Getting paid what you are worth: Part two
Tuesday, March 15, 2016
Speakers
Jennifer Awrey
Mario Barrera
Senior Associate
Partner
Jennifer Awrey is a senior associate in
Norton Rose Fulbright's Los Angeles
office.
Mario Barrera has over 20 years' experience
handling first chair cases and trying those cases
to verdict. As a labor and employment partner in
Norton Rose Fulbright's San Antonio office, Mario
has been involved in individual and
class/collective actions involving race, national
origin, religion and gender discrimination; Age
discrimination and retaliation cases; Workers
compensation retaliation; Misclassification and
overtime claims under the Fair Labor Standards
Act; Discrimination and retaliation claims under
the Americans with Disabilities Act; Discrimination
claims under the Family and Medical Leave Act
(FMLA); Breach of fiduciary claims under the
Employee Retirement Income Security Act
(ERISA); Occupational Safety and Health
Administration Act (OSHA); Restrictive
Covenants; Employment torts and contractual
claims.
She is a member of the employment and
labor practice group. Jennifer represents
employers in all aspects of employment
law, including discrimination, retaliation,
wrongful termination, disability law,
harassment, and wage and hour issues.
She has represented employers in
multiple jurisdictions in federal and state
courts, and in administrative proceedings
before federal agencies. Jennifer has also
assisted employers with claims ranging
from administrative charges and single
plaintiff lawsuits to large wage and hour
class actions.
A portion of Mario's practice also involves
rendering legal advice and opinions on a variety
of issues including all facets of discrimination,
harassment, retaliation, wage and hour, restrictive
covenants, employment agreements, separations,
OSHA, ERISA and collective bargaining issues.
Mario has conducted both employment
investigations and training seminars for a variety
of clients.
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Speakers
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Shafeeqa Giarratani
Derek Rollins
Partner
Counsel
Partner Shafeeqa Giarratani, an Austin native,
practices in the employment and labor,
appellate and litigation groups. She
represents employers in federal and state
court and before administrative agencies and
regulatory agencies. She is a strong advocate
for her clients and regularly handles litigation
matters at both the trial and appellate level, in
alternative dispute resolution and before
governmental agencies.
Derek Rollins is a member of the
employment and labor group of Norton
Rose Fulbright's Austin office. His practice
covers employment litigation, including
discrimination, retaliation, and wage and
hour issues, as well as labor disputes.
Derek represents employers in state and
federal courts, as well as proceedings
before the Texas Workforce Commission
and the Equal Employment Opportunity
Commission.
Shafeeqa has represented management in
civil rights, wrongful discharge, Family and
Medical Leave Act, Fair Labor Standards Act,
employment tort, defamation, breach of
contract, tortious interference and other
employment-related charges and litigation.
She also regularly advises clients that are
federal contractors on affirmative action,
legislative and regulatory changes affecting
employment matters for federal contractors
and Office of Federal Contract Compliance
Program (OFCCP) compliance issues, from
developing affirmative action plans to
representing companies during the audit
process. Shafeeqa also performs supervisory
training seminars, prepares and reviews
personnel handbooks and policies and
advises clients regarding employee retention
and termination.
He is Board Certified in Labor and
Employment Law by the Texas Board of
Legal Specialization.
Agenda
• New EEO-1 Reporting
Requirements
• Pay Equity Compliance
and Penalties
• Best Practices for
Compliance
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Heightened Emphasis on Pay Equity Compliance
• Signature issue for Obama Administration (Ledbetter Act, Equal
Pay Task Force, National Equal Pay Day)
• Election Issue – Gallup Survey found that pay equity was one of
the top six issues rated “extremely or very important” by voters
• Pay equity was the only one where voters said Democrats were in a
better position to address
• A solid majority of Republicans or Republican-leaning voters found
closing the pay gap to be a major priority
• Last webinar discussed increased state legislation
• New state pay equity laws in California, Massachusetts, Minnesota, and
New York; pending elsewhere
• Now increased focus from government agencies (EEO-1
Compensation Data Collection & FLSA revised regulations)
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Increased Focus by the Department of Labor
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New EEO-1 Reporting
Requirements
Current EEO-1 Reporting Requirements
• Applies to:
• Private employers with 100+ employees
• Federal contractors with 50-99 employees
• Requires employers to list number of individuals
employed by job category, and by race, ethnicity, and
sex
• Number of reports varies depending upon whether
business is single-establishment or multiestablishment
• Data pulled from one pay period in July, August, or
September of current survey year
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New EEO-1 Reporting – Requires Inclusion of Pay
• An expected next step:
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President’s National Equal Pay Task Force targeted pay discrimination
Equal Pay Act largely ineffective
National Academy of Sciences study conducted
Emphasized data collection and agency collaboration
• Who would proposed EEO-1 apply to?
