On Friday, President Obama announced a proposal submitted by the EEOC that would require employers with 100+ employees to report, not just employee demographic data, but also pay data. The objective is for employers to provide data that could then be used to search for patterns of discrimination, or to support existing discrimination claims. It is hoped that the report will spotlight any inequities in pay data by gender, race, and ethnicity, and prompt employers to examine their pay practices and correct any potential discriminatory practices.
Who has to comply with the reporting of pay data?
- Any employer in the US with 100+ employee
When will you have to comply?
- The proposal was officially published on 2/1/2016, which means it has the normal 60 day commentary period until 4/1/2016.
- Assuming all goes as planned, the first report will be due 9/30/2017, using data from any pay period between July and September of 2017. So, you have more than a year and a half to find and resolve any potential issues.
What does compliance look like?
- Check out the form that will be used to record data. This is the best way to understand what data will be required. They did take steps to make it as easy as possible to incorporate this data-reporting into the typical work flow of the typical company.
How can you comply?
This proposed reporting is huge because it makes visible any differences in pay trends. Once those differences are visible and documented, they have to be corrected. So what should you do? Get ahead of it! You’ve got some time to get your ducks in a row. Get!
- Make sure you are appropriately gathering information on your employee demographics, including race, gender, and ethnicity data.
- Do an audit. In most cases, if you have a lawyer conduct that audit, the results are protected by attorney/client privilege. In any case, you should absolutely be looking to see that you are paying fairly for similar positions with similar responsibilities. If you have employees in NY or California, this is triply important for you as in each of your states, there is new legislation requiring fair pay on the basis of gender. PayScale will be hosting a webinar on February 11th that digs into the California Fair Pay Act.
- Have a sound compensation plan (ie legally defensible). How is your starting wage determined? How are increases determined? Make sure that you can explain any difference in pay that exists.
- Ensure that pay practices are clear and documented. Every manager should know how pay is determined in your organization.
- Training your managers on what pay discrimination means, and the laws that prevent it. You’ll need their help to comply.
Here’s something not to do: don’t decide to pay everyone the same because you’re afraid of reporting on you pay practices. Performance still matters, and it matters even more to the millennial population that is now the workforce’s largest population. Notice that a lot of litigation is talking now about fair pay not equal pay. It’s fair to be paid more if, given the same experience and opportunities, your work outperforms your peer’s work—regardless of which demographic box you fit into.
Go Beyond Compliance
On Friday, President Obama also announced that there will be a White House summit on “the United State of Women” in May. Much like he isn’t stopping with mere compliance, you can’t afford to do so either. Complying with the law is like trying to skimp by with the lowest performance possible to remain employed. Don’t just comply, get it right. And then once you’ve gotten it right, brag about it.
For a couple years now, a number of silicon valley tech companies have been reporting their pay diversity data. They’re committing to improving the pay bias they have, and reporting about those results. Millennials, as employees, are turning to employers who have fair pay. More than that, Millennials, as customers, are turning to companies that have fair practices as well. And the kind of fair pay that you can brag about isn’t mere compliance, it’s a much deeper and broader sense of fair pay that says:
- For people working in similar jobs, we don’t have pay discrimination based on your demographic (gender, race, ethnicity)
- We seek to have gender and racial diversity in our tech roles, which have tended to be less diverse
- We seek to have gender and racial diversity in our leadership roles, which have tended to be less diverse
Now getting that right? That’s really something to brag about. Complying with the law is boring and kind of old school. Of the 50 states plus the District of Columbia, only 7 don’t have explicit equal pay laws regarding gender. And of those 7 states, 5 already have anti-discrimination laws on the books. Bottom line, in most places, fair pay is already legislated, it’s just not enforced. The litigation in NY and California, along with this proposed mandatory reporting, just seeks to push harder on the existing foundation. So find out where you are, and push the envelope a little. After all, were we not all created equal?
DISCLAIMER: this is intended to be informational, not to serve as legal advice. If you think you have a potential pay discrimination issue, seek out a lawyer.