The Equal Pay Act in the United States dates back to the early 1960s. But its enforcement—and the conversation about equal pay issues around the globe—requires close watching in the next few years.
The U.S. Equal Employment Opportunity Commission (EEOC) and the Department of Labor, Office of Federal Contract Compliance, announced in September new requirements for EEO-1 reporting. The EEOC explained the move by saying it hoped to address workplace discrimination that “plays a role in explaining the pay gaps nationwide for women and, especially, for African American and Hispanic or Latina women.”
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I outlined the changes during NAVEX Global’s 2016 Ethics & Compliance Virtual Conference, as part of a broader overview of important regulatory issues. The EEOC reporting changes apply to 2017 employees, with new information due on March 31, 2018. But it’s important to start getting your houses in order now, even if some of the fine print might change in the coming months (more on that in a moment).
Since the plan was announced, employees and employers have criticized its structure as overly broad. Simply put, there are concerns that squeezing millions of American workers into 10 job categories and 12 pay bands—as outlined in the September announcement—won’t unearth much information of value.
For example, one job category is “Professionals,” which includes a broad spectrum of roles from doctor to engineer. Comparing a heart surgeon’s pay with a bridge designer’s isn’t exactly apples to apples. Beyond that, the pay bands are extremely wide, with band 11 covering anyone who makes between $163,800 and $207,999. Band 12 covers anyone who makes $208,000 or more.
As you can tell, the new EEO-1 structure is a very blunt tool for unearthing pay equity issues—but this is where the EEOC wants to start. Given that organizations have more than a year before their first reports are due under the new system—and given the potential for policy changes by the Trump administration—it’s very likely that the reporting requirements will be altered, so employers need to be on the lookout for potential changes.
Read More: 5 Key Takeaways from My Long List of Regulatory Changes Shared at ECVC2016
Whatever shape the EEO-1 changes take in the U.S., equal pay issues are popping up around the world, including in Austria, Finland, Japan, Thailand and the United Kingdom. And even some states, including Massachusetts, are enacting new laws.
Ways Organizations Should Prepare for New EEO-1 Changes
Conduct a Privileged Audit of Pay Equality
This is an important step, but it shouldn’t be taken without a law firm. If an organization isn’t working with its lawyer, the information gathered won’t be privileged and could be obtained through disclosure and discovery processes. Even organizations that have worked hard at pay equity are going to have flaws—and plaintiffs’ lawyers are adept at looking past the positives.
Develop a Strategy and Communication Plan for Reporting or Correcting
It’s important to be strategic about how decisions are made—and ensure that pay decisions are made objectively so they’re defensible and non-discriminatory. In addition to wanting to do the right thing, it’s important to understand that bad publicity in this area can be devastating.
Review All Job Titles to Make Sure They’re Accurate and Comprehensive
Unless everything is in writing, it’s hard to explain why person A makes more than person B. Organizations should also consider standard pay ranges for each position and train human resources and managers on the importance of gender equity and equal pay, particularly when it comes to setting compensation (including bonuses and raises).
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From the EEOC and regulators worldwide who enforce equal opportunity employment, there’s a trend toward greater transparency—and broader liability. Smart organizations will be prepared, even if some of the details change over time.
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