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Red flag alert: EEOC turning up the heat on pay discrimination

August 16, 2012

Article courtesy of SBAM Approved Partner ASE

By Kevin Marrs  

Those of us still rattled by the impact of the Lilly Ledbetter Fair Pay Act of 2009 may now have more to be concerned about.  According to the Employment Law Daily, a publication of CCH Incorporated, the EEOC is looking at new approaches aimed at uncovering pay discrimination.

Under a pilot program, the EEOC, agency that enforces the federal employment discrimination laws, has begun examine the use of “direct investigations” of employers suspected of violating the Equal Pay Act.  Direct investigations are investigations that are initiated without a claim or charge of pay discrimination. Employers may not be aware that the EEOC has the authority to initiate investigations under rules set forth by the Equal Pay Act and the Age Discrimination in Employment Act. But that is the case, and actually has been since 1979.

According to Senior Attorney-Advisor Justine Lisser, “. . .  [T]he EEOC does not need to wait for a charge of discrimination to be filed, and has the authority to conduct directed investigations of employers to assess whether Equal Pay Act violations are occurring.”

As part of its focus on pay discrimination, the Agency is making other preparations for its assault against pay discrimination:

  • The Agency worked with the National Academy of Sciences to examine the types of data that exists or could be compiled by the agency.
  • The Agency has begun working with other governmental agencies to share best practices.
  • Over 2,000 investigators and enforcement personnel from various agencies—not just the EEOC—received training on compensation discrimination.

This increased emphasis on pay discrimination should make employers pay attention. First, it is uncertain how the EEOC will select employers for investigation, which amounts to a red flag to all employers to prepare.  Many employers have gone several years without thoroughly reviewing their compensation programs.   Any comprehensive review should include the following:        

  • Review or create a comprehensive pay philosophy.  From a pay equity standpoint, a well defined philosophy can set the tone for fair and non-discriminatory pay practices.
  • Review or create a formal pay structure (or structures).  From a pay equity standpoint, pay structures set the parameters and controls used to ensure fair pay between jobs and incumbents. Depending upon the base pay system, further pay equity controls can be integrated into the base pay system.
  • Establish a system of compensation controls. The Human Resource department stands at the front line of proactive risk management and, as a result, should take an active role in auditing pay decisions or other actions that might result in pay discrimination, intentional or otherwise. Activities such as the annual merit review process, performance reviews, and promotions should all be actively monitored for fairness.

Of course, these activities do not come without their challenges.  However, with well designed systems and processes in place, the HR department can better position itself to defend and prevent pay discrimination claims.

For information on how ASE can assist your organization with its compensation program, click here.

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