{"id":38401,"date":"2021-05-04T19:23:36","date_gmt":"2021-05-05T02:23:36","guid":{"rendered":"https:\/\/www.careersingovernment.com\/tools\/?p=38401"},"modified":"2021-05-04T19:23:46","modified_gmt":"2021-05-05T02:23:46","slug":"planning-pay-equity-audits","status":"publish","type":"post","link":"https:\/\/www.careersingovernment.com\/tools\/gov-talk\/about-gov\/planning-pay-equity-audits\/","title":{"rendered":"Planning Pay Equity Audits"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; custom_padding_last_edited=&#8221;on|desktop&#8221; admin_label=&#8221;section&#8221; _builder_version=&#8221;4.9.0&#8243; background_image=&#8221;https:\/\/www.careersingovernment.com\/tools\/wp-content\/uploads\/2021\/05\/1-2.jpeg&#8221; min_height=&#8221;629px&#8221; custom_margin=&#8221;||-6px|||&#8221; custom_padding_tablet=&#8221;50px|0|50px|0&#8243; custom_padding_phone=&#8221;&#8221; padding_mobile=&#8221;off&#8221;][et_pb_row column_structure=&#8221;1_3,2_3&#8243; admin_label=&#8221;row&#8221; _builder_version=&#8221;3.25&#8243; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; custom_padding=&#8221;0px||126px|||&#8221;][et_pb_column type=&#8221;1_3&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][\/et_pb_column][et_pb_column type=&#8221;2_3&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_divider show_divider=&#8221;off&#8221; disabled_on=&#8221;on|on|off&#8221; _builder_version=&#8221;3.23.4&#8243; height=&#8221;200px&#8221;][\/et_pb_divider][et_pb_text _builder_version=&#8221;4.9.0&#8243; text_font=&#8221;PT Sans||||&#8221; text_text_color=&#8221;#ffffff&#8221; text_font_size=&#8221;72&#8243; text_line_height=&#8221;1.1em&#8221; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; max_width=&#8221;620px&#8221; custom_margin=&#8221;0px||0px|&#8221; text_font_size_tablet=&#8221;52&#8243; text_font_size_phone=&#8221;&#8221; text_font_size_last_edited=&#8221;on|tablet&#8221;]<\/p>\n<p><strong>Planning Pay Equity Audits<\/strong><\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; custom_padding_last_edited=&#8221;on|desktop&#8221; _builder_version=&#8221;3.22&#8243; min_height=&#8221;1978px&#8221; custom_margin=&#8221;-86px|||||&#8221; custom_padding=&#8221;11px|||||&#8221; custom_padding_tablet=&#8221;50px|0|50px|0&#8243; custom_padding_phone=&#8221;&#8221; padding_mobile=&#8221;off&#8221;][et_pb_row column_structure=&#8221;1_3,2_3&#8243; column_padding_mobile=&#8221;on&#8221; custom_padding_last_edited=&#8221;on|tablet&#8221; admin_label=&#8221;row&#8221; _builder_version=&#8221;3.25&#8243; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; max_width=&#8221;1200px&#8221; custom_padding=&#8221;20px||0px|&#8221; custom_padding_tablet=&#8221;0px|||&#8221; custom_padding_phone=&#8221;&#8221; use_custom_width=&#8221;on&#8221; custom_width_px=&#8221;1200px&#8221;][et_pb_column type=&#8221;1_3&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_image src=&#8221;https:\/\/www.careersingovernment.com\/tools\/wp-content\/uploads\/2020\/06\/Screen-Shot-2020-06-06-at-9.44.14-AM.png&#8221; title_text=&#8221;Screen Shot 2020-06-06 at 9.44.14 AM&#8221; show_bottom_space=&#8221;off&#8221; align=&#8221;center&#8221; align_tablet=&#8221;center&#8221; align_phone=&#8221;&#8221; align_last_edited=&#8221;on|desktop&#8221; disabled_on=&#8221;on|on|&#8221; _builder_version=&#8221;4.4.6&#8243; animation=&#8221;off&#8221; sticky=&#8221;on&#8221;][\/et_pb_image][et_pb_text disabled_on=&#8221;on|on|&#8221; _builder_version=&#8221;4.4.6&#8243; text_font=&#8221;PT Sans|on|||&#8221; text_text_color=&#8221;#02b875&#8243; text_font_size=&#8221;20&#8243; text_line_height=&#8221;1.2em&#8221; header_text_color=&#8221;#000000&#8243; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; text_orientation=&#8221;center&#8221; max_width=&#8221;140px&#8221; module_alignment=&#8221;center&#8221; custom_margin=&#8221;20px||0px|&#8221;]<span style=\"color: #000000;\"><a style=\"color: #000000;\" href=\"https:\/\/www.careersingovernment.com\/tools\/author\/howardr\/\" target=\"_blank\" rel=\"noopener noreferrer\">HOWARD RISHER<\/a><\/span><br \/>\n[\/et_pb_text][et_pb_text disabled_on=&#8221;on|on|&#8221; _builder_version=&#8221;4.4.6&#8243; text_font=&#8221;PT Serif||on||&#8221; text_text_color=&#8221;#363636&#8243; text_font_size=&#8221;16&#8243; text_line_height=&#8221;1.4em&#8221; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; text_orientation=&#8221;center&#8221; max_width=&#8221;140px&#8221; module_alignment=&#8221;center&#8221; custom_margin=&#8221;10px||60px|&#8221;]Howard Risher has 40 years of experience as a consultant and HR executive with clients in every sector.\u00a0He has published frequently in HR journals and websites.\u00a0 He is the author or co-author of six book and a growing list of ebooks. The most recent is\u00a0<i>Building the Workforce Government Needs.\u00a0\u00a0<\/i>He has a quarterly column in the IPMA HR News.