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April 2, 2019 | Payroll Software | Posted by Bob Greene, Senior HR Industry Analyst at Ascentis

What is Equal Pay Day, Anyway?

A bare 24 hours after this blog was originally posted about Equal Pay Day, EEOC Acting Director Victoria Lipnic filed the Trump Administration's response to the DC District Court's ruling on March 4 vacating the Administration's set-aside of EEO-1 Component 2 (W-2 data) filing requirements.  The EEOC is proposing that the 2018 EEO-1 report (filing year of 2019) be split into two separate deadlines:  the current deadline of May 31 for "Component 1" data (all the "stuff" we've been reporting for years), and a new deadline of just four months later (September 30) for "Component 2" data:  W-2 information sorted into 12 separate compensation "bands", as well as hours worked information separated exempt from non-exempt.

This ruling affects an estimated 80,000+ employers in the US.

While it is not clear when or how we will hear of a final ruling by the Court, there appears to be little standing in the way of this being that final word.  Employers are advised to "circle September 30 on their calendars" keep checking the EEOC's reporting website (which, it should be noted, hasn't been updated with this information as of April 7) and ensure they have preparations in place to comply with this new reporting requirement.

Good news for those of you who support gender pay equity principles! Today, April 2, 2019, is Equal Pay Day – the day of the year when a male employee in the same job, with the same experience, and the same background, on average, must start working to earn the same amount of pay by the end of the year as a female employee who started work January 1. And it’s a full EIGHT DAYS earlier than it was last year.

In Need of Continued Improvement

In honor of Equal Pay Day this year, there is a record amount of new information and informative metrics that help us understand the gender pay gap. One report of particular note, published by the Institute for Women’s Policy Research, projects how long it will take until women and men are paid equally in the workplace based on the current rate of the narrowing pay gap. Sneak peek: Female workers compared to male workers, full pay parity will not be achieved until 2059 (40 more years).

The analysis also drills down on racial disparities within the gender gap, using white male workers as the control group, since their average pay is the highest. For white women compared to white men, full parity will be achieved slightly earlier, in 2055. For black women compared to white men, full parity won’t be achieved until 2119. And for Hispanic women compared to white men, full parity will not be achieved based on current disparities and the rate of gap closure, until the year 2224.

A Brief History

In 2018, the gap stood at 22.1% (meaning: the average woman earned 22.1% lower wages for the exact same job, controlling for variables like experience, skills, etc., as the average man.)  A close examination of the change in this gender pay gap over the last 20 years is a classic example of “one step forward, one step back.” And this trend persists, despite the eye-opening facts, per the Pew Research study cited above, that:

(a.) women now compose nearly half the workforce (up from less than 30% of the workforce in 1950)

(b.) women participants in the workforce are now far more likely to be college-educated than their male counterparts (38% of women vs. 34% of men age 25 to 64 having a baccalaureate degree).

Recent Developments

Regular readers of this blog may remember a prior entry in which I reported on the “stand-off” over changes to the EEO-1 report, put in place by the Obama Administration, which would have mandated “banded” annual compensation reporting be added to the existing organizational analysis of gender and race. This change was put on hold by the current Administration. On March 5 of this year the US District Court for the District of Columbia granted summary judgment to plaintiffs National Women’s Law Center effectively reinstating the new compensation reporting requirements.

Wondering what that means for an EEO-1 filing season already under way? (Yes, it opened March 18 and will close May 31.)  I think we’re all in the same boat. The US District Court Judge gave the EEOC and Office of Management and Budget until April 3 to update employers on this requirement.

H.R. 7:  The Paycheck Fairness Act of 2019

On January 30, 2019, Rep. Rosa DeLauro (D-CT-3) introduced the Paycheck Fairness Act and on March 27, it was engrossed (initial final copy published in the House of Representatives). The law amends the Fair Labor Standards Act of 1938 (FLSA) to strengthen gender pay equity provisions, many of which have not previously been amended since the Equal Pay Act of 1963 was originally passed into law.

The bill also takes the opportunity to finalize, and commit to national standards, a number of regulations and laws that have been gaining popularity among the states.  The four most prominent provisions of the bill include:

  • Strengthening the protections of the Equal Pay Act by restricting the application of the “bona fide factor” defense in justifying pay disparities (§3(a)).
  • Introducing a new non-retaliation provision relating to employee discussions of compensation (§3(b)).
  • Formalizing and passing into law the requirement for compensation band reporting to be part of the EEO-1 report (§8).
  • Introducing a formal, nationwide prohibition on asking applicants about wage, salary or benefits history (popular among some states and cities to attempt to curtail the perpetuation of current pay gaps, §10).

It is this bloggers prediction that the bill, while likely to pass the Democrat-controlled House, faces an uphill battle in the Senate and a likely veto by the President.

California Weighs in on Boards of Directors Composition

The State of California has tried a more organic approach to influence employers’ pay equity policies, and time will tell whether it will be effective and if other states will follow California’s example.

On September 30, 2018, then-Governor Jerry Brown signed into law SB-826, which mandates gender diversity on the Boards of Directors of public corporations incorporated in California. Although other states, like Colorado, Illinois, Massachusetts, Pennsylvania and Ohio, have passed non-binding resolutions encouraging gender diversity on public corporations’ Boards, California is the first state to give such a provision the force of law.

SB-826 applies to all publicly traded corporations that are incorporated within California, or that are foreign (e.g., incorporated in Delaware) but headquartered in California. The new California law requires that:

  • By the end of 2019, each publicly traded California corporation must have at least one female director
  • By the end of 2021, each publicly traded California corporation must have:
    • three female directors if the total number of directors is six or more
    • two female directors if the total number of directors is five or more
    • one female director is the total number of directors is 4 or fewer

Bob Greene currently serves as Senior HR Industry Analyst at Ascentis. Bob’s 40 years in the human capital management industry have been spent in practitioner, consultant and vendor/partner roles. As practitioner, he managed payroll for a 5,000-person bank in New Jersey. As consultant, he spent 8 years advising customers in HRMS, and payroll and benefits system design as well as acquisition strategies. Bob also built a strategic HCM advisory practice for Xcelicor (later acquired by Deloitte Consulting.)