The topic of a wage gap between genders is hotter than ever, and both the Equal Employment Opportunity Commission (EEOC) and Office of Federal Contract Compliance Programs (OFCCP) continue to make regulatory strides with respect to pay equity for women and minorities. Here are five tips to help plan your strategy for pay equity compliance:
1. Stay on top of new and proposed regulatory requirements
Of particular significance at the federal level is the proposed EEOC requirement for federal contractors to report W-2 earnings with annual EEO-1 filings. It’s more important than ever to monitor the latest fair pay legislation and requirements—particularly laws being enacted at the state level. California and New York are among the first states to pass Fair Pay Acts, with several other states expected to pass fair pay legislation in 2016.
2. Promote pay transparency for employees and applicants
Pay Transparency regulations went into effect January 11, 2016. If your organization has covered federal contracts or subcontracts entered into or modified after January 11, 2016, include the specific nondiscrimination statement prescribed by OFCCP in your employee handbook, electronic and/or physical postings, and in your online application system. Also, post the most current “EEO is the Law” and the “EEO is the Law” Poster Supplement. Find the poster supplement here.
3. Benchmark salaries against market data
Begin with market data as a reference point to build a strong foundation for ongoing pay equity. At least every two years, benchmark jobs against market data within your industry and/or geographic location(s). Gather data at the low, median, and upper end of the market to determine appropriate pay levels for new hires versus tenured employees fully competent in the position. Rely on market data as a framework for making adjustments to individual salaries based on varying levels of compensable knowledge, skills, and abilities while staying within that predetermined range for ongoing pay equity.
4. Document your compensation policies
Item 19 of the current OFCCP Scheduling Letter requires contractors to submit “documentation and polices related to compensation practices.” Have written documentation stating the organization’s compensation philosophy, processes for determining the pay range for a position, and guidelines for making compensation decisions. These guidelines should include starting pay, personnel actions such as promotions, merit pay increases, and variable pay such as bonuses. Be prepared to identify the factors the organization uses to influence compensation.
5. Conduct compensation analysis annually
Each year, conduct a statistical analysis of differences in pay between favored and non-favored groups of employees. Use the results to determine where further review and analysis is necessary and to identify specific individuals whose pay appears to be out of line with others who are similarly situated. Be prepared to make equity adjustments as necessary. Consult with counsel prior to conducting any analyses. Be aware of state laws that may impact the employee population to be analyzed and the predicting variables to be considered. You should also have a plan to periodically analyze actual pay practices against documented pay practices to ensure the compensation system is running as intended.
To learn more about the latest pay equity regulations and enforcement efforts, access this free HR white paper, “From Scrutiny to Transparency OFCCP Pay Enforcement Uncovered.”