Enhanced Pay Discrimination Enforcement: What You Should Do To Respond Presented By: Mickey Silberman, Esq. (303) 225-2400 [email protected]

Enhanced Pay Discrimination Enforcement: What You Should Do To

Respond

Presented By:

Mickey Silberman, Esq.(303) 225-2400

[email protected]

www.jacksonlewis.com

Jackson Lewis Presents For

The INDUSTRY LIAISON GROUP2012 National Conference

mailto:[email protected]

http://www.jacksonlewis.com/

© 2012 Jackson Lewis LLP

INTRODUCTORY STATEMENT

THE MATERIALS CONTAINED IN THIS PRESENTATION

WERE PREPARED BY THE LAW FIRM OF JACKSON

LEWIS LLP FOR THE PARTICIPANTS’ OWN

REFERENCE IN CONNECTION WITH EDUCATION

SEMINARS PRESENTED BY JACKSON LEWIS

LLP. ATTENDEES SHOULD CONSULT WITH COUNSEL

BEFORE TAKING ANY ACTIONS AND SHOULD NOT

CONSIDER THESE MATERIALS OR DISCUSSIONS

THEREABOUT TO BE LEGAL OR OTHER ADVICE.

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ABOUT JACKSON LEWIS LLP

Jackson Lewis LLP is dedicated to representing

management exclusively in workplace law and

related litigation. With nearly 50 offices and more

than 700 attorneys nationwide, the firm has a

national perspective and sensitivity to the

nuances of regional business environments.

Guided by the principle that a positive work

environment results in enhanced morale and

increased productivity, the firm devotes a

significant portion of its practice to management

education and preventive programs. This

approach helps limit exposure to grievances,

charges and lawsuits.

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ABOUT THE AFFIRMATIVE PRACTICE GROUP

We have unparalleled experience preparing AAPs

and defending them before the OFCCP in all

industries and areas of the country. Our diverse

team of 35 attorneys, analysts, statisticians, and

support staff prepares approximately 2,500 AAPs a

year.

Since 2009, we have defended over 250 OFCCP

audits, including successful defense of Corporate

Management (“Glass Ceiling”) Compliance

Evaluations. As a law firm, we offer more than

consulting services, we offer strategic thinking and

sophisticated legal representation.

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ABOUT MICKEY SILBERMAN, ESQ.

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Mickey is the Managing Partner of the firm’s

Denver office and Chair of the Jackson Lewis

National Affirmative Action Practice Group. Mickey

represents management exclusively in all areas of

employment law and specializes in EEO,

affirmative action and diversity.

Mickey spends much of his time counseling

employers on complex, “real world” issues relating

to Equal Employment Opportunity, including pay

equity. He has helped employers develop

strategic compliance processes relating to pay

systems, applicant tracking, recruitment, pre-

employment testing, performance assessment,

succession planning, etc.

[email protected]


PAY ENFORCEMENT - TOP AGENCY PRIORITY

• President Obama and OFCCP made pay

discrimination among its top

enforcement priorities

• WHY? The persistent “Pay Gap”

• Since early 1980s, pay gap for women

plateaued around 80¢ on the dollar for

men

• In 2011, women earned approximately

77¢ for every $1 earned by men

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NATIONAL EQUAL PAY ENFORCEMENT TASK FORCE

• To implement President Obama’s pledge to

“crack down” on equal pay violations, the

Administration formed the Task Force made up

of the EEOC, DOJ, DOL, OPM, and OFCCP

• Recommendations of the Task Force included:

Improve interagency coordination and

enforcement efforts

Collect detailed annual pay data on the

private workforce to identify employers for

targeted enforcement

Greatly increased audits and investigations

of employers’ pay practices

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A NEW PAY DATA COLLECTION TOOL - THE RETURN OF THE EO SURVEY?

• To more vigorously enforce pay equity, OFCCP

developing a pay data collection tool

• In August 2011 Agency issued an Advance NPRM

to solicit feedback on form data collection tool

Agency received roughly 7,800 comments

• OFCCP wants to use as tool to select employers

for audit, similar to the EEO-1• The EEOC wants to develop its own pay

collection tool for all private employers

Equal Pay Act Investigation Pilot Program

– “flips” the model – EEOC initiates the

actions

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• Settlements for alleged discriminatory

compensation are on the rise. . .

FY 2008 – 0 compensation settlements



FY 2011 – 27 – 33% of all CAs involved

comp

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COMPENSATION: THE OFCCP’S NEW HOT SPOT

© 2012 Jackson Lewis LLP 10

DON’T FORGET ABOUT EEOC . . .

• EEOC settlements for alleged discriminatory

pay are also on the rise. . .

• FY 2009 $4.8 million in EEOC Equal Pay Act

settlements

• FY 2010 $12.6 million in EEOC Equal Pay Act

settlements

• FY 2011 $23 million in EEOC Equal Pay Act

settlements


• In January 2011, OFCCP published notice

proposing to rescind the Systemic Compensation

Discrimination Standards and Voluntary

Guidelines for Self Evaluation of pay practices

• On January 17, 2012 OFCCP submitted a Second

Notice to Rescind to OMB for approval

• Why rescind? OFCCP believes they are too rigid

• OFCCP wants much greater flexibility to conduct

different types of pay investigations depending

on the facts

• OFCCP acting as if the Standards already gone

WHERE WE STAND TODAY – RESCISSION OF THE STANDARDS AND

GUIDELINES

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OLD OFCCP COMPENSATION ANALYSES

Under the 2006 Standards, at least employers knew the rules . . .

