The Government - Here To Help and To Determine How Much Your Employees Are Worth...

A few months ago, I riffed on the Employee Free Choice Act (EFCA).  Under the act, the right to a confidential election/ballot for employees to vote for/against union representation is eliminated.  That’s a shocking right to take away from employees. It’s also a very, very big deal for HR pros and business at large. 

More great ideas from Washington are on the way.  Ann Bares and Mike Haberman have been active in speaking up against the Paycheck Fairness Act (PFA).  Like the EFCA, it's got a great title.  Who can argue against fairness? 

The main thrust of the act is to address issues like gender pay equity, which is something all of us should look to impact on a daily basis in the offer and performance management process. 

The problem with the Paycheck Fairness Act is simple.  The bill overreaches by getting the DOL involved in telling you how you should value talent in your organization.  With that in mind, the question is pretty simple - who do you want valuing the 1,001 factors that go into decisions on how to compensate your talent?  The government, or your management team led by you, the gritty human capital pro?

You're kidding me on that question right?  Be sure to see the cuts originally riffed by HR Observations here and here.  Meanwhile, here's some fodder to think about from Compensation Force on the PFA:

"The Paycheck Fairness Act’s Section 7, like Section 3 discussed above, would directly involve the Department of Labor in the wage-setting process of employers, and, just as problematic, inject the widely-rejected theory of “comparable worth” into that process. And in deciding what jobs are worth to individual employers, the Government would apparently exclude consideration of some of the factors most relevant to that highly individualized determination, such as: marketplace value and supply and demand; the nature of a position vis-à-vis whether it involves physical labor; a company’s position in the marketplace; employers’ varying business needs and priorities; employees’ educational backgrounds; employees’ experience, both qualitatively and quantitatively; and regional differences.

There is more than enough here that ought to concern HR professionals, beginning with an unprecedented ability of government and the courts to insert themselves into all practices related to pay decisions, from performance management to job evaluation.  I'd like, however, to focus on a particular element of the Act: the requirement that a government mandated approach be used to, in effect, override market influences on compensation.  Like previous attempts at comparable worth legislation, this is based upon the argument that the market is biased against female dominated jobs, necessitating that its influence be nullified in setting employee pay.

I don't deny that gender pay differences exists; in fact I've posted on this topic before.  I do believe, however, that the influences behind gender based pay differences are varied and nuanced.  And my 20+ years of experience in compensation convinces me that aiming an instrument as blunt and misguided as the Paycheck Fairness Act at U.S. pay administration practices will have consequences that are more harmful than good - particularly in its aim to negate the impact of the market."

Again - pay equity GOOD (and many of you work towards this in your practice daily), government as a replacement for markets BAD.  Be a critical thinker, no matter how cushy the title of a bill sounds. 

What else would you expect from a site with "capitalist" in the name?  Be a business minded HR pro and follow the lead of Ann Bares and Mike Haberman on this one.  Write a letter, let your C-level folks know what's up and think about how much government you want running your business.

Comments

[Michael Haberman, SPHR]

Glad to see you in the "booga booga" group with me and Ann. LOL

[Dan]

I agree with Mike. As a relatively new HR guy it is nice to read someone who actually believes in the capitalism that supplies our paychecks (within reason of course).

[Ron Ulrici]

"I'm from the government and I'm here to help you." Yeah, right. In this sound byte world, most folks will embrace legislation like this just because of the title. Scary.

Just a note about pay equity. After 30 years in HR and Compensation in the electronics industry, I rarely witnessed pay inequities except when we were recruiting for female circuit designers - then we offered more than their male counterparts (high demand, low supply). What pay differences I saw overall, were mostly because of seniority. The pioneers in Silicon Valley were mostly male and were around (some are still there) a lot longer.