Background - Practices (Details)

Pay Equity

From corporate boardrooms and the U.S. Women's Soccer team to the White House and state legislatures, pay equity is among the hottest compliance topics for employers today. Obama Administration officials issued almost daily pronouncements about the pay gap between men and women, the topic was featured at the Oscars, and new studies comparing the pay of women and men emerge regularly. State legislatures, from California and Maryland to New York and Massachusetts, are enacting new Fair Pay laws with requirements that go well above and beyond the requirements of the federal Equal Pay Act and Title VII. Employers are also recognizing that pay equity can be a market differentiator, as companies compete for talent on a global stage.

Crowell & Moring's Pay Equity Team understands the current legal and compliance landscape, existing market conditions, the legitimate Board-level interest in pay equity, and the yearning to be a market leader on pay equity. Beginning with class action employment discrimination litigation targeting performance management and compensation systems in the late 1990s and extending through the current emphasis on pay equity, Crowell & Moring's Pay Equity Team has assisted sophisticated employers in the design, management, and auditing of compensation and performance management systems for nearly two decades.

While class action litigation has ebbed and flowed during this time period, the Office of Federal Contract Compliance Programs has remained the driving force of efforts to address pay equity through audits of federal government contractors and subcontractors. Our OFCCP compliance team is best-in-class, having successfully represented dozens of contractors and subcontractors in OFCCP audits for the last two decades.

We help employers design compensation and performance management policies, practices, and auditing programs to yield industry-leading pay equity programs. We team with preeminent labor economists to conduct privileged analyses of whether an employer has gender (or racial) gaps, not just in base pay and total compensation but in promotions, performance ratings, and individual categories of rewards, including incentive pay and stock.

We obtain information from our clients' compensation teams as to factors that can and should impact pay, promotions or other awards for that client and the extent to which the clients maintain electronic data on those variables. We then work with the labor economists to develop regression models that control for those factors and determine whether any statistically-significant differences exist between men and women or between racial subgroups. If there are statistically-significant variances in pay, we dig further into the pay differences and provide privileged legal advice to our clients regarding those differences. Our clients, armed with our legal advice, assess whether pay adjustments (or adjustments to promotions and other rewards) should be made. We provide clients information on the magnitude of change to bring variances within various statistical thresholds and to parity.

For employers with common review dates for their employees, we conduct "real time" analyses of preliminary performance ratings, merit increases, bonuses, stock awards, and promotions. We then provide legal advice to those employers, permitting review of any areas of vulnerability and potential changes.

We also help clients develop documentation reflecting the organizational levels at which performance rating and compensation decisions are made, the method by which similarly-situated employees are identified, and the factors that impact pay. This is done with an eye toward developing tangible evidence that supports employers' pay practices and statistical methodologies. This proactive evidentiary work is increasingly necessary, as states are redefining, through legislation, how pay comparisons are to be made.

Finally, we provide recommendations for programmatic changes that will help cabin the subjectivity of decision-making and minimize the likelihood of gender- or race-based gaps in rewards, while adhering to principles of meritocracy and pay for performance.