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WORKSPAN
WORKSPAN DAILY |

What the Biden Administration Could Mean for Compensation

Editor’s Note: Workspan Daily will be publishing a monthly columns from the Fortney Scott for the benefit of our readers and to encourage further discourse on topics vital to workplace equity and compensation professionals. New to WorldatWork? Please feel free to join the discussion in our Online Community or send your thoughts to workspan@worldatwork.org.

President-elect Biden announced an ambitious and holistic Agenda for Women focusing on five key areas: economic security, expanded access to health care, affordable family care, eliminating violence against women and empowering women across the globe. 

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The President-elect’s efforts to promote economic security will likely build off of key Barack Obama-era initiatives, including pay data collection, paid leave, reintroduction of the Paycheck Fairness Act and enhanced litigation efforts. These initiatives originally grew out of President Obama’s 2010 National Equal Pay Enforcement Task Force, which included representatives from the Equal Employment Opportunity Commission (EEOC); Department of Labor, Office of Federal Contract Compliance Programs (OFCCP); and the Department of Justice, Civil Rights Division. (2010 Equal Pay Task Force Report)

A Biden Administration is most likely to quickly reintroduce the pay data reporting requirement and refocus on systemic pay discrimination litigation as neither require Congressional action.  However, passage of paid leave legislation and the Paycheck Fairness Act are less likely to occur at present as the Democrats have a slim margin in the House of Representatives and will either have a deficit in the Senate or only a one vote majority.

Pay Data Collection

On Jan. 29, 2016, President Obama announced the EEOC’s proposed revision of the EEO-1 Report, which added a component requiring disclosure of W-2 compensation and hours worked data by nine-pay bands in the report’s seven race/ethnicity categories and ten job categories.  President Obama’s term ended before the data collection tool known as Component 2 was implemented and the Trump Administration suspended the requirement in August of 2017. After a federal district judge ordered reinstatement of the pay data requirement based on litigation initiated by the National Women’s Law Center, the EEOC required covered employers to submit pay and hours worked data for fiscal years 2017 and 2018, as the rule only required the collection of two years of data.  In November of 2019, the EEOC announced that it was not seeking permission to extend the collection of Component 2 data as part of the future EEO-1 Report collections. Several months later, in July 2020, the EEOC announced that it intended to fund a study with the National Academies of Sciences, Engineering, and Medicine’s Committee on National Statistics (NAS) to conduct an assessment of the “quality and utility” of the Component 2 data.   

Although the agency rejected the recommendations of a previous NAS expert panel on collecting pay data, the recent move to study the usefulness of Component 2 does not signal the end of federal pay reporting. 

Both President-elect Biden and Vice President-elect Kamala Harris identified pay data reporting as integral to closing the gender and race pay gap. More importantly, implementation of a new reporting mechanism does not require Congressional action and there is no shortage of options for collecting pay data. 

The NAS could find that Component 2 is an effective mechanism for collecting and assessing pay disparities. Alternatively, they may recommend other ways to collect pay data for such an assessment. In 2014, OFCCP proposed its own tool for collecting compensation data from federal contractors. It was scrapped in favor of Component 2, but there is nothing stopping the new administration from dusting off OFCCP’s proposal. Finally, Vice President-elect Harris outlined the framework for an “Equal Pay Certification” administered by the EEOC when campaigning to be the Democratic Party’s nominee for President. Under Vice President-elect Harris’s plan, employers would have to show they are paying employees comparable pay for comparable work, regardless of gender in order to receive the certification. The EEOC would administer the program and be empowered to levy fines on employers that did not satisfy the certification requirements.

A pay data collection report in the Biden Administration is a certainty. The only question is what data will be collected and by which agency.

Paycheck Fairness Act

President-elect Biden has made clear his support for the Paycheck Fairness Act. The bill has been introduced in Congress ten times since 1997, most recently on Jan. 30, 2019.  It passed the Democrat-controlled House in March 2019, but it did not come up for a vote in the Republican-controlled Senate.

This Bill seeks to materially amend the Equal Pay Act, the first federal pay equity law initially passed in 1963. Most notable, the Act seeks to significantly narrow employers’ primary defense — that the identified pay disparity is the result of a factor “other than sex.” If passed, the language of the defense would be “a bona fide factor other than sex, such as education, training, or experience.” The bill also seeks to expand the type of remedies available to employees under the Equal Pay Act to include compensatory and punitive damages. Additionally, the bill would institute a nationwide ban on requesting that applicants provide their prior salary history and a national pay transparency requirement.

Given that the Republican Party dominates the Senate, passage of the Fairness Act is highly unlikely at this point. 

Increased Enforcement Actions
President-Elect Biden has also been clear about his commitment to ensuring that the equal employment opportunity laws, including laws prohibiting discrimination in pay, are vigorously enforced. To that end, he has stated his intent to expand funding to the three federal civil rights enforcement agencies, DOJ, EEOC and OFCCP to support hiring additional lawyers and litigation expenses.

Federal Paid Leave

The demand for universal paid leave initially gained traction among Democrats in Congress during the Obama Administration. However, little progress was made until COVID-19 shone a spotlight on the importance of paid leave for all workers. 

The Families First Coronavirus Response Act required certain employers to provide their employees with temporary paid sick leave and expanded family and medical leave for specified reasons related to COVID-19. COVID-19 coupled with the ever-growing patchwork of state and local paid leave laws struck a chord with employers.

Recently, a number of Fortune 500 companies through the Business Roundtable and the U.S. Chamber of Commerce voiced strong support for a federal paid leave law. With the business community on board, this is one employee-friendly piece of legislation that may actually get traction in a deeply divided Congress. 

All indications are that the Biden-Harris Administration is poised to hit the ground running on Jan. 20, 2021. Employers will be well served to stay abreast of developing policy, legislative and enforcement priorities of the new administration.

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About the Author

Consuela Pinto Bio Image

Consuela Pinto is a shareholder and head of the pay equity practice at FortneyScott.


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