<br \/>\n[\/et_pb_text][\/et_pb_column][et_pb_column type=&#8221;2_3&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_text _builder_version=&#8221;4.9.0&#8243; text_font=&#8221;PT Serif||||&#8221; text_text_color=&#8221;#363636&#8243; text_font_size=&#8221;24&#8243; text_line_height=&#8221;1.5em&#8221; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; max_width=&#8221;720px&#8221; custom_margin=&#8221;0px||0px|&#8221; custom_padding=&#8221;||0px|||&#8221; text_font_size_tablet=&#8221;&#8221; text_font_size_phone=&#8221;&#8221; text_font_size_last_edited=&#8221;on|tablet&#8221;]<\/p>\n<p>The focus on pay equity is heating up.\u00a0 At the federal level, President Biden\u2019s proclamation on National Equal Pay Day, March 24, provided renewed support for equal pay to advance \u201cAmerica\u2019s values of fairness and equity . . .\u201d\u00a0 His statement reaffirms the policies of the Obama Administration and its Equal Pay Pledge.\u00a0 The Pledge made voluntarily, committed employers \u201cto conducting an annual company-wide gender pay analysis across occupations\u201d and to equal pay efforts in broader enterprise-wide initiatives.\u00a0 By late 2016 over 100 companies had signed onto the pledge.\u00a0 Trump tried to cancel Obama\u2019s policies but he was overruled by a federal judge. \u00a0Biden restated his support for pay equity in his first speech to Congress.<\/p>\n<h4>Support for Pay Equity<\/h4>\n<p>Today the federal focus is on the possible passage of the Paycheck Fairness Act, a bill that was first introduced in 1997. \u00a0It was re-introduced in January, passed by the House this April on a party-line vote, and sent to the Senate.\u00a0 The focus is sex discrimination and requires that employers prove that wage discrepancies are tied to legitimate business qualifications and not gender.\u00a0 It also prohibits employer retaliation for inquiring about, discussing, or disclosing employee pay.\u00a0<\/p>\n<p>It&#8217;s opposed by the US Chamber of Commerce that argues it will \u201csignificantly erode employer defenses for legitimate pay disparities . . .\u201d\u00a0<\/p>\n<p>However, the 80 Business Roundtable member companies have signed on to a new multi-year targeted effort to reform companies\u2019 talent management practices.\u00a0 As an element of that commitment, they have \u201ccalled on companies to conduct periodic pay equity reviews and regular pay equity analyses, and to implement processes to review and close gaps. . . .\u201d<\/p>\n<p>An important development in January was a Seventh Circuit court decision (Kellogg v Ball State University) that found the Ledbetter Fair Pay Act\u2019s paycheck accrual rule applies to all alleged discrimination.\u00a0 Prior to this, employees had 180 days to file a complaint.\u00a0 The Court ruled that each new pay period begins an employee claim for pay discrimination, making employers liable for decades-old discriminatory pay decisions.\u00a0 Until discrimination is addressed, the costs continue to increase.\u00a0 That is a new reason to consider a pay equity review.<\/p>\n<p>At the state level, in addition to laws prohibiting discrimination in pay, 17 states have passed pay transparency laws that prohibit employers from restricting employees from discussing or disclosing their pay and from discriminating against those that do.\u00a0 In addition, 15 states and several cities now prohibit employers from asking applicants about their salary history.\u00a0 The two most aggressive requirements are California and Colorado.\u00a0 Their laws are discussed later in the report.<\/p>\n<p>Significantly, Canada passed a Pay Equity Act in 2018 that \u201cwill come into force on a day or days that the Governor in Council will set\u201d.\u00a0 It\u2019s expected to become effective later this year.\u00a0 A pay equity plan, as required by the Act, must, at minimum, do the following:<\/p>\n<ul>\n<li>Identify the different job classes made up of positions in their workplace;<\/li>\n<li>Determine whether each job class is predominantly male, predominantly female, or gender-neutral;<\/li>\n<li>Determine the value of work <em>[presumably based on a job evaluation method]<\/em> of each predominantly female or male job class;<\/li>\n<li>Calculate the compensation of each predominantly female or male job class;<\/li>\n<li>Compare the compensation between predominantly female and male job classes doing work of equal or comparable value.<\/li>\n<\/ul>\n<p>A key feature of the law is that merely developing a plan is not enough. \u00a0Employers must increase pay for identified, underpaid female job classes within three to five years of the Act\u2019s effective date. \u00a0In addition, they have the obligation to close identified pay gaps disclosed during the updates required by the Act.<\/p>\n<p>Pay equity is a global concern beyond North America.\u00a0 This past fall the United Nations held its first International Equal Pay Day.\u00a0 To mark the day,\u202fthe Equal Pay International Coalition called all leaders to take necessary steps to ensure pay equity\u202fis at the heart of\u202fCOVID-19\u202frecovery efforts worldwide.\u202f\u00a0 The World Economic Forum has reported the Global Gender Gap Index since 2006 that combines data measuring the gap between men and women across health, education, politics and economics.\u00a0 On that index the US ranks 51<sup>st<\/sup> out of 149 countries, behind every country in western Europe.