Employment Law Lookout

Compliance Concept on İnterface Touch ScreenThe Employment Law Lookout is taking a holiday break this week, but will resume delivering insightful discourse and updates on the day’s most pressing workplace issues next week.

In the meantime, we want to wish all of our readers, contributors, and editors a safe and happy (and warm) holiday season.  We hope you are able to spend time with family, friends, and loved ones and rest assured knowing that we’ll be on the lookout for more management insights to bring you in 2017.

Thank you and Happy Holidays.

By Michael Wahlander

Seyfarth Synopsis: Within the last few years, the California Legislature has amended laws related to an employee’s right to inspect personnel records, intending to ensure employees have access to those records. Since then, employers have seen more such requests, claims made before the Labor Commissioner, and even lawsuits over production of personnel files. We offer here some tips on how to comply.

What Is This Letter and What Do I Do About It?

Your company receives a letter from a former employee (or a lawyer) asking to inspect the personnel file or “employment records.” What (if anything) should you do in response?

How and when a California employer responds to these requests can have legal consequences. That’s right—employers can be sued (or even face criminal liability) over how they did, or did not, respond to personnel file requests.

The proper response depends, first, on what the employee is asking to inspect. In California, three principal statutes govern employee requests to inspect personnel records—Labor Code §§ 1198.5, 226, and 432. See below for details.

Labor Code § 1198.5

Section 1198.5 says that employees (and former employees) have the right to inspect personnel records maintained by the employer “related to the employee’s performance or to any grievance concerning the employee.” Employers must allow inspection or copying within thirty (30) days of the request, which can be made by the employee or their representative (often an attorney). That time period can be extended by five (5) days by mutual agreement.

Covered documents: Under the terms of the statute, it appears that documents such as performance reviews, commendation letters, disciplinary notices (“write-ups”), corrective action plans, and complaints about the employee would likely be covered.

The language in Section in 1198.5 is broad; it uses the terms “related to” and “concerning.” As a result, determining exactly what other documents might be covered can be a challenge. But the Labor Commissioner has issued some guidance on its website on what might be included in a “personnel file,” including, in addition to the above, things like an employment application, notices of leaves of absence or vacation, education and training notices, and attendance records. Unfortunately, there is no appellate case interpreting the scope of the current statutory language. So the overall scope of the statute still remains an open-ended question.

Nevertheless, the statute excludes certain files. For most employers, those files are (1) records about a criminal offense, (2) letters of reference, and (3) ratings, reports or records obtained before the employee’s employment, prepared by identifiable examination committee members, or obtained in connection with a promotional examination. In addition, employers can redact the names of any non-supervisory employee mentioned in the requesting employee’s file.

There are also situations when the statute does not apply. For example, if an employee (or former employee) files a lawsuit that “relates to a personnel matter” against the employer, then the right to inspect or copy the records ceases during the pendency of the lawsuit. The inclusion of this provision strongly suggests that Section 1198.5 is not a replacement for broad civil discovery.

What happens if I forget to produce records in time? If the employer does not permit the inspection or copying of these records in time, the employee may bring an action to obtain a court order (injunction) for the employer to comply with the statute. Employees are also entitled to a statutory penalty of $750 AND an award of attorneys’ fees and costs for bringing the action. And failure to comply is a criminal infraction. Ouch!

Labor Code § 226

Section 226 requires California employers to furnish employees with itemized wage statements that show nine (9) specific categories of information, such as all hourly rates, hours worked, gross wages earned, etc. The employer must provide these wage statements at the time employees are paid or semi-monthly. The specific information required and the entire text of the statute can be found here.

Covered documents: The scope of this one is easier than Section 1198.5. In addition to requiring itemized wage statements, this section also requires the employer to produce those wage statements to employees on request or a computer-generated report that shows all nine (9) categories of information required. Employers must make the records available to the employee within twenty-one (21) days.

What happens if I forget to produce records in time? Section 226 has remedies similar to those available under Section 1198.5. Section 226 also authorizes the employee to sue for a court order requiring the employer to produce the information and also a penalty of $750, and employees can also recover attorneys’ fees for bringing the lawsuit. Violation of the statute is also a criminal infraction. But unlike Section 1198.5, there is no exception for pending litigation. Yikes!

