Labor Department May Ease up on Federal Contractor Pay Discrimination Investigations

Labor Department May Ease up on Federal Contractor Pay Discrimination Investigations

Last month, Bloomberg BNA’s Ben Penn and Porter Wells reported that the US Department of Labor was planning to relax a policy put in place by the Obama administration to vigorously enforce regulations prohibiting gender pay discrimination by organizations that contract with the federal government. The department was said to be issuing new guidance to supplant a 2013 directive that had given the Office of Federal Contract Compliance a mandate to audit federal contractors for salary bias and make its own determinations as to whether workers were employed in identical or comparable roles for that purpose.

The OFCCP had used that directive to force substantial settlements from several large employers over alleged pay discrimination, and it has been at the center of the ongoing dispute between the Labor Department and Google over pay discrepancies the office has said indicate widespread discrimination (Google vigorously denies this and claims to have no statistically significant gender pay gap at all).

The new guidance, Penn and Wells explained, would “allow businesses to shape the random Labor Department audits by determining which workers investigators should be comparing for possible pay bias” instead. This change would be in keeping with Labor Secretary Alexander Acosta’s approach of assuming good faith on the part of businesses and allowing them to admit and correct compliance issues without fault rather than pursuing investigations and lawsuits. After these plans came to light, however, the department may be backtracking, Allen Smith reports at SHRM. Mickey Silberman, an attorney with Fortney & Scott in Denver, tells Smith that the OFCCP, Labor Department, and various stakeholders are now discussing the proposed changes.

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Vermont Enacts Law Restricting Salary History Inquiries

Vermont Enacts Law Restricting Salary History Inquiries

Vermont Governor Phil Scott signed legislation on May 11 that will bar employers from asking job candidates about their salary histories during the recruiting process, Littler Mendelson attorney Joseph A. Lazazzero reports at Lexology:

The new law, H. 294, effective July 1, 2018, prohibits asking a prospective, current, or former employee about or seeking information regarding his or her compensation history. For these purposes, compensation includes base compensation, bonuses, benefits, fringe benefits, and equity-based compensation. Under the new law, employers are also prohibited from requiring that a prospective employee’s current or past compensation satisfy minimum or maximum criteria for employment. If an employer discovers a prospective employee’s salary history, the employer may not determine whether to interview the prospective employee based on this information.

Like similar prohibitions in other states, Vermont’s new law still allows employers to confirm a candidate’s past pay if the candidate discloses it voluntarily, as well as to ask about candidates’ salary expectations. When the bill was introduced in the state legislature in January, its sponsors told Vermont Public Radio that it would help close the state’s gender pay gap, which stands at around 16 percent for full-time workers. The original bill also instructed the Vermont Department of Labor to collect new data on gender pay disparities in the state, VPR reported at the time, but this provision does not appear in the final bill signed by Scott last week.

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Judge: Philadelphia Can Ban Use of Salary Histories in Setting Pay, But Not the Question Itself

Judge: Philadelphia Can Ban Use of Salary Histories in Setting Pay, But Not the Question Itself

A federal judge has partly struck down the ban on salary history inquiries passed by the city of Philadelphia last year, ruling that a prohibition against asking candidates about their past earnings infringes employers’ First Amendment right to free speech. However, US District Judge Mitchell S. Goldberg concluded in his ruling, issued Monday, that the city did have a right to bar employers from basing salary offers on that information as a means of combating wage discrimination:

I conclude that the City’s Inquiry Provision violates the First Amendment. Although the Ordinance represents a significant positive attempt to address the wage gap, the First Amendment compels me to enjoin implementation of the Inquiry Provision. The Reliance Provision, however, does not offend the First Amendment and remains intact.

Accordingly, Joseph DiStefano reported at the Philadelphia Inquirer, both the Chamber of Commerce for Greater Philadelphia, which pursued the lawsuit, and the city found something to celebrate in Monday’s ruling. DiStefano gets a local attorney’s take on what it means for employers:

Under Goldberg’s ruling, “employers have to be careful. You can ask for their prior salary. But, once you know the salary, it’s very difficult to ‘unring that bell,’” and claim there was no discrimination, if employees later find they were underpaid relative to others in the same job, [Tracey Diamond, an employment lawyer at Pepper Hamilton LLP,] added.

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HR Must Lead on Pay Equity. Here’s What It Can Do

HR Must Lead on Pay Equity. Here’s What It Can Do

Organizations today are increasingly compelled to pursue pay equity for a variety of ethical, reputational, and business reasons, and HR is the most essential contributor to that effort, though it is not the only one. In a recent article at Talent Economy, Zenefits Chief People Officer Beth Steinberg outlined some key steps HR leaders and professionals can take to commit their organization to closing pay gaps based on gender or race. Her first piece of advice? “Get the leadership team on board”:

Establishing and promoting pay equity starts with leadership. That doesn’t mean that HR is powerless, but HR is handicapped without support from senior leadership. If leadership isn’t already on board, HR needs to make the case for pay equity and show why it’s important to the bottom line. Fairness, especially fair pay, is a huge factor in employee engagement and motivation. When there is a lack of fairness, people become disengaged.

The takeaway? The CEO and leadership team need to understand the importance of paying employees equally. Cultural tenets and values of a company are no longer intangible benefits that reside in a handbook; people want to work for companies that walk the walk, which necessarily includes, but is not limited to, ensuring fair compensation.

Steinberg’s other key action items for HR are to “do the due diligence” and “create a pay structure that employees understand … rooted in research and solid methodology,” and to be prepared for tougher questions about pay equity from more savvy and better-informed employees: “Around compensation, most people can handle a decision that they don’t agree with as long as they understand that the decision was done in a way that’s fair,” she notes. “And the new generation of employees is going to be more vocal in asking about these things.”

