Pay transparency is becoming an increasingly important and challenging issue for organizations to address. There is growing pressure to disclose compensation information, not only at the executive-level, but at the employee-level as well. Regulators and those with vested interests are placing new demands on organizations to reveal data that has typically been kept confidential.

1. Effective
Strategies for
Dealing with
Pay Transparency
Demands
TalentTakeaways
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Guest Presenters:
Tom Burke, Conduent
Donna Westervelt, Conduent

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Talent Takeaways Series
Tom Burke is a Principal and the Global Leader of the Career
Consulting Practice at Conduent Human Resource Services. In this role,
Tom serves as the leader of the firm’s consulting services associated
with compensation and talent management. He is accountable for
client and employee satisfaction and retention, business development
and growth, oversight of projects and client relationships, staffing,
team collaboration, as well as resource and financial management.
Tom holds a B.A. degree in Economics from Duquesne University and
has more than 30 years of consulting experience.
Donna Westervelt is a Principal in the Engagement Consulting Practice
at Conduent Human Resource Services. In this role, Donna partners
with clients to develop compelling, comprehensive, and tailored
engagement strategies that help drive desired employee (and other
participant) behaviors.
Donna holds an M.A. degree in Industrial/Organizational Psychology
from Hofstra University and a B.A. degree in English and Psychology
from the University of Massachusetts at Amherst. Donna’s career spans
more than 15 years as a consulting and compensation and benefits
practitioner.

6. Effective Strategies for
Dealing with
Pay Transparency Demands

7. April 25, 2017 7
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

8. April 25, 2017 8
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

9. April 25, 2017 9
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.

10. 10April 25, 2017
Driving Forces

11. April 25, 2017 11
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

12. 12April 25, 2017
Inherent Fairness

13. April 25, 2017 13
What is Fair Pay?
• Fair day’s wages for a fair day’s work
• Equity Theory
• Internal Equity
• Gender Pay Gap

14. 14April 25, 2017
Stakeholder Demands

15. April 25, 2017 15
Stakeholder Demands
• U.S. Women’s National Soccer Team
• U.S. Women’s National Hockey Team
• Glassdoor
• Company Shareholders
• Equal Pay Day

16. April 25, 2017 16
Equal Pay Day

17. 17April 25, 2017
Legislation and Regulation

18. April 25, 2017 18
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

19. 19
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
April 25, 2017

20. 20
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
April 25, 2017

21. 21
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)
April 25, 2017

22. 22
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)
April 25, 2017

23. 23
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
April 25, 2017

24. 24
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
April 25, 2017

25. 25
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
April 25, 2017

26. 26
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
April 25, 2017

27. April 25, 2017 27
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.

28. 28
State Pay Transparency Laws
April 25, 2017
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

29. 29
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
April 25, 2017

30. 30
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
April 25, 2017

31. April 25, 2017 31
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.

32. April 25, 2017 32
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

33. 33April 25, 2017
What Employers Should Consider Doing and Not Doing

34. Substantially
Equal
Equal
Similar
Comparable
April 25, 2017 34
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.

35. April 25, 2017 35
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

36. April 25, 2017 36
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.

37. April 25, 2017 37
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.

38. April 25, 2017 38
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.

39. April 25, 2017 39
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.

40. April 25, 2017 40
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.

41. April 25, 2017 41
How Much Transparency?
I know how much
I’m paid.
I know how mypay
wasset.
I know how mypay was
setand how it
comparesto others’at
myorganization.
That bonus wasa
complete surprise!
I know mybonus
target andhow what
I do influences the
amount.
I monitored myown
performance and the
company’s
performance against
plan throughout the
year.

42. April 25, 2017 42
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.

43. April 25, 2017 43
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

44. April 25, 2017 44
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

45. April 25, 2017 45
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?

46. April 25, 2017 46
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

47. 47
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?
April 25, 2017

48. April 25, 2017 48
How Should Employers Prepare?
• Plan ahead.
• Develop a pay transparency policy.
• Review current pay programs and practices.
• Formulate an effective communication strategy.

49. April 25, 2017 49
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 . . .

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