Labor Code § 432

Section 432 applies to any document that an employee (or job applicant) “signs” that is related to obtaining or holding employment. Upon request, the employer must provide those documents. Fortunately, this statute is simpler than the others. There is no timeline for production and there is no private right of action to enforce compliance.

But that does not mean that employers should ignore requests under this statute. As a practical matter, documents covered by this section can also be covered by Section 1198.5 (i.e., signed performance reviews or signed disciplinary write-ups). More importantly, failure to comply with such a request is a misdemeanor. And there is also no exception for pending litigation. Wow!

Covered documents: As mentioned, Section 432 covers any document the employee signed related to “obtaining” or “holding” employment. Examples include job applications, handbook acknowledgments, arbitration agreements, job descriptions, and any signed policy acknowledgments (anti-harassment, retaliation, discrimination, at-will employment, meal/rest break polices, etc.).

Workplace Solutions

Employers often wonder if they have to produce “every” record about an employee in response to these requests. As the statutes indicate, the answer is “no”— only documents that fall within the categories requested need to be produced. Employers must also remember to protect other important rights. Indeed, personnel issues often implicate attorney-client privilege, attorney work-product, proprietary information, and privacy issues. As a result, responding to personnel file requests often requires a case-by-case approach.

If you would like assistance in ensuring your company’s compliance with a personnel file request, or if you have any questions raised in this post, then please do not hesitate to contact the author or any other member of Seyfarth’s Labor and Employment Group.

Edited by Coby M. Turner.

 

 

By Matthew J. Gagnon, Christopher J. DeGroff, and Gerald L. Maatman, Jr.

Seyfarth Synopsis: With the end of another EEOC fiscal year employers look with anticipation to what the year-end trends can tell us about the sometimes elusive EEOC litigation agenda. In years past, the EEOC has engaged in a “filing frenzy,” with dozens of lawsuits filed in the waning days of the fiscal year. Although there was an uptick in filings this year, the EEOC’s FY 2016 went out with a whimper and not a roar.

We have prepared the following chart, which shows the total monthly filings for FY 2013-2016, which highlights the EEOC’s historical year-end filings compared to the somewhat tepid activity that we saw this year.


 

 

 

 

 

 

As with prior years, we anticipate that the EEOC may continue to file cases well into the night in the courthouses of the Western states, so the final tally may not be known for another 48 hours. But at the time of publication, the raw numbers show that the EEOC filed 136 lawsuits in FY 2016 (99 merits lawsuits and 37 subpoena enforcement actions). This is significantly less than prior years. (See here, here, here, and here.) The reason for this significant drop in lawsuits most likely can be attributed to the EEOC’s limited budget coupled to an already bloated litigation inventory. The fact that this is an election year with all of the possible changes that may represent could also be impacting the EEOC’s willingness to commit to additional litigation so close to November.

FY 2016 was originally planned to be the final year of the EEOC’s 2013-2016 Strategic Enforcement Plan (“SEP”). The EEOC developed the SEP in 2012 in order to set its priorities and goals for enforcement activity through 2016. Last year, the EEOC received permission from the Office of Management and Budget to delay the release of a new SEP until 2018 so that the Commission could align its strategic planning with other agencies. Although the SEP has now been extended through 2018, this year still marks the final planned year, and provides a useful moment in time to look back and take stock of where the agency has driven its enforcement program over the past four years.

Cases Filed By EEOC District Offices

Location is always a key factor for defending against EEOC litigation. Year after year, certain EEOC district offices distinguish themselves by the number of cases that they file. The map below shows the number of filings by each district office in FY 2016.


 

 

 

 

 

 

 

 

 

Filings by district office in FY 2016 were pretty much on par with prior years with one glaring exception. Year over year, Chicago has been the consistent leader in terms of total cases filed. Last year alone, the Chicago office filed 27 lawsuits. This year, the Chicago office filed only 7, a shockingly low number for that office. The other traditional filing leaders stayed consistent with prior years, and some even ticked up a bit in FY 2016. The Philadelphia office filed 22 lawsuits in FY 2016, up from 19 last year. The Charlotte office filed 16 lawsuits this year, compared with 13 last year. The Phoenix office filed 17 lawsuits in FY 2016, the same as last year. The bar chart below compares the number of filings from each office for FY 2013 – FY 2016.


