Compensation Force

HR & Public Policy, Part 2: What May Be Stopping Us...

In yesterday's post, I spoke about HR's perceived passivity with respect to impending changes in labor law and called out for the profession to get more actively involved in a year when a staggering amount of employment legislation is making its way through Congress.

Reader Elizabeth left a thought provoking comment to this post, sharing an interesting hypothesis on why at least some in our profession might hesitate to take a proactive stance:

Even though it really isn't true, an HR professional is frequently perceived as being an employee advocate. So, if an employee of a company sees his perceived advocate actively lobbying *against* legislation that is perceived to be pro-worker, it can create a real trust issue for that employee. "Yo! I thought you were on my side!"

We'll need to address that underlying issue before you'll see HR professionals rising up en masse to effect legislative change. One good way to start is to make sure we properly position ourselves with our employee bases so that their perception is, indeed, accurate and is thus not jolted too far when they see us take action.

Is the perception of our role as an employee advocate serving as an impediment to our involvement in the public policy debate?  If so, how do we address that and make sure - as Elizabeth suggests - that we properly position ourselves in the organizations where we serve?  

Is this challenge related to the whole "seat-at-the-table/HR-versus-Finance" thing?

What do you think?  What lessons can you share with us?

Our Role in Public Policy: Yes, We Can! (Have One, That Is)

I had the opportunity yesterday to attend a legislative update presented by Cara Welch, WorldatWork's Public Policy Director.  It was a great overview of the dizzying array of legislation and legislative developments in play that potentially impact the field of total rewards.  (Check out Cara's blog, open to the general public, as a great source of information and updates on public policy.)

While the presentation was extremely well-done and well-received, what I found particularly interesting was the points raised during our informal post-presentation discussion.  In this conversation, Cara drew a comparison between her experience as a public policy advocate for HR professionals and her experience serving in this role for other groups.  Her hypothesis: HR professionals are notably more passive - less likely to proactively pursue making an impact - in response to impending legislation than people in other disciplines.

On the one hand, this didn't completely surprise me; on the other hand, it kind of blew me away.

If this is true, what does this say and what does it mean in a year when a staggering amount of employment related legislation is making its way through Congress?  I know that Cara, for one, is making it a priority to engage WorldatWork members in proactively approaching legislation.  I can't think of groups whose input should be more front and center in today's employment related public policy debates than HR and reward professionals.

According to Cara, there are a number of ways to make our voices heard, including:

• Sending a letter to our own Congressional representatives, letting them know our position on a piece of legislation as well as the facts and experience that support that position.

• Submitting testimony or statements for the record for Congressional hearings (see here for how to communicate with Congress).

• Submitting comment letters or providing input to federal regulatory agencies (like the Department of Labor).

So, can we make it happen? 

Image: Creative Commons Photo "United States Capitol, Capitol Hill, Washington, D.C." by Phillip Ritz

The Employee Free Choice Act Roundup

Hopefully you all know by now that the Employee Free Choice Act has been introduced to both Houses of Congress.  If passed, this bill will dramatically alter the employment landscape by eliminating the rights of employees to a confidential vote on whether or not they want to be represented by a union and by mandating binding arbitration for first collective bargaining agreements, a move that will disproportionately and negatively impact small businesses, a crucial engine of American economic growth.

If you aren't already well aware of this legislation and its far-reaching implications, please get up to speed now and inform your representatives of your position.  To help you do just that, this post is dedicated to presenting you with a round of terrific links.

To read the bill in its entirety, the EFCA Report has links to its full text.

Can't bear the idea of reading legislation?  Two legal blogs provide helpful summaries: The Nuts & Bolts of EFCA at the Pennsylvania Labor & Employment Blog and EFCA 2009 Introduced in House & Senate at the Washington Labor & Employment Wire.

Workforce has a great article which summarizes not only the details of the law but also its implications for HR professionals.

The real impact that this law would have on jobs is addressed in this Chamber of Commerce analysis and in this article on the Thinking Right blog.

More information on the lesser known arbitration provisions of EFCA is provided at HR Observations.

A terrific personal take on EFCA is provided by KnowHR.

The HR Capitalist addresses some of the spin coming out of the pro-EFCA camp. More EFCA myth-busting here courtesy of the Chamber of Commerce.

And finally, over at Fistful of Talent, the editor applies some pressure to SHRM - and to us - on the PR front, and tells us its time to stand up and take action!  So, do it!

