WWHD - What Would Houdini Do?

I have to admit, I was excited when the new administration was voted in.  And, while I think their hearts are in the right place, I’m not sure the mind is in sync. 

I don’t think the new pay laws are necessary; I think we need to be more assertive in our value add.  

I went to a legal discussion of the Ledbetter case and the Paycheck Fairness Act...  Yawn.  I know, you’re beginning to think I’ve gone down the proverbial hole. Trust me,  I haven’t.

I walked away with more interesting information to share.  Here are a few tidbits:

Both the Ledbetter Fair Pay Act (LFPA) and the Paycheck Fairness Act (PFA), should it pass (which seems likely), will make companies more likely to be subject to class pay discrimination claims.  You read it correctly.  More likely. 

I’ll leave LFPA for now and only touch on the PFA.  Language has been added that will result in more class claims cases and increased cost to employers. For example, language has been added that:  

• Expands language defining same establishment to include employees in the same county or similar political subdivision of the state.  
• Replaces the current “opt-in” class claims under Equal Pay Act (EPA) with “opt-out” class claims.  This alone may take claims from about 1/3 participating to about 90% participating.  
• Allows plaintiffs to receive back pay and an equal amount in liquidated damages.
• Adds compensatory and punitive damages which are not available under the EPA. 

What should employers do to minimize risk and exposure to class claims?

• Improve Documentation of Decisions - improve documentation of employment decisions that directly and indirectly affect pay.  
• Make sure your recordkeeping is outstanding - In short, get your house in order.  By ensuring any effects on current pay are eliminated, the claim is potentially preempted.  
• Institute tighter Controls on Managerial Discretion in Compensation Decisions - another small rant will follow.
• Conduct pay equity analyses to eliminate and preempt claims under both statutes.

The proof the employer has to submit is much more demanding under the new laws. 

More mechanistic approaches will come in to play and are more defensible. 

The Rant.  I’m hearing the theme from The Twilight Zone now.  We’ve just traveled through sight and sound to another dimension. 

To the best of our ability, we should be using objective metrics to measure performance and our managers need our value add when it comes to training on performance ratings, pay decisions, and proper documentation of each of these.  I also know that no matter how much training we provide, these are human beings we are dealing with and humans are frail (easily led into evil or easily broken or destroyed) and may color outside the lines.  Most people managers don’t really subscribe to the phrase “I have flying monkeys and I’m not afraid to use them” (great visual comes to mind from The Wizard of Oz).  They don’t mean to pillage and plunder the rewards systems.  They are attempting to reward their people. 

There will be subjectivity in the process no matter how hard we try to eliminate it.  Whatever nomenclature you put in a ranking/rating system does not mean every manager interprets the definition of the highest level of performance the same way.  I like the ability to be flexible, nimble and creative when it comes to compensation, I hate to see us being forced to move to a totally rigid system to provide the big CYA, especially if we’re really trying to reward performance within the regs. 

You have to decide what Harry Houdini would do to escape the ever shrinking box the regulators are putting in place, and share your thoughts.

p.s. It was a pleasure meeting my fellow CC blogger Darcy Dees at the RMCA meeting that prompted this post. 

Terri Albee, CCP, is managing partner of HR Ops Team LLC, which provides scalable and affordable human resources services, ensuring human resources structures are in legal compliance, streamlined for funding or exit events, or just optimized for day-to-day operations.  Terri has planned and managed HR operations in a variety of industry verticals from start-up organizations to the Fortune 500, domestically and globally.  Her experience encompasses design, implementation, compliance and management of compensation, benefit and equity plans at all levels.

Image credit: Library of Congress, public domain per Wikipedia

Comments

[working girl]

That does sound overly complex and expensive. Even if a company regulates and standardizes every aspect of what pay gets awarded for what level of performance (thereby eliminating any creative motivation the performance process might have inspired among employees) performance ratings will always be subjective. So basically anyone can sue for back pay if they don't like their performance appraisal? Now who's got the flying monkeys?

[Terri Albee]

Working girl: I'm thinking the ones with the ability to use the flying monkeys may be outside the employment relationship now. :->