What Do The FY 2016 Filings Say About The EEOC’s Priorities?

Each fiscal year we analyze the EEOC’s filings to determine substantive trends. The following chart shows the number of claims categorized by statute, along with a further division of the largest category – Title VII – by discrimination theory.

As with prior years, Title VII cases were the majority of cases filed, making up 41% of all filings (as compared with 55% in FY 2015 and 57% in FY 2014). This is not particularly surprising given the number of protected groups covered by the statute. ADA cases also made up a significant percentage of the EEOC’s filings, totaling 41% this year. Together, complaints alleging discrimination under those two statues made up 82% of all cases filed in FY 2016. Age cases represented a relatively small 5% of the overall cases.

 

 

 

 

 

 

 

 

 

 

 

 

In late August, the EEOC issued its final revision to the Enforcement Guidance on Retaliation and Related Issues (which we discuss here), replacing the 18 year old Section 8, “Retaliation” portion of the Compliance Manual last updated in 1998. This revision touches upon all of the statutes which the Commission enforces, and covers the legal analysis used to define evidence that supports retaliation claims as well as retaliation remedies, legal access for persons with disabilities under the ADA, and even a play-by-play of employer/employee interactions that might prompt retaliation.

Considering the EEOC’s renewed focus on this area, we analyzed the FY 2016 retaliation cases to test which discrimination claims are most often paired with a retaliation claim. The following chart shows which types of discrimination were paired with retaliation allegations in FY 2016:

 

 

 

 

 

Sex + retaliation cases make up the largest percentage of these claims at 46%, followed by race discrimination at 27%, pay discrimination at 13%, age discrimination at 7%, and disability discrimination at 7%. Pregnancy discrimination, national origin discrimination, religious discrimination, and genetic discrimination all had zero claims of retaliation.

In addition to the revised retaliation guidelines, the EEOC also revised its Employer Information Report (EEO-1) yesterday to require employers to submit information regarding employee pay range and hours worked. The Commission asserts that the purpose of collecting this pay data along with race, ethnicity, sex, and job category would be to “assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.” It is, by most accounts, an ominous development for the future of EEOC litigation.

The EEOC also issued its final rules on employer wellness programs as they relate to the ADA and GINA, which clarify the implications of those rules and their interactions with employer wellness programs. We reported on this development here. Harassment was also a hot button issue for the Commission in FY 2016, with a particular focus on Muslims and people of Middle Eastern origin. Among other things, the EEOC issued a call-to-action for employers to ‘reboot’ harassment prevention efforts (which we discuss here).

Insight & Implications For Employers: Conclusions

As with prior years, this year’s analysis reveals that the EEOC’s activities continue to be guided by the 2012 SEP. For the past four years, we have reported on the many ways that the SEP has guided and shaped the EEOC’s enforcement initiatives – and with that, the landscape of labor and employment law. FY 2016 was the last year that was planned to be covered by the 2012 SEP. As we enter FY 2017, it is unclear whether we will see more of the same, or if we will see the EEOC branching out to new priorities and initiatives that may line up with its vision for the 2018 SEP and the future of EEOC litigation.

We will continue to analyze the data and filings from FY 2016 to extract additional insight about the EEOC’s litigation priorities, and what employers should watch out for in FY 2017 and beyond. We look forward to distilling those observations into our annual analysis of trends and developments affecting EEOC litigation. We hope that you are looking forward to that publication as much as we are, and that you continue to find it a useful reference and guide to developments in EEOC litigation. Please stay tuned, loyal blog readers!

By Ming Henderson

In the last five years, with the development of information technology and mobile devices, the distinction between being “at work” and “off work” has been profoundly altered.

Working time is no longer confined to being in an office and working days are both more intense and infinitely extendable, making monitoring working time even more complex.

Coupled with a global economy, many employees feel that they are permanently connected to their work, irrespective of time zones and local laws.

