Supplemental materials for LEAP 2025 session Structuring Pay with Confidence: Transparency, Equity and Audits
By Brian Levine, Ph.D.
Pay compression—hiring new employees at higher pay rates than incumbents—is a common issue faced by HR professionals. It is exacerbated when labor markets are tight, as they are today. Compression devalues the contributions of incumbents and poses a retention risk, as employees perceive inequities. The dynamic is particularly concerning for companies that rely on firm-specific human capital—deep knowledge of company products, processes and people—for their comparative advantage.
Compression is also a known culprit driving gender inequities. A commonly offered rationale is that men negotiate pay more effectively than women and, therefore, get hired at higher pay rates. Female incumbents fall even further behind.
New “pay transparency” regulations in many U.S. states and emerging elsewhere serve to limit future compression opportunities. In relevant jurisdictions, organizations must post pay ranges when hiring. Seeing the ranges helps all to bargain from a comparable position and empowers incumbents to seek more equitable pay. Pay transparency should serve to reduce the gender gap and the gap between new hires and incumbent employees, reducing inefficiencies driven by decentralized managerial decisions and short-term constraints.
Organizations have increasingly relied on pay equity analyses to address areas of inequity driven by gender and race that arise with decentralized and discretionary decisions. Pay equity analysis accounts for legitimate differences between employees, in their roles and experiences, to calculate “adjusted” pay gaps in various organizational areas. Where gaps are found, the analysis provides insight on specific employees for whom pay should be reviewed and the impact of processed adjustments on the gaps. It can also identify the specific jobs for which compression is driving gaps (i.e., jobs into which female and male new hires are coming in at differential pay rates), ensuring that recruiters can review hiring processes specific to those roles.
Pay equity analysis can be tailored so unintended experience differentials are not perpetuated. Statistical models used to adjust for employee differences reveal the actual factors that come to drive employee pay inside the organization and their effects. The models can show, for example, that new hires come in at a premium relative to incumbents and that tenure at the organization is penalized. In such a case, the model can be adjusted to omit the offending factor.
The revealed factors that are valued by an organization can also be leveraged where employees raise questions about how they are positioned in their pay ranges. Managers can reference the most critical pay drivers and, before any conversation takes place, ensure they can adequately defend and explain the position of the employee.
Pay compression has largely been a symptom of short-term focus—a desire to quickly onboard expensive, critical talent, with limited budget available to increase pay for incumbent peers. It has had negative effects on the ability of organizations to ensure equity and align pay differentials with the most productive employee attributes.
The convergence of new regulations and an increased focus on pay equity should serve to diminish the extent of such inefficiencies in the future as organizations are more effectively evaluating their practices.
Brian Levine, Ph.D., is a partner at Merit Analytics Group.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Structuring Pay with Confidence: Transparency, Equity and Audits
While HR professionals are likely aware of the rising trend and growth of pay transparency laws, pay equity laws are rising as well. Joanna Colosimo, vice president of workforce equity and compliance strategy at DCI Consulting, dug into this issue during a session at SHRM’s annual conference this past June. She informed HR departments that they must analyze the data before they submit it to federal agencies. But even if your company isn’t required to submit pay information, she says companies should consider performing pay equity analyses.
It’s no surprise that California requires private employers with 100 or more employees to submit an annual pay data report. This includes information on employee compensation and hours worked by job category, race, ethnicity and sex.
“It’s a heavy lift just to get the data they want before you submit it,” says Colosimo.
Over in Illinois, the state’s Department of Labor also requires private employers with more than 100 employees in the state to submit an annual pay data report. This report includes information on the gender, race and ethnicity of employees, as well as their wages.
“In Illinois, you’re giving social security numbers, race, gender, etc. They’re going to do something with it,” Colosimo says. “You don’t want to go to your CEO and say, ‘We submitted this.’ Before you turn it over, you need to tell your teams what’s in that data.”
These are just two examples of a rising trend. Colosimo says that regardless of who is elected president this November, this is a bipartisan trend, and companies should be prepared no matter what happens.
