Europe is on the front line of the Equal Pay movement these days. Iceland this year became the first country to mandate that companies with 25 or more full-time employees must submit proof that both men and women are paid equally. This spring, organizations of 250 or more employees in the United Kingdom began providing the government with 12-month snapshots where they stand in providing pay to men and women as part of new required annual reporting on the gender pay gap.
A similar initiative has been put into place this month in France.
The new French law, “For the freedom to choose one’s professional future,” is an effort to shrink the wage gap between men and women. Under the new law, employers must:
- Annually publish data showing whether there are pay gaps within their workforces and identify the processes they are taking to remove these pay gaps.
- Propose a solution to eliminate the pay gaps within their organizations. If one can’t be reached, the organization will have to consult with the CSE (Comité social et économique) (Social and Economic Committee).
- Comply with the equal pay requirements within three years. If at the conclusion of the three-year period the employer has unsatisfactory Equal Pay data set forth by the decree, the employer could be subject to financial penalties.
While more of the details need to be addressed by the French government, the new law goes into effect no later than January 1, 2019, for employers with more than 250 employees. For employers that have employee workforce sizes ranging from 50 to 250 employees, decree provisions will be published no later than January 1, 2020.
How does this affect organizations in the United States? As far back as 2016, the Equal Employment Opportunity Commission (EEOC) had intended its new EEO-1 Form to contain fields that would include for the first time pay data broken down by gender, race, and ethnicity. However, the White House Office of Management and Budget (OMB) put the new summary pay data requirements on hold last year. In the meantime, members of Congress have repeatedly introduced Paycheck Fairness Act that would require pay data reporting on a federal level. At the state level, New Jersey already has passed legislation that requires pay data reporting by state contractors, and California is considering legislation that would require private employers with 100 or more employees to report pay data to the state. It seems that requirements for pay reporting for private companies in the U.S. is only a matter of time.
As more and more attention is paid to pay equity and workplace discrimination issues, and as state and local governments continue to lead the way with more progressive pay equity legislation, companies would be well served to review their current pay policies and practices to determine if they are in line with federal laws, as well as state and local laws in the locations where the operate.
Now also may be the time for companies to undertake an audit of their compensation structures to identify and address possible issues that could lead to expensive litigation in the future. If organizations haven’t already begun to take proactive measures to ensure they are complying with Equal Pay practices, they might want to start doing so. At the very least, organizations with operations in Europe may want to be sure there are operating within the parameters of these new requirements.