EU working time laws are rapidly developing to deal with this trend and the negative impact it’s having on employee health and wellbeing. The sanctions for employers breaching these laws are potentially serious. This means that one of the most challenging issues facing global companies today is juggling time zones effectively and responding to business 24/7 without falling foul of working time laws.

Trying to figure out the local time of employees based in different time zones is a complex task in itself. Thankfully, there are a variety of user-friendly apps that can do the maths for you. But understanding the labour law rules when employees are operating in a different time zone is even more daunting, and unfortunately, no app is available to crunch this data for us.

For example, employees working on global projects will often be expected to dial into calls outside their regular local business hours and/or to respond to emails late at night. Though most internationally-minded employees may be willing to accommodate the requirements of their manager or client based overseas, in the EU, asking employees to work beyond their standard hours poses many challenges for employers in complying with working time regulations.

The EU Directive on Working Time (2003/88/EC) of 4 November 2003, directly connects working time to health and safety matters. For this reason, it specifies a series of principles employees should respect to preserve their sanity:

  • a maximum of 48 working hours per week;
  • a minimum rest period of 11 hours, every 24 hours;
  • a minimum weekly rest period of 24 uninterrupted hours for each 7-day period (in addition to the 11 hours above); and
  • paid annual leave of at least 4 weeks per year.

There are additional working time arrangements for specific industries such as the transport sector and sea workers, and to make things more complex, each jurisdiction within the EU has supplemented the Directive with its own laws and sector specific agreements, so the variations are quasi-infinite.

The potential sanctions for non-compliance are high-stakes for employers. They include penalties and claims for overtime payments (sometimes over several years prior) and can extend to criminal records for the company’s representatives, damages for breach of contract or liability for work-related injury and harassment. In recent debates, it has been suggested by the EU commission and selected EU countries that not recording all workers’ working hours might constitute an offence of undeclared work, which in turn is connected to modern slavery, and can have a severe impact on an organisation’s reputation and brand.

In recent debates, it has been suggested by the EU commission and selected EU countries that not recording all workers’ working hours might constitute an offence of undeclared work, which in turn is connected to modern slavery, and can have a severe impact on an organisation’s reputation and brand.

France, a pioneer in intricate working time laws, introduced a new Labour Law on 2 August 2016, safeguarding an employee’s ‘right and duty to switch off from work’. This right was previously found in the Syntec collective bargaining agreement governing most software companies in France and was utilised in a handful of workplace agreements of major French groups and even some German groups. They have made this part of the labour code, thus obliging all employers in France to include this topic in their annual negotiations effective January 2017.

In practice, French employees will still be allowed to occasionally join late calls or work with colleagues in different time zones, but employers should avoid expecting this routinely from their employees and managers. Though it is still unclear how the reform will fully play out, we anticipate employers will, beyond the negotiation obligations explained above, need to implement a mechanism, and, for those employing more than 300 employees, launch a corporate policy, ensuring such a right is effectively recognised and takes into account specific business working patterns and requirements.

Some employers may choose to simply pay lip service to the reform, yet it clearly states that from 1 January 2017 companies will have a duty to actively support the employee’s right to switch off their devices: this will include, as a strict minimum, verifying employees comply with rest periods and stating that they are allowed not to respond to emails during rest periods – or even ensuring software supports compliance.

A straightforward approach could be to adopt a policy allowing employees who work internationally to start work later or earlier, raising awareness of the virtues of having a healthy work life balance, creating group discussions to propose practical solutions to achieve work life balance, and monitoring with employees’ input any issues relating to excessive connections to their work device.

For companies who have a health and safety committee, they must be closely involved in the design and monitoring of the company’s plans.

Ming Henderson is a partner in our International Employment Law practice based in the London office. She is a qualified practitioner in both France and the UK.

By Megha J. Charalambides

Seyfarth Synopsis: A federal judge has allowed a discrimination lawsuit to proceed against the Archdiocese of Chicago. The plaintiff alleges that his engagement to another man resulted in his termination.  The church sought to dismiss the case under the ministerial exception doctrine.  The District Court ruled that the ministerial exception, as an affirmative defense, does not render plaintiff’s claims meritless, and ordered the parties to proceed to discovery on the issue of whether plaintiff was, indeed, a minister such that the exception could apply.