<\/p>\n<h4>Pay Equity and Comparable Worth<\/h4>\n<p>The pay equity issue first became a national issue following the passage of the Equal Pay Act in 1963.\u00a0 Then reformers arguing for \u2018comparable worth\u2019 focused on the ratio of women\u2019s to men\u2019s full-time, year-round, median annual earnings. \u00a0In the 1960 Census, women aged 25 to 34 earned 65 percent of what men in the same age group earned. In 1980, the same women, now aged 45 to 54, were earning only 54 percent as much as men in the same age group. \u00a0Census data for 1980 disclosed that female professionals were earning less than semiskilled male blue-collar workers, and female college graduates were earning less than male high school graduates who had not attended college.<\/p>\n<p>The ratio was in part attributable to the pay of sex-segregated, \u201cwomen\u2019s jobs\u201d.\u00a0 The answer was \u201ccomparable worth\u201d, raising wages for traditionally female-dominated jobs to the level of those for arguably comparable male-dominated jobs. \u00a0Further, the decline in the ratio was explained by women dropping out of the workforce to care for their children.<\/p>\n<p>Comparable worth should not be confused with the focus of the Equal Pay Act, \u201cequal pay for equal work\u201d. Rather, comparable worth policies promote equal pay for comparable work. \u00a0Advocates of comparable worth argue that sex discrimination in employment and pay setting reflects centuries of discrimination and the devaluation of the work traditionally performed by females. \u00a0According to supporters, the pay of traditionally women\u2019s jobs should be reset to better reflect the true value of the work.<\/p>\n<p>Through the 1980s lawsuits brought the issue of comparable worth to political prominence. \u00a0In the state of Washington, the AFSCME union won a case that provided raises and compensatory back pay to female state employees, who were found to be earning 20 percent less than their male coworkers. Although the decision was overturned on appeal, the state of Washington agreed to make women\u2019s wages equal to those paid to men. Through the decade pay equity laws were adopted in Canada, Australia, and in a number of states and cities. \u00a0Since then, women have made significant strides in moving into formally male-dominated occupations.\u00a0 Support for comparable worth waned after the 1990 recession, the decline in office support jobs traditionally held by women, and the ongoing changes in the work paradigm.\u00a0<\/p>\n<p>The pay ratio in 1990 was 71.6%.\u00a0 In 2019 it was 82.3%.\u00a0 With the COVID-19 crisis, the ratio would be different today because many of the jobs lost were in retail, travel, and service fields still dominated by women.\u00a0 But a key issue is that equal pay laws focus narrowly on occupational pay data, comparing \u201clike with like\u201d, where the gaps are significantly smaller.\u00a0<\/p>\n<p>A key for employers is the understanding of relevant labor markets, local area differentials, specific skill requirements, and other factors (e.g., volunteering to work overtime) that explain w-2 pay differentials.<\/p>\n<h4>Emerging Federal and State Reporting Requirements<\/h4>\n<p>The EEOC is responsible for enforcing the Equal Pay Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, and Title I of the Americans with Disabilities Act.\u00a0 Most employers with at least 15 employees are covered by EEOC laws (20 employees in age discrimination cases). \u00a0The data that employers are required to report can be used under any of the laws.<\/p>\n<p>More specifically, \u201cThe Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work. \u00a0The jobs need not be identical, but they must be substantially equal. \u00a0Job content (not job titles) determines whether jobs are substantially equal. \u00a0All forms of pay are covered by this law, including salary, overtime pay, bonuses, stock options, profit-sharing, and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.\u201d\u00a0 That\u2019s clearly \u2018total compensation\u2019.<\/p>\n<p>The 2019 &amp; 2020 EEO-1 Component 1 data collection opened on April 26. \u00a0The data collection deadline is July 19.\u00a0 For a time, the EEOC required submission of a Component 2 form reporting the number of male and female employees and the hours worked for 10 job categories, from executives to laborers and service workers.\u00a0 The data are reported for the usual race and ethnic groups.\u00a0 It&#8217;s very possible the form will be required again in the near future.\u00a0<\/p>\n<p>At the state level, the recently enacted laws and associated information required by California and Colorado could be the models for future compliance practices in other states.<\/p>\n<p>Last September <em>California<\/em> adopted a reporting requirement essentially the same as the discontinued EEO \u2013 Component 2 form, showing the number and hours worked by male and female employees in the same 10 job categories.\u00a0 The data had to be reported by March.\u00a0 Over the last few years, the state also broadened the coverage of its equal pay legislation to include race and ethnicity.\u00a0 They also eliminated the requirement that jobs must be located at the same location; now employees need to be paid the same, regardless of location across the state.