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Keep EEOC at bay with proactive pay audits

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in Discrimination and Harassment,Human Resources

The EEOC has been told to deemphasize collecting compensation data from employers—but that doesn’t mean it stopped aggressively pursuing Equal Pay Act and Title VII sex discrimination in pay cases.

In August, the federal Office of Management and Budget ordered the EEOC to scrap a plan to require employers to report aggregated compensation data, sorted by protected characteristics, on their annual EEO-1 reports. Even so, enforcement of pay equity laws remains robust.

Performing a preemptive pay audit and proactively fixing pay problems is the best defense against being sued.

Case in point: The EEOC sued Spec Formliners on behalf of a female sales representative who claimed that she was paid less than her male counterparts. The suit claimed the woman had to hit higher sales figures to earn the same commission men received.

Before the case went to trial, the court approved a settlement. The female sales representative will receive back pay of about $105,000. But back pay is just a small part of what Spec Formliners agreed to undertake.

The company will also have to invest considerable time and money into efforts to equalize pay across the company. The court required Spec Formliners to hire a consultant to completely revamp its compensation plan, complete a fair pay audit and report back regularly to the EEOC.

In addition, it must conduct anti-discrimination training and let employees know the details of any policy revisions determined necessary. This will surely cost far more than the modest back pay award.

Advice: Identify and resolve any equal pay problems before they morph into an EEOC lawsuit. Rather than having to revamp compensation practices under duress, auditing pay and correcting disparities you discover will cost less and be more effective.

Not only won’t you attract the negative attention that comes from an EEOC lawsuit, but you may even benefit from the positive PR that comes from proactively equalizing pay between the sexes.

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