The “ministerial exception” implicates both employment law and religious freedom by essentially barring workplace bias suits by church employees who act as “ministers” to their denominations. Most famously, the Supreme Court’s unanimous holding in Hosanna-Tabor Evangelical Lutheran Church v. EEOC ruled for the first time that religious employers were permitted to discriminate against employees deemed to be ministers under the “ministerial exception” implicit in the Free Exercise and Establishment Clauses of the First Amendment.  In doing so, the Court essentially gave religious employers carte blanche to hire (and fire) their ministers.  Yet the Court chose not to provide a precise definition of “minister”–a key, if not the key, component to determining the applicability of the “ministerial exception.”  Instead, the Court ruled that ministerial status is a fact-specific inquiry (though the plaintiffs formal title given by the Church, the substance of her work, and religious functions she performed guided their decision), leaving open the question of when and to whom the ministerial exception can and does apply.

Earlier this month, Judge Charles P. Kocoras of the Northern District of Illinois seized on this ambiguity in denying the Archdiocese of Chicago’s motion to dismiss the complaint of John Collette, its former Director of Worship and Director of Music.

According to Mr. Collette’s complaint, the Archdiocese terminated his employment after learning of his engagement to another man. He alleges that the Archdiocese’s Cardinal indicated in emails that his “non-sacramental marriage” was the reason for his termination, and that a weekly church bulletin specified that he was being terminated for “participating in a form of union that cannot be recognized as a sacrament by the Church.”  Mr. Collette therefore claimed that his termination discriminated against him on the basis of “his sex, sexual orientation, and marital status.”

The Archdiocese sought dismissal of the case on the basis of its First Amendment Right under the ministerial exception. It argued that Mr. Collette’s titles as Director of Worship and Director of Music sufficiently defined his role as a “minister” within the meaning of the ministerial exception.  The Court, however, disagreed.

In his opinion, Judge Kocoras explained that a formal title given to an employee by a religious institution, while relevant, is not dispositive under Hosanna-Tabor.  Indeed, he added that additional factors to be considered include the plaintiff’s religious training and the religious mission of his or her position.  Judge Kocoras concluded that a “factual record focus[ing] on Collette’s functional role . . . is therefore needed to determine whether that role was ministerial.”  He thus denied the Archdiocese’s motion to dismiss and allowed the case to move forward to discovery.

It remains to be seen what factors the Court will ultimately consider in deciding whether Mr. Collette is a minister under the law. His case, however, makes it clear that religious employers no longer have a carte blanche when it comes to employees they consider ministers.  Religious employers may be subject to scrutiny in their employment decisions where discrimination is at play.

Seyfarth Synopsis: Members of the Pay Equity Group are hosting an in-person discussion June 22nd to help employers stay ahead of this trend.

As you have likely gathered with the plethora of recent media coverage, pay equity presents one of the fastest moving issues in the employment law landscape.

Politicians have added the “Pay Gap” to their arsenal of campaign buzz words.  The EEOC has proposed a major revision to the Employer Information Report requiring all employers with more than 100 employees to annually submit compensation data to the EEOC beginning in 2017.  State legislatures are busy cranking out new and more stringent pay equity laws.  The plaintiffs’ employment bar and state Attorneys’ General are taking steps to expand the scope of existing laws.

Employers that stay ahead of this trend will be in the best position to avoid litigation and enforcement actions.  And Seyfarth’s Pay Equity Group (PEG) is on top of these issues.  Members of Seyfarth’s PEG are providing practical discussions on the pay equity landscape in-person across several of our offices as well as a webinar, which was attended by a record number of employers.  Click here to listen to a recording of this webinar.  If you are able to join us in Chicago on June 22nd, our attorneys, David Baffa, Annette Tyman, and Christine Hendrickson, will be discussing:

  • Recently passed and pending legislation that expands employers’ obligations regarding equal pay for equal (or comparable) work
  • The EEOC’s proposed EEO-1 report
  • Best practices for conducting a pay equity audit and avoiding pay equity claims

For more information or to register, please click here.

If you have questions regarding Pay Equity, please contact a member of the Seyfarth Pay Equity team.

