BCLP At Work

BCLP At Work

Pay Equity

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French Gender Equality Index

In order to fight against gender inequalities at work, French law no. 2018-771 adopted on 5 September 2018 introduces an obligation for employers to achieve the principle of equal remuneration between women and men (as opposed to a best efforts obligation). To do so, companies with 50+ employees will be required to calculate an “equal pay index”, based on gender equality indicators. They must then publish their results on their website and remedy inequalities in the event of insufficient results. They must also disclose the result to their personnel representatives and to the French labor authorities.

The gender equality indicators that must be taken into account are:

– the gender pay gap, calculated according to the average pay of women as compared to men, by age group and equivalent job category;

– the difference in the rate of individual salary increases between women and men;

– the percentage of employees who were granted an increase in the year following their return from maternity leave, if increases were granted during the period during which the leave was taken;

– the number of employees of the under-represented sex among the ten employees with the highest remuneration.

In addition, companies that have 250+ employees must take into account a fifth indicator: the gap in promotion rates between women and men.

Points will be granted for each indicator depending on the results achieved. The results are then aggregated in order to obtain an overall result ranging from 0 to 100 points. French Decree n°

Pay Equity Shareholder Proposals

Scrutiny of the gender pay gap in the U.S. and abroad has intensified in recent years and shows no sign of diminishing in the short term.

In the U.K., both private and public sector employers with at least 250 employees are now required to publish gender pay data. This is an annual obligation to publish details including the organization’s overall gender pay gap, the percentages of male and female employees across four quartiles and the gender pay gap in relation to bonuses. The deadline for the first reports was April 4, 2018, for private sector employers and March 30, 2018, for public sector employers.

Meanwhile, in the U.S., the Equal Employment Opportunity Commission continues to identify pay discrimination enforcement actions among its strategic priorities, and a number of states (e.g., California, Delaware, Oregon, etc.) have recently enacted more stringent laws aimed at achieving pay equality in the workplace.  Alongside these legislative and enforcement efforts to curb pay discrimination, activist shareholder firms have begun pressuring public companies in the U.S. to address the gender pay gap by making shareholder proposals that, if passed, would require targeted companies to disclose pay information describing their female employees’ pay as a percentile of male employees’ compensation.

Activist firms, such as Arjuna Capital and Trillium Asset Management, have targeted numerous companies with shareholder proposals that would require disclosure of gender pay data in annual 14-A proxy statements. Overwhelmingly, these proposals have either failed (by a significant margin) or, increasingly, have been withdrawn before a formal

OFCCP Issues New Compensation Directive

The OFCCP’s recent Directive, issued on August 24, 2018, signals a move towards greater transparency in the compensation review process for contractors.  With this new Directive, the OFCCP has rescinded former Obama-era guidance on compensation review, for a more open and transparent process.  The OFCCP sent out 750 corporate scheduling announcement letters to contractors on September 7, 2018, so compliance reviews may be imminent for a number of employers.

Highlights

Pay Analysis Groupings

The Directive sets out the OFCCP’s procedures for grouping similarly-situated employees for statistical compensation analysis.  The OFCCP explains that it analyzes compensation for similarly-situated employees by:

  • developing pay analysis groupings (PAGs); and
  • statistically controlling for further structural differences within the PAGs and individual employee characteristics, such as tenure, prior experience, education and grade level.

In a significant change, the OFCCP will use the contractor’s compensation hierarchy and job structure to run its analysis, provided that:

  • the structure is reasonable,
  • the OFCCP can verify the structure as reflected in the contractor’s compensation policies, and
  • the groupings are of sufficient size to conduct a meaningful statistical analysis.

If the contractor does not provide information about its compensation system, the OFCCP will as a default use either EEO-1 or AAP job groups.  The OFCCP will “control further for sub-job groupings, functions, units, or titles,” as well as “tenure, full-time status” and other factors as appropriate.

Statistical Methodology and Modeling

The Directive provides an overview of the OFCCP’s methodology for statistical analysis of compensation data during the

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