Today is Equal Pay Day

Today is Equal Pay Day. Equal Pay Day was originated by the National Committee on Pay Equity (NCPE) in 1996 as a public awareness event to illustrate the gap between men's and women's wages. According to the NCPE, Equal Pay Day "symbolizes how far into 2010 women must work to earn what men earned in 2009."

According to NCPE,

"Equal Pay Day involves thousands of local advocates in programs and activities focused on eradicating wage discrimination against women and people of color. Local Equal Pay Day activists organize rallies, lobby days, speak-outs, letter-writing campaigns, workshops, and meetings with employers, policy-makers, and enforcement agencies to promote effective solutions for closing the wage gap."

In his March 2010 testimony before the Senate HELP Committe, Acting EEOC Chairman Stuart Ishimaru stated:

"The wage gap is alive and well in America, with the typical full time year round female worker making $0.77 for every dollar earned by her male counterpart... Although some of the pay gap can be explained by differentials in experience or as a result of the differences in the occupations men and women typically do, the Shriver Report estimates that about 41% of the pay gap cannot be explained by these factors."

Based on the findings of the Shriver Report, of the $0.23 differential between men's and women's earnings, approximately $0.09 cannot be explained by differentials in experience or differences in occupation.

Employers should regularly conduct compensation self-audits to ensure that they are compensating employees fairly. In these self-audits, looking for gender disparities is not enough; it's important that all employees are compensated fairly, regardless of protected group status.

Formula-Based Comp Systems Protected from Title VII Disparate Impact Claims

Last week, there was a new ruling affecting the financial services industry with respect to claims of compensation discrimination. A federal judge in the Southern District of New York recently held that a pay system that compensated people on the basis of actual production is protected from disparate impact claims under Title VII, irrespective of whether the pay system has a disparate impact on minorities or women and irrespective of whether the employer knows that it will have a disparate impact.

According to information provided by Weil Gotshal:

The case involved a transition "stay bonus" program that Merrill Lynch adopted in connection with the Bank of America merger. The program provided payments only to Merrill Lynch's most productive Financial Advisors, and those payments were tied in various ways to the amount of the FA's production. Plaintiff argued (a) that the protections in Title VII for production and merit-based programs do not apply if the production is infected with discrimination, because for example leads are given to men but not to women, or (b) under the express language of the statute the protection does not apply if the program is adopted with "intent to discriminate", and plaintiff argued that such intent can be inferred if the employer adopts a program knowing that there is underlying discrimination that infects the production on which the program is based."

In response to plaintiff's first argument, the court held that "a merit, seniority, or production-based compensation system is 'bona-fide' if it applies equally to all employees in the same way. Even if the compensation system perpetuates the effect of other acts of discrimination that clearly violate Title VII, as long as the compensation system itself was adopted without discriminatory intent, it is immunized under section 703(h) [of Title VII]... To the extent that other acts of discrimination in violation of Title VII affect the 'inputs' into a bone fide merit, seniority, or production-based compensation system, a plaintiff's remedy lies in challenging those other violations directly." In addressing plaintiff's second argument, the court held that "knowledge of past and even present discrimination alone does not make it plausible that defendants actually adopted the [stay bonus program] with discriminatory intent."

There are some important implications. Under the reasoning of this decision, employers would be protected from general attacks on formula-driven compensation systems. Plaintiffs would have to show that the inputs into the compensation formula were discriminatory. This changes the nature of the statistical inquiry in these matters. Rather than simply examining "compensation", the processes and metrics determining compensation would need to be studied with respect to disparate impact.

Webinar: Employment Litigation Risk and Proactive Statistical Analyses

As part of my EEA/LS Division's roll-out of our new proactive services with open pricing, I will be hosting a webinar on Managing Employment Litigation Risk With Proactive Statistical Analyses on Wednesday, April 21, 2010 at 1:00 pm, Eastern Daylight Time. The agenda for this webinar is as follows:


1. Current employment law climate
2. Importance of Litigation Avoidance
3. Areas of Vulnerability
4. Statistical Analyses and the Employment Lifecycle
5. Example analyses: hiring, termination, compensation
6. Benefits of Proactive Analyses

The webinar will present the statistical concepts of proactive analyses in a non-mathematical way, and is intended for HR professionals, risk managers, corporate counsel, employment attorneys, and anyone else interested in learning how to assess and manage an organization's risk of employment-related litigation.


