This webinar deals with the issues related to pay transparency. The issue is examined from the perspectives of fairness, stakeholder concerns and regulatory requirements.

1. Effective Strategies for
Dealing with
Pay Transparency Demands
April 25, 2017
Conduent Human Resource Services

2. November 13, 2019 2
Today’s Session
• Pay transparency is becoming an increasingly
important and challenging issue for employers.
• Pressure is growing to disclose compensation
information, not only at the executive-level, but
at the employee-level as well.
• Lawmakers, regulators, stockholders and
others with vested interests are placing new
demands on organizations to reveal data that
has typically been kept confidential.
Dealing with Pay Transparency Demands

3. November 13, 2019 3
Today’s Session
• Understanding the driving forces
• Emerging pay transparency trends at the state
and local level
• Potential compliance pitfalls and traps to avoid
• Ways to ensure pay transparency without
breaching confidentiality
• Best practices for effectively communicating
pay to managers and employees
Key Takeaways

4. November 13, 2019 4
What is Pay Transparency?
In its simplest form . . .
The practice of providing clear insight as to how
much one is paid.
A more dynamic and contemporary definition is . . .
A way to achieve fair and equal pay by making
information open and accessible. Doing so helps to
eliminate bias, favoritism, and prejudice associated
with pay decisions.

5. 5November 13, 2019
Driving Forces

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Pay Transparency: A Means to an End
• The end or goal is Pay Equity.
• Other driving forces include
inherent fairness, stakeholder
demands, legislation and
regulation.
• These forces also drive pay
transparency.
PAY
EQUITY
Stakeholder
Demands
Legislation
andRegulation
Pay
Transparency

7. 7November 13, 2019
Inherent Fairness

8. November 13, 2019 8
What is Fair Pay?
• Fair day’s wages for a fair day’s work
• Equity Theory
• Internal Equity
• Gender Pay Gap

9. 9November 13, 2019
Stakeholder Demands

10. November 13, 2019 10
Stakeholder Demands
• U.S. Women’s National Soccer Team
• U.S. Women’s National Hockey Team
• Glassdoor
• Company Shareholders
• Equal Pay Day

11. November 13, 2019 11
Equal Pay Day

12. 12November 13, 2019
Legislation and Regulation

13. November 13, 2019 13
Patchwork of Federal Regulations
• Equal Employment Opportunity Commission
• Internal Revenue Service
• Office of Federal Contract Compliance Programs
• U. S. Department of Labor
• U. S. Securities and Exchange Commission

14. 14
Federal Regulations
• Amended Fair Labor Standards Act of 1938 to prohibit
sex-based wage discrimination between men and
women in the same establishment
• who perform jobs that require substantially equal skill,
effort and responsibility under similar working conditions,
• except where such payment is made pursuant to (i) a
seniority system; (ii) a merit system; (iii) a system which
measures earnings by quantity or quality of production;
• or (iv) a differential based on any other factor other than
sex . . .
Equal Pay Act of 1963
November 13, 2019

15. 15
Federal Regulations
Prohibits employers with at least 15 workers
from discriminating against their employees
on the basis of race, color, religion, sex or
national origin in all terms and conditions of
their employment, including pay.
Title VII of the Civil Rights Act of 1964
November 13, 2019

16. 16
Federal Regulations
Prohibits federal contractors and
subcontractors from discriminating in
employment decisions (including
compensation) on the basis of race, color,
religion, sex or national origin, on contracts
exceeding $10,000
Executive Order 11246 (1965)
November 13, 2019

17. 17
Proposed Federal Regulations
• Introduced in every session of Congress since 1997,
but has never passed.
• Would amend Equal Pay Act to narrow the “bona fide
factor other than sex” defense and modify the “same
establishment” requirement.
• Protect against retaliation for asking about, discussing
or disclosing salaries with co-workers.
• Prohibits applicant screening based on salary history
and using salary history during the hiring process.
• Create a negotiation skills training program for women
and girls.
Paycheck Fairness Act (1997)
November 13, 2019

18. 18
National Policy Strengthens
• Lilly Ledbetter Fair Pay Act (2009)
– Extended time to bring equal pay lawsuit
under Title VII
• Dodd-Frank Wall Street Reform and
Consumer Protection Act (2010)
– Say-on-Pay
– CEO Pay Ratio
• National Equal Pay Task Force
• White House Equal Pay Pledge
• Employers for Pay Equity Consortium
Momentum Begins to Build Under President Obama
November 13, 2019

