The first actions that a president takes after entering office say a lot about what the leader’s goals will be going forward. And so it was with President Barack Obama, who on Jan. 29, 2009, signed his first bill into law, the Lilly Ledbetter Fair Pay Act, which lengthened the statute of limitations for plaintiffs to file lawsuits alleging pay discrimination.
The act was named after Lilly Ledbetter, who filed a charge with the Equal Employment Opportunity Commission in 1998 against Goodyear Tire and Rubber Co., alleging she was underpaid as an area manager in Gadsden, Ala. because of sex discrimination in violation of Title VII of the Civil Rights Act. She later sued the company and the case eventually reached the U.S. Supreme Court, which denied her claim in 2007, saying it was untimely.
“I do think it set a tone for the administration, and maybe even more than a tone, it showed us what the administration’s priorities would be,” said Sarah Fleisch Fink, director of workplace policy and senior counsel at the National Partnership for Women & Families, which advocates for pay equity for women.
President Obama and executive branch regulatory agencies, particularly the Equal Employment Opportunity Commission, have focused on ensuring that men and women are paid equally, in spite of the fact that the Paycheck Fairness Act, first introduced in Congress in 1997, has yet to win legislative approval. But some efforts by the administration have been controversial.
Perhaps the most talked about action is the EEOC’s revisions to its EEO-1 form. The commission, which prioritizes equal pay in its current strategic enforcement plan, has long required employers with at least 100 workers to disclose demographic information about race, ethnicity and gender of members of their workforce through an annual EEO-1 filing.
But a new version of the form announced in January 2016 and revised in July asks these companies to place employees into 12 pay bands and 10 job categories, and provide aggregate data on their pay so that the commission can use it to help investigate potential pay discrimination.
Companies will be required to turn in their first disclosures under the revised EEO-1 by March 31, 2018, but since the numbers must be taken from 2017 pay data, the data collection process will start much sooner than that across human resources departments.
Equal pay advocates have welcomed the new EEO-1. “We’re glad to see the proposed change, we commented on the proposal in support, and we’ve long thought that an employer being required to do some self-analysis, and reporting that information, is a piece of solving the wage gap,” said Fink. “There are so many different variables in play as to why we still have a pay gap and the lack of information from the employer is one piece.”
But some employers and business groups, while saying they supportequal pay, see the new EEO-1 disclosures as a flawed way of spotting and evaluating potential inequities.
Barry Miller, a partner who represents employers at Seyfarth Shaw, said the disclosures will be a big paperwork burden for companies and that the data they will produce may be inaccurate.
“You’re going to produce all kinds of false positives and false negatives,” he said.
Miller said that each job category contains such a variety of different specific positions that it could be hard to make a really legitimate comparison between men and women using the data gathered for each category. For instance, jobs that can fall under the EEO-1 category of “professional” in one workplace could vary from lawyer to doctor to nurse.
Attorneys for employers are also concerned that companies will have to draw the pay data for the EEO-1 from “Box 1” of each employee’s annual W-2 form. Box 1 of the W-2 shows a worker’s wages, but doesn’t account for factors like how much the worker contributes to a 401(k) as well as other non-discriminatory factors like performance and geographic location. “It’s certainly an incomplete representation of what someone’s compensation is,” said Jill Rosenberg, a partner at Orrick, Herrington & Sutcliffe.
There have also been questions over how the EEOC will use the data. Although there won’t be a public database, Rosenberg said that attorneys in discovery could obtain it if they are involved in a case against a reporting company. “I suspect we’ll see plaintiffs trying to make the argument to get at that information,” she said. Members of the public or the media who want to see the numbers could also make a Freedom of Information Act request, although companies can mount arguments against these types of FOIA queries.
The EEOC has explained that it will share the data it has collected with the U.S. Department of Labor’s Office of Federal Contract Compliance Programs, which deals with government contractors’ employment practices. But the commission hasn’t said whether it will share the data with other federal agencies too.
Outside of the EEOC, the president took action in 2010 by creating an Equal Pay Task Force, made up of representatives from government agencies looking to close pay gaps.
He has also made use of executive orders to try and influence equal pay practices at companies with government contracts: In April 2014, Obama signed Executive Order 13665, which prohibits federal contractors from discharging or discriminating against employees who discuss their paychecks. The administration said in the order that it hoped that more transparency around pay would allow employees to more readily discover if they were experiencing pay discrimination based on their gender or another protected characteristic.
A few months later, Obama signed controversial Executive Order 13673, known as the Fair Pay and Safe Workplaces order, which toughened rules on federal contractors again by requiring them to disclose information about administrative findings of labor violations—including pay discrimination—when applying for contracts, even if the findings haven’t been litigated yet.
Another big agency, the National Labor Relations Board, has joined the pay transparency effort as well, declaring many company handbook policies that prohibit discussion of compensation illegal under Section 7 of the National Labor Relations Act. The section protects employees’ ability to discuss terms and conditions of employment.
The executive branch also has participated in outreach directly to businesses. In June, the administration announced it had created an Equal Pay Pledge, signed by 28 major companies.
Those that signed on to the pledge promised to undergo annual company-wide analyses of compensation to ensure that all workers are being paid equally regardless of gender and other protected characteristics. They also promised to review hiring and promotion practices to ensure that unconscious bias and other structural barriers to success for women and minorities were mitigated.
One of the companies that signed on, Cisco Systems Inc., completed its nationwide audit of pay by gender, race and ethnicity in March 2016. While the company found that its system was fairly equitable on the whole, Saidah Grayson Dill, senior director, Cisco Inc. Global Employment Legal Services and Employee Relations, said that the company did wind up giving about 2 percent of its pay population a pay adjustment.
She noted that this sort of a focus on equal pay as well as diversity and inclusion is good for current employees, and potential future ones.
“A lot of prospective candidates on the job market aren’t only interested in the product or service that you produce, but who your company is,” Dill said. “Are you helping to make things better or are you satisfied with the status quo?”
To read more of our package on the issue of gender pay equity, please go to Assault on Wage Gap Forcing Industry to Pay More Than Lip Service