Pay Equity is “Comp”licated · Mickey regularly conducts mock audits to assist employers in...

Pay Equity is “Comp”licated

Mickey Silberman Co-Chair, Pay Equity Resource Group Chair, Affirmative Action & OFCCP Group Jackson Lewis P.C. silbermanm@jacksonlewis.com | (303) 225-2400

•  Represents management exclusively in every aspect of employment, benefits, labor, and immigration law and related litigation

•  800 attorneys in 57 locations nationwide

•  Current caseload of over 6,500 litigations, approximately 650 class actions

•  Founding member of L&E Global

•  A leader in educating employers about the laws of equal opportunity, Jackson Lewis understands the importance of having a workforce that reflects the various Communities it serves

About the Firm

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About our Affirmative Action & OFCCP Group

•  Our Affirmative Action & OFCCP Practice group is comprised of approximately 40 lawyers partnering with a team of P.h.D.- and Master’s-level statisticians, economists, and data analysts

•  We prepare approximately 3,700 affirmative action plans (“AAPs”) annually

•  Our team has assisted with more than 250 OFCCP audits since 2014

•  Our audit defense includes dozens of systemic discrimination investigations around the country, including pay and hiring

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•  For 20 years, we have worked with employers to address pay equity issues

•  Our Pay Equity Group is comprised of approximately 30 attorneys partnering with a team of Ph.D.- and Master’s- level statisticians and economists

•  Our comprehensive pay equity expertise includes:

–  Defending employers in agency investigations and in litigation under Title VII, the Equal Pay Act, and state fair pay laws

–  Conducting proactive privileged pay analyses

–  Helping employers identify and address unexplained pay disparities

–  Providing advice and counsel regarding how to design, implement, and improve pay systems to minimize liability

About our Pay Equity Group

©2016JacksonLewisP.C.

About Mickey Silberman

Mickey Silberman is Co-Chair of the firm’s Pay Equity Resource Group and Chair of its Affirmative Action & OFCCP Practice Group.  He assists employers to design and implement compliance programs including pay systems. He is recognized as a national expert on pay equity and systemic pay discrimination.

Mickey has overseen hundred of pay equity analysis projects conducted on a proactive basis and in response to EEOC investigations, OFCCP audits, internal complaints, and litigation. Mickey regularly conducts mock audits to assist employers in assessing their compliance with pay equity, EEO, and affirmative action obligations.

Mickey and the Practice Group each year prepare thousands of affirmative action plans and defend hundreds of EEOC and OFCCP discrimination investigations.

©2016JacksonLewisP.C.

Lawyer’s Disclaimer

Jackson Lewis P.C. has prepared the materials contained in this presentation for the participants’ reference and general information in connection with education seminars presented by the firm and its attorneys. Attendees should consult with counsel before taking any actions that could affect their legal rights and should not consider these materials or discussions about these materials to be legal or other advice regarding any specific matter.

©2016JacksonLewisP.C.

Agenda

•  Equal Pay is “hot”

•  Increased pay equity enforcement

•  Proposed EEO-1 pay reporting

•  Wave of aggressive state pay laws

•  How do you protect your organization?

•  Conducting a pay analysis

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THE INCREASED FOCUS ON “EQUAL PAY”

The “Three Big Ps” of Pay Equity

They Said What?

•  Pope Francis: “Why is it taken for granted that women must earn less than men? No! The discrepancy is a pure scandal.”

•  President Obama: “Women deserve equal pay. It’s 2016. It’s time.”

•  Patricia Arquette: “It’s our time to have wage equality once and for all.”

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It’s all about the “Pay Gap”

For every $1.00 paid to a man, how much is paid to a . . .

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Why Not More Claims? People Just Don’t Know…

•  Employees don’t know what they don’t know about pay

•  Applicants don’t know what they don’t know about pay

•  The government doesn’t know what it doesn’t know about

pay

•  You don’t know what you don’t know about pay

Shareholder Pressure to Achieve and Announce “Equal Pay”

•  Activist investor pressure to achieve pay equality and transparency

•  CEOs are telling HR and in-house counsel: “This is going to get done.”

•  Silicon Valley and other Fortune 500 companies feel increasing pressure to conduct pay equity analyses

•  … and publish the results

–  “I'm proud to share that at Facebook, men and women earn the same” - Lori Matloff Goler, Facebook, Inc.

–  Black employees earn $1.003; Hispanic employees earn 99.9 cents; and Asian employees earn $1.006 for every $1 earned by White employees - Kathleen Hogan, Microsoft Corp.

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Pressure from the White House to Sign “Equal Pay Pledge”

•  28 companies (and counting) have signed the “White House Equal Pay Pledge,” announced June 14, 2016 –  Amazon, American Airlines, Dow Chemical, Gap Inc., Johnson & Johnson

•  Signatories pledge to conduct annual pay analysis across entire workforce

–  Privilege issues?

•  Will results of analyses be published?