The EEOC’s Strategic Enforcement Plan (SEP) for fiscal years 2024–2028 highlights advancing equal pay as one of its priorities. And a recent EEOC case reminds employers that discriminatory pay practices can exist against male and white employees. For these reasons, companies may want to start preparing meaningful pay equity analyses. Colosimo offers advice on where to start.
Best practice: Implement pay policies that are structured and consistent.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Investigations: Getting It Wrong Is Not an Option
Courts will generally honor employer decisions that seem to have been made in good faith. That includes decisions concerning who was telling the truth about a workplace incident.
In this case, the court concluded the employer acted in good faith when it decided bystanders were more credible than an employee who was being disciplined.
Recent case: Ahmad, age 66, was a team leader at Volvo’s Mississippi warehouse. Management received a complaint that Ahmad became aggressive and screamed at a subordinate who made a mistake.
HR investigated, interviewing the subordinate, Ahmad and three uninvolved co-workers who were nearby at the time of the incident. According to Ahmad and the subordinate, nothing happened. But the bystanders said Ahmad screamed, was combative and used profanity. Each said Ahmad did this regularly, saying it was just the way he was. Volvo fired Ahmad for violating its code of conduct.
Ahmad sued for age discrimination. He denied he ever acted inappropriately, citing his subordinate’s interview. But the court said Volvo acted in good faith when it believed the bystanders over Ahmad and the subordinate. It tossed out Ahmad’s lawsuit. (Rafee v. Volvo, 6th Cir., 2022)
Advice: When investigating incidents involving conflicting accounts of what happened, interview all witnesses. Document the process, summarizing why you believed one account over another. Those reasons can include giving more weight to bystander accounts of what happened based on their lack of a personal stake in the outcome. Your explanations may help a judge see that you were acting in good faith.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Investigations: Getting It Wrong Is Not an Option
Employment lawyer John Doran has a secret weapon he deploys every time a client asks him to conduct an investigation of alleged workplace misconduct: an investigations toolkit already loaded onto his laptop. It contains templates for all the documents needed to conduct witness interviews, determine what happened and guide the investigation toward resolution.
Speaking at The HR Specialist’s 19th Annual Labor & Employment Law Advanced Practices Conference this spring in Las Vegas, he urged HR pros to prepare a similar suite of documents themselves.
Doran, a partner at the Sherman & Howard law firm in Phoenix, says an investigations toolkit serves two important purposes.
“The final report on your investigation findings is Exhibit A in court,” Doran said. “It will be read by every judge and every jury.”
Pro tip: Doran advises placing a folder containing templates for all the following documents directly onto your computer desktop. “Then copy and paste it into your working files every time you start an investigation,” he said. Then save all the documents with file names unique to the investigation at hand.
Here are the elements that belong in your investigations toolkit:
Investigative plan: Your overall strategy for conducting the investigation. Capture what allegedly happened, who was allegedly involved and when the alleged incident occurred. Lay out a preliminary schedule for conducting the investigation.
IT and litigation-hold documents: These are boilerplate documents telling the IT department and all relevant parties that they must preserve and not alter any files that might conceivably be associated with the incident or investigation.
Issues list: A detailed catalog of the problems you may have to address as an investigator.
To-do list: A detailed catalog of all the tasks you envision having to complete during the investigation and afterward, after you have gathered all the available information.
Witnesses list: Who you must interview to gather information about the incident.
Witness scripts: What you will say to every witness you meet with. Examples: statements about the reason for the investigation and its goals, how the process will work, the interviewee’s role and what might happen (and might not happen) once the investigation concludes. Include questions you will ask everyone you interview, as well as queries specific only to certain witnesses. “After 35 years, I still use a script whenever I interview a witness,” Doran noted.
Interview notes/witness statements: This is where you will document what witnesses tell you. Prepare one set of notes and statements for each witness.
Documents reviewed list: Record every single document you accessed or read during the investigation, including internet searches.
Call, email and voicemail list: Note the details of every conversation you had with anyone about the investigation, regardless of the medium. Capture the date, the parties involved and the substance of each conversation.
Issue resolution list: Record matters still outstanding after you have conducted all interviews and gathered as much information as possible. Detail how you plan to resolve these issues.