\u00a0 That ignores the significant differentials for larger, urban areas.<\/p>\n<p><em>Colorado<\/em> banned requests for a salary history in its 2019 Equal Pay for Equal Work Act (effective 1\/1\/2021). \u00a0The law applies to all employers and aims to \u201chelp close the pay gap in Colorado and ensure that employees with similar job duties [regardless of job title] are paid the same wage rate regardless of sex, or sex plus another protected status.\u201d \u00a0The law recognizes \u201cbona fide factors\u201d that can justify pay differentials including:<\/p>\n<p>1. A seniority system;<\/p>\n<p>2. A merit system;<\/p>\n<p>3. A system that measures earnings by quantity or quality of production;<\/p>\n<p>4. The geographic location where the work is performed;<\/p>\n<p>5. Education, training, or experience to the extent that they are reasonably related to the work in question; or<\/p>\n<p>6. Travel, if the travel is a regular and necessary condition of the work performed.<\/p>\n<p>Colorado now requires employers to notify employees of job openings and promotional opportunities, including the pay rate or range, a general description of additional cash payments (e.g., bonuses) and all benefits offered to hired applicants.\u00a0 That is a \u2018red flag\u2019 change that makes it easy for employees to assess their pay.<\/p>\n<p>Significantly the state provided a safe harbor for employers that conduct proactive pay equity audits.\u00a0 Employers may avoid damages if they can demonstrate with reason that they believed they were not in violation of the law.<\/p>\n<h4>The Argument for Supporting Pay Equity<\/h4>\n<p>The most obvious reason is compliance with the law.\u00a0 All the evidence suggests the state laws will become more restrictive and noncompliance more costly.\u00a0 Only Mississippi has not enacted an equal pay act.\u00a0 The transparency laws were all enacted in the past three years.\u00a0 It\u2019s very likely Congress will at some point pass the Paycheck Fairness Act.\u00a0 Plus, there will be increasing pressure from investors as well as public and media attention.\u00a0 There is no evidence support will fade.\u00a0<\/p>\n<p>To emphasize a key point, the focus of the research has been the overall US workforce and pay means and medians \u2013 but the laws are relevant to women and minorities at all levels.\u00a0 Analyses by McKinsey in 2019 found that in the prior five years \u201crepresentation of women at the C-suite level\u201d increased by 24%.\u00a0 At lower levels of management, women increased by over 25%.\u00a0 Their study found 87% of companies were committed to gender diversity, compared with 74% in 2015.\u00a0 President Biden demonstrated his commitment by appointing a number of women to leadership roles in government.<\/p>\n<p>It should not be forgotten that the pay package for executives, managers and many professionals is not limited to salary.\u00a0 Comparative analyses need to take into account cash incentives, income from stock-based plans and eligibility for perquisites.\u00a0 Salaries are often a small percentage of compensation at senior levels.\u00a0<\/p>\n<p>An added factor is the labor market, the talent shortages in a number of fields, and the high demand for professionals in STEM and medical fields.\u00a0 Technology is expected to replace many low skill production jobs but fields where women predominate \u2013 education, business services and healthcare \u2013 will continue in large numbers.\u00a0 Prior to the pandemic, for the first time women outnumbered men in the workforce (excluding agriculture).\u00a0 In knowledge fields, the shifting occupational supply and demand will push up salaries for the better qualified applicants, regardless of gender.\u00a0 The pay gap with lower level jobs will increase over time, making adjustments more costly.\u00a0 That tilts recruiting to focus on women.<\/p>\n<p>Perhaps most important is building a diverse, trusting and committed workforce.\u00a0 That\u2019s important as organizations emerge from the pandemic and begin rebuilding their workforces.\u00a0 The next year will also see efforts to adjust to the \u201cnew normal\u201d with redefined supervisor\/employee relationships, possible reorganizations, and renewed interest in mergers and acquisitions.\u00a0 When the alternatives are assuming a proactive strategy to address equity problems or waiting until problems emerge, employees want to work for forward thinking employers with clear values that enable employees to work for a purpose, and balance work and life.\u00a0<\/p>\n<p>The work environment relevant to compensation management has changed significantly in the past decade or so.\u00a0 More important than the legislation is the availability of pay information on websites like Glassdoor.\u00a0 Those sources are far from valid, the data are fragmented and unreliable \u2013 but the information influences how employees view their pay and their employer.\u00a0 Employers need to consider their policies and their communications in light of what employees learn from those sources.