Proposed Federal Legislation Would Require Companies to Publicly Disclose Pay of Women and Minorities
A bill quietly introduced in Congress could result in a big bang to publicly traded companies.
On January 18, 2012, Rep. Meeks (D-NY) introduced a bill to amend the Securities Exchange Act. Interestingly, the bill has nothing to do with what you might think given the financial meltdown of the last few years. Instead, H.R. 3791, would amend the Securities Exchange Act to require publicly traded companies to include information in their annual 10K regarding the compensation of minorities and women.
If passed, companies who must file annual 10K reports would need to review compensation information for all employees and create 5 brackets of compensation that range from the lowest paid 20% of employees to the highest paid 20% of employees. The bill would then require companies to report the number of minorities and women that fall in each bracket.
In addition to creating new reporting requirements, the bill would also provide information not generally available to employees. The goal of the legislation is to identify companies that have a "glass ceiling" as far as women and minorities are concerned. The hope is that the public would avoid companies that do not adequately reward women and minorities and thus compel those companies to change inequitable pay practices.
Obviously, this also means that there might be an increase in claims under the Equal Pay Act or other anti-discrimination laws as more employees may have statistical evidence of discriminatory practices. If the bill does become law, then companies subject to it should be proactive about reviewing compensation scales and addressing discrepancies.
(photo courtesy of borman818 via Flickr)