You can register for this webinar here. 

Are Poor Project Management and Recruiting Practices Contributing to Gender Discrimination?

Are poor project management and recruiting practices contributing to gender discrimination at high-tech firms? Ellen Messmer, of Network World, thinks so. In her post Gender Discrimination Linked to Poor Project Management, she states that 'tech firms rely excessively on a 'hero mindset' to save runaway coding projects that are poorly organized, and employees with family responsibilities -- often women -- are sacrificed as a result."

Her conclusions are based on a new study by the Anita Borg Institute for Women and Technology. The study, "The Recruitment, Retention, and Advancement of Technical Women: Breaking Barriers to Cultural Change in Corporations" alleges that there is also bias against women in recruitment and job assignment in high-tech corporate cultures that thrive on this 'hero mindset'.

Ms. Messmer states that "this fly-by-the-seat-of-your-pants workaday world represents a pattern that's grown mainly because an organization 'poorly defines requirements and project management'." Ms. Messmer paraphrases a portion of the Borg report, stating:

"Silicon Valley's sometimes frantic fire-fighting pace and in-your-face communications style produce many technical cultures that 'leave women feeling isolated and crushed', according to the report."

The Anita Borg Institute is proposing some recommendations aimed at eliminating gender bias at high-tech firms. One of these recommendations is based on the finding that women are eliminated in the hiring process at the resume-reviewing level. The Institute proposes that companies might consider interviewing all women candidates.

While it may be the case that gender discrimination exists in recruiting, hiring, and job assignment, interviewing all female candidates is not the solution. I think that this is a very inefficient solution that would most likely have little effect on reducing any gender bias in hiring.

A better solution is to have clearly defined job descriptions with well-articulated qualifications. Each candidate should be objectively assessed against those qualifications.  In order to assist with this objective assessment, an organization may want to remove any information that would identify a candidate's "protected class status" and create a redacted 'candidate profile'. The 'candidate profile' would provide all information about education, qualifications, previous experience, and other pertinent information used by the organization in evaluating a candidate. This 'candidate profile' would then be passed along to hiring managers and decision makers. It should be noted that this is also an effective strategy for organizations that rely heavily on recruiting from social media; social media profiles tend to provide protected class information which should not be considered in the hiring process.

If a candidate is rejected at the 'candidate profile' screening phase, the reasons for this decision should be documented. Documentation of the objective rejection reasons, such as failure to meet minimum education or certification requirements,  is perhaps one of the most important things an organization can do. Not only does it create a permanent record of the rejection reason, it forces the hiring manager or decision maker to clearly articulate the reason(s) for which the candidate is rejected.

The creation of a 'candidate profile' will not guarantee a bias-free hiring process. There is still the opportunity for hiring managers and decision makers to introduce bias at the interview stage, either consciously or subconsciously. It is, however, a step in the right direction.

March is Compensation Month on The Proactive Employer

March is Compensation Month on The Proactive Employer! Throughout the month, we'll be talking all things compensation. We have some great podcasts lined up, and I'll be presenting a complimentary webinar on compensation auditing. Here's the schedule:

March 5 - Podcast: Five Standards for an OFCCP-Compliant Compensation Self-Evaluation - In this installment, I will be providing five standards for conducting an OFCCP-compliant compensation self-evaluation with respect to gender, race and ethnicity. We'll cover construction of similarly situated employee groupings (SSEGs), statistical analysis and multiple regression analysis, practical versus statistical significance, investigation and remediation of statistically significant disparities, and contemporaneous creation and retention of required data.

March 12 - Podcast: The Implications of the Ledbetter Fair Pay Act - During this installment, I'll be discussing the Ledbetter Fair Pay Act, what it means for compensation discrimination allegations, how to examine compensation for discrimination, and implications of this act on HR professionals.

March 18 - Webinar: Understanding the Compensation Self Audit - In this one-hour webinar, we'll be discussing reasons to conduct a compensation self-audit, the self-audit framework, similarly situated employee groupings, edge factors, data measurability, availability and collection, multiple regression analysis, practical and statistical significance, and follow up investigations. The webinar will take place at 2PM Eastern. You can register for the webinar here (meeting password is 6360)

March 19 - Podcast: Understanding the Compensation Self-Audit - we'll continue our discussion of compensation self-auditing. I'll be providing a recap of my webinar, and touch briefly on the topics relating to a compensation self-audit

March 26 - Compensation systems linked to length of service - are they discriminatory? In this installation, we'll be discussing kinds of compensation systems that use length of service or seniority, and whether or not these kinds of systems introduce gender bias and discrimination. I will provide an economic argument, as well as a summary of the recent legal discussion (note that the information provided should not be construed as legal advice).