19. 19
Focus Broadens to Include Pay Transparency
• Executive Order 13665
– Protects employees of federal contractors against
reprisals for disclosing or discussing compensation
information.
• Equal Employment Opportunity Commission
– EEO-1 form will require companies with 100 or more
employees to report summary pay data categorized by
employees’ gender, race and ethnicity starting on
March 31, 2018.
• New Overtime Rules under the Fair Labor Standards Act
Federal Legislation in Motion
November 13, 2019

20. 20
2016 Presidential Election is a Game Changer
• CEO Pay Ratio put on hold
• New FLSA Overtime Rules on appeal, as we
await a new Secretary of Labor
• Paycheck Fairness Act introduced again in 2017
in the 115th Congress (11th consecutive session),
but . . .
New Administration Takes Office
November 13, 2019

21. 21
States Expand Protections
California, Maryland and New York have each enacted
sweeping changes to their equal pay laws within the past
year that:
• Adopt a more expansive standard than the “equal work”
standard under the Equal Pay Act
• Broaden the comparison between jobs
• Narrow defenses available to employers in pay disparity
matters
November 13, 2019

22. November 13, 2019 22
State Equal Pay Regulations
Source: U.S.
Department of
Labor website
State Equal Pay Laws
• The District of Columbia and 48
states have laws that address
equal pay.
• Mississippi and Alabama do not
have equal pay regulations.

23. 23
State Pay Transparency Laws
November 13, 2019
State Transparency Laws
• Anti-discrimination laws that prohibit sex-
based pay discrimination are being expanded
and equal pay laws amended to include pay
transparency provisions.
• The District of Columbia and 13 states now
provide pay transparency protections.
• Most recently, Maryland, Delaware and
Massachusetts have enacted laws prohibiting
employers from taking adverse action against
employees who disclose or discuss their
wages.
Source: U.S.
Department of
Labor website

24. 24
Leveling the Paying Field
• Prohibit employers from restricting employees’ ability to
discuss wages with coworkers
• Bar employers from firing or discriminating against
employees who ask about or disclose their own or other
employees’ pay
• Allow employees to discuss wage information without
reprisal
• Prohibit employers from requiring employees to waive
their right to discuss their wages
• Laws promoting pay transparency do not require
disclosure of individual salary information
Pay Transparency Laws in General
November 13, 2019

25. 25
Restricting Salary History Inquiries and Use
• Massachusetts enacted the country’s first statewide
prohibition on employers requesting or requiring a job
seeker’s wage history.
• California enacted a law precluding employers from
using prior salary history to justify a wage disparity
between employees performing similar work.
• Philadelphia became the first U.S. city to prohibit
salary history inquiries during the hiring process.
• New York City council passed a bill that prohibits
employers from asking about job candidates’ salary
history during all stages of the employment process.
A Key Issue to Watch
November 13, 2019

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City Regulations
• New Orleans, LA
• New York, NY
• Philadelphia, PA
• Pittsburgh, PA
• Washington, DC
A growing number of U.S.
cities are adopting
regulations that prohibit
the use of salary history
information in the hiring
process.

27. November 13, 2019 27
Polling Question 1
Which type of pending future pay-related legislation most concerns you?
A. Federal
B. State
C. Local
D. Two of the above
E. All of the above

28. 28November 13, 2019
What Employers Should Consider Doing and Not Doing

29. Substantially
Equal
Equal
Similar
Comparable
November 13, 2019 29
Know the Lingo
Pay equity may differ from regulation to regulation.
For example, the new Massachusetts law
uses this definition:
“Comparable work,” work that is
substantially similar in that it requires
substantially similar skill, effort and
responsibility and is performed under
similar working conditions; provided,
however, that a job title or job description
alone shall not determine comparability.

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Caution!
• Using pay history to set starting pay levels.
• Paying employees below the minimum of the pay range
for their jobs.
• Making pay decisions on a case-by-case basis without
any defined criteria or written guidelines.
• Allowing managers full discretion when it comes to
starting pay amounts, pay increases, and promotions.
• Not having a stated compensation philosophy and
strategy.
• Paying for performance without defining and measuring
performance.
Six situations to avoid

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Polling Question 2
To what extent do you use market pay to determine the value of jobs in your organization?
A. It’s the primary factor that we use.
B. We use it as a guideline and also consider other factors.
C. We use it as a tie-breaker.
D. We rarely or never use it.

32. November 13, 2019 32
What About Using Market Pay?
• Male-dominated jobs tend to be paid more than
female-dominated jobs.
• Doing so continues a historical bias in favor of
males and perpetuates pay disparities.
• Job segregation is a major factor in pay
discrimination.
Legal, but opposition may intensify.

