Companies Feeling Pressure to Confirm they Pay Employees “Equally”

Increasingly, high-profile companies in the tech industry are feeling the pressure to publicly share employee pay information and address any existing “pay gaps.”  This has led to a number of recent press releases from Silicon Valley employers proclaiming “equal pay” within their organizations.

Most recently, in connection with Equal Pay Day, Facebook, Inc. and Microsoft Corp both publicly announced they pay male and female employees equally.  Microsoft went so far as to disclose its female employees earned 99.8 cents for every 1.00 dollar earned by men in the company and also shared data on pay equality for minority employees.

While other companies likely have, or soon will, feel the pressure for pay transparency, there are important considerations to take into account before doing so.  Some things to keep in mind include:

  • What type of analyses will the company rely on to substantiate such a pronouncement?
  • How will the analyses be conducted to protect them under privilege?
  • How will this information be utilized by the company, existing and former employees and other third-parties?

Importantly, if employers are going to make public statements about paying their employees “equally,” they first should conduct pay equity analyses to substantiate these claims and ensure the analyses are protected under privilege.  [Note: By “pay equity analyses,” we mean comparing employees to one another, not to market.  Many organizations conduct market analyses, but do not actually review pay equity for their employees within their organizations.]  However, with this increasing pressure on employers to make “equal pay” statements, many requests to analyze pay data come directly from the C-suite, so ensure you are aware of when this occurs and your organization is running these analyses properly and they are protected under privilege.

Department of Labor Regulatory Agenda Update

The Department of Labor has released its Spring 2016 regulatory agenda.  While the agency has accomplished many things already this year there are still a couple of items it would like to check off its list, including the following:

There was no new information provided in connection with EEOC’s proposed changes to the EEO-1 report for the collection of pay data.

Stay tuned for further updates.

Final Revised Overtime Rule Released by Department of Labor

The U.S Department of Labor’s Wage and Hour Division has finalized its much anticipated revisions to the rules governing overtime compensation. The revisions, in part, increase the income level of those who are exempt from overtime pay to $47,476, almost doubling the prior threshold, allowing a greater number of employees to qualify for overtime pay.

According to the White House, the modifications are expected to extend overtime protections to an additional 4.2 million Americans and significantly increase wages for workers over the next decade. The revisions come at a time when the country, and federal contractors in particular, are seeing the Obama Administration and the federal agencies “double-down” on commitment to fair pay.

The new regulations, with which employers will have until December 1, 2016 to comply, are yet another addition to the Agency’s pay enforcement toolbox which already includes Federal Minimum Wage, Pay Transparency regulations, Directive 307 and Item 19 pay data submission requirements for OFCCP audits. The toolbox will soon be expanded further with the new EEO-1 pay data collection tool.

Employers have experienced invigorated pay investigations during OFCCP compliance reviews, and have already started seeing compliance officers inquire about compliance with Federal Minimum Wage standards. Consistent with its pay enforcement agenda, we expect to see inquiries about compliance with these new overtime standards once they go into effect.

For more information about these new regulations, please join our Wage & Hour colleagues on Monday, May 23, 2016 at 11:30 Eastern for a webinar discussing the changes.

Webinar on New FAAP Directive Announced

In connection with the release of its updated FAAP Directive, Directive 2013-01, OFCCP will host a complimentary webinar on May 19, 2016 discussing Functional Affirmative Action Programs.

Information about registering for the webinar is available on OFCCP’s website.

OFCCP Publishes Finalized Updated FAAP Directive

OFCCP has received approval from OMB for revisions to the Agency’s Functional Affirmative Action Program (FAAP) directive.  The revised Directive 305 went into effect on April 28, 2016.  In response to public comments received, OFCCP made modifications to its proposed revised directive, as reflected in the supporting statement filed with OMB.

OFCCP last updated its FAAP directive in January 2013 which significantly changed the Functional Affirmative Action Program.

Fair Pay & Safe Workplaces Proposed Regulations Sent to OMB

We’ve learned the Office of Management and Budget has received for consideration the proposed regulations and guidance implementing the Fair Pay & Safe Workplaces Executive Order.  This is the next step in the regulatory review process and indicates the regulations and guidance are one step closer to finalization.  To be clear, the documents need OMB approval before being final.

And given the controversy surrounding the order and the implementing documents, its anticipated there will be legal challenges initiated soon after the regulations and guidance are finalized.

Whether changes have been made to the proposed regulations and/or guidance is unknown at this point as the version of the documents sent to OMB are not public at this time.

It remains to be seen how long OMB will take to review the proposals but we will update as soon as we have additional information.

National Equal Pay Day 2016

April 12, 2016 is National Equal Pay Day – the date which symbolizes the additional days into the current year women must work, on average, to reach the average pay of men during the previous year.

In the past year, the emphasis on fair pay has continued to grow. In fact, 2015 and the early parts of 2016 have seen increased emphasis and focus on identifying, exposing and eradicating pay discrimination.

With the enactment of the California Fair Pay Act, and passage of similar laws in New York and other jurisdictions, employers across the country (not just federal contractors) need to be aware of obligations (and prohibitions) when it comes to pay equity.

Additionally, with the EEOC proposal to collect pay data which, if made final, would require all employers with at least 100 employees to annually submit employee pay information to the federal government, employers need to take a hard look at their pay practices to ensure they do not impose barriers to fair pay.  For covered federal government contractors there is a duty to undertake an annual review of your pay systems.

So what does this mean?

  • Employers should consider undertaking proactive pay analyses
  • The analyses should be conducted under privilege
  • Companies should develop a plan to address unexplained pay differences identified by the analyses

In an increasingly transparent landscape, where there is a growing expectation to share pay information, make sure your company understands the impact of its comp practices before it is required, or decides, to disclose the information because, “what you don’t know, CAN hurt you.”

Comments Submitted on EEO-1 Pay Data Proposal

As part of the vibrant dialogue currently underway surrounding the EEOC’s proposal for modification of the annual EEO-1 Report to include information on pay, Jackson Lewis submitted feedback for the Agency’s consideration.

During the public comment period, which closed April 1, 2016, Matt Camardella, Stephanie Lewis, Jennifer Seda and Stacey Bastone prepared and submitted a thoughtful and detailed comment expressing concern with and offering practical suggestions for improvement of the EEOC’s proposal.  The comment allowed the firm, and our clients’, voices to be heard on this  important subject.

Jackson Lewis’ comment, in addition to others submitted during this time, are now under consideration by EEOC in connection with the feedback received by the Agency as part of its public hearing on March 16, 2016.  What the Agency will do with the feedback remains to be seen.


Additional Extension of Paid Sick Leave Comment Period

The Department of Labor has again extended the public comment period for Executive Order 13706.  Public comments are now due April 25, 2016.  This is the second extension of the public comment period.

Pursuant to President’s Obama Order, the Agency has until September 30, 2016 to implement a final rule.

Wyoming Governor Signs Veteran Preference Law

Veterans are continuing to receive support in their quest for employment with Wyoming being the latest state to join the ranks of those permitting a preference to be granted based on veteran status, including spouses of disabled or deceased veterans.  The law will go into effect July 1, 2016.

Governor Matt Mead’s signing of the new law coincides with the release of new veteran unemployment numbers which show the rate of unemployment for veterans who have served since 9/11 continuing to fall.  As of this week the unemployment rate, at 5.8 percent, is at an all time low.  The unemployment rate for all veterans has also decline to 4.6 percent.

As a reminder, federal contractors subject to VEVRAA have 7% annual veteran hiring benchmark.