Pay equity compliance becoming more burdensome

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Wage laws are becoming a prominent hot button issue for employers on the national and state levels.

There is a lot of publicity and attention on workplace pay equity, said Lara De Leon, an attorney with Ogletree Deakins. She points to recent moves by Amazon and Microsoft that have tried to get in front of the issue by publishing their own statistics.

Speaking recently at the Society for Human Resource Management’s annual conference in New Orleans, De Leon says this increased visibility has come from EEOC and web sites like Glassdoor, with more employees becoming aware of the pay gap issue and bringing it up internally.

But one of the major statutes employers should pay attention to is the Equal Pay Act. The main thing to think about is this has nothing to do with job descriptions, but with the actual work employees perform, she says.

“With these cases under the Equal Pay Act, we’re seeing lot of investigation into what employees actually do on a day-to-day basis,” De Leon said. “There is a lot of litigation around this area.”

She says the trick for employers is how to justify and articulate how the disparity exists.

Under the Equal Pay Act, she noted, the employer has the burden based on:

· A bona fide seniority system
· Merit system — Or a pay for performance system, which is what most employers do.
· Incentive system (quality or quantity of work)
· Any other factor other than gender.

In this last one, De Leon says, “the sky is the limit” and is actually where most litigation occurs and which usually gives employers the “heebie jeebies” having the court system and plantiff’s counsels questioning business strategies.

But if employers think about it ahead of time and can articulate why there is a disparity, they can be successful in their litigation, she said.

An important change in remaining compliance is being seen at the state and local levels.

“I can’t say it enough; we’re seeing so much development in the state and local laws,” De Leon said.

In the absence of federal intervention, she has noted that a number of state legislatures and governors have passed laws to update their fair pay acts.

“We’re seeing a patchwork of state laws every two to three weeks, she said. “When you operate in several states, it’s going to be more complex to have a one-size-fits-all approach.”

That said, De Leon recommends being proactive and taking steps now to ensure compliance.

Look at your pay situation in your organization and consider these two steps: First, take a look at your compensation process. How are you making pay decisions? Who is responsible for making these pay decisions. What are you doing and what are you basing pay on? Second, examine how decisions are documented. Those pay decisions that fall outside the norm, you should document and understand why you’re doing that to have that justification if you’re ever called on to defend.

In addition, De Leon suggested these pay audit considerations going forward.

· Review written policies for pay increases and bonuses.
· If you have something that establishes guidelines, try and establish quantifiable objective factors that go into pay.
· Document pay decisions. The idea is that if in 10 years, a lawsuit comes in, those involved will know what was happening at the time.
· Assess performance evaluation process. Make sure things line up.
· Train interviewers/managers/decision makers. It’s good to do a refresher training and remind them about pay equity and its importance to the organization.

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Equal pay Payroll Equal Pay Act Compliance Benefit compliance