 

By Johanna T. Wise and Alexander Meier

Seyfarth Synopsis. The Eleventh Circuit clarifies the framework in mixed-motive cases. Although damages are limited, a plaintiff can establish a mixed-motive claim by showing a protected characteristic was a motivating factor for an adverse employment action.

Historically, district courts in the Eleventh Circuit were loath to depart from the traditional McDonnell Douglas burden-shifting framework in all but the most egregious employment discrimination cases involving allegations of direct evidence.  That preference and the exclusivity of McDonnell Douglas is, however, showing signs of erosion.

In two recent decisions, the Eleventh Circuit reversed a district court’s grant of summary judgment and fashioned a new framework for Title VII causation determinations.  These decisions suggest that summary judgment will be more difficult to obtain in mixed-motive employment discrimination cases under a 1991 amendment to Title VII: 42 U.S.C. § 2000e-2(m). The provision allows an employee to establish an unlawful employment practice by demonstrating that a protected characteristic “was a motivating factor for any employment practice, even though other factors also motivated that practice.”

The Eleventh Circuit first hinted that employees could proceed under the more lenient “motivating factor” causation standard in Chavez v. Credit Nation Auto Sales, LLC.  That case involved alleged sex discrimination against a transgender auto mechanic.   The company owner allegedly made comments that he was “very nervous” that the mechanic’s gender transition could “negatively impact his business.”  The company owner disciplined the mechanic for various performance issues, and ultimately fired her when he found her asleep at work.

Chavez sued and the district court granted summary judgment based on the company’s legitimate, non-discriminatory reason for her termination, namely falling asleep on the job.  The circuit court reversed and indicated that an employer’s presenting a legitimate, non-discriminatory reason is not a complete defense to liability.  The circuit court reasoned that an employee could still recover declaratory relief and attorneys’ fees, though not damages, by establishing that discrimination based on a protected characteristic was a “motivating factor” for the adverse employment action.

The full impact of Chavez was not entirely clear.  The decision was unpublished, and there were some signs that the company owner deviated from the written disciplinary system to immediately terminate the mechanic.

But the Eleventh Circuit’s recent decision in Quigg v. Thomas County School District, issued just over a month after Chavez, clarified that alternatives to the McDonnell Douglas burden-shifting framework were not as narrowly available as past cases suggested.

Quigg involved an employee who claimed that the school district discriminated against her based on her sex and gender by failing to renew her employment contract.  The school district countered that the employee had performance issues and violated the school district’s ethics policies.

The district court granted summary judgment on all claims using the traditional McDonnell Douglas burden-shifting framework.  The district court found that the school district provided a legitimate, non-discriminatory reason for her termination and that the employee’s evidence was insufficient to establish that her performance issues were mentioned only as a pretext for discrimination.

The Eleventh Circuit reversed, holding that the McDonnell Douglas framework did not apply in mixed-motive cases. Rather, an employee could survive summary judgment by demonstrating that the protected characteristic was a motivating factor, even though the school district had legitimate issues with the employee’s job performance.  The circuit court held that, rather than examine the case under McDonnell Douglas, the proper framework on summary judgment should be to “ask only whether a plaintiff offered evidence sufficient to convince a jury that: (1) the defendant took an adverse employment action against the plaintiff; and (2) [a protected characteristic] was a motivating factor for the defendant’s adverse employment action.”  The decision brings the Eleventh Circuit in line with the majority of other circuits that addressed the issue, including the Second, Third, Fifth, Sixth, and Tenth Circuits. To date, only the Eighth Circuit persists in applying McDonnell Douglas to mixed-motive claims based on circumstantial evidence.

Significantly, an employer can still reduce the damages available to the employee by establishing that it would have made the same decision “in the absence of the impermissible motivating factor.” 42 U.S.C. § 2000e-5(g)(2)(B). This partial defense allows an employer to escape liability for actual damages and the potential for reinstatement but leaves a litigant’s ability to request declaratory relief and fees intact.

Given the limited nature of relief in mixed-motive cases, time will tell whether mixed-motive claims will begin to increase in the Eleventh Circuit or if McDonnell Douglas will continue to apply as the prevailing framework.

 

By Kristina M. Launey with Christine Hendrickson

Seyfarth Synopsis.  Responding to inquiries regarding your company’s stance on pay equity can be dicey.  Having a strategy on how you address questions is important. 

