Pay equity explained and what you can do to be ready for review
In today's Bits & Bytes, Scott Kushner, senior consultant at OutSolve and host of Bits & Bytes, dives deep into pay equity with Dr. Thomas Carnahan, principal organizational psychologist and statistician. They discuss what exactly a pay equity report is and what companies can do to make sure they are compliant with pay equity when the the attorney general, OFCCP or EEOC comes knocking.
Scott: Welcome everyone. I'm Scott Kushner, a senior consultant here at Outsolve. I'm here with Dr. Thomas Carnahan, and we are here to discuss pay equity and the various reporting that goes into it. Just to start with, what is the difference between the obligations that clients and contractors will have regarding OFCCP on compliance versus what a pay equity report is and what it does?
Dr. Carnahan: Right. So the OFCCP will come knocking at an audit and will require you to present information as part of item 19, so that they can determine if race or gender are significantly attributing to differences in pay that may exist between men and women and then amongst the races. So that's the thing that they're most concerned with. The states though are passing laws on pay equity that look a little bit deeper into it. Some of the states do more than just race and gender, they do whether homosexuality, and transgender, and age, and everything that's protected under federal or state law. And they require there to be zero reason as the difference between pay to be attributed to gender, or race, or anything else. So, instead of it just being significantly different, if there's any difference that can be attributed to gender, you're in violation of that state's law.
Scott: How do you then go about protecting people in an instance where you find a difference, or where you find problem areas that might exist?
Dr. Carnahan: Right. So we can do a study in which we take a look first at the HR processes and procedures to make sure that you're doing everything by best practices when it comes to pay equity. How you set starting pay, performance management, etc. Then we can do a analysis of your pay grades and pay levels, because these state laws require you to look across what is called comparable worth, so that you can look across job titles in different divisions, different departments. It's not just solely based upon within the job title. So we'd want to make sure the pay grades are set up appropriately.
And then I would use statistics like multiple regression and others to identify why are there differences in people's pay. Now what we hope is that it's based upon time in job, time with company, education, and performance management scores, things like that. But what could happen is that a portion of the differences gets established by race and gender, and then what we want to do is make suggestions on how to alleviate that kind of a problem. Now, doing this study with us is something that's called an affirmative defense, so that if the attorney general, OFCCP, or even EEOC came knocking, you can tell them, "We are proactively working on this, and we're going to take care of this." And, you know, they're not in the business of punishing people who are trying to do the right thing.
Scott: Sure. Now, you're dealing with a lot of sensitive information when that were to occur. I mean, there's a lot of valuable data sets that are gonna be coming, you know, your way or Outsolve's way. How much has to be under attorney-client privilege and what's the protection that is required of that?
Dr. Carnahan: Yeah. So we have kind of two options there. The best option and strongest option is for us to both contract with a third party external lawyer. And we have, you know, people that we work with on this, but to make sure that everything stays a strong attorney-client privileged as possible, you know, we don't want any of this getting out. The second option we have is an internal lawyer, but we just want to make sure that that lawyer that we're communicating with and working with does not have any direct reports and is not part of any kind of decision making at the company, because if they do, then it becomes discoverable.
Scott: Well, thanks so much for the information. Thank you for joining us. I'm Scott Kushner, senior consultant here. This is Dr. Thomas Carnahan. And thanks for stopping by.
Where are You with Pay Equity?
Do any fall under any of these questions? Be prepared when the attorney general, OFCCP or EEOC come knocking.