<\/p>\n<p>Now we understand the old \u2018keep them in the dark\u2019 philosophy \u2013 and the repercussions when employees were caught discussing pay &#8212; never benefited employers or their employees.\u00a0 In those years employees had no reason to believe wage and salary management was fair.\u00a0<\/p>\n<p>But pay transparency is a double-edge sword &#8212; it can be beneficial only when an employer is committed to maintaining \u2018fair pay\u2019.\u00a0 An important question is \u2013 How would employees react if salaries were posted on a webpage available to everyone?\u00a0 How would women and people of color react?\u00a0 Leading edge practice is moving in that direction.<\/p>\n<p>We now have a better understanding of how the employee experience influences their commitment \u2013 how pay that is seen as unfair affects their commitment.\u00a0 Their understanding of the pay program and how its managed both internally and relative to market practices is central to its effectiveness.\u00a0 Pay equity studies confirm an employer\u2019s commitment to a fair workplace.\u00a0 This is not an issue that employers can afford to ignore.<\/p>\n<p>The bottom line is that the pattern as confirmed in research across the private sector is broadly consistent \u2013 employers still pay women and people of color less than white men for the same work.\u00a0 That\u2019s true at all career stages which translates into differences in lifetime earnings \u2013 as much or more than $1 million &#8212; and influences family planning decisions that will affect future generations.\u00a0 Organizational leaders need to decide if that is consistent with their management philosophy and values.\u00a0<\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;3.22&#8243; background_color=&#8221;#f7f7f4&#8243; custom_margin=&#8221;-641px|||||&#8221; custom_padding=&#8221;0px||0px|||&#8221;][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; admin_label=&#8221;Section&#8221; _builder_version=&#8221;3.22&#8243; custom_padding=&#8221;0px||0px|&#8221;][et_pb_row column_structure=&#8221;2_3,1_3&#8243; use_custom_gutter=&#8221;on&#8221; gutter_width=&#8221;1&#8243; make_equal=&#8221;on&#8221; column_padding_mobile=&#8221;on&#8221; module_class=&#8221; et_pb_row_fullwidth&#8221; _builder_version=&#8221;3.25&#8243; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; width=&#8221;100%&#8221; width_tablet=&#8221;100%&#8221; width_phone=&#8221;&#8221; width_last_edited=&#8221;on|desktop&#8221; max_width=&#8221;100%&#8221; max_width_tablet=&#8221;100%&#8221; max_width_phone=&#8221;&#8221; max_width_last_edited=&#8221;on|desktop&#8221; custom_padding=&#8221;0px||0px|&#8221; make_fullwidth=&#8221;on&#8221; custom_width_px=&#8221;680px&#8221;][et_pb_column type=&#8221;2_3&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_image src=&#8221;https:\/\/www.careersingovernment.com\/tools\/wp-content\/uploads\/2021\/05\/2-2.jpeg&#8221; title_text=&#8221;Flipping,Of,Unequal,To,Equal,Sign,Between,Man,And,Woman.&#8221; show_bottom_space=&#8221;off&#8221; force_fullwidth=&#8221;on&#8221; align_tablet=&#8221;center&#8221; align_phone=&#8221;&#8221; align_last_edited=&#8221;on|desktop&#8221; _builder_version=&#8221;4.9.0&#8243; custom_margin=&#8221;-1px|||||&#8221; animation=&#8221;off&#8221;][\/et_pb_image][\/et_pb_column][et_pb_column type=&#8221;1_3&#8243; _builder_version=&#8221;3.25&#8243; background_color=&#8221;#efefe9&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_image src=&#8221;https:\/\/www.careersingovernment.com\/tools\/wp-content\/uploads\/2021\/05\/3-5.48.36-PM.jpeg&#8221; alt=&#8221;video presentation&#8221; title_text=&#8221;Symbol,For,The,Equal,Pay,Day.,Dice,Form,The,Expression&#8221; show_bottom_space=&#8221;off&#8221; force_fullwidth=&#8221;on&#8221; align_tablet=&#8221;center&#8221; align_phone=&#8221;&#8221; align_last_edited=&#8221;on|desktop&#8221; _builder_version=&#8221;4.9.0&#8243; animation=&#8221;off&#8221;][\/et_pb_image][et_pb_text disabled_on=&#8221;off|off|&#8221; _builder_version=&#8221;4.9.0&#8243; text_font=&#8221;PT Serif||||&#8221; text_text_color=&#8221;#818178&#8243; text_font_size=&#8221;24&#8243; text_line_height=&#8221;1.4em&#8221; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; text_orientation=&#8221;center&#8221; module_alignment=&#8221;center&#8221; custom_margin=&#8221;20%|10%||10%&#8221; custom_margin_tablet=&#8221;|10%||10%&#8221; custom_margin_phone=&#8221;&#8221; custom_margin_last_edited=&#8221;on|desktop&#8221; text_font_size_tablet=&#8221;&#8221; text_font_size_phone=&#8221;&#8221; text_font_size_last_edited=&#8221;on|phone&#8221;]<\/p>\n<div class=\"page\" title=\"Page 5\">\n<div class=\"section\">\n<div class=\"layoutArea\">\n<div class=\"column\">\n<p>The bottom line is that employers still pay women and people of color less than white men for the same work.