Preparing for Pay Equity | Report from the Front Lines
After working with several Massachusetts companies to complete a pay equity “self-evaluation,” AIM has confirmed that compliance with pay equity is both an art and a science.
Determining whether an employer is eligible for an affirmative defense is not based on whether the courts agree with the comparable groups and analysis, but whether the self-evaluation was performed in good faith and reasonable in detail and scope. As a result, companies must review each position in depth to assess skill, effort, responsibility and working conditions.
Here is a case study taken from an engagement AIM recently completed with a member employer.
The company has 100 employees. In an initial meeting with key stakeholders, we reviewed the Pay Equity law requirements and the process we would undertake to conduct the self-evaluation.
First, we took stock of job descriptions. Like most companies, this employer had some, but not for every position. Rather than delay the self-evaluation process, we identified updating job descriptions as an option after the self-evaluation was completed.
With essential leadership in the meeting, we talked through all the jobs within the organization to understand the required skill and effort, working conditions and responsibilities for each. The company did well in focusing first on the role and not the individuals.
We talked through education and experience requirements, whether the position manages others and budgetary impact. Because we had the right people in the meeting who had direct knowledge of the jobs being discussed, this process went smoothly.
Aspects such as working conditions were easier to identify while defining responsibilities took more in-depth discussion. One advantage was the company had a good understanding of the job families and how one job progressed to the next.
The process revealed a couple of instances in which the job being performed was no longer the same job as the title indicated. In these cases, the company needs to decide whether the position should be retitled or the individual moved to another position.
We then tackled a rating system using the criteria above to assemble comparable groups. This should not be confused with a point-factor evaluation system, which will not assemble jobs in the desired fashion.
In this self-evaluation process, we started out by evaluating all employees who work in an office environment. Then those who have management responsibility. Then those jobs that require a Bachelors’ degree. And finally, the level of responsibility the position has.
In a similar methodical fashion, we worked through remaining job titles until each job was placed within a comparable workgroup. This process can be lengthy but with good facilitation and the use of pivot tables – the process runs smoothly.
A challenge is finding the right criteria for determining comparable workgroups. Don’t use enough criteria and you end up with too few groups. Use too many criteria, and you end up with too many groups. Having an experienced consultant proves beneficial in this process.
There is no one-size-fits-all approach. Two companies similar in size and industry may have different ways of approaching these comparable groups. The key remains to conduct your evaluation in good faith with reasonable scope and detail. We can’t emphasize enough the importance of assembling the key stakeholders to participate in this process.
The next phase of the project will be where the science comes into play, by analyzing the people who have been placed into comparable groups. A detailed analysis of current pay and general pay practices is required to make sense of the data.
Through a combination of using the Attorney General’s Pay Equity calculator and some regression analysis, we will identify outliers. From there, we will identify disparities that are allowable under the AG’s guidance, and create a remediation plan for the discrepancies that need to be addressed.
The organization highlighted in this article is not unlike many of the other companies we are working with. With 12 weeks to go before Massachusetts Pay Equity takes effect, now is the time to identify your comparable groups, conduct your pay analysis, and determine plans for remediation.