On January 10th, the California Pay Equity Task Force approved the substance of several draft documents that provide guidance to employers on complying with the California Equal Pay Act (CEPA) in light of amendments enacted over the past several years to strengthen the act. The documents include: (1) a step-by-step guide for evaluating employee wage rates to identify any proscribed differences by gender, race or ethnicity, (2) a chart listing both basic and desirable data elements that would be useful in conducting a pay equity analysis, and (3) suggested guidelines for employers to follow in setting starting salaries given the prohibitions within CEPA against seeking salary history information from applicants. The documents in their final form should be available on the Task Force’s website (https://women.ca.gov/california-pay-equity-task-force/) in the near future.
Employers with California employees will find the step-by-step guide particularly useful in addressing questions they may have about how to group employees for wage rate comparisons and what factors they can assert as a defensible basis for a wage difference. The guide puts forth relevant questions an employer can ask to identify jobs that constitute “substantially similar work when viewed as a composite of skill, effort and responsibility.” It provides useful examples that illuminate when two jobs meet or do not meet the “substantially similar” criterion. It also examines the meaning of “skill, effort and responsibility,” defining each of the three attributes in turn and again providing concrete examples comparing jobs in which the skill required, the effort exerted, or the responsibility demanded may or may not be similar. Along the same lines, for each factor recognized under CEPA as a defensible basis for a wage difference, the guide articulates the conditions that must be met for the factor to be considered “bona fide” and then offers examples to clarify the discussion. The guide examines, in turn, each of the following factors that an employer can assert to explain a wage difference: seniority, merit or performance, the quality or quantity of production, education, experience and ability, training, and geography.
The chart listing useful data elements for a pay equity analysis serves as a good starting point, particularly for employers unfamiliar with such studies. While some elements are straight-forward and readily understood (e.g. time in company and time in job), others are broadly stated and may leave the employer bewildered about what exactly to collect and why. For example, under “Employee Profiles,” the chart references “internal/external employment history, experience, institutional knowledge, education, accomplishments, and competencies.” Employers should tailor the list as needed, being sure to identify data elements that (a) facilitate comparisons of employees who perform substantially similar work and (b) measure any of the bona fide factors listed above that serve to explain pay differences.
The focus of the third and final document is to provide some suggested practices for employers to utilize in setting starting salaries in the absence of prior salary information. Most employers, with or without California employees, would find this document, in whole or in part, to be a useful supplement to the training materials they provide hiring managers, recruiters and HR business partners who determine salaries for newly hired employees. Talent acquisition teams also could utilize the document to foster internal discussions about whether to revise current policies governing how starting salaries are set.
Copies of the draft documents can be downloaded here here.
By Murray Simpson, Principal Consultant, at DCI Consulting
