How can my company reduce the risk of equal pay discrimination claims?

There’s a simple (and, relatively inexpensive) thing you can do - with no lawyers! - to help prevent equal pay claims.

Yes, in addition to making sure you’re not discriminating, which goes without saying.

And no, I am not talking about using outside consultants, HR consultants, statistical analysis at any level, etc., etc.

Give me a drum roll, please. I’m going to keep you in suspense a while longer.

Keep reading.

Review employees in a job classification during the same review period. Lots of companies do this. Lots of other companies are reviewing employees when it is the anniversary of their start dates, which is not so good on the equal pay side of things.

Your equal pay obligations, at a minimum, in general, require you to treat ”similarly situated” employees similarly. Not “nicely.” Similarly. At least for protected class employees in terms of race, sex, national origin, color, religion, age, disability (and other attributes depending on your jurisdiction). If you are uniformly unpleasant, that’s usually fine, unless it also denies a reasonable accommodation of disability or religion.

(Note: I am not suggesting anyone be unpleasant as an employment tactic. There are plenty of reasons not to be a jerk at work. But these laws aren’t about being nice, but about being equal in your non-niceness. Or niceness. Equal, is the goal.)

Why review employees in a job classification during the same review period? Here are two reasons.

Staggered Review Periods Can Unintentionally Lead to Differential Treatment

Reason 1: if your employees’ pay is dependent on your mood - that can be a discrimination problem. Imagine having a day that started off so absurdly good that I can only try to explain it like this. The day starts with great sleep. Just the right temperature. You wake up refreshed. A perfect breakfast. Lots of bright sunshine. Your family couldn’t be more loving, without being creepy about it. You drive to work on clear roads, with the sort of weather in which you think, “How lovely to be alive!” Your boss adores you. And it goes on and on. Great mood.

Feeling a little nicer and more generous toward everyone, including those you supervise? Of course you are.

Now picture the most absurd day you can imagine. A hilarious day - if you’re not living it. Your neighbor’s dog barks all night, and you hit the snooze button so many times you’re late getting ready. When you finally get to the kitchen, your cereal has turned into staleness dust with bugs inside. The kid you share with your spouse has brought back an amazing type of art project that’s basically throwing Elmer’s glue at paper to see what sticks. You and your spouse have a huge fight. Not only do you have to go to work, but the morning comes with a nice layer of freezing rain with a side of ice. Traffic is ridiculous because that ice decided to set up shop on your road just in time for the morning commute. If all that weren’t bad enough, your boss scowls at you.

Feeling as generous toward those who report to you? Probably not.

Put yourself in those same scenarios - but as an evaluator of employees. Bet your answers and evaluations would be different? Think about it. On the good day you would give employees the benefit of the doubt. On the bad day you would not. If you follow that little logic train to its natural conclusion, you see how staggered review periods can unintentionally lead to differential treatment or pay in terms of employees.

And then someone can accuse you of discrimination due to those pay disparities.

Reason 2: the standards for same-job employees can also change. And sometimes (though of course you would never say this explicitly, and you might not even realize it) can feel different for some employees than for others. Lola and Dave do the same job. Lola gets reviewed in July, in part, based on the tough performance standards the company set in May. Those standards get loosened up in August. Dave doesn’t get reviewed until November, and he did okay. If you tell yourself “We don’t do that,” you may be in for a surprise.

And you know what Lola is going to find out? Yep, how Dave was rated and the raise Dave received. Do you think Lola is going to chalk this one up to timing? Not a chance. Lola will consider it discrimination.

But wait! What should the company do in Lola’s case? Go back and do it over. She should have been reviewed more favorably, and she should have gotten the raise she deserved retroactively. If everyone was reviewed in one review period, the company would have applied the same standard to everyone. If everyone were reviewed after August, everyone would have done great! If everyone were reviewed before August, everyone would have gotten harsh reviews, but at least a sex discrimination claim would fail because everybody was treated the same. Wouldn’t that be easier?

Annual Compensation Audit

But one very important caveat: still super smart to conduct an annual compensation audit. Preferably with outside help. It is just so much better to figure out mistakes before they are discovered during an audit, a charge or a lawsuit. All the more so if you’re a federal contractor. The Office of Federal Contract Compliance Programs (“OFCCP”) is responsible for enforcing affirmative action and is increasingly focusing on the issue of pay equity.