Thursday, March 31, 2016

The Gender Pay Gap

How big is it, really?

Numbers are great, data in the form of statistics can help us make a point, prove a theory or just move a conversation along in an organized, factual way. However, those same numbers can have a dark side. They can be used to sway arguments in one direction or another, depending on your motive or position on the subject.

"Simple" statistics, like gross percentages, are particularly prone to this kind of misuse, I think. Enter the "gender pay gap" argument. The most commonly stated gap is that women earn only 78% of what men earn – a 22% difference. There are many who use this as ammunition for the passage of more and more federal, state and local laws and regulations to "address" pay discrimination. There are at least a couple of problems with that number. The figure compares all working women with all working men. It also implies a statistical correlation or relationship that is less than direct (if you’re into statistics, you might be familiar with the terms spurious correlation and spurious relationship).

Comparing all working women with all working men ignores several, very important factors. Among them are age, job title, time in workforce, industry, employer, education, experience and geography. All of these factors can and do influence rates of pay. That gross number of 78% does not control for any of these relevant factors. So, what happens when you do control for those factors? Well, a recent survey by Glassdoor tells us.

When controlling for all those factors, the gap shrinks to something like 5.4%. Glassdoor looked at data from 5 countries. As you’ll see the results from those countries are fairly consistent.

"To drill down further into what’s causing the gender pay gap, we look at the numbers in a slightly different way. We divide the overall gap into an "explained" part due to differences between workers, and an "unexplained" part due either to workplace bias—whether intentional or not—or unobserved worker characteristics. In all countries, most of the gender pay gap is explained. The "unexplained" part is 33 percent in the U.S. and is less than half in every country, suggesting overt discrimination alone does not explain most of today’s gender pay gap."

What is the main cause?

"But the data show that while overt forms of bias may be a partial cause of the gender pay gap, they are not likely the main driver. Instead, occupation and industry sorting of men and women into systematically different jobs is the main cause."

Take a look at the study. It’s very thorough and does a good job of explaining the numbers in a factual and intellectually honest way.

Yes, gender pay discrimination occurs; I’ve experienced it myself in my career. But what this study and others shows me is that more and more laws (that truly don’t offer any more protection) do nothing to address the situation. I covered this in a recent post here. Forcing business to collect and report mass amounts of gross data and not drilling down to the relevant factors will not address any real pay discrimination that occurs. There are already several federal (and state counterpart) laws that address discrimination and provide appropriate penalties for violations. More is not better. And using numbers to mislead and garner support for your cause without fully examining or explaining those numbers is dishonest.

Friday, March 25, 2016

GOP Introduces Bill in Opposition to DOL’s Overtime Rule

The fight continues….

On the heels of the news that the DOL’s new rules on overtime could be released this Spring, Republican members of the House and Senate introduced a bill that would effectively invalidate it. The Protecting Workplace Advancement and Opportunity Act, was introduced by Sen. Tim Scott (R-SC) and in the House by Rep. Tim Walberg (R-MI).

The GOP bill cites the following deficiencies of the DOL’s proposed rule:

  • The Secretary of Labor significantly underestimated the cost of compliance with the rule.
  • The Secretary of Labor did not consider the potential impact of the proposal on workplace flexibility.
  • The Secretary of Labor did not analyze the potential impact of the proposed rule on multistate employers.  These companies operate in multiple states with different costs of living and different salary scales, and therefore "face costs and unique complications" in reclassifying thousands of employees in multiple jurisdictions.
  • The Secretary of Labor lacks the authority to increase the salary threshold on an annual or other basis "without conducting notice and comment rulemaking with respect to each change in accordance with section 553 14 of title 5, United States Code."
  • Although the proposed rule indicates changes to the duties test might be included in the final rule, these changes would be made without the requisite notice and comment period and procedures.

In light of this, the bill would "require the Secretary of Labor to nullify the proposed rule regarding defining and delimiting the exemptions for executive, administrative, professional, outside sales, and computer employees, to require the Secretary of Labor to conduct a full and complete economic analysis with improved economic data on small businesses, nonprofit employers, Medicare or Medicaid dependent health care providers, and small governmental jurisdictions, and all other employers, and minimize the impact on such employers, before promulgating any substantially similar rule, and to provide a rule of construction regarding the salary threshold exemption under the Fair Labor Standards Act of 1938, and for other purposes."

Veto bait? Surely, but it is another indicator of the level of opposition to the DOL’s proposed rule, and how it went about the process. This bill simply echoes the stance of many business groups to the serious problems these changes to the FLSA would cause. 

Thursday, March 17, 2016

Federal Agencies Behaving Badly….Or Just Not Making Sense

NLRB Violates the NLRA? Really??

It is so very amusing when a regulatory agency that has dedicated itself (at least recently) to punishing and attacking businesses for normal and accepted business practices, fails to follow its own rules and then bitches about the penalty.

