Equal pay has become a hot topic on both the state and federal levels. As a woman who is a management-side employment attorney, I sometimes find myself puzzled as to how this topic came to be such a hot button issue, especially since there are already many laws on the books that address equal pay.
On the federal level, we have the Equal Pay Act, Title VII, and the Lily Ledbetter Fair Pay Act, which are enforced by the Equal Employment Opportunity Commission (EEOC). For federal contractors, there are Executive Orders 11246 (affirmative action for women and minorities), 13665 (pay transparency), 13673 (fair pay and safe workplaces), and a Presidential Memorandum on equal pay, all of which are enforced by the Office of Contract Compliance Programs. In Maryland, we have the Maryland Civil Rights Act (the equivalent of Title VII) and the Equal Pay for Equal Work Act. All of these are designed to address and enforce equal pay, regardless of sex or other protected characteristics.
However, just last month, on the 7th anniversary of the signing of his very first law while in office (the Lily Ledbetter Fair Pay Act), President Obama announced that the EEOC was issuing a new rule that would change the EEO-1 reporting requirements for employers with 100 or more employees and for government contractors with more than 50 employees and more than $50,000 in federal contracts or subcontracts. Under the proposed rule, these employers would need to report aggregated data on pay and hours worked by pay bands. A summary of the proposed rule can be found here.
Here in Maryland, there are currently a number of bills pending in the Maryland General Assembly that either amend the Equal Pay for Equal Work Act (to the detriment of employers by either instituting treble damages or other fines and penalties) or create an entirely new Equal Pay Commission, both of which seek to impose more reporting requirements on employers.
While I understand and support the underlying principles of the proposed legislation and regulations, issues arise in instituting these reporting obligations on employers. In addition to the effort and time required for collecting and reporting the data, such reported data does not fully capture the non-discriminatory differences between two individuals. A true assessment of equivalent jobs and the people in those jobs requires a thoughtful and detailed analysis of a multitude factors, including – but certainly not limited to – the following:
- Job knowledge;
- Industry knowledge;
- Certifications or licenses;
- Prior experience;
- Level of education;
- Negotiation of starting salary;
- Salary at prior jobs;
- The choices individuals make with respect to child rearing or other responsibilities (e.g. choosing to work part time, or not to work overtime, or flexible careers with less earning potential);
- Market competitiveness;
- Geographic location.
This nuanced and individual-specific analysis isn’t readily apparent from cold, limited data. I am apprehensive that mandatory reporting will only create more issues for employers when any of these established or potential enforcement agencies come knocking on employers’ doors seeking explanations for what appears to be facially discriminatory – but is not, in fact.
Aside from the significant effort and resulting headaches associated with compiling and reporting the data, another major concern stems from what will happen with this data after it is submitted. The EEOC says that it will use the data to assess complaints of discrimination, focus agency investigations, and identify pay disparities, as well as encourage companies to engage in self-assessment and correction. But questions still remain as to what the EEOC’s evaluation of this data will truly look like. Will it take into account differences in geographic locations, such as cities versus rural areas? Northeast v. Midwest? What about industry distinctions, or non-profit v. for profit institutions? Company size?
And frankly, the data being sought is very similar to what was required by the Equal Opportunity Survey, which was used by the OFCCP from 2000-2005 to collect personnel data, including compensation information, from federal contractors. The EO Survey was abandoned in 2006, after an independent consulting group found that it was ineffective in identifying systemic discrimination!
I am also concerned about the security of this data. We all know that the government isn’t immune from being hacked, so how will the data be submitted in a secure fashion? What will be the fate of this data after it is submitted? Will competitors learn of your wage rates and then attempt to lure away your best employees with an offer of higher pay?
It’s not that I am against equal pay. Indeed, as a woman, that would be just plain ridiculous (of course I want to be paid the same as my equally situated counterparts!). Similarly, I support equal pay for minorities. The point I’m making as a management-side employment attorney is that there are already laws and agencies in place to address equal pay issues. Enacting more laws (with more obligations on employers) and creating even more governmental agencies tasked with investigating discrimination in pay (to no actual effect!), when there are already agencies that do that, is redundant and unnecessarily burdensome on employers.