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<p>[\/et_pb_text][et_pb_text _builder_version=&#8221;4.4.6&#8243; text_font=&#8221;PT Sans|on|||&#8221; text_text_color=&#8221;#888888&#8243; text_font_size=&#8221;12&#8243; text_letter_spacing=&#8221;2px&#8221; text_line_height=&#8221;1.2em&#8221; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; text_orientation=&#8221;center&#8221; module_alignment=&#8221;center&#8221; custom_margin=&#8221;20px||20%|&#8221; custom_margin_tablet=&#8221;20px|||&#8221; custom_margin_phone=&#8221;&#8221; custom_margin_last_edited=&#8221;on|tablet&#8221;]HOWARD RISHER<br \/>\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row use_custom_gutter=&#8221;on&#8221; gutter_width=&#8221;4&#8243; column_padding_mobile=&#8221;on&#8221; custom_padding_last_edited=&#8221;on|tablet&#8221; admin_label=&#8221;row&#8221; _builder_version=&#8221;3.25&#8243; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; max_width=&#8221;1200px&#8221; custom_padding=&#8221;0px||0px|&#8221; custom_padding_tablet=&#8221;0px|||&#8221; custom_padding_phone=&#8221;&#8221; use_custom_width=&#8221;on&#8221; custom_width_px=&#8221;1200px&#8221;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_text _builder_version=&#8221;4.9.0&#8243; text_font=&#8221;PT Serif||||&#8221; text_text_color=&#8221;#363636&#8243; text_font_size=&#8221;20&#8243; text_line_height=&#8221;1.4em&#8221; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; custom_margin=&#8221;19px||0px|||&#8221; custom_margin_tablet=&#8221;40px||0px|&#8221; custom_margin_phone=&#8221;&#8221; custom_margin_last_edited=&#8221;on|tablet&#8221; text_font_size_tablet=&#8221;&#8221; text_font_size_phone=&#8221;&#8221; text_font_size_last_edited=&#8221;on|tablet&#8221;]<\/p>\n<p><strong>Equal Pay Language \u2013 the Starting Point<\/strong><\/p>\n<p>Federal and state equity laws focus internally on the management of pay for \u2018substantially equal\u2019 jobs.\u00a0 That is a different focus than the advocates of comparable worth.\u00a0 The legal requirement is more consistent with the reality of labor markets and the dynamics that drive up salaries in high-demand fields.<\/p>\n<p>In the 1980s, when pay equity first became a national issue, the early methodologies were a response to the comparable worth argument and followed the logic of job evaluation, covering all exempt jobs in an organization.\u00a0 These systems were the first \u2018comp\u2019 applications using multiple regression to analyze data.\u00a0 A core problem then and now is that few people understand the math; it goes well beyond the basic stat course common in college curriculums.\u00a0 It also goes beyond the requirement in federal and state statutes.<\/p>\n<p>Federal law has been consistent since the passage of the Equal Pay Act in 1963, which requires: \u201cmen and women be given equal pay for equal work in the same establishment. The jobs need not be identical, but they must be substantially equal.\u201d<\/p>\n<p>In planning a pay equity analysis, the starting point is the language on the EEOC website:<\/p>\n<p>Skill: \u201cMeasured by factors such as the experience, ability, education, and training required to perform the job. The issue is what <em>skills are required for the job<\/em>, not what skills the individual employees may have.\u201d<\/p>\n<p>Effort: \u201cThe <em>amount of physical or mental exertion<\/em> needed to perform the job.\u201d\u00a0 The focus is on extra effort.\u00a0 An example from the EEOC website focuses on a job requiring heavy lifting.<\/p>\n<p>Responsibility: \u201cThe <em>degree of accountability<\/em> required in performing the job.\u201d<\/p>\n<p>Working Conditions: \u201cThis encompasses two factors: (1) <em>physical surroundings<\/em> like temperature, fumes, and ventilation; and (2) <em>hazards<\/em>.\u201d<\/p>\n<p>Establishment: \u201cAn establishment is <em>a distinct physical place of business<\/em> rather than an entire business or enterprise consisting of several places of business.\u201d<\/p>\n<p>\u201cPay differentials are permitted when they are based on <em>seniority, merit, quantity or quality of production, or a factor other than sex<\/em>. These are known as &#8220;affirmative defenses&#8221; and it is the employer&#8217;s burden to prove that they apply.\u201d\u00a0 (The key words are in italics.)<\/p>\n<p>That language can be used to explain and justify pay differentials.\u00a0 A clear example is the current focus on cybersecurity specialists and the high demand driving up their salaries.\u00a0 The pay equity argument supports comparing the pay of men and women in this new specialty but combining those specialists with others in the IT field makes no sense since the skill sets, especially the non-technical skills, are not the same.<\/p>\n<p>An important \u2018however\u2019 is that under Title VII, ADEA, and ADA, discrimination claims are <em>not <\/em>limited to jobs that are substantially equal or that employees work in the same establishment.\u00a0 The EEOC website uses the example of a disabled employee paid less and the employer&#8217;s explanation does not satisfactorily explain the differential.<\/p>\n<p><strong>Data Concerns Need to Be Addressed<\/strong><\/p>\n<p>Regardless of the jobs in question, it will be important to confirm relevant, current data are available.\u00a0 Its often the case that multiple data platforms are involved, or the data are incomplete or not current.<\/p>\n<p>For each employee included in the analysis, the data file should include the basics \u2013 salary, grade\/band, age, gender, race\/ethnic group, date of hire, date of last promotion, last performance rating, etc.