Equal Pay Is Here To Stay

As predictions abound regarding what a Trump presidency will mean for employers, including which laws and regulations might be amended, scaled back, or repealed all together, the issue of pay equity is likely here to stay.  Over the past year, numerous states – including several with Republican governors – have enacted aggressive equal pay legislation, following California’s lead in 2015.  Additionally, activist shareholder groups continue to exert pressure by filing proposals that, if passed, require companies to disclose publicly the percentage “pay gap” between male and female employees, and planned steps to address it.  And while pay equity is not at the top of Trump’s political agenda, his daughter Ivanka has been an equal pay advocate, perhaps signaling that the EEOC’s final rule requiring employers with more than 100 employees to report W-2 pay data to the federal government through new EEO-1 reporting requirements may not be on the Trump chopping block.  Accordingly, smart employers will stay the course on equal pay, including by following these recommendations:

  • As we’ve previously blogged, the first submission of compensation data through the revised EEO-1 report is not due until March 2018. Accordingly, employers should consider a “trial run” in March 2017 (based on 2016 W-2 data).  To be clear, this “trial run” would not constitute a meaningful pay equity analysis, for reasons we’ve previously discussed.  It would, however, help employers determine if there are particular areas where the EEOC may focus in an investigation.  It also will help determine if any observable patterns exist (for example, purported differences in the average wages for men and women in certain job categories, or a lack of females in certain job categories) that may lead EEOC to question whether the employer has compensation disparities or engages in job steering.
  • In addition to replicating the EEO-1 data submission, employers also should conduct privileged compensation analyses to determine if true unexplained disparities exist that warrant addressing, and to determine where the greatest areas of risk exist. Such analyses may include:
    • A nationwide analysis, controlling for relevant factors, to determine if the company has an overall “wage gap.” This type of analysis would be particularly useful for an employer facing an activist shareholder proposal, and/or an employer who otherwise is considering (or has decided to) make a public disclosure regarding wage parity.  In cases of public disclosure, additional precautions to preserve privilege of the underlying analysis should be taken.
    • An analysis based on EEO-1 establishment to determine the employer’s defense or response in the event the EEOC focuses on a particular location, based on the data submitted through the EEO-1 report.
    • For companies with significant employee populations in states like California, New York or Massachusetts, a state-based analysis that considers the particular standards and requirements of the state-based equal pay laws.
    • For companies with international employee populations (particularly in the UK, where certain pay disclosures will be required), an analysis of compensation data outside the US, taking into consideration any relevant non-US laws.

For additional developments in the area of equal pay, stay turned to Orrick’s Equal Pay Pulse blog.