Now is the time for employers to take action in reviewing their compensation practices – before the Equal Employment Opportunity Commission (EEOC), the Office of Federal Contract Compliance Programs (OFCCP), or a state employment discrimination agency initiates an examination, or an employee files a complaint. Pay equity has been a focal point of the EEOC since 2012, and both the EEOC and OFCCP remain committed to identifying prohibited pay discrimination.

During a Jan. 29, 2016 White House ceremony celebrating the seventh anniversary of the Lilly Ledbetter Fair Play Act, the EEOC introduced its proposal to change its Employer Information Report EEO-1 (“ EEO-1”). The proposal would require employers to include aggregate pay data, in addition to the data they currently submit on the EE0-1.

If the proposed changes to the EEO-1 are implemented, beginning in 2017, private industry and federal employers with more than 100 employees would be required to tally and report the number of employees in each category whose W-2 earnings for twelve months fell within the following twelve pay bands: 
  
     

     
In addition, a number of states are focusing on compensation practices. In 2015, New York and California enacted legislation to lower the threshold for plaintiffs to bring and establish gender pay discrimination claims, and to provide greater transparency in employee compensation.

Here are some tips to help you ensure your compensation practices are lawful:
    

• Carefully perform a pay data analysis. This analysis would preferably be conducted under the direction of an attorney so that it would be privileged and protected from disclosure.
      
• Justify compensation by legitimate factors. If pay disparities appear in the analysis, you must identify and document the factors, such as education, seniority, skill level and/or productivity that justify the disparities.
      
• Make changes if disparities cannot be justified. Again, such changes should be incorporated under the direction of an attorney