• All employers with 100+ employees
• But not federal contractors with 50-99 employees
• Approximately 63 million total employees
• When does it go into effect?
• Comment period ends early April 1, 2016
• First submission date: September 30, 2017
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New EEO-1 Reporting Requests Pay Range Data
• Aggregate data on pay ranges and hours worked
• To be completed across ten job groups
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Increased Regulation – EEO-1 Fair Pay Report
• Any 12 month period between July 1 and September 30
• Employers will report based on W-2 earnings
• Total compensation—information to include wages, salaries, and other
compensation, such as commissions, tips, taxable fringe benefits, and
bonuses.
• Includes full-time, part-time and employees who have not
been employed the full reporting year
• 12 pay bands:
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$19,239 and under
$19,240 - $24,439;
$24,440 - $30,679;
$30,680 - $38,999;
$39,000 - $49,919;
$49,920 - $62,919;
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$62,920 - $80,079;
$80,080 - $101,919;
$101,920 - $128,959;
$128,960 - $163,799;
$163,800 - $207,999; and
$208,000 and over
What Is The Government Going To Do With Your Pay
Data
• EEOC expects to use pay data during charge
investigations and to conduct studies of industry trends
• EEOC will work with the OFCCP to “develop a software
tool that will allow their investigators to conduct initial
analysis by looking at W-2 pay distribution within a single
firm or establishment, and by comparing the firm’s or
establishment’s data to aggregate industry or metropolitanarea data.”
• Completed a Pilot Study in Sep 2015 using “synthetic data”
• EEOC proposes that it would share EEO-1 pay reports
submitted by all employers with the OFCCP
• OFCCP to use pay data reports to target federal
contractors
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Concerns and Criticisms of Proposed Changes
• Confidentiality: Submitted data is “private” and
supposedly protected from FOIA requests, but not
from litigation
• Unqualified data: Pay bands do not consider legallyaccepted variables (seniority, level of responsibility,
production, education)
• Defend yourself: Anticipate “false positives” requiring
defense/explanation from employers
• Investigation/Audit triggers: Data expected to
establish industry compensation standards, leading to
benchmarks for EEOC investigations and audit
selection
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Further Changes to Proposed Regulations?
• Significant employer/industry resistance
• EEOC’s notice underestimates burden hours
• Not enough time to prepare, particularly for employers with
multiple locations
• Data often meaningless using narrow job groups
• Overwhelming potential liability
• Confidentiality of pay data concerns among competing
companies
• Show Cause letters for categorically defensible situations
• More comprehensive study recommended
• Anticipate revision before implementation
• Unclear whether it will decrease employer burden or
increase data refinement (and therefore burden)
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What This Means For Employers
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Pay Equity Compliance and
Penalties
More focus on Pay Transparency
• All employers – National Labor Relations Act
• Prohibits discrimination or retaliation for concerted
activity, including discussion of pay
• Applies to employees
• Federal contractors - Executive Order 13665
• Prohibits discrimination or retaliation for inquiring about,
discussing, or disclosing compensation information
• Applied to applicants and employees (including
supervisors)
• Contractors must disseminate language informing
employees and applicants about the prohibition
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Penalties for Non-Compliant EEO-1 Pay Data
• Failure to timely provide EEO-1 pay data
• No penalties or fines, but…
• Violation/Show Cause letter
• Best case: you timely provide accurate data
• EEOC explicitly says that it will use the pay information “to
discern potential pay discrimination”
• Used to support charges of pay discrimination, initiate
EEOC investigations
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Penalties for Pay Discrimination Claims
• Lilly Ledbetter Fair Pay Act
• Pay claims can be based on any discriminatory pay
reflected in current paycheck
• Penalties for pay discrimination claims – Equal Pay
Act and Title VII
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Back pay
Front pay
Punitive damages
Liquidated damages
Attorneys’ fees
Injunctive relief
Recent EEOC Wage Settlements
• EEOC v. Market Burgers, LLC d/b/a Checkers
• EEOC alleged female shift managers, cashiers, and
sandwich makers made less than male coworkers
• Wages suppressed by job assignments
• $100,000 settlement
• EEOC v. National Railroad Passenger Corp. d/b/a
Amtrak
• EEOC alleged a single female HR manager for wagebased discrimination and retaliation
• Violated the Equal Pay Act and Title VII
• $171,483 settlement plus raise for single employee
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Recent OFCCP Settlements
• Savannah River Nuclear Solutions - $234,895
• 57 female and 15 African American engineering employees
• Paid less than male, white counterparts
• Lahey Clinic - $190,000
• 38 female housekeepers
• Earning 70 cents less per hour than males
• G&K Services - $265,983
• 59 female laundry workers “steered” to lower paying jobs
than men
• Given back wages and all offered higher paying positions
• Medtronic, Inc. - $290,000
• 78 Hispanic entry-level employees in Danvers, MA
• Paid less than white counterparts
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Best Practices for Compliance
Preparing for the new EEO-1 Reporting
Requirements
• The regulations are not final! Submit comments
before the April 1, 2016 deadline
• Determine what time frame to use for W-2 wages
• Determine how to annualize compensation
• Revisit hiring, placement, and promotion standards
• Privileged pay equity analysis
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What We Recommend to Protect Your Organization
Develop Pay
Disclosure Policy
Privileged Pay
Equity Analysis
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Review Pay
Practices
Document,
Document,
Document!
