Pay equity analysis software could aid compliance, talent acquisition

ADP releases pay analytics cloud software to help employers comply with new EEOC rules. But with the rules likely to be quashed, ADP is also marketing it for competitive hiring.

When ADP was developing its new pay equity analysis software, the payroll giant targeted employers looking to comply...

with a wide-ranging upgrade of the EEOC antidiscrimination electronic reporting system.

But now that the long-awaited Equal Employment Opportunity Commission, or EEOC, revamp of its EEO-1 system is awash in political trouble, ADP is pivoting the cloud-based pay equity analysis software more toward hiring competitiveness.

To enforce antidiscrimination in hiring laws, EEOC has used employment data categorizing workers according to race, ethnicity, gender and job category from the so-called EEO-1 Report since passage of the Civil Rights Act of 1966.

New EEOC rules in doubt

Under former President Barack Obama, a broadly expanded EEO-1 was headed for enactment. But Donald Trump's administration appears poised to torpedo the measure, which would add more detailed data about total pay across 10 job categories and 12 pay bands.

In any event, amid uncertainty about whether the new EEO-1 will be weakened, scuttled or take effect in September as originally planned, ADP said it has several beta users and is planning a general release of the pay equity analysis system in fall 2017.

Employers can use the ADP Pay Equity Explorer system to identify gender and race-ethnicity pay gaps companywide, or in particular countries, regions, cities or job locations.

ADP: Need for pay equity analysis despite EEOC uncertainty

Jennifer Cambern, vice president of product management for the Pay Equity Explorer product at ADP, based in Roseland, N.J., said whatever happens with EEO-1, ADP still sees a strong market for the system because social changes have created an expectation of pay equity.

Cambern noted that pay equity has been federal law for more than five decades; 49 of 50 states have their own pay equity laws, and California and Massachusetts have approved pay transparency laws that allow employees to openly talk about their salaries.

"Those changes really do point to the need to have deep analytics that help the client understand, at multiple entry points, how to both hire someone with fair and equitable pay and also help them address some inherited problems that they may have within their workforce," Cambern said.

Pay equity system works with cloud

Jennifer CambernJennifer Cambern

The pay equity analysis software works with the ADP DataCloud by tapping into what ADP said are data points from 33 million employees who work for ADP clients around the world.

The anonymized data is from ADP clients that have opted in to the cloud system, according to the company, and ADP said this feature, in particular, distinguishes its pay equity analysis offering from competitors, because they can't assemble as big a data store.

Mike AamodtMike Aamodt

Meanwhile, one HR consulting company that sells its own pay equity analysis and EEOC reporting software is telling clients to wait out the EEO-1 situation and, at the same time, prepare to install new technology, if necessary.

"No one knows what's going to happen with EEO-1. It could be rescinded or changed tremendously," said Mike Aamodt, principal analyst at DCI Consulting in Washington, D.C. "I think most companies have been trying to prepare for the reporting as if it's going to be enacted and in place."

Pay equity reporting debate

The purpose of the tool is really to start the analysis and have the conversation.
Jennifer Cambernvice president of product management, ADP

While civil rights and equal pay advocates long pushed to expand the EEO-1 program, Aamodt and others critics have argued that the data it would produce would be inaccurate and not usable because its pay and job categories are too imprecise. Some critics also maintain it would stifle corporate hiring.

As for ADP's prospects in enabling customers to mine its data cloud, Aamodt raised privacy concerns as possible impediments. "They have a lot of data, but can they use it?"

Cambern said ADP clients' employees are given a privacy statement that explains how data is deidentified and aggregated.

"We adhere to all legal privacy requirements for employee data," she said.

Benchmarking and analytics functions

Cambern said the EEO-1 reporting function is a discrete module within the pay analysis software system, and clients can use the analytics portion without deploying the expanded reporting a revamped EEO-1 would require.

Further, Cambern characterized the product as a set of hiring data benchmarks available to clients that use the ADP cloud that can help companies better attract and keep employees with an equitable pay structure.

"The purpose of the tool is really to start the analysis and have the conversation. This isn't an EEOC-driven event," she said. "It's really to look and be able to understand exactly what differentials might occur with gender pay and minority pay equity gaps. It's really introducing a best practice for our clients."

When ADP publicly announced Pay Equity Explorer with a March 20 media release, it highlighted the need to comply with expanded EEO-1 requirements, and later in the release, it positioned the product as a talent retention and acquisition tool.

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