•  White House seeking to increase pay transparency to eliminate wage gap with public commitments and follow through

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The White House “Equal Pay Pledge”

We applaud the growing number of countries that have already made significant progress in closing their gender wage gap.  Women working full-time earn only 79 percent of men's wages, and we are committed to taking action individually and collectively to reduce that national pay gap. We believe that businesses must play a critical role in reducing the national pay gap. Towards that end, we commit to conducting an annual company-wide gender pay analysis across occupations and embedding equal pay efforts into broader enterprise-wide equity initiatives.  We pledge to take these steps as well as identify and promote other best practices that will close the national wage gap to ensure fundamental fairness for all workers.

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THE EEOC AND OFCCP’S INCREASED “EQUAL PAY” ENFORCEMENT

EEOC Enforcement Trends

•  EEOC has made pay discrimination a top enforcement priority in its 2013-2016 Strategic Enforcement Plan

•  Reasonable cause findings 11X higher for systemic pay discrimination claims

–  EEOC generally finds probable cause in 3% of all charges they receive

–  In 2014, EEOC found probable cause in 33% of EPA systemic charges

•  EEOC can issue Commissioner’s Charges and directed investigations

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New OFCCP Pay Requirements

•  In every audit, for each employee:

•  BaseSalary/WageRate

•  OverAme

•  Bonuses

•  Commissions

•  MeritIncrease

•  IncenAvePay

•  Locality Pay

•  Date of Hire

•  Hours Worked

•  Job Title

•  EEO-1

•  Job Group

Recent OFCCP Compensation Request

Recent Compensation Request

Recent Compensation Request

Recent Compensation Request

Recent Compensation Request

Recent Compensation Request

PROPOSED EEO-1 PAY REPORTING

EEOC Updated Proposal to Collect Pay Data

•  Adds “W-2 earnings” and work hours for all employees to EEO-1 reports starting in 2018

–  Requires employers to aggregate data across HRIS and payroll systems

–  Reporting burden will increase by 1,933%

•  EEOC will publish pay data by industry and geography for employers to “benchmark” against

–  Who else can use the pay data? Unions, plaintiffs’ counsel, competitors, the press . . .

•  Comment Period ends August 15 – make your voice heard

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GROWING WAVE OF AGGRESSIVE STATE PAY LAWS

California Leads The Way…

•  California Fair Pay Act –  Compares “substantially similar” employees, when viewed as

a composite of skill, effort, and responsibility –  Compares employees across locations –  Employers must explain “entire wage differential”

–  Attorneys’ fees for prevailing plaintiffs •  CA wage-hour plaintiffs’ bar ready to jump in

•  . . . And 20+ states follow

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EEO-1 Annual Pay Reporting

OFCCP Aggressive Pay Investigations

Pay Transparency

State Fair Pay

Laws

White House

“Equal Pay Pledge”

Activist Investors

California Fair Pay

Act

Hollywood

Privileged Proactive Pay

Analysis

CONDUCTING AN EEO PAY ANALYSIS

Steps in Conducting a Pay Analysis

1.  Establish privilege

2.  Decide groupings for analysis

3.  Gather data

4.  Conduct EEO pay analyses: the “funnel approach”

5.  If necessary, make equity adjustments

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1. Establish Privilege

•  Increasingly, government enforcement agencies and private plaintiffs demand internal pay analyses

–  Nothing worse than handing over a road map to exposure

•  CRITICAL FOR THESE ANALYSES TO BE AT THE DIRECTION OF COUNSEL

•  Establish privilege protocols at start of project.

–  Identify team of “need to know” participants

–  Prepare memo outlining protocols and tips to avoid waiver

–  Mark and treat documents as “Privileged & Confidential”

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The Sliding Scale of Privilege

Not Privileged Argument for Privilege Privileged

No Attorney Involvement In-House Counsel (on surface)

In-House Counsel (substance)

Outside Counsel (on surface)

Outside Counsel (substance)

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2. Decide Groupings for Analysis

•  Who is compared with whom?

–  Nothing is more important for a strategic pay analysis

•  Comparator groups often can be different depending on:

–  OFCCP analysis – Directive 307 Pay Analysis Groups

•  Job Groups? Ever appropriate for comparing employees’ pay?

–  Title VII

–  Equal Pay Act

–  California Fair Pay Act

•  Bottom line: groupings should mirror the reality of your pay process

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3. Gather Data

•  Date of hire

•  Date in position

•  Time in grade

•  Department

•  Prior experience

•  Education

•  Salary at previous employer

•  Starting salary

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4. Conduct EEO Pay Analyses: The Funnel Approach

1. Identify groups with pay disparities

2. Explain those you can with readily available factors

3. Explain remaining with factors you gather manually and code

4. What’s left? A few (or no) pay disparities

5. So, What Do We Do?

•  Consider conducting privileged pay equity analyses –  On “meaningful” pay groupings

–  Controlling for factors that influence pay

–  Not all pay differences are a problem, most aren’t

•  But, when they are, plan to make pay adjustments –  No lump-sum, off cycle adjustments

–  Do as part of regular pay cycle incrementally over a few years

•  Review pay system and processes to identify fixes

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Questions?

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