Friday Double-Header from The Proactive Employer

This Friday, March 5, will be a double-header for The Proactive Employer. During the 8:30 AM EST installment, I will be discussing the five standards for conducting an OFCCP-compliant compensation self-evaluation with respect to gender, race, and ethnicity. The five standards center around (1) the construction of similarly situated employee groupings, (2) sample size needed for statistical analysis, (3) the statistical analysis, (4) investigation and remediation of statistically significant disparities, and (5) contemporaneous creation and retention of data. You can listen live here, or listen later in podcast form here or on iTunes.

Then, at 11:30 AM EST, I will be discussing "Be A Proactive Equal Opportunity Employer In 5 Easy Steps" with Joel Passen of Newton Software. We'll be talking about the biggest challenges faced by employers, and how to overcome these challenges. It should be a great discussion - listen or join in here.

The Statistics Police

The Statistics Police

I came across an interesting news bit in this month's issue of Wired: "Minister of Truth - The UK's data cop protects the public from lies, damn lies, and statistics". The piece, which appears on page 10, was written by Mathew Honan:

"Did you know that 62 percent of all cited statistics are bogus? OK, we made that up. But after a 2007 poll found that barely a third of all British citizens trust published stats, Parliament formed a math-police squad to investigate. The top cop in the UK Statistics Authority is Richard Alldritt, a expert in how governments fudge numbers."

In his current position, Mr. Alldritt monitors statistics from approximately 200 public agencies. Mr. Alldritt has been quoted as saying that "no set of statistics has has a completely clean bill of health."

It's unlikely that this problem is limited to the 200 UK public agencies being monitored. If the same level of scrutiny was applied to the US, I would bet that we would find a similar situation.

This raises an interesting issue for employment litigation. Assume that a firm is being sued for failing to hire female applicants for a given position. Further assume that an expert conducts a statistical analysis in which the gender characteristics of hired individuals is compared to the gender characteristics of individuals "available" for the position, and that Census data is used to construct the "available" population. Finally, assume that this availability analysis indicates a statistically significant shortfall of female hires for the position(s) in question.

This analysis, and the finding of a statistically significant disparity, may contribute to a finding of gender discrimination. But what if the Census data is wrong? What if the Census data contains errors?

Let me be clear - I am not advocating the abandonment of Census data (or other government data) for any analytical purpose based on the assumption that it may be incorrect. In many cases, Census data is the best available data for the analytical question at hand. I do think, however, that this is an issue that deserves some consideration. I don't know whether the formation of a US Statistics Police is the answer, or whether this would eliminate all data error with 100% accuracy. We, as consumers of data, should educate ourselves about the data we're using in our analyses and question anything that doesn't pass the smell test.

Planning and Executing a Reduction in Force: A 10-Point inspection

According to the Mass Layoff Statistics program (Department of Labor, Bureau of Labor Statistics), there were 28,030 mass layoff events and 2,796,456 initial claims during 2009. These are recorded program highs. The unemployment rate closed out the year at 10 percent, up more than three and a half percentage points from the previous year.

Given the current economic conditions, many businesses are struggling and may need to take action to not only remain profitable but to remain sustainable. Some organizations may be considering a reduction in force. When exploring the option of a reduction in force, it is important that corporate counsel is involved. Corporate counsel will be able to advise on the legal implications of the reduction, to protect the interests of both the employer and the employees. The following ten points are designed to facilitate the discussion with your legal department when having a reduction in force conversation.

1. Are there Alternatives to a Reduction In Force?
When considering alternatives, Maribeth Minella of Young Conaway Stargatt & Taylor, LLP suggests thinking creatively:

Thinking creatively has always been a business necessity and in this economic environment it is imperative for companies to come up with new ways to cut labor costs while maintaining a competitive edge.

