This Employment Law This Week Deep Dive episode addresses the heightened focus on equal pay and executive compensation in the wake of the #MeToo movement and what that means for employers as they evaluate bonuses and pay structures for the upcoming year. Attorneys Gretchen Harders, Jeffrey Landes, and Marc Mandelman of Epstein Becker Green discuss the following topics: how comparable salaries may not always result in equal pay, recent equal pay law activity, pay transparency and compensation, salary history inquiries, and what’s next for the #MeToo movement.
Read on for more about this episode:
1. The #MeToo Movement Brings Equal Pay into Focus
The #MeToo movement has brought with it a heightened focus on equal pay and executive compensation. As employers are evaluating bonuses and compensation structures this year-end, Gretchen Harders, from Epstein Becker Green, explains how even comparable salaries may not always result in equal pay:
“Looking at overall compensation, particularly in the industries where maybe salary is lock-step by position and where the pay differentials can come into play, are in the bonuses. The only way to completely ensure that you’re in compliance over compensation and bonuses is to do an equity pay audit. There are a number of consultants out there that can come in and look at all the different positions, do the comparisons, run the numbers, and be able to come up with results that really tell you where a company might have some issues.”
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2. Equal Pay Laws Go Local
In 1963, Congress passed the Equal Pay Act (EPA), which amended the Fair Labor Standards Act to require equal payment for “substantially similar” work. States and cities have largely taken it upon themselves to clarify the EPA, and that trend continues today in the context of #MeToo. Jeffrey Landes, from Epstein Becker Green, has more about recent equal pay law activity:
“We’ve seen acceleration of the trend with respect to state and local equal pay changes. Particularly, we’ve seen a broadening of equal pay laws. For example, the federal equal pay law focuses on equal pay for substantially equal work. However, that standard has now been loosened in a number of states. The New Jersey Equal Pay Act that went into effect on July 1 stands out and may be used by others as a model going forward. It is, without question, the most robust equal pay legislation we’ve seen today. For example, while we typically think of pay equity as a gender issue and addressing the gender gap, New Jersey prohibits pay discrimination based on 20 protected categories.”
3. Pay Transparency and Compensation
We’re also seeing more legislative activity concerning pay transparency.
“The pay transparency idea is that you don’t want to prevent employees from speaking to each other about their compensation and disclosing to each other what their salary and wages and compensation is in any given time. And under these state and local laws, employers are not allowed to fire or take any adverse employment action against an employee because they told somebody what their salary was or what their compensation or bonus was.”
4. Salary History Inquiries
More efforts are underway to ban salary history inquiries. Marc Mandelman, from Epstein Becker Green, has more:
“The premise behind salary history legislation is that, on average, women and minorities have historically been paid less than their male or non-minority counterparts, and that basing a person’s pay on what he or she has previously been paid will only perpetuate that trend. A number of jurisdictions have enacted salary history bans and pay transparency laws, and many employers have had to change longstanding hiring and compensation practices in the name of equality. And there isn’t really any proof that these laws will have the desired effect. So, there is some skepticism out there.”
5. What’s Next for #MeToo
Where #MeToo will lead next is uncertain. But moving forward, employers that are proactive put themselves in the best position to succeed. When it comes to equal pay, that means conducting pay audits and making sure the proper policies are in place to ensure compliance with federal, state, and local requirements.
“I think the first step would be to look at compensation policies and procedures. What are in your compensation and bonus policies, and what are the procedures that you use to implement it? Another thing to consider is for bonuses. What are the metrics being used? Are they fixed metrics, are they clear metrics, and how is judgment being applied to the bonus? Who’s making the decisions, and how is discretion being applied to the bonus?”
Stay tuned for further developments that may affect your business.
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