The #MeToo Movement and Pay Plans

We recently reported on the success of the #MeToo movement in getting a provision in the recent federal tax legislation to prohibit deduction of payments, attorneys fees, and other expenses in settling sexual harassment claims if there is a confidentiality clause in the settlement agreement. Recently, fifteen U.S. Senators cosponsored legislation to bar employers from including sexual harassment or gender discrimination claims in mandatory arbitration agreements. The same legislation has been introduced in the United States House of Representatives. There is opposition to the bills, but the public relations strength of the #MeToo movement is daunting.

What does that mean in a car dealership? A dealer must be wary over pay parity challenges spurred by the #MeToo movement. Pay parity is probably not an issue with salespeople. Most dealers have one pay plan for the sales force. However, what about F&I personnel? Or managers? Or department heads? They often have individualized pay plans, and a dealer must ask how the company’s pay plans will fare in a pay parity challenge.

Look at your pay plans. Sort them by employee gender. You may see them as the result of individual negotiations.  But how will they look to an outsider if pay plans for male employees are compared to those for female employees?  Can you justify pay plan differences based on objective factors such as experience? Time in job? Differences in responsibilities? Differences in performance?

Don’t wait for a #MeToo challenge. Analyze your pay plans now to determine how they will appear if litigation highlights the differences between pay for male and female employees.