The Lily Ledbetter Fair Pay Act signed into law last month, essentially removes the period of limitations for claiming that pay disparities result from past discrimination. In response to the new legislation, a number of employers are proactively reviewing their salaries and salary structure to determine if they are vulnerable to claims.
This review should take the form of a comparison and evaluation of salaries for arguably comparable positions within the organization. Organizational charts can be used to compare jobs at the same horizontal level within the company. If significant salary discrepancies are found within a job classification, or between jobs with arguably similar responsibilities, the employer should determine if these differences involve persons in protected categories (i.e., gender or race).
The employer should then analyze the positions and salaries to determine if there are legitimate, non-discriminatory business reasons for the pay differences. These can include performance evaluations, financial results, market factors, outside salary surveys, etc. Managers should be interviewed to gather additional information regarding the relationship between the respective salary levels and the importance of the jobs to the organization.
Where appropriate, the employer may decide to adjust salaries if there are not defensible reasons determined for the disparities. In any event, the results of the analysis should be thoroughly documented. The employer may consider having legal counsel conduct the review, in order to preserve a possible claim of attorney-client privilege over the results.
If the proposed Paycheck Fairness Act becomes law, this review will become even more crucial. The PFA would remove many of employers' current defenses to claims of unfair pay among various jobs. A fair, thorough and documented salary review can serve as an important defense to what is expected to be an increasing number of pay discrimination claims.