Much of her advice here resonates with the actions our Total Rewards team at CEB, now Gartner, recommends that organizations take based on the findings of our major 2017 study of pay equity.

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Salesforce Finds Closing Pay Gaps Is a Continuous Process

Salesforce Finds Closing Pay Gaps Is a Continuous Process

Salesforce has been on a quest to achieve gender pay equity across its entire workforce since 2015, when CEO Marc Benioff first announced that the company had spent $3 million assessing and closing pay gaps between its male and female employees, affecting 6 percent of its 17,000 employees, or about 1,000 people. However, as Benioff told CBS’s Lesley Stahl on “60 Minutes” last weekend, he and his leadership team at Salesforce soon discovered that closing the pay gap once wasn’t enough:

Marc Benioff: We did it the first time. We were so happy with ourselves. It was great. Then all of a sudden we kind of did our audit again and the same thing happened again. We’re, like, “How can this be?” But it turned out we had bought about two dozen companies. And guess what? When you buy a company, you just don’t buy its technology, you don’t buy its culture, you also buy its pay practices.

Lesley Stahl: So they would come in and the men were paid much more and then that got eaten up into your statistics, into your audit. So you had to redo the whole thing all over again, costing as much as the first time.

Marc Benioff: It cost us as much as the first time. In total, it’s now cost us $6 million.

Lesley Stahl: Are you gonna have to do this audit every year—

Marc Benioff: More than every year. We’re gonna have to do this continuously. This is a constant cadence. You’re gonna have to constantly monitor and keep track of that, but that’s easy today. We run our company the same way every company is run with computers and technology and software. … [T]here’s never been an easier time to make this change.

In a blog post on Tuesday, Salesforce Chief People Officer Cindy Robbins provided more detail about this year’s pay equity adjustment and how the company plans to manage the process going forward, now that they have realized the importance of addressing pay gaps continuously:

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How Do We Close the Gender Pay Gap?

How Do We Close the Gender Pay Gap?

Equal Pay Day is a symbolic event that highlights the pay gap between men and women in the US. Equal Pay Day is held on a Tuesday, representing how far into the next week the average woman has to work to earn what the average man earned the week prior, and in early April to represent how much farther into this year she needs to work to earn as much as he did last year. While individual studies differ slightly, nearly all of them calculate the overall US gender pay gap at around 20 percent, meaning women earn roughly 80 cents to every man’s dollar. (It bears mentioning that these figures are significantly worse for women of color.)

To a significant extent, this gap reflects women being offered lower salaries than men for the same or similar work. Fast Company’s Lydia Dishman points to some recent research by Hired that suggests women are often being lowballed:

The majority (63%) of the time in the U.S., men are offered higher salaries than women for the same role at the same company, according to wage gap data and survey responses compiled by Hired. On average, these companies offer women 4% less than men for the same role, with some offering women up to 45% less. These numbers are likely due to unconscious bias, inconsistent pay practices, and paying new hires based on what they made in their previous role. “Our data found that 66% of the time, women are asking for less money–6% less on average–than men for the same role at the same company,” says Kelli Dragovich, senior vice president of people at Hired. Undervaluing themselves is part of the reason, she says, as 50% of female survey respondents said they experienced impostor syndrome most of the time.

However, even companies that pay men and women equally for equal work still have pay gaps, because women are often concentrated in professions with lower earning potential. Our recent research at CEB, now Gartner, finds that these group-to-group gaps account for most of the global gender pay gap of 27 percent, although 7.4 percentage points remain unexplained by factors like size, industry, geography, education, or experience.

The main cause of this larger pay gap is the sorting of women into lower-paying roles, or occupational segregation, Maggie Koerth-Baker explains at FiveThirtyEight. That doesn’t mean women are choosing to earn less money, however, and “the fact that certain industries are dominated by men or women — and that the men’s jobs pay more — has never just been about what qualifications an individual did or didn’t have, or how tough the job was to do”:

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Salary Histories Can’t Justify Gender-Based Pay Disparities, Ninth Circuit Rules

Salary Histories Can’t Justify Gender-Based Pay Disparities, Ninth Circuit Rules

Differences in past salaries are insufficient to justify disparities in pay between male and female employees in the same role, the Ninth US Circuit Court of Appeals ruled on Monday. In an en banc rehearing of a case decided by a three-judge panel nearly a year ago, the court’s 11 judges unanimously ruled in favor of Aileen Rizo, a California school employee who learned in 2012 that her male counterparts were making more than she was and filed a discrimination suit under the Equal Pay Act.

The panel last year, citing a 1982 ruling by the court that said employers could use salary history information as long as they applied it reasonably, had overturned a 2015 decision by US Magistrate Judge Michael Seng, which held that the Fresno, California, school district’s pay structure perpetuates gender-based wage disparities. Monday’s opinion, authored by the late judge Stephen Reinhardt before his death last month, reaffirmed Seng’s ruling, concluding that ” allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum—would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands”:

We conclude, unhesitatingly, that “any other factor other than sex” is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. It is inconceivable that Congress, in an Act the primary purpose of which was to eliminate long-existing “endemic” sex-based wage disparities, would create an exception for basing new hires’ salaries on those very disparities—disparities that Congress declared are not only related to sex but caused by sex. To accept the County’s argument would be to perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.

Reinhardt’s opinion will cheer critics of salary histories, who argue that using this information to set pay enables the persistence of unjustifiable gender-based pay gaps throughout an employee’s career.

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