Compensation Managers Have Direct Connection With Pay Equity Movement


payequity

Advocates of pay equity will call attention to the gender gap in compensation by marking Equal Pay Day on April 10.

The day isn’t exactly a cause for celebration, especially among the professionals who may be tasked with explaining company compensation practices when federal officials detect signs of pay bias.

Compensation managers and directors are responsible for developing and running their organizations’ pay programs. They also analyze compensation data and are tasked with keeping the programs competitive with market conditions while staying in compliance with state and federal mandates.

The pay equity movement ties in directly with their duties and responsibilities.

State laws on pay equity are growing and worker advocates are calling for more pay transparency in the workplace, said Annette Tyman, a partner at Seyfarth Shaw in Chicago, during a webinar addressing equal pay practices. The Equal Employment Opportunity Commission and the Labor Department’s Office of Federal Contract Compliance Programs continue to focus on pay discrimination, she added.

The March webinar was sponsored by the National Industry Liaison Group, a nonprofit organization representing federal contractors that collaborates with the OFCCP, the EEOC, and other government agencies to support affirmative action and EEO compliance. 

Implications for the Profession

During a question-and-answer period, Tyman was asked how employers should prepare compensation managers and directors who may be required to testify in pay discrimination litigation or interviewed during an OFCCP compliance audit. She also was asked whether the pay equity movement and new laws will affect the role of compensation managers and directors.

“Ultimately, we’ll have to see how the compensation director’s role will change under the new legal landscape. But I would say that you are going to see more sophisticated compensation practices and more reliance on compensation professionals to help guide the discussion on pay equity,”  Tyman replied. “Companies that have strong compensation leadership that understand the [pay equity] issues are going to be the better for it.” 

Comp Leader Goes on the Record

In pay discrimination litigation, a plaintiff’s attorney or the EEOC may seek to depose the employer’s compensation manager or request that the individual testify at trial. The facts of the case, however, will dictate how the employer’s legal team will prepare the compensation manager to discuss the specific issues surrounding the lawsuit, Tyman said.

If the compensation manager is asked to explain how the company sets its pay structure and strategies, Tyman recommended that the person be fully briefed on the company’s compensation data. “Oftentimes, there is a belief that certain factors play a greater role in compensation than others,” she said. But when those factors are analyzed, it may be that compensation is actually driven by another factor the compensation person didn’t know existed, Tyman added.

OFCCP Phone Interviews

The OFCCP is conducting more audits in which a compliance officer asks to interview by telephone a compensation director or manager to learn more about the employer’s pay practices and policies, Tyman said.

The agency wants to know how adjustments and increases are applied to starting pay and compensation, so “it’s really important that the person being interviewed understands what the company’s compensation data looks like,” she said. The individual also should be “armed with the understanding” that pay structures within the organization may vary depending on the department. 

The OFCCP’s goal is to understand the forms of compensation within the organization and the factors relevant to pay, Tyman said. “This is the information the agency is trying to gather through the interview,” she said. The OFCCP will analyze and evaluate the contractor’s compensation data based on the information and factors provided by the compensation manager or director.

Bloomberg Law® helps labor and employment law practitioners provide rapid, accurate and complete advice to clients by bringing together trusted, market-leading Bloomberg BNA content like Daily Labor Report® and treatises like The Fair Labor Standards Act and The Developing Labor Law, with a fully integrated, innovative legal research platform. Click here to request a free trial.