Abstract
Self-analysis of internal pay equity is a valuable tool in the employer’s risk management toolbox. Unfortunately, few organizations make use of this strategy. In light of the changing landscape of pay equity enforcement, coupled with dramatic increases in employment litigation and regulatory investigation, employers can no longer afford to ignore this important tool.
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Notes
- 1.
Chubb Group of Insurance Companies, 2010 Private Company Risk Survey, www.chubb.com/businesses/csi/chubb12192.pdf.
- 2.
Jury Award Trends and Statistics (Westlaw, 2012–2013).
- 3.
“The Cost of Conflict in the Workplace,” Conflict Solutions Center, available at www.cscsb.org/mediation/cost_of_conflict.html.
- 4.
Gerald Maatman, “Annual Workplace Class Action Litigation Report: 2012 Edition,” Seyfarth Shaw, LLP, 2012, p. 1.
- 5.
“Equal Pay Task Force Accomplishments,” White House, April 2012, p. 3, available at www.whitehouse.gov/sites/default/files/equal_pay_task_force.pdf.
- 6.
Ibid., p. 4.
- 7.
Ibid.
- 8.
David Nenni, “The Costs of Employment Litigation and the Benefits of Litigation Prevention and Employment Audits,” National Law Review, May 10, 2011.
- 9.
The availability heuristic is a mental shortcut that occurs when people make judgments about the probability of events based on how easily they can think of examples.
- 10.
“Pharmaceutical Giant AstraZeneca Agrees to Pay $250,000 to Settle Sex Discrimination Lawsuit Brought by US Department of Labor,” OFCCP News Release, Release Number 11-0829-PHI, June 6, 2011.
- 11.
Other regulatory agencies and employment laws have data and document retention requirements as well. Examples include EEOC, Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Immigration Reform and Control Act, Executive Order 11246, Vietnam Era Veterans’ Readjustment Assistance Act, and Section 503 of the Rehabilitation Act. Some of these requirements involve compensation and benefits-related information, but they are largely concerned with hiring, promotion, termination, disability accommodation, workforce utilization, and so on.
- 12.
“Ledbetter and Compensation Document Creation and Retention with Philip Miles,” The Proactive Employer, April 10, 2010, www.thomasecon.com/tpe/shows/119-apr-2-2010-ledbetter-and-compensation-document-retention.html.
- 13.
Privilege issues are very complex and beyond the scope of this discussion. Readers are encouraged to contact legal counsel with any questions regarding attorney–client privilege, self-critical analysis, or discoverability issues.
- 14.
Note that the study population may include multiple similarly situated employee groupings.
- 15.
For example, the choice of the classical model structure will naturally lead to multiple regression analysis. The choice of a means test will lead to the performance of a t-test.
- 16.
It is not uncommon in practice to choose a class of model structure, such as separate equations, and estimate multiple specifications of the model for the same similarly situated employee grouping. For example, the first specification may be separate equations stratified by gender, the second specification may be separate equations stratified by race, and so on.
- 17.
Typically, empirical testing of the proposed modifications is reestimation of the compensation model(s) substituting proposed compensation, rather than actual compensation, as the pay metric. For example, if compensation modifications are proposed for ten individuals within a similarly situated employee grouping of sixty employees, the model would be reestimated using proposed compensation amounts for the ten people for whom modifications are recommended and actual compensation amounts for the remaining fifty individuals in the similarly situated employee grouping.
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© 2013 Stephanie R. Thomas
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Thomas, S.R. (2013). Litigation Avoidance and Proactive Self-Analysis. In: Compensating Your Employees Fairly. Apress, Berkeley, CA. https://doi.org/10.1007/978-1-4302-5042-5_10
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DOI: https://doi.org/10.1007/978-1-4302-5042-5_10
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