It's no secret that union membership and influence has been on the decline for some time.  If eliminating the chance to vote by secret ballot and opening the doors to coercion (i.e. truly reducing or even eliminating "employee free choice") is the only way unions believe they can stem that decline, that speaks volumes to me.  It tells me that this is purely about a grab for power and political influence, and not at all about positively impacting the lives of workers. 

Remember - The Exchange of Salary Information (In Surveys & Otherwise) is Bound by Anti-Trust Regulations

Recent interchanges in a national compensation publication serve to remind me that few HR professionals (including many compensation specialists) are aware that the conduct of both formal and informal compensation surveys is regulated by the Sherman Antitrust Act of 1890. The purview of this law extends to as simple an act as calling another employer to find out what they pay their customer service representatives - through the participation in more formal and sophisticated pay surveys.  For this reason, and in the spirit of keeping unnecessary litigation at bay, I thought it might be worth another post.

First, a little history.  The Sherman Antitrust Act, named for its author, Senator John Sherman of Ohio, was original passed to limit monopolies and other restraints on commerce.  It is the Act's provisions on pricing and competition which impact those seeking information on compensation practices via salary surveys.  The U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), which have primary responsibility for enforcing our nation's anti-trust laws, have determined that organizations conducting their own salary surveys could be seen as practicing illegal price-fixing.

To guide HR and compensation professionals seeking to determine competitive pay levels while avoiding antitrust violations, the DOJ and the FTC have jointly published a series of Anti-Trust Safety Zone Statements, which have been interpreted (through not extensively tested in court) to provide a "safe harbor" for organizations involved in this exchange of information.

The DOJ/FTC Antitrust Safety Zone Statements are as follows (note that these were initially developed with health care organizations and activities as their focus):

Antitrust Safety Zone: Exchanges of Price and Cost Information Among Providers That Will Not Be Challenged, Absent Extraordinary Circumstances, By The Agencies

The Agencies will not challenge, absent extraordinary circumstances, provider participation in written surveys of (a) prices for health care services, or (b) wages, salaries, or benefits of health care personnel, if the following conditions are satisfied:

1. The survey is managed by a third-party (e.g., a purchaser, government agency, health care consultant, academic institution, or trade association);
2. The information provided by survey participants is based on data more than 3 months old; and
3. There are at least five providers reporting data upon which each disseminated statistic is based, no individual provider's data represents more than 25% on a weighted basis of that statistic, and any information disseminated is sufficiently aggregated such that it would not allow recipients to identify the prices charged or compensation paid by any particular provider

The conditions that must be met for an information exchange among providers to fall within the antitrust safety zone are intended to ensure that an exchange of price or cost data is not used by competing providers for discussion or coordination of provider prices or costs. They represent a careful balancing of a provider's individual interest in obtaining information useful in adjusting the prices it charges or the wages it pays in response to changing market conditions against the risk that the exchange of such information may permit competing providers to communicate with each other regarding a mutually acceptable level of prices for health care services or compensation for employees.

Forewarned is forearmed, my friends!

Image: Creative Commons Photo "Gavel" by walknboston.

Life After Ledbetter

The Lily Ledbetter Fair Pay Act of 2009 was signed into law by President Obama on January 29.

After some reading and research over the past few days, here's my quick summary and initial thoughts on what this new law means for HR and reward professionals.

The Act overturns the Supreme Court's ruling in Ledbetter vs. Goodyear Tire & Rubber, which held that employees must file a discrimination claim within 6 months of the act of discrimination.  The new law's main purpose is to extend that statute of limitations so that the clock doesn't begin ticking, in effect, until 180 days (300 days*) after an employee receives either a final paycheck or a final benefit payment (e.g., pension check) that can be traced back to a discriminatory decision or practice.  The net impact of the new law is to effectively remove any time limits on pay discrimination claims - a claim can now be brought years, even many years, after the discriminatory action allegedly took place.

What does this mean for HR and reward professionals?

To state the obvious, our first step should be to ensure that there are no problems to begin with.  All pay-related decisions - and this includes but is not limited to job evaluation, performance appraisal, merit and other salary increases, market salary adjustments, promotions, etc. - must be made based on clear and objective guidelines which are consistently applied.  Job titling, definition and documentation must be accurate and up-to-date.  Supervisors and managers must be trained and held accountable for the important role they play in all these regards, and for clear and meticulous communication with employees.   