Alternatives can take the form of low-risk, long terms solutions, such as hiring freezes, pay freezes, and other reductions in employee-related expenses such as travel and tuition reimbursement. Mid-range solutions include job-sharing, reassignment of employees whose skills are better utilized in other areas or departments, and voluntary programs such as early retirement, sabbaticals, and flex time / part time arrangements. Deep impact solutions include short term shutdowns, sales of portions of the business, and long term furloughs.

2. What Are the Reasons for the Reduction In Force?
It's critical that the organization understand the reasons why a reduction in force is necessary. Common business reasons include cost reductions, loss of business, abandonment of lines of business, and restructuring of operations. Business reasons should be identified and memorialized in writing, and documentation supporting those reasons should be identified, collected, and maintained.

3. What Size Reduction is Necessary?
The answer to this question will be guided by the reason(s) for the reduction in force. Reductions can be thought of in terms of payroll dollars or in number of positions. If cost reductions are the primary reason for the reduction in force, then payroll dollars may be the preferred metric to express the size of the necessary reduction. If abandonment of lines of business is the primary reason, the number of positions may be the preferred metric.

4. What Areas of the Organization Will be Affected?
It's important to examine where in the organization the reduction in force will occur. Will the reduction be a certain percentage of the entire workforce? All or a portion of the employees in a particular department or business line? A specific number of employees? Again, the answer to this question will be determined by the underlying business reasons for the reduction in force.

5. What are the Secondary Effects of the Reduction in Force?
The reduction in force will impact more than just the employees being separated. After the reduction in force, the organization may suffer a temporary loss of organizational efficiency due to people moving into new positions and new areas at the same time.  The company may likely be confronted with high one-time costs for such things as unemployment compensation, lump-sum payments for accrued leave, and severance pay. Additionally, employee morale may suffer after the reduction.

6.  What Criteria Will Be Used in the Selection Process?
The criteria used in the selection process should be objective, supported by documentation. The more objective the criteria, the less likely the decision will be vulnerable to a claim of discrimination. Examples of commonly used criteria include length of service, attendance record, disciplinary record, past performance evaluations over a set period of time, the positions / functions that are being eliminated, and the absence of skills that will be needed in the reduced workforce. Consideration of a multi-component evaluation process may be advised; if so, the organization needs to determine whether the various components are given equal weight, whether some components are weighted more heavily than others, and whether some components are used as tie-breakers. Organizations need to be aware that what they perceive to be "objective" criteria may not be perceived as "objective" by employees. For example, performance evaluations and disciplinary records  could be viewed as "tainted". For example, the employee may argue that (s)he was disciplined more frequently/severely and was rated lower on performance evaluations because of gender/race/age.

7. Which Employees Are Selected?
Similarly situated employees should be grouped together into comparison pools, and the criteria identified in the previous step should be applied uniformly to each member of each pool. One of the key issues here is defining "similarly situated" employees. The structure of the workforce itself will guide the definition of "similarly situated" employees. The general rule is that employees are similarly situated if they share the same job functions and levels of responsibility.

8. Do the Selections Have a Disparate Impact?
After objectively applying the criteria to the comparison pools and making the initial selections, a disparate impact analysis should then be conducted to determine if the selection decisions have a disparate impact by age, gender, race, or other protected characteristic. A formal statistical test of disparate impact is preferred to other ad-hoc methods, such as the 4/5th Rule (also known as the 80% Rule), a means test, or other non-statistical tests. If disparate impact is found, the selections should be examined to determine whether they can be justified by business necessity or reasonable factors other than protected group status.

9. What are the Organization's Obligations Under the Older Workers Benefit Protection Act and Other Regulations?
If a reduction in force involves two or more employees, employers need to comply with the Older Workers Benefit Protection Act (OWBPA) for age waivers for individuals over 40. In circumstances where the age waiver is offered as part of an exit incentive of the employment termination program, the OWBPA requires that employees must be informed of their right to speak with an attorney, must be given at least 45 days to consider the severance agreement, afforded 7 days to revoke their acceptance of the agreement, and be provided with statistical information about the reduction in force. The organization should carefully prepare the statistical information about the reduction in force, and legal counsel should approve the information prior to its dissemination. It is important to note that the Worker Adjustment and Retraining Act applies to employers with 100 or more full time employees. WARN obligations are triggered by initiating a reduction that meets one of several possible criteria defined by statute.

