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Pay Equity Matters: Mind the Gap

Kamala Harris Proposes Pay Equity Punishment Plan

If a prominent candidate for the 2020 Democratic nomination for president has her way, federal pay equity law would be strengthened to add some real teeth—and the spoils of the increased financial penalties would fund a national leave policy. Senator Kamala Harris (D-CA) unveiled a plan on Monday that would require employers to receive affirmative certification from the EEOC that they are in compliance with federal pay equity law, or risk facing a fine equal to 1 percent of their profits for every 1 percent of the wage gap that exists between genders. The fines collected would then be invested in building universal paid family and medical leave. This is the boldest proposal taken to date by any presidential candidate vying for a shot at the White House in 2020, and may spur the current slate of candidates to begin a substantive conversation about pay equity on the national stage.

Blueprint: 7-Step Plan Touted By Harris

Here are the seven specific steps she proposes:

  1. Mandatory “Equal Pay Certification” – First, companies would be required to obtain a certification from the EEOC acknowledging that they have eliminated pay disparities between women and men who are doing work of equal value. The only factors that would justify a pay gap would be merit, performance, or seniority. Companies with 100+ employees would be required to obtain this certification within three years of enactment, and every two years thereafter. Companies with 500+ employees would have two years.
  2. Massive Fines – Businesses that fail to receive the certification or otherwise stay in compliance would face a fine for every day they discriminate against their workers. “This fine will be assessed based on a company’s average wage gap for work of equal value,” the senator’s policy proposal states. “For every 1% gap that exists after accounting for differences in job titles, experience, and performance, companies will be fined at 1% of their average daily profits during the last fiscal year.”
  3. Public Disclosure – Companies would be required to disclose whether they are “Equal Pay Certified” on the homepage of their websites and to prospective employees; public companies would also need to disclose this certification in their annual reports. Compliance reports would also be posted publicly on the EEOC’s website for all to see.
  4. Universal Leave – Senator Harris estimates that the plan would generate roughly $180 billion over 10 years, with revenue decreasing over time as “strong equal pay practices become part of corporate culture.” This money would be used to fund the proposed FAMILY Act and provide 12 weeks of paid family and medical leave.
  5. Pay Disclosures – Companies would be required to disclose their pay policies to the EEOC as part of the certification process. They would also be required to report statistics on the percentage of women in leadership positions and the percentage of women who are among the company’s top earners. They would also be required to report the overall pay and total compensation gap that exists between men and women, regardless of job titles, experience, and performance. These statistics will be reported by employees’ race and ethnicity.
  6. Best Practices – The plan also outlines a series of pay equity “best practices” that would be enacted through law:
    • Employers could no longer ask about prior salary history as part of the hiring process.
    • Mandatory arbitration for pay discrimination matters would be banned.
    • Employees would be permitted to freely talk about their pay with each other.
  7. Expanded Enforcement – Senator Harris proposes to expand Title VII to cover all employers, not just those that meet the minimum employee standard. The plan would also boost the resources of the EEOC to significantly increase the agencies oversight and investigatory authority.

Federal Contractors May Be Impacted Immediately

Finally, the plan notes that Senator Harris wouldn’t have to wait for Congress to adopt these provisions when it comes to federal contractors. If elected, she would put this plan into action via executive order for those under OFCCP authority. The enforcement mechanism would see companies barred from competing for federal contracts worth over $500,000 if they fail to comply.

Conclusion

It’s going to be a long road to the Democratic nomination for president, let alone the general election in November 2020 (still 18 months away), and there are sure to be countless twists and turns when it comes to candidates’ policy proposals along the way. It is difficult to predict which proposals will gain traction and become part of the national conversation, and which will fade away under the glare and scrutiny of the campaign trail. We’ll continue to monitor this proposal, along with the other pay equity proposals that will undoubtedly be floated by other candidates, during the long march to the next federal election.

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