These are the things that should have been happening all along, of course.  What changes now is our responsibility for documentation and recordkeeping.  With the possibility of a lookback for discrimination claims that could go back years - even decades - we must assume that neither the HR or reward professional nor the decision making manager involved will be around to rely on for personal recollection or documents if a pay related decision is challenged.  Instead, it will be imperative to establish formal and comprehensive recordkeeping practices, as far backward as can be managed and certainly going forward from today.

*If the discrimination charge is filed in a state with its own equal employment opportunity agency.

Postscript:  Here is a link to a CNNMoney article highlighting, in particular, what the Ledbetter Fair Pay Act means to small businesses, who may not have or be in a position to afford the access to legal and human resource talent that big businesses have to help them with compliance.  The list of recommended steps near the end are particularly good.  Hat tip to Laurie Ruettimann for the link.

Lily Ledbetter Fair Pay Act Passes Senate

Yesterday evening, the Senate passed the Lily Ledbetter Fair Pay Act of 2009 by a vote of 61 to 36.  President Obama has already indicated that he will sign the bill into law, so there are no real remaining hurdles for this legislation.

For details and information on the Act and how it will affect HR professionals, see these very informative posts -

Lily Ledbetter Fair Pay Act Passed by Senate and Awaiting Obama Signature - Pennsylvania Labor and Employment Blog

Lily Ledbetter Fair Pay Act of 2009 Passes Senate, 61 to 36; President Will Sign - Connecticut Employment Law Blog

Summary Thoughts on the Paycheck Fairness Act

The Paycheck Fairness Act has passed the House and has been introduced into the Senate.

I posted on this legislation and related topics several times last week (here, here and here); by now regular readers are probably aware of my fears that this Act will bring us more harm than good.

A few final thoughts here and then - like everyone else - I'll be waiting to see what happens as the Senate considers this potential law.

I certainly share the concerns expressed by others about the "trial attorney windfall" aspects of the Act, which include:

• The elimination of any limits on punitive and compensatory damage, without requiring any proof of intent to discriminate, and

• The fact that workers are automatically made members of a class action suit, unless they opt out.

Additionally, while the overt comparable worth provision appears to have been removed from the legislation, a lot of the language and provisions that remain (including the rather potent phrase "similarly situated employees") appear "comparable worth like" in their intent and description.  At the very least, they would give the motivated prosecutor a lot to work with.

And so I fear that the outcomes of this legislation would go beyond intentional and even inadvertent discrimination to pursue and punish employers for maintaining differences in pay that are based in market demands and business needs.

I see the Act, if passed, as having a substantial impact on the work and priorities of those of us in the reward profession.  Driving business growth and success through insightful reward design may have to take a back seat to defense.  The name of the game will be compliance, baby - recession or not.

The biggest winners will be the trial lawyers and - yes - the consultants.  Everyone else, including women, I'm not so sure.

With that, I will return you to our regularly scheduled programming...

Dear Legislators: A Missing Link to Paycheck Fairness?

In an effort to correct pay discrimination on the basis of gender, our representatives in Washington have left no stone unturned, covering the waterfront with proposed efforts that range from the potentially unprecedented insertion of government into private pay practices to a national award for pay equity in to the workplace to a grant program targeting negotiation skills training for women.

Or have they?

I see a huge hole, a missing link, among this tasklist of possible remedies.

Pay equity proponents have a tendency to view the labor market (and its incentives) as the enemy - a force that must be cowed and overcome in order to even the playing field for women.  This is the reason that comparable worth initiatives (which, at their core, seek to override the influences of the market on pay) are such a common centerpiece of pay fairness initiatives.

Many, in the private sector (in general) and among businesspeople in particular, take exception to these anti-market provisions.  This is why they have been (mostly?) removed, for the moment, from this week's version of the Paycheck Fairness Act.  And this is because the market, in fact, performs an important and necessary task, not just for business but for our society as a whole, in exerting its influence on pay.  The market drives pay differences, not on some arbitrary and capricious whim, but for a purpose, the purpose of meeting society's demands for different skills and contributions.  Mess with the market and you mess with our collective ability to get the work done that is necessary for our country to grow and prosper - particularly in today's flatter world.

