4 Tips for Analyzing Your Pay Equity Data

Takeaways from the 2018 ILG Conference

In early August, several of our experts in affirmative action planning and workforce compliance joined the federal contractor and compliance community at #TheHappiestILGonEarth in Anaheim. This is the first in a 3-part series capturing what we learned from sessions led by OFCCP leaders and other experts.

For both EEOC and OFCCP, complaints and enforcement of the Equal Pay Act are on the rise. This year has seen more charges, resolutions, suits, and higher monetary settlements for salary discrimination and systemic salary discrimination.

Given this trend, employers should conduct their own proactive analyses to ensure they’re meeting the legal standard—federal, state, and/or international—to which they will be held in case of lawsuit or audit.

Here are 4 tips for ensuring your proactive analyses will deliver valid results, reveal any pay equity problems, and give you defensible results that will withstand the scrutiny of an audit or complaint.

1. Concentrate Your Analyses

For the sake of efficiency, focus on areas where you have statistical issues—for example, annual pay, base pay, commission, or total rewards.

And make sure your pay analysis groups are meaningful. For example, our experts in pay equity studies recommend analyzing multiple years of data together to uncover systemic trends.

You should also control for difference in pay by breaking analyses into small groups—for example, by grade, family, function, or department. Use factors like job level, units, or locations to focus your analyses and document legitimate explanations for pay differences.

2. Watch for Red Flags

Certain patterns in your data may signal the existence of disparities in pay based on gender or other protected class. Common red flags of pay disparities include

  • Correlation between performance ratings and gender – Because men are known to receive higher ratings than women, performance ratings are a tainted variable.
  • Advanced degrees associated with higher pay – Education level may be a tainted variable, correlating more with race, gender, or age.
  • Clusters of employees within a protected class at a lower job level – Those at higher levels receive higher pay.

3. Map Your Legal Landscape

Depending on where you have employees and operations, your pay equity practices may be held to both the federal standard and one or more state standards. So keep abreast of changes in state laws.

Several states have enacted or are considering legislation around equal pay. Some create safe harbor for employers who conduct their own pay equity analyses. Others are more employee friendly. Employers must know the difference.

Companies with operations outside the U.S. must also keep abreast of changes in international pay equity law. For example

4. Make Proactive Pay Equity Analyses Routine

Best practice calls for running pay equity analyses on a regular basis—at least every 1-2 years. This will not only ensure your knowledge of your salary data are current, but it will create opportunities to

  • Review compensation practices and systems
  • Keep pace with changes in legislation, employee expectations, and other drivers
  • Communicate with employees to ensure they understand how compensation decisions are made.

Reaping the Benefits of Pay Equity

Bottom line: Data dumps are dangerous. Your organization must know what’s in the data well before you’re required to submit a report in response to an EEOC or OFCCP audit or to a lawsuit.

By following these tips and engaging experts when you need them, your organization can be confident in the data that you submit.

You can provide employees with the transparency they have come to expect from employers and make your commitment to equitable pay a hallmark of your employee experience and your employer brand.

Workforce Compliance that Works for You

Photograph of Chuck McGhee, Affirmity’s lead statisticianAbout the Author

Charles McGhee, PhD serves as Affirmity’s lead statistician. He has over 20 years of expertise in workforce compliance, in the private and public sectors. Prior to joining Affirmity, he served for 10 years as senior statistician with the Office of Federal Contract Compliance Programs (OFCCP) and Equal Employment Opportunity Commission (EEOC). Dr. McGhee holds a PhD in Biostatistics, and undergraduate and Master’s degrees in Mathematics.