\u00a0 For jobs where overtime, shift differentials or bonus payments are involved, w-2 earnings is probably the best measure (since differences in male \/female schedules and work hours are relevant). \u00a0Differences in the scope of financial or managerial responsibility should also be considered.<\/p>\n<p>A common problem is that job titles and job descriptions are not current.\u00a0 Or that the same title is used with jobs requiring different skill sets.\u00a0 Similarly, analyses that compare jobs at the same salary grade (or band) should start by confirming jobs are graded accurately.\u00a0 It may be that a survey to confirm job duties and skills is the right first step.\u00a0 A \u2018like with like\u2019 analysis has to start with reliable employee and job information.<\/p>\n<p><strong>Statistical Concerns<\/strong><\/p>\n<p>Simple descriptive statistics \u2013 means, medians and percentiles \u2013 are understood by virtually everyone.\u00a0 But most pay equity studies are based on regression analysis \u2013 which at its simplest can be illustrated on a graph where the X or bottom axis is the independent variable and pay is the Y or dependent axis.<\/p>\n<p>Actual pay decisions are based on several \u201cindependent\u201d variables (simplistically captured in the law by skill, effort, responsibility and working conditions).\u00a0 That means pay equity analyses require multiple regression methods \u2013 and multiple \u2018Y\u2019 variables.\u00a0 Its not a subject a lot of people have studied or used.<\/p>\n<p>One reality of regression analysis is that the math always produces an equation, regardless of the data.\u00a0 That would be true even if a janitor\u2019s pay was compared with the CEOs pay.\u00a0 A related issue is that the equation can be highly influenced by extreme or outlier values \u2013 like the janitor\/CEO example.\u00a0 That makes it important to evaluate the regression results.\u00a0 It can be GIGO \u2013 garbage in, garbage out \u2013 if the assumptions in planning the analysis do not make sense.<\/p>\n<p>An added issue is that simple regression assumes a straight line relationship (to illustrate, that would mean each year of experience adds a constant dollar amount to an employee\u2019s pay).\u00a0 That\u2019s overly simplistic.\u00a0 When salaries are graphed, the data pattern is typically not linear.\u00a0 Pay increases are generally expressed as a percentage, which means the dollar amounts get larger at high salaries.\u00a0 Further, in organizations that relay on a merit matrix based policy, the percentage increases are larger early in a new job but then get smaller as tenure and salaries increase.\u00a0 To accommodate the percentage issue in the analysis, salaries are often switched to logarithmic values.\u00a0 (The step increases in the General Schedule reflect this pattern.)\u00a0 The resulting estimates then have to be switched back to dollars for discussion.<\/p>\n<p>In a multiple regression equation, the coefficient linked to each X variable shows the change in Y for an incremental change in the Y variable.\u00a0 Gender (or race) is normally assigned a 1\/0 value and the coefficient is a measure of the overall difference between men and women.<\/p>\n<p>Another technical problem is multicollinearity which affects the validity or accuracy of the coefficients.\u00a0 That occurs when there is a high intercorrelation between two or more X variables.\u00a0 When the problem exists, it distorts the coefficients as well as the pay estimates. \u00a0Its common with the factors that govern pay since older, longer service, better educated employees are generally higher paid. \u00a0A series of preliminary analyses is useful to assess the relevance of the issue.<\/p>\n<p>A practical issue is that all regression results are best understood and pictured as that X-Y graph with data points plotted above and below the line.\u00a0 In concept that\u2019s true with a multivariate analysis.\u00a0 Pay adjustments close the gaps, effectively raising below-the-line salaries \u2013 relative to the highest salaries.<\/p>\n<p>The concerns make it important to invest adequate upfront time to plan the analyses.\u00a0 To reiterate, regression analyses always produce an equation.\u00a0 That\u2019s true even if its a CEO\/janitor comparison.\u00a0 Once the data crunching ends, the results have to be credible to everyone. \u00a0The credibility is likely to ride on the planning and ongoing communication.<\/p>\n<p>Caveat:\u00a0 Pay analyses can uncover evidence of discrimination and place employers at significant legal risk.\u00a0 Employers should consider if it\u2019s important to preserve attorney-client privilege.<\/p>\n<p><strong>Planning the Job to Job Comparisons<\/strong><\/p>\n<p>An employer\u2019s commitment to pay equity is one of several issues that need to be considered in developing an overall compensation strategy.\u00a0 The core questions are:\u00a0 Is total compensation planned and managed to support the talent management strategy?\u00a0 Is the organization able to hire and retain talent with essential knowledge and skills?\u00a0 If not, is compensation an issue?