The market, for example, has created incentives - in the form of higher pay - for many scientific and engineering jobs; jobs where need and demand continues to outstrip supply, where we have often been forced to import talent when the homegrown kind comes up short, and where (most unfortunately) men significantly outnumber women.  Can the answer be to override these market incentives in the name of gender equity, thus handcuffing our ability to meet our talent needs - in a time when technological innovation and improvement are so critical?

Or could the answer be to embrace that market on behalf of women?

One of the root causes of pay disparity between men and women is our (women's) under-representation in a number of high paying fields.  Why not take some of the dollars that our legislators are willing to throw at this issue and use them to attract more women to, and help get them into, these critical and high paying fields? This would ultimately benefit everyone - women, businesses and our society overall.

I can envision a multi-pronged effort that could potentially include initiatives to:

• Identify the high earning fields where women are under-represented*.

• Examine the extent to which these professions can be "re-branded" and better marketed, in order to make them more attractive to women.

• Target efforts early (elementary, middle and high school) to get girls interested and involved in the areas of study that will prepare them for these opportunities.

*Perhaps this effort would overlook those professions which include physical barriers to female participation (e.g., size, strength), perhaps not...

Readers, what do you think?  Legislators, are you listening?

On Comparable Worth, Pay Equity and the Paycheck Fairness Act

The quick trip that pending pay legislation, particularly the Paycheck Fairness Act, made to the floor of the House this week has renewed discussion of the concept of comparable worth.  Comparable worth provisions were among the most controversial aspects of the Paycheck Fairness Act in its previous rendition(s); they appear to have been (mostly? maybe entirely?) removed from the current bill, which is expected to be passed before the end of this week.  Of course, we have yet to see what exact form the bill will take when it comes up in the Senate.

By reader request, the purpose of this post is to provide some background on comparable worth. 

From my perspective (which is a practical, not a legal one), comparable worth reflects one of two different viewpoints on how to approach and resolve gender-based pay disparities:

First, there is the idea of pay equality, which I would define as the notion that men and women must be paid the same if they are found to be performing the same job in the same organization.

Secondly, there is the idea of pay equity or comparable worth, which I would define as the notion that men and women must be paid the same if they are found to be performing jobs of comparable value in the same organization.  Comparable value is typically determined by a factor-based job evaluation process which disregards or dilutes the consideration of a job's value in the marketplace for talent.  (Go here and here for more on factor-based job evaluation.)

See the difference?

We here in Minnesota have had opportunity for an early look at the potential workings and consequences of a federal comparable worth law, because we already have such a law in place at the state level.  Our State Employee Pay Equity Act, however, applies only to public sector employees, although efforts have been underway for years to extend its provisions out into the private sector.  Some time back, when the whole comparable worth argument was getting kicked up in anticipation of the earlier PFA, I posted an interview here with Dr. Ellen Benjamin, a compensation consultant and colleague of mine, who has virtually unparalleled experience with compliance under our pay equity law. Click back to her interview and see what she has to say about the probable impact of extending such a law nationally into the private sector.

With respect to the current legislation, following is the portion of the earlier HR 1338 Paycheck Fairness Act that I believe to contain the comparable worth provisions:

SEC. 7. TECHNICAL ASSISTANCE AND EMPLOYER RECOGNITION PROGRAM.
(a) GUIDELINES.—
(1) IN GENERAL.—The Secretary of Labor shall develop guidelines to enable employers to evaluate job categories based on objective criteria such as educational requirements, skill requirements, independence, working conditions, and responsibility, including decisionmaking responsibility and de facto supervisory responsibility. 
(2) USE.—The guidelines developed under paragraph (1) shall be designed to enable employers voluntarily to compare wages paid for different jobs to determine if the pay scales involved adequately and fairly reflect the educational requirements, skill requirements, independence, working conditions, and responsibility for each such job with the goal of eliminating unfair pay disparities between occupations traditionally dominated by men or women.
(3) PUBLICATION.—The guidelines shall be developed under paragraph (1) and published in the
Federal Register not later than 180 days after the date of enactment of this Act. 

And yes, I take note of the word "voluntarily" with respect to the use of the DOL job evaluation guidelines, but I wonder how voluntary they would truly be, for example, for private firms with (or seeking) government contracts or whose pay practices were audited or challenged in any way.  At any rate, these provisions appear to be absent from the version of the bill being considered by the House this week.

However.  There remains in the current bill, however, a section titled "REINSTATEMENT OF PAY EQUITY PROGRAMS AND PAY EQUITY DATA COLLECTION.  It is noted in this section that the "employees of the Office (of Federal Contract Compliance Programs) shall use the full range of investigatory tools at the Office’s disposal, including pay grade methodology". 

