March 3, 2010 — Scottsdale, Ariz. — While the signage of the Lilly Ledbetter Fair Pay Act is just over one year old, the focus on rewards fairness should continue, one consulting firm maintains. According to Mercer, the following are five reasons employers should continue to focus on pay equity this year.
Presidential emphasis. In his Jan. 27 State of the Union address, President Obama reiterated his administration’s focus on equal pay, noting that “We’re going to crack down on violations of equal pay laws — so that women get equal pay for an equal day’s work.” Coincident with the speech, the president announced the establishment of a National Equal Pay Enforcement Task Force to ensure that the agencies responsible for equal pay enforcement are coordinating efforts and limiting potential gaps in enforcement.
Important action on the Paycheck Fairness Act. US Sen. Christopher Dodd (D-Conn.), recently announced that the Senate Health, Education, Labor and Pensions (HELP) Committee will soon hold hearings on the Paycheck Fairness Act, which passed in the House last year. This proposed legislation would amend the Equal Pay Act, potentially increasing damage awards and the size of class actions as well as the burden for employers to justify pay differentials.
Significant EEOC activity. This past year saw significant activity within the federal agencies that oversee pay discrimination. For FY 2009, more than 93,000 workplace discrimination charges were filed with the Equal Employment Opportunity Commission (EEOC) — continuing record level of activity in 2008. The commission also obtained record monetary relief for victims of discrimination last year.
Impact of cost-cutting measures. Difficult workforce and rewards decisions made over the past year in response to the economic downturn (for example, pay freezes and workforce reductions) may have inadvertently opened up the potential for pay inequities claims.
Certain industries at exceptional risk. Developments over the past year have indicated that certain industries are more at risk of having inadvertent pay equity problems or being actively targeted for scrutiny by federal government agencies, as follows:
a. Financial services firms will face increased pay equity risk as they shift compensation from objective, results-based rewards to subjective, less-dynamic base pay rates.
b. Construction companies will face increased scrutiny due to federal directives stemming from the American Recovery and Reinvestment Act (ARRA).
c. Health-care organizations are under greater scrutiny as the government looks to establish that they are federal contractors.
d. Food services firms will likely continue to be heavily targeted for audit by the Office of Federal Contract Compliance Programs (OFCCP).
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