10. What do the "Raw Numbers" Look Like?
The OWBPA required that all releases and waivers of federal age discrimination claims provided as part of a severance program offered to terminated employees must include written disclosure of the job titles and ages of all individuals selected and all individuals eligible for selection for the reduction in force. This information - the "raw numbers" - is the basis for a terminated employee (and his attorney) deciding to sign the waiver or pursue an age discrimination claim. Thus, it is important to not only perform the statistical analysis of disparate impact, but to also consider the raw numbers.

March Installments of "The Proactive Employer" Podcast

March Installments of "The Proactive Employer" Podcast

We have more great installments of "The Proactive Employer" scheduled for the next few weeks. We have another live installment and a special one hour episode. We'll be talking about the use of statistics in reduction in force and other employment decisions, compensation self-auditing, OFCCP requirements and compliance, calculation of economic damages in wrongful termination, and the elements of a comprehensive employment litigation risk management plan.

Friday, 2/26: In this LIVE installment, our guest will be Jonathan Hyman, a Partner in the Labor and Employment Group of Kohrman Jackson and Krantz. We will be discussing the use of statistics in reduction in force matters, and how statistical analysis factors into employment law. Mr. Hyman is the author of the Ohio Employer's Law Blog. 

Friday, 3/5: In this installment, I will be providing five standards for conducting an OFCCP-compliant compensation self-evaluation with respect to gender race, and ethnicity. We'll cover construction of similarly situated employee groupings (SSEGs), statistical analysis and multiple regression analysis, practical versus statistical significance, investigation and remediation of statistically significant disparities, and contemporaneous creation and retention of required data.

Friday, 3/12: We'll continue our discussion of compensation self-auditing. I'll be providing a recap of my webinar, "Understanding the Compensation Self-Audit". Topics include reasons to conduct a self audit, the self-audit framework, similarly situated employee groupings, edge factors, data measurability, availability and collection, multiple regression analysis, practical and statistical significance, and follow up investigations. The webinar will take place on Thursday, March 4 at 2PM Eastern. You can register for the webinar here. 

Friday, 3/19: In this installment, I will be discussing proactive statistical analyses. These analyses span the entire employment life cycle, from initial hiring, initial assignment and initial pay, to compensation, promotions, and reductions in force. These proactive statistical analyses will not only help you assess your risk of employment-related litigation, they can lead to operational efficiencies, more streamlined processes, and can help you transform your organization into a best-practices firm that can attract and retain top talent.

Friday, 3/26: In this installment, I will be providing an overview of the calculation of damages in wrongful termination litigation. My presentation will focus on the key issues and concepts, and will be non-mathematical in nature. We'll talk about mitigation, duration of unemployment and job search, and estimation of earnings streams but-for the alleged wrongful termination and given the alleged wrongful termination.

March should be a very exciting month at The Proactive Employer. I hope you'll be able to join me for these upcoming installments. You can listen online or download these podcasts at The Proactive Employer, or you can subscribe (free of charge) via iTunes.

Newton Software and Minimax Consulting Enter a Joint Marketing Initiative

Newton Software and Minimax Consulting Enter a Joint Marketing Initiative

Newton Software, a leading provider of on-demand applicant tracking and recruiting software solutions, and Minimax Consulting, a leading provider of expert statistical analysis of employment decisions and employment litigation risk management, are pleased to announce a joint marketing agreement that will provide significant benefits to customers.

Stephanie R. Thomas, Ph.D., Director of the Equal Employment Advisory and Litigation Support Division (EEA/LS) of Minimax Consulting stated, “Our agreement with Newton will position both organizations to enhance service offerings to new and existing customers. We’re looking forward to introducing our clients to Newton, and to providing expert insights and analysis of EEOC and OFCCP compliance for Newton’s customers.”

“The services offered by Minimax’s Equal Employment Advisory and Litigation Support Division are a perfect complement to Newton’s capabilities,” said Joel Passen, Newton Software’s Co-Founder and VP of Marketing. “We have a growing number of customers that are relying on our EEO and OFCCP Compliance feature to capture, track and report critical employment data. Dr. Thomas and the Minimax team will now offer our customers the ability to analyze this data to make better employment decisions and to manage employment litigation risks.

