Q&A: Pay equity analysis not a quick fix
Question: We’re concerned about new state laws on equal pay, and we don’t know where to start with a pay equity analysis. How do we get a handle on our potential exposure?
Answer: You need to do a lot of homework before conducting a pay equity analysis. California, Oregon (as of January 1, 2019), and Washington have all revised their equal pay laws in ways that significantly increase employers’ potential liability for pay discrimination claims. Oregon’s law is particularly concerning because it takes into account 10 protected classes (not just sex, race, and ethnicity as in California, or just gender as in Washington), and it limits the acceptable reasons for differences in pay to a list of only 8 reasons, with no catchall for any other nondiscriminatory reason. You can learn more about these laws by reviewing our Legal Guide, Equal Pay: Avoid the Pitfalls.
Update your job descriptions: In order to determine how to compare people in different jobs (to determine whether people are being paid equally), you’ll need to make sure all of your job descriptions are up-to-date and accurately capture the job duties that people are performing. Thorough and accurate job descriptions are essential to starting this project right.
Determine what jobs to compare: State law defines what jobs to compare. In California, employees can compare jobs that require “substantially similar work.” In Oregon, it’s “work of comparable character” and in Washington it’s “similar working conditions.” This means that you aren’t simply comparing job titles to make sure people are paid the same; you also need to evaluate the various jobs and determine what jobs are on the same playing field (i.e. should an operator of Machine X be compared to an operator of Machine Y?). You’ll be using the job descriptions to determine how best to group jobs together for the pay analysis.
Figure out how pay is determined: Identify and document factors that affect pay for each type of job. These factors will almost certainly differ depending on the job.
Vigilant can help you through these steps if you are a Vigilant member (To help ensure that your analysis is protected under attorney-client privilege, our employment attorneys can provide direction and oversight). The next step is a true pay equity analysis, which should be done by a certified compensation consultant or a person with a statistical degree and experience in equal employment opportunity (EEO) analyses. We can refer you to providers who offer this service. Before tackling this project, you should also ensure that you have budgeted not only for assistance with the compensation analysis, but also for fixing any pay disparities that may show up in the analysis. If you don’t have the budget to make any adjustments, then doing the analysis may not be a good idea.
One final caution: There’s no guarantee that conducting an analysis and fixing the problems that you detect will protect your organization from liability. For one thing, a plaintiff’s attorney may group jobs differently than you do when conducting a pay analysis. Also, the equal pay laws in California, Oregon, and Washington don’t take into account whether differences in pay are statistically significant – any difference in pay on the basis of a protected status can result in liability. Contact your Vigilant employment attorney if you’d like to begin tackling this effort, but go in with your eyes open. If you aren't a Vigilant member, inquire today about how we can help you.