Pay Equity Compliance 101

by | 28 Jul, 2017

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The topic of a wage gap between genders is hotter than ever, and wage laws are becoming an issue of concern for employers on both the state and national level. In September, the Equal Employment Opportunity Commission (EEOC) released a final version of the Employer Information Report, also known as the EEO-1, which now requires employers with 100 or more employees to provide data on pay to the federal government. The EEOC and the Office of Federal Contract Compliance Programs (OFCPP) continue to make regulatory strides towards pay equity, and employers must be cognizant of how their businesses will be impacted.

Here are some steps employers can take to ensure pay equity compliance:

    • Be aware of new and potential regulations and requirements. The political landscape is very unpredictable, and there are many potential changes on the horizon. Employers must be cognizant of all the potential and current regulations, especially laws being enacted at the state level.
    • Clearly document compensation policies. Every organization, big or small, should have a clearly written document that details the organization’s compensation policy, including how the pay range for a position is determined, and any other guidelines used for making compensation decisions. Furthermore, employers should regularly analyze their compensation policies and make updates as necessary to keep up with new regulations.
  • Train decision makers in the company. After formal policies are developed and/or updated, employers should emphasize the importance of pay equity and pay equity compliance by frequently training interviewers and managers on the importance of pay equity and the steps they need to take to help ensure that the organization remains compliant.
  • Conduct an internal audit of pay practices. Employers should strongly consider enlisting the help of outside counsel to closely examine the compensation given to employees performing very similar roles and identify any significant disparities that should be addressed. If disparities are found, the employer must determine whether or not they can be explained with a reason other than gender. If the disparities cannot be justified for reasons other than gender, the employer must take steps to correct the disparity, ideally before the next EEO-1 report is due.
  • Clearly document all pay decisions. Employers must be diligent in documenting pay decisions to avoid confusion and possible penalties in the future. In the event that the organization faces a lawsuit, it is best to have clear documentations of all past pay decisions so that those involved will be able to know exactly what was happening at the time.

In conclusion, employers simply cannot afford to avoid the issue of pay equity. This is a hot topic, and failure to be knowledgeable about all the state and federal regulations can be very costly down the road. Employers should take proactive steps to be aware of the current and potential wage laws, and take steps to update company policies accordingly and clearly communicate the policy to the organization, especially those in leadership positions.

Tom DiSilva
Tom DiSilva has been providing professional human resource services for over 30 years. As the CEO of Navigate PEO, he actively partners with organizations of all sizes in the Greater New England area and across the country to help their businesses grow. He has expertise in HR and Labor Management, offering guidance and support for key areas of business such as negotiations, operations management, employee coaching, and employee benefits design. He is an active member of The Society for Human Resource Management (SHRM), The National Association of Professional Employer Organizations (NAPEO), Professional Association of Co-Employers (PACE), and The American Payroll Association (APA). He is deeply committed to giving back to the community both personally and through Navigate Cares, which provides support for several nonprofit organizations such as the USO, The Boys & Girls Club, and the 3Point Foundation.

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Disclaimer: this article does not represent expert advice and is provided for informational purposes. Please get in touch if you would like expert HR advice.