So, the Federal Labor Relations Authority (the body that has authority over public employers and unions) has ruled that the NLRB engaged in an unfair labor practice when it refused to continue bargaining with the Board employees’ union in regard to the Board’s move to another location within Washington, D.C. (Now, why bargaining should be required when a business sees it necessary to relocate operations within the same city, is quite beyond me, but there it is.)

Apparently, after bargaining for two days, the NLRB declined to continue bargaining into the next week, while at the same time, the union declined to stay through the night to further narrow down the issues.  Then, the Board refused to engage in mediation initiated by the union; refused to furnish relevant information to the union and delayed the start of bargaining until many important decisions regarding the new headquarters had already been made. Seriously. Had this been just another business caught in the crosshairs of the NLRB, it would most likely had faced serious monetary penalties, rather than just the normal public-shaming requirement of having to post a notice that it violated the law.  As stated by the Labor Relations Authority, the posting "will emphasize to employees that the agency that enforces labor laws in the private sector must itself comply with labor laws in the public sector."

What’s required for the goose is not required for the gander? Hmmmm??

And then we have the DOL, who apparently can’t seem to get its timetable straight – at least in terms of the new overtime regulations. 

In review, last fall the DOL’s Solicitor of Labor M. Patricia Smith said that the finalized changes to the FLSA’s overtime eligibility rules likely won’t be issued until late 2016. Shortly after that, the DOL released its fall 2015 regulatory agenda, which said the agency was targeting a July 2016 release date for the final rule. Then DOL Secretary Thomas Perez told Bloomberg BNA in an interview that the agency is "confident we’ll get a final rule out by spring 2016." Got it so far?

Not long after that statement went public, the Congressional Research Service, a branch of the Library of Congress, released a report that suggested the DOL had until approximately May 16 to release the rule to avoid giving the next Congress and president the power to overturn the rule. (The report referenced a mechanism created by the Congressional Review Act that gives Congress 60 legislative session days to pass a joint resolution that would invalidate any major rule. If the rule is submitted to Congress with fewer than 60 session days remaining on the legislative calendar, then the next Congress will have a similar 60-day period to consider the rule.)

Then, Smith, while speaking at another meeting of the American Bar Association, said the rule would be published in July 2016. Smith also stated that the rule will become effective 60 days after it’s published. About a week later, she backtracked some and said that the final rule could be published in or before July. She also said the rule will take effect at least 60 days after it’s published.

On Monday, March 14th, the DOL sent the final rule to the Office of Management and Budget (OMB). That is the final step in the process before it gets published in the Federal Register. The OMB’s average review period runs four to six weeks, which would put the effective date sometime this Spring. Conventional wisdom again suggests the timing is political in nature, hoping to avoid the Congressional Review Act and the possibility the rule would be nullified.

Thanks to HR Morning for the above info.

Let’s move on to the EEOC, shall we? If your business is required to file the annual EEO-1 (or other related versions) Form, your life is about to get even more complicated. Next year’s form will include the requirement for a massive amount of additional data. You can get the details from this National Law Review article. The EEOC has said that this data will help to identify and remove pay discrimination practices.

According to the US Chamber, the new form will require some 3,360 cells (of a spreadsheet) to record the data. Camille Olson, of Seyfarth Shaw law firm, testified on behalf of the Chamber before the EEOC this week. In part, she testified that the EEOC has not "identified the specific benefit that the collection of aggregated wage and hours data would provide to the agency,"

While the EEOC has said it recognizes that differences in education, experience, training, shift differentials, job classification systems, temporary assignments, "red circling," revenue production, and market factors, etc., can explain compensation differences, it is requiring that jobs be lumped into broad categories and employers will be forced to categorize employees who perform wildly different work into these groupings. The groupings are so broad, that they will necessarily capture a wide range of positions that will not lead to meaningful compensation comparisons.

An example the Chamber article cites is noteworthy if only because it would be a very common occurrence in many businesses. In a hospital both nurses and lawyers would be lumped together as "professionals." But, of course, these are very different jobs that require different education, experience, skills and are quite naturally paid very differently. It is also true that nursing attracts more females than males. The EEOC’s proposal seriously fails to account for these and other legitimate, non-discriminatory factors that affect employee pay. 

Ms. Olson goes on to say that the statistical analysis EEOC will perform on it "may not identify actual pay differences that are consistent with discrimination when it truly exists, and may incorrectly conclude that there is evidence consistent with discrimination when employees are actually paid equivalently."

In sum, Olson said, "There is simply no circumstance under which broad-brush, aggregate compensation and hours data can be used effectively on a grand scale to target employers for review."  But that is exactly what the EEOC intends to do with this data.

Both behaving badly and making no sense.