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Are Employers Ready to Tackle Pay Equity?

Ahu Yildirmaz, Ph.D. Vice President, ADP Research Institute

The Equal Employment Opportunity Commission (EEOC) has expanded its EEO-1 form to require many employers to submit more information and provide greater transparency around their pay practices. Yet, according to ADP’s 2016 Compliance Confidence Study[1], almost half of organizations responded that they weren’t confident in their ability to comply with the EEOC rule by the 2018 deadline.

So, if they’re not ready, where should employers start?

Examining their payroll and HR data is key. The data collection needed to comply with the EEOC rules can help organizations uncover and analyze inequitable pay practices, which oftentimes exist without their knowledge. In our latest whitepaper on pay equity, ADP outlines a few steps employers can take when getting started with data:

  1. Get familiar with the latest EEOC compliance rules – and how reporting needs to change: Starting in March 2018, employers with at least 100 employees (or those with 50 or more employees that have a federal government contract) will be required to submit an expanded EEO-1 form including additional information on pay data and hours worked. But ADP’s data shows organizations are not yet ready to make the transition. Seven out of ten large employers and just 60 percent of midsized organizations said they were aware of the new EEOC compliance rules. The first step for organizations is to learn about the new EEOC regulations, determine where the data lives that they will need, and develop a system for collecting it.
  2. Diagnose with data: Once employers know where the data exists, it’s time to start analyzing. Much of this data will come from multiple systems, but once a full view of HR and payroll data is achieved, it’s much easier to accurately diagnose where the pay equity gaps are. This objective data can also help employers better communicate with employees about pay equity.
  3. Audit your information: Conduct a privileged self-audit to identify and correct disparities – not only based upon gender, but also race. When doing this, employers should discuss with their counsel how to protect this information as well as the proper way to invoke attorney-client privilege.
  4. Analyze the data to get an action plan: There are many different ways to look at HR and payroll data. Use this opportunity to think differently to get new insights. Diagnostic tools and analytics can help employers identify potential pay equity hotspots and develop potential solutions to address pay differentials and demonstrate an organizational commitment to equal pay.

As pay equity continues to be a growing compliance issue, employers need to consider how they will address this challenge. Further, the importance of pay equity goes beyond compliance – it has an effect on talent attraction and retention as well. Analyzing payroll and HR data can help organizations gain fresh insights and develop strategies that bring more parity to pay policies. To learn more, read: Are employers paying their employees equitably?

[1] ADP 2016 Compliance Confidence Study, ADP Research Institute, November 2016.

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