46 JULY / AUGUST 2019 HUMAN RESOURCES Pay Equity Reporting obligations and more Pay equity lawsuits and enforcement actions have been on the rise in the past few years. The trend is expected to continue as the Equal Employment Opportunity Commission (EEOC) begins collecting pay data in EEO-1 reports.1 Collection of Pay Data In the wake of the U.S. District Court for the District Court of Columbia’s decision in National Women’s Law Center, et al. v. Office of Management and Budget, et al., certain employers which are required to file EEO-1 reports must now submit pay/hours worked data (known as “Component 2,” or pay data) for calendar years 2017 and 2018 by Sept. 30, 2019.2 EEO-1 filers should begin collecting the pay data, as the process is time-consuming and may involve compiling information from different systems, if payroll records are maintained separately from a human resources information system. Some considerations: • EEO-1 filers with 100 or more employees, including federal contractors,3 are required to file pay data information. • The EEOC requires that covered employers submit aggregate pay (W-2 “Box 1” income) and hours worked data for employees in each of the 10 EEO-1 job categories and 12 specified pay bands. • Employers should track how much time staff spends collecting and reporting pay data. The EEOC has indicated that it is collecting the information so it can assess the burden of the reporting obligation on employers. • The EEOC will use the pay data in enforcement actions, as well as to identify trends and assist employers with assessing pay practices and policies. • Employers should review or audit their current pay practices and address any pay disparities or inequities for female or minority employees, ideally before submitting the EEO-1 pay data. This will help minimize the risk of scrutiny by the EEOC and the possibility of a lawsuit or enforcement action. An effective audit should include: o Reviewing processes of determining salaries and benefits; o Reviewing job evaluation systems to ensure they are consistent and unbiased; o Assessing compensation systems for market competitiveness and consistency (e.g. are you compensating men at or above market rates, but women or other minorities below market rates?); o Reviewing hiring information (e.g. at what level or position and pay rate do you bring men, women and minorities in, and are there differences by gender or race?); o Assessing how raises, bonuses and commissions are determined. • Employers should consider having an experienced labor and employment law firm or attorney assist with the audit so that attorney-client privilege can be invoked whenever possible The Equal Pay Act The Equal Pay Act (EPA), which applies to virtually all employers, prohibits pay discrimination based on gender and has been in effect for over 50 years; however, enforcement actions increased under former President Obama’s administration when the National Equal Pay Enforcement Task Force was created. The task force consists of members of the EEOC, Department of Justice, Office of Personnel Management and Department of Labor. It aggressively went after Debra A. Mastrian Partner SmithAmundsen LLC dmastrian@salawus.com SmithAmundsen LLC is a Diamond Associate Member of the Indiana Bankers Association.
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