About Newton Software:

Newton Software is a leading provider of on-demand applicant tracking and recruiting software solutions. Newton software delivers an easy to use, fast-to-deploy, affordable solution for creating, managing and improving corporate recruiting programs with no hardware to buy or software to license. With deep domain knowledge in corporate recruiting, a best-in-class software-as-a-service platform and a fast-growing community of customers, Newton enables smarter recruiting practices that allow for companies to quickly become more competitive, compliant, and efficient.

www.newtonsoftware.com

About Minimax Consulting:

Minimax Consulting is a full service consulting firm providing quantitative services across a wide variety of industries. The Equal Employment Advisory and Litigation Support Division of Minimax Consulting brings more than ten years of experience in expert statistical analysis of employment decisions and employment litigation risk management. Headed by Stephanie R. Thomas, Ph.D., the EEA/LS Division provides consulting services, dispute resolution support, and expert testimony to small businesses, Fortune 500 companies, major law firms, and local, state, and federal governments and agencies.  The EEA/LS Division specializes in labor and employment issues in both advisory and litigation contexts.

www.minimaxconsulting.com

Webinar: Using Social Media for Recruiting? Beware Disparate Impact

Please join me for my webinar entitled "Using Social Media for Recruiting? Beware Disparate Impact". The webinar will take place on Tuesday, February 9, 2010 at 1 PM eastern. The agenda for the webinar is as follows:

• conventional methods of job search and recruiting
• how and why recruiters are using social media
• kinds of information available from social media
• legal concerns of recruiting via social media
• demographic differences: civilian labor force versus social media
• implications for recruiting strategy
• recommendations for incorporating social media into your recruiting strategy

If you're interested in learning more about this webinar, please email me or leave your request as a comment to this post. You can register directly for the webinar at my webex page:

http://minimaxconsulting.webex.com

Thanks, and looking forward to seeing you at the Webinar!

Comment on 'Go Time' For Discrimination Claims

Mark Batten, Steven Hurd, and Brian Gershengorn have an article appearing in today's "Corporate Counsel" entitled 'Go Time' for Discrimination Claims? Fallout From the Ledbetter Act. The article, in its entirety, can be found here. 

The authors note that federal courts have decided forty-seven cases interpreting the new statute, and they see a consistent approach beginning to emerge. Courts are limiting the application of the Ledbetter Act in several ways.

1. courts are reluctant to apply the Ledbetter Act when a plaintiff fails to demonstrate a prima facie discriminatory act;
2. courts will not apply the Act where the claim concerns something other than wage or compensation discrimination;
3. even where courts are applying the Act to revive an untimely claim, many ultimately deny plaintiff's claim for failure to demonstrate a prima facie discriminatory act;
4. courts are reluctant to expand the scope of the Act to claims arising outside of Title VII, ADEA, ADA, or "parallel" state anti-discimination laws;
5. courts will not allow a plaintiff's knowing and voluntary vwaiver of an ADEA claim to be reviewed by the Ledbetter Act.

None of the above is surprising, and the pattern emerging appears to mirror the intentions of the Act.

The authors also raise the issue of something which I have discussed in other posts, articles and presentations - what is meant by other practices. They state

... though it has yet to be a focal point of litigation, the Act's nebulous reference to "other practice[s]" appears destined to spawn a wave of claims by employees unable to prove that their superiors have rendered a discrete discriminatory "decision," but have engaged in some other discriminatory compensation practice. We have by no means reached the end of the interpretive road, and employment practitioners will be watching the evolution of Ledbetter interpretation for years to come.

I couldn't agree more. The precise definition of 'other practices' is a thorny issue that will surely be the subject of much discussion and debate. As plaintiffs bring claims related to 'indirect determinants' of compensation, such as grade assignment, department or division assignment, etc., courts will be faced with deciding what is meant by 'other practices', the impact these other practices have on compensation, and whether these arguments relating to indirect determinants have any merit.

A Practical Guide to Compensation Self-Auditing eBook Now Available on Lulu

My eBook "A Practical Guide to Compensation Self-Auditing: Understanding the How and Why of Compensation" is now available on Lulu. The eBook provides a thorough discussion of compensation self-auditing, including:

• why you should conduct a compensation self-audit;
• the self-audit framework: how are individuals compensated and why are individuals compensated at different rates;
• understanding and constructing similarly situated employee groupings;
• edge factors;
• data measurability and availability, and choosing and using proxy variables;
• data collection;
• multiple regression analysis;
• practical and statistical significance;
• conducting follow-up investigations;
• developing and implementing an ongoing compensation monitoring program.

