May 31, 2019
A campaign proposal by presidential hopeful Sen. Kamala Harris (D-CA) would submit companies to extensive gender pay reporting requirements and fines equaling 1% of their average daily profits during the last fiscal year for every 1% gap that exists after accounting for differences in job titles, experience, and performance.
Companies would be required to seek “Equal Pay Certification” from the EEOC by establishing with the Commission that they have “eliminated pay disparities between men and women who are doing work of equal value." To the extent pay disparities do exist for similar jobs, companies will be required to show "the gap is based on merit, performance, or seniority—not gender.” The campaign points to a Glassdoor pay assessment as an example of a “similar assessment.”
Certification every two years: Companies with 500 or more employees would be required to obtain the certification from the EEOC within two years of enactment, and every two years thereafter. Lacking the certification would also bar companies from receiving federal contracts valued at more than $500,000.
Fines: Companies that fail to receive “Equal Pay Certification” would be fined 1% of their average daily profits during the last fiscal year for every 1% gap that exists after accounting for differences in job titles, experience, and performance. The fines would be used to help pay for a federal paid leave insurance program proposed under separate legislation.
Companies would further be required to disclose:
Equal pay practice mandates: Companies would be required to disclose their pay policies and adopt certain equal pay “best practices.” Sen. Harris’ website lists as examples prohibiting asking prior salary history as part of the hiring process, banning forced arbitration agreements in employment contracts for pay discrimination matters, and allowing employees to freely discuss their pay.
Companies would be required to disclose whether they are “Equal Pay Certified” on the homepage of their websites and to prospective employees. Full compliance reports would be posted publicly on EEOC’s website. Public companies would also be required to disclose their certification to shareholders in their annual report.
Federal contractors up first: Sen. Harris promised that, if elected, she would take executive action to mandate the changes for federal contractors first.
Iceland passed a similar law in 2017, which took effect in January of 2018.
Takeaway: Gender pay equity will be a major issue in the race for the Democratic nomination. Regardless of whether Sen. Harris gains the nomination, expect this proposal—or components thereof—to be picked up by other candidates and/or members of Congress