The European Parliament has now formally adopted the Pay Transparency Directive having reached political agreement on its provisions with the Council of the EU at the end of 2022. Its provisions are likely to enter into force in most EU member states
On March 15, 2022, the US Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) issued a new directive putting federal contractors on notice that it will more closely scrutinize their pay equity audits. Making headlines, the directive states that federal contractors are expected to hand over information about their internal pay analyses when being audited by the office, including documents that are protected by the attorney-client privilege and/or work product doctrine.
Executive Order 11246 requires affirmative action and prohibits federal contractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. Contractors also are prohibited from discriminating against applicants or employees because they inquire about, discuss, or disclose their compensation or that of others.
As part of their affirmative action obligations, supply and service contractors are required to perform an in-depth analysis of their total employment practices to determine whether and where impediments to equal employment opportunity exist. This includes conducting an in-depth analysis of their compensation systems to determine whether there are gender-, race-, or ethnicity-based disparities, as provided in 41 CFR 60-2.17(b)(3).3.
To comply with the regulations, most companies doing business with the federal government conduct an evaluation of their pay practices for potential gender, race, or ethnicity-based disparities. Oftentimes, these analyses are performed with the help of outside counsel who provides legal advice regarding, among other things, compliance with the requirements enforced by OFCCP. And, until now, these pay audits have been considered privileged and confidential.
Impact of the new directive
During a compliance evaluation, a supply and service contractor is required to provide OFCCP with compensation data. In addition to requesting additional compensation data, interviews, and employment records, the OFCCP is now making explicit that it may also seek the contractor’s evaluation under § 60-2.17(b)(3), which the OFCCP calls the “pay equity audit.”Continue Reading OFCCP Emboldened To Demand Contractors’ Internal Pay Analyses
The EU Commission has proposed a directive that would reinforce the entitlement to equal pay for men and women for the same work, or work of equal value, including by giving employees the right to comparative pay information and by requiring gender pay gap reporting for employers with 250+ employees, amongst other measures. Some EU member states already have aspects of these rules, while others do not, meaning that the rules could be a significant additional compliance burden for some organisations. The rules, if adopted, would be unlikely to come into force before late 2024.
The EU Commission has proposed a new directive on pay transparency. If adopted, it would:
- Require measures to ensure employers pay the same work, or work of equal value, equally.
- Require employers to provide initial salary (or salary range) information to job applicants, pre-interview.
- Prohibit employers from asking job applicants about salary history.
- Create a right for a worker to request information about:
- Their own pay level
- Average pay levels, broken down by gender and categories of workers doing the same work / work of equal value
- Require gender pay gap (GPG) reporting for employers with 250+ employees.
- Create joint pay assessments if:
- GPG is 5%+ for any category of workers doing the same work or work of equal value, and
- employer has not justified the GPG.
Based on previous experience, we estimate that these proposals, if adopted, would need to be implemented by sometime in late 2024.Continue Reading European Union: Commission Proposes Pay Transparency Rules to Secure Equal Pay
It’s hard to miss the uptick in litigation against high profile US companies over alleged unequal pay for female employees these days. Cases seem to hit the headlines frequently and several targeted industries include professional sports, professional services organizations, and technology companies. With equal pay protections constantly expanding, and employees often seeking class certification, in 2021, employers should be especially diligent in identifying and rectifying unjustified pay disparities.
So, if you need a New Year’s Resolution, consider undertaking a pay equity audit. This will position your company to determine, at baseline, whether any unjustified pay disparities exist, where those disparities lie and proactively take any remedial measures to help mitigate against becoming a headline. In conducting a pay equity audit, employers should pay close attention to the legal backdrop of pay equity, and how that landscape is changing.
As we head into the New Year, here are several US developments companies ought to know:
California Enacts First Employee Data Reporting Law
On September 30, California Gov. Gavin Newsom signed Senate Bill 973, Sen. Hannah-Beth Jackson’s bill relating to annual reporting of employee pay data. SB 973 requires private employers with 100 or more employees to report employee pay data to the Department of Fair Employment and Housing (DFEH) by March 31, 2021, and annually thereafter, for specified job categories by gender, race and ethnicity. California will be the first state to require employers to submit such employee data.Continue Reading US Pay Equity and Transparency Developments: What You Need to Know Going Into 2021
As predicted, on September 30, 2020, California Governor Newsom signed SB 973 into law. SB 973 requires private employers with 100 or more employees to report pay data to the Department of Fair Employment and Housing by March 31, 2021, and by March 31 each year thereafter, for specified job categories by gender, race, and…
Join us in our new Palo Alto office for a breakfast briefing on October 30 as we explore the top 5 trends impacting multinational employers in EMEA.
Hear from leading practitioners in 5 key EMEA jurisdictions – France, Germany, South Africa, Spain and the United Kingdom – as we address these key developments:
This summer the U.S. Women’s Soccer team won more than the World Cup – they’ve had tremendous success in garnering public support in their bid for equal pay. However, beyond the star power of Alex Morgan and Megan Rapinoe, pay equity continues to be a hot button issue for employers in the U.S.
Less than two weeks ago we reported that all employers with 100 or more workers in the US would have until September 30 to provide the EEOC with pay data (read more here).
Then, just days later, on May 3rd, the Justice Department appealed the two rulings resurrecting the Obama-era mandate. Ironically, the appeal…
Last month, we reported that a federal court in Washington D.C. lifted the government’s stay of the revised EEO-1 form that requires companies to submit summary wage data by race/ethnicity and gender. Following the court’s order, uncertainty loomed concerning whether employers would need to include the additional data by the current EEO-1 Report deadline…
Today is Equal Pay Day in the US. It marks the date women need to work into 2019 to earn what men were paid in the previous year. (And, in fact, this particular date does not take into account that women of color are often paid less than white women.)
Collecting, sharing, maintaining (and possibly publishing) diversity data (of any type but including gender pay) remains a significant undertaking for employers. And the complexity compounds for multinationals.
The global trend towards requiring transparency is not slowing. Just recently, France, Spain and soon Ireland have jumped aboard.Continue Reading France, Spain And Soon Ireland, Kick Off New Gender Pay Gap Reporting Requirements