The information is provided in a non-technical manner, and is intended for readers with little to no quantitative background.

The eBook is available on Lulu and can be found here. A preview is available, and includes information about the author, the table of contents, and the complete introductory section.

Workplace Class Action Litigation: Pro-Active Planning 'Critically Important'

On January 12, 2010, Seyfarth Shaw announced the availability of their Sixth Annual Workplace Class Action Litigation Report.  Information about this report can be found here:

http://www.seyfarth.com/ClassActionReport/

A press release issued by Seyfarth Shaw highlights the increasing number of class action and collective action matters filed, as well as the financial exposure these matters present to employers:

"Since we began publishing this annual report six years ago, both the number of cases filed and the financial exposure that they pose to companies has increased exponentially," said J. Stephen Poor, Chair and Managing Partner of Seyfarth Shaw.  "As plaintiffs' attorneys bring increasingly sophisticated litigation against employers that combine claims under multiple statutes, the financial exposure is only going to become greater for businesses."

Regarding this year's report, Gerald Maatman, Jr., Co-Chair of the firm's Complex Discrimination Litigation Practice Group states:

"One certain conclusion drawn from this year's report is that employment law class action and collective action litigation is becoming ever more sophisticated and will continue to be a source of significant financial exposure to employers well into the future... [G]iven the enormous financial stakes, pro-active planning and legal compliance programs - to get ahead of class action risks - are critically important for businesses in 2010."

Developing an employment litigation risk assessment and management plan is an important component of your overall business strategy.  Minimax Consulting has more than a decade of experience in the statistical analysis of wage and hour issues and employment decisions, including hiring, promotion, termination, and compensation.  If you are interested in incorporating a formal statistical analysis as part of your compliance and litigation risk management program, please contact me for a consultation.

Shortcomings of the 80% Rule - Highly Sensitive to Framing of Question

The 80% Rule is highly sensitive to the way in which the question is framed. Opposing inferences can be generated from the same underlying data depending on whether one is examining positive employment outcomes (e.g., selection) or negative employment outcomes (e.g., rejection). As a result, the 80% Rule can easily be misapplied or misunderstood.

For example, some courts have applied the 80% Rule to rejection rates, rather than selection rates, without any appreciation of the difference. The following example, taken from Paetzhold and Willborn's Statistics of Discrimination, illustrates this issue.



In all five of these examples, the minority to majority selection rate is 80%. Applying the 80% Rule to any of these selection rates, one would conclude that no disparate impact exists. But the rejection rates differ quite dramatically between the five cases. The rejection rates are also affected by whether we take the majority rejection rate as the denominator (column 4), or whether we take the minority rejection rate as the denominator (column 5).

According to Patezhold and Willborn, some courts have found disparate impact based on the proportion of favored and disfavored group members in the pool of rejected applicants. As the following example demonstrates, this alone is not enough information to make a determination of disparate impact.



Based on the proportion of rejected minority applicants and rejected majority applicants alone, one may be tempted to infer disparate impact. But in order to make any inferences using the 80% Rule, one needs to know the total number of minority and majority applicants. In the above example, if we assume 100 minority applicants and 100 majority applicants, we infer disparate impact, since 29.9% is less than 80%. However, if we assume 1000 minority applicants and 1000 majority applicants, we do not infer disparate impact, since 93.18% is greater than 80%.

Note that in this example, we have two opposing inferences regarding disparate impact based on the same rejection information. This demonstrates why having just rejection information alone is not enough. It also demonstrates that the application of the 80% Rule to rejection rates, rather than selection rates, can lead to Type I and Type II errors.

There are a variety of other statistical tests available that are insensitive to the framing of the question, and work equally well whether one is examining positive employment outcomes (e.g., selection) or negative employment outcomes (e.g., rejection). A review of these alternative statistical tests will be provided in a subsequent post.

Any Interest in Webinar on Social Media Recruiting and Disparate Impact?

I'm thinking about putting together a webinar on the potential for disparate impact associated with using social media for recruiting. At this point I'm trying to gauge interest in the topic.

If you are potentially interested in this, please email me at
sthomas_eea@minimaxconsulting.com

or DM me on Twitter: @sthomas_eea