Ongoing draft report: This is an iterative version of your final report describing what you learned during the investigation, what conclusions you reached and the discipline you recommend, if any.
Crucial advice: “Save each version of your draft reports,” Doran counseled. “Never delete any of the files you create during an investigation.” That’s because an employee’s attorney will zero in on any gaps in your investigation documentation, and that could sink your defense in any litigation. “Deletion equals guilt in court,” Doran said.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Investigations: Getting It Wrong Is Not an Option
When you launch an investigation into suspected wrongdoing, be sure to document each step you take. Employees who get fired are very likely to file lawsuits. Their lawyers will surely scrutinize your investigation for any evidence that you took shortcuts or were biased in some way against their client.
It’s up to HR to prepare for that possibility by showing that the investigation was based on valid business reasons and that you applied the process even-handedly. In court, good records can help prove your good faith.
Recent case: Montrell, who is gay, worked for HCA Human Resources for less than two years. The company had a tuition-reimbursement plan, and Montrell quickly signed up to advance his education.
In late December of his second year at HCA, Montrell told a high-level manager about his sexual orientation.
Around the same time, he also submitted a tuition-reimbursement request for a semester’s university studies. HR denied the request, noting that Montrell hadn’t received prior approval before the semester began. Montrell asked HR to reconsider his request. When it reopened his file, HR spotted discrepancies in prior reimbursement requests, such as inconsistent start and end dates for his courses. One document included another student’s name. Further investigation made HR suspect Montrell had used software to alter his tuition account documents. HR concluded Montrell had “altered education documents.”
Montrell was fired and filed a lawsuit alleging a hostile work environment and discrimination based on sexual orientation.
The court reviewed HCA’s investigation documentation and tossed out Montrell’s lawsuit. It said the company demonstrated it had conducted a legitimate investigation spurred by reasonable suspicion that Montrell had submitted altered reimbursement claims. The court said that was unrelated to anyone learning Montrell’s sexual orientation. (Kilpatrick v. HCA Human Resources, 6th Cir., 2023)
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Surviving the Expanding Landscape of Reasonable Accommodations
Download Religious Accommodation Request Form.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Surviving the Expanding Landscape of Reasonable Accommodations
Download ADA Accommodation Change Form.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Surviving the Expanding Landscape of Reasonable Accommodations
Supervisors must juggle conflicting responsibilities. They’re required to manage schedules and ensure their departments are adequately staffed. They’re also often the first point of contact for workers with disabilities that could affect attendance. Those competing needs may mean that even well-intentioned supervisors mishandle ADA accommodations.
That’s why it’s important to train supervisors that they must honor approved disability accommodations and immediately refer all requests to modify accommodations to HR.
Recent case: Sandra was a full-time customer service manager at a Walmart store in Pennsylvania. She has been diagnosed with both depression and fibromyalgia, conditions for which she sometimes took FMLA leave.
Walmart agreed to accommodate her fibromyalgia by providing her with a seat when she had to work at a desk or counter. But Sandra claims she didn’t always have access to those accommodations. She would later allege that her supervisor often told her, “There’s nothing wrong with you” and accused Sandra of “faking” her conditions. She said she once sent a text to the supervisor saying she needed to go home to rest, only to receive a reply that simply said, “Don’t start with me.”
Sandra was fired, allegedly for misusing coupons meant for customers. She sued, claiming she was really terminated in retaliation for requesting accommodations. Her lawsuit cited the supervisor’s antagonistic approach to her accommodation requests.
The court said her case could go to trial, including her request for punitive damages for the supervisor’s refusal to honor Sandra’s approved accommodations. (Lugo v. Walmart, ED PA)
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Pregnant Workers — New Laws & Evolving Expectations
Download Managing and Accommodating Pregnant Employees.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
See other supplemental materials available.
Supplemental materials for LEAP 2025 session Pregnant Workers — New Laws & Evolving Expectations
Download Pregnancy Accommodation Form.
Interested in joining HR Employment Law Advisor? For a limited time, LEAP 2025 attendees can get an annual membership at 30% off at https://www.hremploymentlawadvisor.com/leap30.