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Guidelines for Using Market Pay
• Use credible and multiple compensation
survey sources.
• Document survey job matches and have them
reviewed – DO NOT rely on one person’s
opinion.
• Consider adopting a plan, system, or process
that takes into account factors other than
market, such as skill, effort, responsibility,
working conditions, seniority or performance.
While it is permissible to use market data, relying solely on it may be problematic.

34. November 13, 2019 34
Guidelines for Using Market Pay
• Be careful to evaluate jobs not people, which
can be particularly challenging in cases of
single-incumbent jobs.
• Review and test market-based compensation
programs, processes, and results to ensure
there are no systemic biases or unexplained
gender-based correlations.

35. November 13, 2019 35
A Word about the CEO Pay Ratio
• Define what median compensation means
• Set the narrative around the Compensation
Discussion and Analysis (CD&A), which is a required
part of a company's annual proxy statement
• State the organization’s compensation philosophy
and how it links to business strategy
• Explain how and why the organization pays the way
it does
• Tell employees what to do if they have questions
about their pay
The median (and the media attention) will be what’s new.

36. November 13, 2019 36
How Much Transparency?
I know howmuch
I’m paid.
I know howmy pay
wasset.
I know howmy pay was
set andhowit compares
to others’at my
organization.
Thatbonuswasa
completesurprise!
I know mybonus
targetand howwhat
I do influencesthe
amount.
I monitoredmy own
performanceandthe
company’sperformance
againstplan throughout
the year.

37. November 13, 2019 37
Get There through Planning and Education
Have you considered whether…?
• Your organization has a documented compensation philosophy?
• It reflects current business strategy?
• Your pay programs align with that philosophy?
• Employees understand their compensation and how their performance influences it?
• Employees trust and believe messages about pay?
• Interviewers know what pay-related questions they can ask?
Have you considered who…?
• Makes decisions about pay?
• Informs employees about pay changes or incentive payments?
• Responds to questions about pay from employees?
Before communicating
with employees, make
sure that managers or
other messengers are
prepared for their role.

38. November 13, 2019 38
Polling Question 3
If you use a pay structure, composed of pay ranges or bands for your jobs, to whom do you
communicate this information?
A. Managers only
B. Both Managers and Employees
C. Neither Managers nor Employees

39. November 13, 2019 39
Polling Question 4
If you have an incentive or variable pay program for employees, with whom do you share bonus
pool funding information?
A. Managers only
B. Both Managers and Employees
C. Neither Managers nor Employees

40. November 13, 2019 40
Potential Topics to Communicate
Base pay
Find the combination that’s right for your organization.
• Compensation framework
• Pay ranges/bands/grades
• Position in pay range
• FLSA classification
• Market competitors
• Connection to individual performance
Short-term incentives
• Funding pools
• Company/division/team performance
measures
• Ongoing communication of performance
against measures
• Individual performance measures
• Timing
• Unpredictables that may affect payouts
Long-term incentives
• Eligibility
• Mechanics (RSUs, PSUs, options)
• Performance measures
• Vesting schedule
• Ownership requirements
How does pay fit in to the larger picture of total rewards? How does pay connect to individual performance?

41. November 13, 2019 41
Potential Communication Methods
• Interactive and scenario-based training for managers,
interviewers, HR and other pay communicators
• One-on-one conversations with personalized leave-behind
• Broad-based education through videos, brochures, learning
modules to explain philosophy, measures, program structure
• Dashboard to share company/team performance progress and
results
• Personalized total rewards summaries

42. 42
Closing the Gaps
• Will employee discussions about pay no longer be taboo?
• Are employees really willing to disclose their salaries?
• How important will websites like Glassdoor become?
• Will fake information emerge?
• What role will social media play?
• What about data analytics?
• Will privacy concerns temper transparency demands?
“Knowledge is Power” – Sir Francis Bacon, 1597
How far will Pay Transparency initiatives take us?
November 13, 2019

43. November 13, 2019 43
How Should Employers Prepare?
• Plan ahead.
• Develop a pay transparency policy.
• Review current pay programs and practices.
• Formulate an effective communication strategy.

44. November 13, 2019 44
Closing Remarks
• Employers that hide or fail to disclose how pay is
determined may inadvertently contribute to a culture
of distrust and lower employee engagement.
• Greater transparency, however, requires sound
compensation policies and programs.
• Employers should have confidence they are doing the
right things when it comes to pay.
• Employers that are upfront with employees about the
organization’s pay policies and practices are more
likely to prove that pay equity is a top priority.
In conclusion . . .