Recent executive orders (EOs) aimed at dismantling DEI and restoring “meritocracy” haven’t changed laws intended to protect workers from discrimination, and ensure equal pay in the workplace.
Nevertheless, the Trump administration’s actions have created uncertainty among HR leaders about their legal obligations when it comes to fair pay, according to a recent show of hands at WorldatWork’s Total Rewards conference in Orlando, Florida.
At a session focused on global pay equity, Katie Bardaro, chief customer officer with pay equity platform Syndio, reminded attendees that the EOs in question don’t change federal laws that inform employers’ compensation practices. Still, “it is creating confusion among organizations,” she noted, that are seeking to understand, “how do I balance all those compliance changes that are coming at us with what is true for our business and business imperatives?”
While the EOs indicate that the administration is shifting its enforcement priorities when it comes to issues like fair pay, employers should continue to monitor for inequities and fix them when they discover them, experts told HR Brew.
Which Trump EOs are tied to pay practices? Among the EOs that touch upon employers’ pay practices is one targeting DEI that was issued on Jan. 21 and rescinded several previous orders affecting the federal workforce. One such order, issued by President Lyndon Johnson in 1965, had required federal contractors to “take affirmative action,” and conduct annual pay equity audits as part of these efforts.
A separate executive order, issued on Apr. 23, takes aim at “disparate-impact liability,” or the legal theory that certain policies and procedures can discriminate against a protected class of individuals, even if they seem neutral on their face. The order directs the Department of Justice (DOJ) and Equal Employment Opportunity Commission (EEOC) to stop enforcing laws and regulations that rely on this theory.
Just because the Trump administration will no longer pursue disparate-impact claims on behalf of workers doesn’t mean employers are immune from pay discrimination lawsuits, Bardaro said.
The expectation is that states and plaintiffs’ attorneys will continue to take up these cases. In addition, state laws can and sometimes do go beyond federal law when it comes to pay equity and other protections.
Back to basics. Sara Hillenmeyer, senior director of data science with Payscale, said recent actions at the federal level don’t seem to have slowed employers’ efforts to monitor pay equity and transparency within their workplaces. “Equal pay is still the law…we’re not seeing a softening in the market. Our companies are still doing it, engaging with us and our services, to make sure that they’re doing a good job,” she said.
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When gauging how these actions may affect compensation practices, it’s worth remembering, “all the executive order [on disparate impact] did was announce enforcement priorities for the federal government,” said Lynn Clements, senior director of people insights at Berkshire, an HR technology and consulting firm. “They can’t change the law, and so pay discrimination is still illegal under Title VII. It’s still illegal under the Equal Pay Act, if it cannot be justified.”
While the Trump administration’s scrutiny of DEI has prompted many employers to reexamine their employment practices, “we have not really seen a lot of employers stepping back from the issue of pay equity,” she said. “In fact, I would say that part of our business, in many cases, continues to grow,” due to the prevalence of pay transparency laws taking effect at the state level and globally. Such laws behoove employers to closely examine their compensation systems, and make sure they’re working as intended, Clements said.
If total rewards leaders are worried about their compensation programs in relation to these recent executive orders, it may be worth revisiting why those programs exist in the first place, Syndio’s senior director of total rewards and solutions, Nancy Romanyshyn, told HR Brew.
Pay equity analyses fulfill “the spirit” of these executive orders, she noted, “in the sense that you want to make sure that no group is favored.” To ensure that’s the case, HR leaders should focus on explaining why variations in pay do exist, when they occur. They may ask, “Are we paying the way we intend or not, for things like experience and skills and the job?” she said.
Employers should be looking out for potential pay disparities in “all directions,” Romanyshyn said, regardless of the gender, race, or ethnicity of workers being affected.
Monitoring compensation not only helps employers remedy pay inequities if they occur, but also show workers that fair pay is part of their employee value proposition, she added.