the data analyzed by an expert Statistically significant differences Outliers Determine if factors explain disparities Correct disparities that cannot be explained with legitimate reasons Timing of corrections Communication regarding corrections
Policy and Procedure Review Review written policies, procedures, practices Decision-makers scope of authority Factors considered related to job, objective, quantifiable How are decisions documented Identify weaknesses in the systems that may lead to disparities Modifications to improve policies and procedures
Practical Tips Written policies for pay increases and bonuses Limit subjectivity with objective factors Assess performance evaluation process Document pay decisions Enforce policies/guidelines Train decision-makers Conduct periodic pay analyses Assess job descriptions
QUESTIONS?