Employers Beware: Fair-Pay Cops Just Got Their Guns

A few days ago, President Obama nagged Congress to pass the Paycheck Fairness Act, which has been stalled since it was passed by the House in 2009. The Act will equip employees with several new rights, and that, of course, has groups like the U.S. Chamber of Commerce complaining on cue.

They are too late. Pay accountability is already ratcheting up, though you're probably reading about it here first. C-level execs, don't assume that your workplace is immune. A few unlucky companies are about to become poster children for the new rules of fair pay.

Vice President Joe Biden's Middle Class Task Force, which President Obama cited in his statement, spent the last few months getting pay-accountability agencies in sync.

• The Dept. of Justice is coordinating with the Equal Employment Opportunity Commission to pilot new ways to investigate pay inequity complaints against state and local employers.
• Justice is also muscling up with the Office of Federal Contract Compliance Programs (OFCCP) to make sure federal contractors and subcontractors pay fairly. If you get Federal money, you're subject to Federal fair-pay audits.
• Justice is looking into its right to proactively sue contractors that it believes are not paying fairly. That ups the ante considerably from the OFCCP's fines.
• The OFCCP gets to hire 200 more employees...on top of its 2009 hiring binge. That means that private sector contractors have a much greater chance of getting audited.
• Employers are going to have to report how much their employees are paid so the Feds can see where the pay gaps are. You think you pay your employees fairly? The exact methodology will be decided soon, as the task force gets down to specifics. But it's fair to say that if you are not conducting regular audits of pay patterns -- from top-line policies and practices down to statistical regression analysis -- you are all but inviting the Feds to do it for you.
• "Education" is on the way. Whether you consider it indoctrination, education, or information, the agencies are rallying public information campaigns to make sure that your employees know about their rights and your responsibilities.

You can scoot ahead of the Feds by taking these key steps:

1. Find out if your industry has a project that reviews fair pay practices in terms of industry terms, industry growth and business priorities. If it does not, start one. Most industries have women's groups that advocate for women. Partnering with them is a good start.
2. Talk with your human resources counsel to audit your pay practices. Order up an equity scorecard to get the top-line analysis. Order up a regression analysis to dig into the dirty details.
3. Be open and transparent. Hiding is self-defeating and makes you look guilty. Formulate a communications plan and turn this process to your advantage.