The Lilly Ledbetter Fair Pay Act, signed into law in January 2009, put renewed focus on rewards fairness. As employers consider their compensation programs in the post-Ledbetter era, Brian Levine, a Mercer consultant on pay equity and fairness, offers five reasons to remain focused on pay equity:
1. Presidential emphasis. In his January 2010 State of the Union address, President Barack Obama reiterated his administration’s focus on equal pay, noting that “We’re going to crack down on violations of equal pay laws—so that women get equal pay for an equal day’s work.” Coincident with the speech, the president announced the establishment of a National Equal Pay Enforcement Task Force to ensure that the agencies responsible for equal pay enforcement are coordinating efforts and limiting potential gaps in enforcement.
2. Important action on the Paycheck Fairness Act. U.S. Sen. Christopher Dodd, D-Conn., announced that in 2010 the Senate Health, Education, Labor and Pensions (HELP) Committee will hold hearings on the Paycheck Fairness Act, which passed in the House in 2009. This proposed legislation would amend the Equal Pay Act, potentially increasing damage awards and the size of class actions as well as the burden for employers to justify pay differentials.
3. Significant EEOC activity. Under the Obama administration, there has been a significant increase in activity in the federal agencies that oversee pay discrimination. For fiscal year 2009, more than 93,000 workplace discrimination charges were filed with the Equal Employment Opportunity Commission (EEOC)—continuing a record level of activity in 2008. The commission obtained record monetary relief for victims of discrimination in 2009.
4. Impact of cost-cutting measures. Difficult workforce and rewards decisions made in response to the economic downturn (including pay freezes and workforce reductions) might have opened up the potential for pay inequities claims inadvertently.
5. Certain industries at exceptional risk. Based on regulatory developments, some industries are more at risk of having inadvertent pay equity problems or being actively targeted for scrutiny by federal government agencies. Among these:
• Financial services firms will face increased pay equity risk as they shift compensation away from objective, results-based rewards (criticized, fairly or not, as promoting long-term risk for short-term gain) to subjective, less-dynamic base pay rates.
• Construction companies will face increased scrutiny because of federal directives stemming from the American Recovery and Reinvestment Act (ARRA). See the SHRM Online article Companies Seeking Stimulus Funds Should Expect a More Aggressive OFCCP.
• Food services firms, likewise, likely will continue to be targeted heavily for audit by the Office of Federal Contract Compliance Programs (OFCCP).
• Health care organizations are under greater scrutiny as the government looks to establish that they are federal contractors subject to strict nondiscrimination standards.
These factors make a compelling case for employers to address potential pay inequities sooner rather than later, as being proactive can minimize employers' financial and reputational risks. The resources listed below discuss ways to diminish potential legal liability and are worth reviewing:
Managing Pay Equity, SHRM Online Research Articles, September 2009
Ledbetter Act Adds Lengthy To-Do List for HR, SHRM Online Legal Issues, February 2009
Adjusting to the Ledbetter Pay Law, SHRM Online, Compensation Discipline, February 2009
Who Gets More: Harry or Sally? Conducting Meaningful Investigations of Pay Equity, SHRM Online Research Articles, July 2006
Obama, Administration Task Force Call for Enactment of Paycheck Fairness Act, SHRM Online Legal Issues, July 2010
Women Still Playing Catch-Up, Report Finds, SHRM Online Diversity Discipline, February 2010