Step 1: Privileged Pay Equity Analysis
 Know what your data says
Privileged Pay
Equity Analysis
 Prepare explanations for defensible,
bona fide differences – even though
new EEO-1 form doesn’t ask
 Resolve problems before 2017
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Step 1: Privileged Pay Equity Analysis
• Involve outside counsel to
maintain privilege
• Protect data from discovery during
litigation
• Bolster argument against FOIA
disclosure
• Formalities are key!
• Craft engagement letter
• Define scope of analysis
• Identify appropriate, narrow control
group
• Restrict internal disclosure
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Step 1: Privileged Pay Equity Analysis
• Key Factors for Analysis
• Know your job groups
• Know your legitimate factors affecting pay
• Think Outside the Box
• Beyond individual pay decisions, are there
reasons why the defined job groups don’t
make sense for your company?
• What is a regression analysis?
• Statistical analysis that groups like employees and takes into account
factors that affect pay
• Use regression analysis to explain why discrepancies may exist, and
to explain why the EEOC’s analysis is incomplete
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Step 1: Privileged Pay Equity Analysis
• How much is too much for pay inequity?
• Small pay differences will add up when aggregated
• “Chance” eliminated by statistics
• From the proposed rule: “The EEOC’s statistical analysis
techniques are consistent with judicially recognized statistical
standards for identifying meaningful discrepancies.”
• Courts generally find “two standard deviations” as probative of
discrimination. See Castaneda v. Partida, 430 U.S. 482, 496-97
(1977); Thomas v. Deloitte Consulting LP, No. Civ. A. 3-02-CV0343, 2004 WL 1960097, *5 (N.D. Tex. Sept. 2, 2004)
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Step 1: Proactive Privileged Pay Analysis
• Pay disparities do not always signal a problem
• Employers often has a non-discriminatory reason for problematic data
• The EEO-1 form does not ask for pay decision explanation, but an
investigator will!
• Internal investigation should include the basis for unexplained data
• Why not just immediately “fix” the numbers?
• Legitimate reasons are your best defense
• “Quick fix” do not address long-term problems
• “Fixes” can create more problems (e.g., reverse discrimination)
• Where no explanation exists, consider pay adjustments:
• Budget for any necessary pay equity adjustments
• Determine best timing for implementing changes
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Step 2: Review Pay Practices
• Prepare written policies on pay to ensure
consistency
 Starting pay
 Increases
 Promotion
• Not just how much, but why
• Periodically review merit increases – at
least once a year
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Review
Pay Practices
Step 3: Draft Written Pay Disclosure Policy
Develop Written
Pay Disclosure
Policy
• How the company will handle
requests for pay information
• Who has access to pay information
• Zero tolerance for pay request
retaliation
• Provision for investigating and
resolving pay-related complaints or
inquiries
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Step 4: Document, Document, Document!
• Document pay decisions
• Create forms for explaining pay
inequity
• Documentation is dynamic – create
paperwork for promotions and
advancements, not just hire/fire
• If you don’t have the resources in
place now, create them before 2017!
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Strong
Documentation
Don’t wait to address pay inequity.
Act now and come out on top!
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contact at Norton Rose Fulbright.
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