OFCCP would initially run the 30-10-3 tipping point test by job groups

If 30-10-3 test resulted in a “red flag”, OFCCP would require submission of “12-Factor” data to conduct “mini-regression” analysis

OFCCP would conduct a “deep dive” class-action style investigation including on-site investigations, wide-ranging review of personnel documents and policies and extensive interviews

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OFCCP WANTS OPTIONS . . . LOTS OF ‘EM

• Now, OFCCP will use a variety of statistical and non-statistical tools and is out to find and demand back pay for pay disparities both big and small…

COHORTMultiple

Regression

2% or $2K

difference by “pay

division”

Anecdotal with Statistics

Anecdotal without

Statistics

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THE CURRENT COMPENSATION ENFORCEMENT MODEL

• Before, OFCCP looked for big groups to

analyze

SSEGs

Roll-Up to Job Group

• And now for some good news . . .

• Employers asked to present data “in the

manner most consistent with current

compensation system”

• OFCCP currently analyzing data in the

groupings we decide on – so take

advantage and get strategic

Opportunity to present data in positive

light


WHAT ARE THEY LOOKING AT?

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The “Two & Two” Test• Looking for average pay difference of

$2,000 or 2% (or more) between individuals

with the same title

They call it a “screening device” . . .

but there’s no screen

• If Two & Two average difference, OFCCP will

ask for 12-18 points of detailed

compensation and personnel data and

conduct a “deep dive”


HOW ARE THEY LOOKING TO GET IT?

• Big Change: OFCCP is going after TOTAL

COMPENSATION

• This means requests for:- Base Pay- Commissions- Bonuses- Equity- Other types of compensation

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WHAT ARE THEY LOOKING FOR?

• Highly detailed follow-up requests

Complete Wage History

– Individualized documents and data for: ALL merit increases ALL promotion increases ALL equity awards

– For employee’s entire history with the

organization

• For groups of ALL sizes . . . From 2 to 300+

• The OFCCP’s taking it to a new level:

Aggregation of data Enterprise or multi-establishment reviews

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A GAME CHANGER: PROPOSED CHANGES TO THE SCHEDULING

LETTER

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OFCCP wants to dig deeper from the start of the

audit . . .

• Detailed Pay Data as of Feb. 1st for ALL

• Employee-specific data – summary no longer

allowed

• Not permitted to submit by job title

• Breakdown of all compensation components

– bonus, commission, stock options etc.

• Date of hire, PT/FT, contract, temp, etc.

• With recent delivery of 2,000 CSALS, the new

scheduling letter could be in place by the time

your audit letter arrives . . .

• So, consider getting a jump start on this NOW


SO HOW IS TECHNOLOGY MAKING IT EASIER TO BRING SYSTEMIC PAY DISCRIMINATION

CLAIMS?

• Easy to get data. . . Easy to analyze . . . Easy

to find systemic pay trends across the

organization

• HRIS systems allow ready access to huge

amounts of electronic data

• These electronic reports of data easily allow

for “deep dive” analyses of pay trends

• Systemic pay trends discovered “at the touch

of a button”


HOW TO BE PROACTIVE AMIDST THE UNCERTAINTY . . .

• OFCCP’S FIRST STEP IN AUDITS TODAY IS

2% or $2,000 disparity by pay

groupings that employer submits

• SO, NEED TO BE STRATEGIC ABOUT JOB

TITLES

Important pay groupings are as clear

and meaningful as possible – Should mirror your pay process

– Who truly is similarly situated for pay

purposesJOB TITLES need to tell the real story of who truly ought to be compared

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• FOR EXAMPLE… Employer has 100 employees in the job

title “Diagnostic Technician”

But not all 100 do the same thing – in fact,

they do very different things and require

very different education, experience, and

skills DO THIS

Engineering Diagnostic Technician I Communications Diagnostic

Technician II Design Diagnostic Technician III

NOT THIS Diagnostic Technician 21

HOW TO BE PROACTIVE AMIDST THE UNCERTAINTY . . .


• Always conduct statistical analyses on trend

data before submitting to OFCCP Know what the data will show before

submission

Conduct the same analysis as OFCCP

If you identify pay differences, before

submission, determine whether you can

explain

If you can’t, consider making

adjustments before submission

After submission, discuss with OFCCP

scope of data requested, encourage

Agency to focus on “red flags”

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OK, SO THE RULES HAVE CHANGED . . .WHAT CAN I DO NOW FOR AN AUDIT?


• Conduct periodic self-audits of your pay

practices under privilege

Formal Self-Audits

– Statisticians, Counsel, 3rd Party

Vendor

Internal Self-Audit

– Review compensation between

individuals with the same job title

– Investigate underlying pay

disparities to ensure you can defend

it as being job-related and consistent

with business necessity

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OK, WHAT CAN I DO BEFORE AN AUDIT?


PROTECT YOUR SELF-AUDITS

• If in your proactive self-audit you find an

issue you cannot explain, consider making

pay adjustments

But only after getting the advice of

counsel

• To protect about unwanted disclosure and

obligation to produce during litigation, you

should take every precaution to ensure the

highest degree of protection and

confidentiality possible when conducting

self-audits

Conduct self-audits under privilege24


Thank you for attending!

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Please contact us with any questions:

Mickey Silberman, [email protected]

P: (303) 225-2400

Jackson Lewis LLPwww.jacksonlewis.com

mailto:[email protected]

http://www.jacksonlewis.com/

Documents

Enhanced Pay Discrimination Enforcement: What You Should Do To Respond Presented By: Mickey Silberman, Esq. (303) 225-2400 [email protected]