\u00a0 Does the management of financial rewards engage employees and support planned performance levels?\u00a0 And of course &#8211; Is there evidence of bias or discrimination in the management of compensation?<\/p>\n<p>If the answer to the final question is affirmative or uncertain, it warrants the investment to develop and assess the evidence.\u00a0 Over and above what is essentially a \u2018CYA\u2019 reason, conducting a pay equity analysis sends an important message.\u00a0 When the analysis is initiated to avoid litigation, narrowly defined job-to-job comparisons are warranted.\u00a0 But if leaders are making a commitment to employees, the message is important and the goal argues for a somewhat broader grouping of jobs.<\/p>\n<p>The necessary analyses can be done behind closed doors but that is taking a significant risk.\u00a0 The initiative will have more value if employees are updated as the project unfolds.\u00a0 Even better is involving them in the planning and analyses and in developing recommendations.\u00a0 That is a common strategy when new pay programs are developed in higher education and healthcare.\u00a0 Experience with employee teams shows they take their responsibility and their planning decisions very seriously.<\/p>\n<p>To make certain any adjustments address the right issues, an early step employers should consider is soliciting feedback from managers and employees.\u00a0 Bias as well as discrimination is generally not flagrant or simple so focus groups are likely to be the most informative sources.\u00a0 But the old saying is relevant &#8212; Don&#8217;t ask if you don&#8217;t want to know the answer.<\/p>\n<p>Every employer should plan to consider what pay equity means within their talent management strategy, work environment, and recent or planned organizational changes.\u00a0 If a reorganization or merger is in future plans, an equity audit should be included in the planning.<\/p>\n<p>The strategy for developing an understanding and the steps to address problems need to be consistent with the values of leaders and their approach to addressing problems. \u00a0In more cautious environments that could translate into limiting the analysis to specific jobs with the same or similar titles.\u00a0 It could also mean limiting the analysis to separate work locations (except in California).<\/p>\n<p>The planning focuses on three core issues:\u00a0 the jobs and career ladders to be compared, the factors are seen as relevant to pay management \u2013 grades, skills, education, experience, performance, etc \u2013 and the database.\u00a0 The common data element of course is gender (or race\/ethnic group).<\/p>\n<p>Two additional issues need to be confirmed before starting the analysis \u2013 top management\u2019s commitment and the plan to address needed adjustments.\u00a0 A communication strategy should also be confirmed.<\/p>\n<p><strong>Setting the Stage for Talent Management<\/strong><\/p>\n<p>Three decades ago, the workforce was managed as a cost.\u00a0 HR was an administrative function.\u00a0 Then Gallup concluded that engaged workers are far more productive \u2013 as much as 30 to 40% more.\u00a0 About the same time the Great Places to Work Institute was created and initiated the lists that are now found in numerous websites and publications here and in other countries.\u00a0 The pandemic gave every employer a reason to value committed workers.\u00a0 Now people management is a key to success.<\/p>\n<p>A pay equity analysis will help to understand the past.\u00a0 It provides insight into what factors have affected pay and careers.\u00a0 Differences will become apparent across large organizations.\u00a0 That\u2019s true at each level of the organization. \u00a0The analysis could provide insight relevant to each employee.\u00a0 Regression equations provide estimates of gender neutral, \u201cfair\u201d pay for each employee.\u00a0 Employers need to use the evidence to address problems.<\/p>\n<p>Going forward, dashboards can be used to highlight departmental or job family issues and to keep managers and possibly employees informed.\u00a0 The dashboards set the stage for future equity audits.<\/p>\n<p>With broader planning, the data collection can generate the information needed to assess additional talent management concerns \u2013<\/p>\n<ul>\n<li>To confirm salary grade\/band levels;<\/li>\n<li>To confirm or define career ladder skill profiles;<\/li>\n<li>To set the stage for market analyses;<\/li>\n<li>For managers and supervisors, to compare their budget and talent management responsibilities.<\/li>\n<\/ul>\n<p>Compensation is typically not the highest priority in attracting and retaining talent but it\u2019s always a consideration.\u00a0 The management of pay as careers unfold sends important messages.\u00a0 With the new emphasis on transparency, employees expect to be kept informed.\u00a0 They want to know where they stand.\u00a0 They will compare notes with co-workers.\u00a0 A commitment from leaders will be important.<\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=&#8221;1&#8243; _builder_version=&#8221;4.9.0&#8243; custom_margin=&#8221;20px||20px||false|false&#8221; 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