**Advance Copy with background information. **As Delivered will focus on case studies and analytical analyses. Total Rewards and Regulatory Compliance: Getting Ahead of the Tide Chris Gokturk, Employment Advisory Services Inc.(EASI) Jude Sotherlund, Sotherlund Consulting *Advance Copy Select EEO Legislation and Regulations Equal Pay Act of 1963. Title VII of the Civil Rights Act of 1964. Civil Rights Act of 1991. Age Discrimination in Employment Act Americans with Disabilities Act of 1990, Sections 501 and 503 of the Rehabilitation Act of 1973. Executive Order 11246 (41 CFR 60-2). 1
Equal Employment Opportunity Commission (EEOC) Can Issue a Commissioners Charge Predominantly Complaint Driven Daily Press Releases Covering All Mandates: Helmerich & Payne to Pay $59,000 to Settle EEOC Disability Discrimination Suit -4/22/2015 Unit Drilling to Pay $400,000 to Settle EEOC Systemic Sex Discrimination Suit - 4/22/2015 EEOC Sues McLane Foodservice for Disability Discrimination - 4/21/2015 Howard University Will Pay $35,000 to Settle EEOC Disability Discrimination Lawsuit -4/20/2015 EEOC Sues Maryland Insurance Administration for Sex-Based Pay Discrimination - 4/20/2015 Patterson-UTI Drilling to Pay $14.5 Million to Settle Claims of Race / National Origin Discrimination - 4/20/2015 EEOC Landmark Compensation Cases EEOC v. Morgan Stanley on behalf of Allison Schieffelin. Extended Stay Hotels paid $75,800 to Settle EEOC Pay Discrimination Lawsuit, February 2014 Checkers Franchise paid $100,000 to Settle EEOC Pay Discrimination Lawsuit, April 2014 2
Department of Labor/OFCCP Proactive Compliance Reviews of covered Federal contractors. Covered Federal contractors and subcontractors must not discriminate in any employment practice on the basis of race, religion, color, national origin, gender. Requires positive steps to ensure nondiscrimination in all employment practices. Regularly/Routinely Monitor Compensation. MOUs with EEOC. Individual complaints referred. *** EEOC has historically taken the lead. OFCCP Compensation Cases G&K Services, Los Angeles, CA Laundry Workers Differing Wage Rates Back of the House vs. Front of the House $290K to Settle Wage Discrimination Allegation Lahey Clinic, Burlington MA Female Housekeepers paid $0.70 less than Male Housekeepers a $1500/year differential $190K to Settle Wage Discrimination Allegation 3
Recent Developments: Presidential Memorandums Minimum wage of $10.10/hour for Federal SCA Contractors. Up-dating and Modernizing OT Regulations. Prohibition of Retaliation against Employees Discussing their Pay. Regulations requiring additional federal contractor compensation data, similar to the EEO-1. Comment period extended into 2015. State and Local Laws/Provisions Minimum Wage Paid must be the HIGHER of Federal and State KNOW it, Respect it. Know your State s Comparable Worth and Equal Pay/Equal Work Laws Examples: Minnesota: Minnesota Women's Economic Security Act Became Law in 2014 Montana: It is unlawful for the state or any county, municipal entity, school district, public or private corporation, person, or firm to employ women in any occupation within the state for compensation less than that paid to men for equivalent service or for the same amount or class of work or labor in the same industry, school, establishment, office, or place of employment of any kind or description. 4
Compensation Competencies Critical Competency: Working Knowledge of Your Salary Administration System. Critical Competency: Working Knowledge of Your Bonus Incentive Pay Plan(s). Critical Competency: Working Knowledge of Commission-based Plans. Critical Competency: Working Knowledge of Your Long-Term Incentive Programs. Working Knowledge of all Other Forms of Cash and Adjustments. Understand Your Job Structure as it Relates to Compensation How are Positions/Jobs Developed? How are Positions/Jobs Organized? How are your Systems Designed to Operate? Compensation philosophy Compensation structure grades, bands, other Company policies and procedures, both formal and informal How do your Systems Actually Operate? 5
Why the Requirement for a In-Depth Understanding? Why is this important to know? When making decisions that impact an employee s pay, the rules around your compensation system must be followed because In an audit/review investigators will look to ensure an alignment of policy and practice! In a complaint, an enforcement agency will seek fairness and consistency in application! What Affects Current Base Pay? Starting Salary/Wage Rate and Initial Assignment What Affects Starting Pay? What is Documented? Performance Appraisals (Current/Historical) Are SKA Documented? Time in Job and Time to Job Merit Increases (Current/Historical) Promotional Increases Out-of-Cycle Increases 6
Relationship with Performance Performance Management and Evaluation (past and present) What is in Database Format? What are the Guidelines? What is the Relationship between Performance and Merit Increases? What is the Relationship between Performance and Other Forms of Compensation? Case Studies: Scenarios Case One: White House Staff Case Two: I ve Got Nothing Case Three: Mergers and Acquisitions Case Four: A Sophisticated System Doesn t Mean a Compliant System Case Five: The Hodge Podge 7
Perform a Base Pay/Salary Review Review Base Pay According to YOUR SYSTEM 1. Is it operating the same for all? 2. Is there integrity? 3. Are there lawful factors influence pay decisions? 4. Are there variations/deviations from policy? 5. What does base pay look like overall? By department? By division? 6. Monitoring and analysis Review All Other Forms of Compensation Review Each Component Individually and Collectively (Total Cash Compensation) Merit Increases and Merit Increases Bonus Plans Overtime Incentive Compensation Commission-Based Pay Long-Term Awards Exceptions and One-Offs 8
Analytic Analyses By Position: Exact same position/title doing the exact same job under the exact same circumstances. By Position: Exact same position/title not necessarily doing the exact same job under the exact same circumstances. By Position + 1 Level Up By Salary/Wage Grade Federal Contractors: AAP Job Groups and EEO Categories 1. Mean Analysis 2. Median Analysis 3. Distribution Analyses Analytic Analyses 4. Regression Analysis: **Highly recommend speaking with attorneys that the process is as protected as possible. 5. Review all Data PRIOR to Submission to an Enforcement Agency. 9
Analytic Analyses 1. Sample One: No Statistical Significance 2. Sample Two: Statistical Significance 3. Sample Three: Identify Key Influencers 4. Sample Four: Small Groups What to do to Get Ahead of the Tide? Prudent employers will conduct compensation analyses on all forms of compensation regularly/ routinely as part of a proactive, ongoing monitoring process, and will make appropriate pay adjustments regardless of the race or gender of the individuals affected. 10
WANT TO CONNECT? Chris Gokturk, Employment Advisory Services Inc. (EASI) cgokturk@easiconsultants.com, 703.941.5541 Jude Sotherlund, Sotherlund Consulting, jude.sotherlund@gmail.com 321.704.0469 11