The California Fair Pay Act: Ripple Effects on Your Business

Mykkah Herner, MA, CCPModern Compensation Evangelist

Angela Ulman, CCPCompensation Professional

www.payscale.com

15,000 Positions 3500 Customers 11 Countries

250 Compensable Factors54Million Salary Profiles

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Agenda

The California Fair Pay Act

o Why does it matter to me?

o Compliance

o Other Pay Equity Laws

Going beyond mere compliance

What should I do first?

Legal Disclaimer: this is intended to be informational, not to serve as legal advice. If you think you have a potential pay discrimination issue, seek out a lawyer.

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Why should the California Fair Pay Act matter to you?

As California Goes…

…so goes the nation.

My company is in Mississippi!

But… I do have that one employee in California.

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What do you need to know in order to comply with the California Fair Pay Act?

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3 main changes

Definition Secrecy Burden of Proof

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Deeper definition of Fair Pay

Same work requiring same skill, effort, responsibilities, and working conditions

Across all locations

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Pay Secrecy is unacceptable

Communicate their own pay

Talk about other people’s pay *

Inquire about other people’s pay *

No imperative in the law to disclose anything

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Increased Burden of Proof

of pay difference between men and women must be demonstrated to stem from one or combination of

• Merit Process

• Seniority Process

• Production quality or quantity Process

• Bona fide factor other than sex

Implications of 100 Proof

• Clear & documented process for determining hiring rates

• Clear & documented process for allocating increases

• Rationale for differences must be captured

This isn’t the time to give up…

Image from http://www.havingtime.com/10-reasons-you-should-never-give-up/

… on Pay for Performance!

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Increased Burden - bonus proof

Keep your records for 3 years now!

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What other pay equity laws should you be aware of?

Turns out 48/50 States have some version of a pay equity law on the books

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New York’s Equity Law 1/19/2016

• Definition: similar work under similar conditions; rationale for differential pay updated to “bona fide factor other than sex, such as education training or experience”

• Secrecy: NY added the right to inquire about, disclose, and discuss wages

• Proof: burden of proof is on the employer, and the penalty for getting it wrong is big

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Canada has it going on

Employer has burden of proof• Manitoba• New Brunswick• Nova Scotia• Prince Edward Island• Ontario• QuebecPolicy framework for negotiating pay• Saskatchewan• Newfoundland• British Columbia

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Sneak peak into proposed reporting

• *Proposed* by EEOC• 100+ EE employers• Adds 12 pay bands to existing EEO-1 report• Report #EEs on one grid, #Hours on the other• First report due 9/30/2017

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Going beyond mere compliance

It’s about way more

than compliance

Let’s dig deeper…

http://www.payscale.com/data-packages/gender-pay-gap

Why is the difference so big in the uncontrolled gap?

http://www.payscale.com/data-packages/gender-pay-gap

5 factors that affect the gender wage gap:

http://www.payscale.com/data-packages/gender-pay-gap

• Job Type• Job Level• Compensable Factors• Marriage & Family• Unconscious Bias

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Go beyond compliance with fair pay

• Similar work by similar people*• Leadership roles• STEM jobs• Workplace currency & Systematic Bias• Go beyond 2 genders• Aiming for fairness now prepares you for

future legislation

Top companies report gender pay data

Source: http://www.informationisbeautiful.net/visualizations/diversity-in-tech/ Dec 2014

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Paying fairly is brag worthy

• External branding• Internal branding or EVP

Millennials aren’t just employees

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It’s a VUCA world

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Paying Fairly leads to business results

• Make a business case• It’s beyond nice, it’s necessary!• Oh the millennials• Companies that don’t change will fail

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Where do you start?

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• Have a compensation plan• Conduct an audit now • Review and update all documentation• Train executives, managers, and employees• Go *far* beyond compliance

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Mykkah Herner, MA, CCPModern Compensation Evangelist

Angela Ulman, CCPCompensation Professional

www.payscale.com