Every time a client asks “what do I say” in response to employee inquiries about what the client’s company is doing to ensure fair pay, Justin Bieber’s song “What do you Mean” starts playing in my head as “What do I Say.” Luckily, while I am certainly not a Belieber, I find the song catchy rather than annoying, and appropriately thought-provoking.

It is a tricky question. I don’t think any company – at least not any of our clients (!) – would argue with the importance of treating all employees equally and paying them fairly.  But when an employee, or group of employees, ask pointed questions such as:

  • Has the company analyzed pay equity amongst employees or different genders (or any other protected group)?
  • If not, is there a plan to do so?
  • If so, can the results be shared?
  • Do we have any information on what other companies in our industry are doing on this front?

What do you say? This may be top of mind on the heels of Tuesday’s Equal Pay Day heightened publicity on these issues.  Perhaps your employee has seen one of the many articles on the issue, or read about the companies like that are taking very public positions on the topic (for example, here, here, and here). Or heard about the Pax Ellevate’s comment letter to the SEC requesting that publicly traded companies disclose “gender pay ratios” on an annual basis to their investors.  What if that is not your company’s style?  Or what if you are still getting your bearings about you with all the recent (and ongoing) changes in pay equity laws, and are not ready to make any pronouncements?  Or, what if you did an analysis but it was privileged?  What do you say?

Ultimately, this is something that depends heavily on your company structure and culture. But at its foundation – despite all the specific pay equity laws and regulations, new and old – pay inequality is a discrimination issue.  Reference to a company’s EEO and nondiscrimination policies and principles is an important start.  And letting the employees know the company is committed to treating all employees – regardless of gender, race, or any other status – fairly in all aspects of their employment, including benefits and pay.

Then it gets more complicated. Many factors are considered in making compensation decisions. It is therefore important to ensure that any pronouncement about the factors your organization considers in compensation decisions is not so targeted that it excludes factors that may be important to some but not all employees.  For example, certifications for IT professionals within your organization are likely to impact compensation for those employees, but being an Oracle Certified Master is unlikely to impact the pay of a welder within your organization.  Also, pay equity is a fragile concept – changes to pay can occur on an annual or often more frequent basis – so making a blanket statement that pay is fair for all employees can be risky because a few hires who are paid higher (or lower) than their peers can result in significant results that were not there even a month (or even a few days) earlier.

The law is moving quickly in this area. The way companies assess fair pay now and on a going-forward basis is changing due to recent changes in laws. Many companies are working quickly to perform assessments using new statutory frameworks and ensure pay practices and documentation line up with those laws going forward, and that all employees with any responsibility for pay decisions are appropriately trained.  Finally, and potentially most importantly, for companies that are conducting pay equity analyses – and as we’ve previously indicated (also here and here and here, and here . . . we won’t go on), conducting a proactive pay equity analysis is often the first and best step employers can take to ensure fair pay and diminish legal risk – privilege issues should also be a big consideration.  Speaking publicly about the results of an attorney-client privileged pay equity analysis may put those results at risk of disclosure.

Whether and what to communicate to employees or publicly about these processes and assessments is a decision that each company must make. But, remember that even California law – touted as the strictest in the country – does not require companies to disclose pay information (they just can’t prohibit employees from disclosing or discussing pay amongst themselves).

If there’s any solace, perhaps it’s that you are not alone in wondering “what do I say.” There is no one “right” answer.  There is no one-size fits all response, though we would caution you to carefully consider your company’s pronouncement so it does not unintentionally end up in the “no good deed goes unpunished” category.

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Seyfarth’s Pay Equity Group leads the legal industry in fair pay analysis, thought leadership and client advocacy. For over twenty years, we have partnered with our clients to proactively address these developments, and minimize risk. Seyfarth also recently testified before the Equal Employment Opportunity Commission on behalf of the U.S. Chamber of Commerce, requesting the EEOC withdraw its proposal to require employers report data on compensation and diversity through the EEO-1 report.  For questions, contact the authors, Kristina Launey, Annette Tyman, Christine Hendrickson, or your Seyfarth attorney with whom you regularly work.