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New Compensation Laws You Don't Want to Overlook

Jen Dewar
Aug 12, 2019, 8:27:20 AM

It’s 2019, and the wage gap persists. Women earn 80 cents for every dollar earned by men. Latino men earn 69 cents for every dollar a white man earns. LGBTQ+ women earn 8 percent less than non-LGBTQ+ men. These wage gap statistics speak for themselves, and demand change. These new compensation laws are designed to address the pay inequities at play, and it’s important that you don’t overlook them.

EEO-1 Component 2 Reporting

Companies with 100 or more employees are required to report Component 2 EEO-1 Compensation Data for 2017 and 2018 by September 30, 2019. The report collects the number of employees and the hours worked by job category, salary pay band, gender, and race or ethnicity. Reports for 2017 and 2018 must be completed and certified separately.

The sample form includes one chart to report the number of employees in each category, and a second chart to report the total number of hours worked during the reported year:

compensation laws EEO-1 employees

 

compensation laws EEO-1 hours worked

 

The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for ensuring pay equity. The extra reporting requirement this year should be a wake up call for companies to undergo their own internal pay equity analyses.

Finding and addressing wage gaps can help you go beyond compliance to make compensation your competitive advantage. In today’s tight labor market, people want to know that their employer takes fair compensation seriously. In fact, employees who rate their employers poorly on pay transparency are 80 percent more likely to say they want to leave in the next six months than those who give higher marks. Hang on to your employees and attract new talent by showing people that you care enough to conduct a pay analysis—and are willing to make necessary changes.

Salary history bans

Several states and localities are jumping on board with salary history bans, adding to an ever-growing list. These include:

  • Alabama: state-wide ban (effective September 1, 2019)
  • California: state-wide ban; local ban in San Francisco
  • Colorado: state-wide ban (effective January 1, 2021)
  • Connecticut: state-wide ban
  • Delaware: state-wide ban
  • Georgia: local ban in Atlanta
  • Hawaii: state-wide ban
  • Illinois: state-wide ban (new laws effective September 29, 2019); local ban in Chicago
  • Kentucky: local ban in Louisville
  • Louisiana: local ban in New Orleans
  • Maine: state-wide ban (effective September 17, 2019)
  • Maryland: local ban in Montgomery County (effective August 14, 2019)
  • Massachusetts: state-wide ban
  • Mississippi: local ban in Jackson
  • Missouri: local ban in Kansas City (new laws effective October 31, 2019)
  • New Jersey: state-wide ban (new laws effective January 1, 2020)
  • New York: state-wide ban (new laws effective January 6, 2020); local ban in New York City; local ban in Albany County; local ban in Suffolk County; local ban in Westchester County
  • North Carolina: state-wide ban
  • Ohio: local ban in Cincinnati (effective ~ March 2020); local ban in Toledo (effective June 25, 2020)
  • Oregon: state-wide ban
  • Pennsylvania: state-wide ban; local ban in Philadelphia (effective date TBD); local ban in Pittsburgh
  • Puerto Rico: Commonwealth-wide
  • South Carolina: local ban in Richland County
  • Utah: local ban in Salt Lake City
  • Vermont: state-wide ban
  • Washington: state-wide ban

Check out HR Dive for brief descriptions of each law's requirements, its effective date, and a link to the original law.

Basing compensation decisions around a candidate’s salary history perpetuates unfair wage gaps in underrepresented groups. Instead, create a compensation plan with job grades and salary bands to make strategic compensation decisions.

Oregon Equal Pay Act

The Oregon Equal Pay Act went into effect on January 1. It prohibits employers from asking about salary history during the application process and mandates equal pay for equal work.

Oregon employees can file complaints directly with the Commissioner of the Bureau of Labor and Industries and, if a discrepancy is found, receive up to two years of back pay. This includes “work that requires substantially similar knowledge, skill, effort, responsibility, and working conditions in the performance of work, regardless of job description or job title.” It’s that last bit employers need to pay attention to, as people from underrepresented groups tend to get stuck in lower-paying roles. For instance, a female administrative assistant to the Chief Marketing Officer may be doing the same work as a male marketing manager—and should be compensated as such.

Employers can file a motion to disallow an award of compensatory and punitive damages if certain conditions exist. They would need to have conducted a reasonable pay equity analysis and corrected discrepancies in the past three years. Additionally, the pay analysis must be “related to the protected class asserted by the plaintiff.” In other words, a comprehensive pay equity analysis in Oregon should look at pay by race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, and age.

Pay scale disclosures

Washington employers with more than 15 employees must provide applicants with the position’s minimum salary upon request, effective July 28, 2019. Employers in Cincinnati, Ohio with more than 15 employees must provide a pay scale upon request, after an applicant has been provided a conditional offer of employment. This is estimated to go into effect around March 2020.

Whether or not pay scale disclosure laws apply to your organization, it’s a good idea to think through your job grades and salary bands. These can help you stay in compliance, while helping you create more consistent and fair compensation decisions.

Final thoughts on new compensation laws

These new compensation laws are meant to address pay inequities in underrepresented groups. Even if these laws don’t apply to your organization, they highlight the need for us all to do better. A compensation plan, complete with job grades and salary bands, is a great place to start. This can help you make more consistent, strategic, and fair compensation decisions. Then a pay equity analysis can call out where to focus your efforts toward fair pay. Going beyond compliance can make compensation your competitive advantage.

compensation laws

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