The section goes on later to state that the Office "for purposes of its investigative, compliance and enforcement activities, shall define ‘similarly situated employees’ in a way that is consistent with and not more stringent than the definition provided in item 1 of subsection A of section 10–III of the Equal Employment Opportunity Commission Compliance Manual (2000)". In defining "similarly situated employees", this Compliance Manual states that the similarity of jobs is determined "by ascertaining whether the jobs generally involve similar tasks, require similar skill, effort, and responsibility, working conditions, and are similarly complex or difficult." 

Sure still sounds a lot like comparable worth to me.  Readers with law degrees and/or more experience in deconstructing legal language, please feel free to weigh in.  I'd love some assistance in better understanding the implications of this section.

My sources tell me that Senator Clinton may be introducing her version of a paycheck fairness bill to the Senate soon.  It will be important to watch the degree to which comparable worth language features in that legislation.

To be fair and in conclusion, the Paycheck Fairness Act does call for a number of efforts - beyond potentially messing with the structure and design of private sector pay practices and lifting the caps on penalties - in the pursuit of gender pay equity.  These efforts include the establishment of a grant program for negotiation skills training for girls and women and the establishment of a national award for pay equity in the workplace.  As a woman who genuinely does want to see gender pay disparities eliminated, however, I think those drafting this legislation have completely overlooked what seems to me an obvious and critical intervention in this regard.  More on that in an upcoming post.

 

Pay Legislation Leaps to Top of House Agenda: Interview with WorldatWork's Cara Welch

Tuesday, January 6 was the first day of the 111th Congress and pay legislation - in the form of the Paycheck Fairness Act and the Lily Ledbetter Fair Pay Act - was scheduled for vote yesterday, January 7.

I had the opportunity to speak with Cara Welch, head of public policy for WorldatWork, to learn a little more about this legislation and what we as HR and reward professionals can do to keep up on the status of both acts.

Regular readers of this blog know that I have particular concerns about the Paycheck Fairness Act and its implications for (and beyond) compensation management.  Most specifically, I am troubled by the comparable worth provisions in the original bill and the potential consequences of mandating this as the cornerstone of work valuation in the private sector.

A few quick highlights from my conversation with Cara Welch –

AB: What is the current status of this pay legislation?

CW: The House is not planning to hold any hearings on these bills.  We  believe the bills will go straight to the floor for a vote, where passage is expected. If they are passed in the House, though, they will still need to make it through the Senate. That is not expected to happen this week. There is a lot more concern about this legislation in the Senate, and it is expected that members there will be slower and more deliberate in their consideration of the bills.

AB: How can interested HR and reward professionals best keep track of this pay legislation as it goes forward?

CW: One way is through my blog, Public Policy Perceptions, which is a public blog and open to all, not just WorldatWork members. I will be posting regular updates and providing links to related information and documents – all of which will be publicly available.

AB: What about the comparable worth provisions in the Paycheck Fairness Act? I hear that they’ve been removed. Is this true?

CW: The comparable worth provisions which were in the original PFA were removed and are not part of the bill being considered today. <Note from Ann:  While I see that the overt comparable worth provisions have been removed in comparing the current to an earlier version of the bill, there is still language included that concerns me - including use of the terminology "similarly situated employees" for purposes of compliance and enforcement activities.  Cara is looking into the comparable worth issues further.>

AB: What is WorldatWork’s role with respect to this pay legislation?

CW: On legislation which touches the areas of employee rewards, WorldatWork will often collect information and conduct research, which is made available for consideration by lawmaking bodies. At this time, WorldatWork does not have a formal public policy committee and does not take formal positions with respect to legislation.

I will continue to follow this legislation, particularly the Paycheck Fairness Act, and will post updates and information here as appropriate.  I would urge readers to check out Cara's blog as an avenue for keeping abreast of developments ... note that I have added her to my blogroll at right.  Ryan Johnson, WorldatWork's Director of Information Development & Public Affairs, whose blog is also 'rolled here, will be commenting on the legislation from time to time as well.  And while I'm at it, other recent posts worth checking out on this topic can be found at HR Observations and the Pennsylvania Labor & Employment Blog.

Thanks, Cara for your time and the update here!

Image: Creative Commons Photo "Capital Hill, Washington DC" by Will Palmer