Get to Know the San Francisco Equal Pay Ordinance

Several states and cities are passing laws to further bolster the federal Equal Pay Act.

The PayParity Post is featuring some of these laws to provide insight into trends in pay equity compliance requirements as more of these laws are considered by states, counties, and municipalities.

In this post, we are looking at San Francisco’s Equal Pay Ordinance.

Authored by Supervisor David Campos, the San Francisco Equal Pay Ordinance (SF EPO) was passed unanimously by the Board of Supervisors on December 9, 2014. Signed by Mayor Edwin Lee, the ordinance amends Chapter 12B of the San Francisco Administrative Code, which prohibits discrimination in city contracting. The SF EPO must be incorporated by reference into every contract and subcontract for or on behalf of the city of San Francisco.

What is the San Francisco Equal Pay Ordinance?

• The SF EPO prohibits discrimination in employment (including job candidates) based on the following protected classes: the fact or perception of that person’s race, color, religion, ancestry, national origin, age, sex, sexual orientation, gender identity, domestic partner status, marital status, disability, weight, height, AIDS/HIV status, or association with members of any of the foregoing classes.
• The SF EPO creates a new requirement for certain San Francisco contractors and subcontractors. Covered contractors must submit an annual “Equal Pay Report” containing “summary information on compensation paid employees”, broken out by gender, race, and gender and race together, plus additional data points to adopted by regulation.
• The SF EPO is the first law in the nation to require reports from contractors on pay equity by gender, race, and gender and race combined.

Who Is Covered to Submit an Equal Pay Report?
Covered contractors for the pay data reporting provision include any contractor or subcontractor that has at least 20 employees worldwide. There are three additional requirements, which depend on the nature of the contract:

• For construction and public works, contractors or subcontractors with an agreement value equal to or in excess of $600,000 (Threshold Amount in S.F. Admin. Code Chapter 6).
• For goods and professional services, contractors or subcontractors with an agreement value equal to or in excess of $110,000 (Minimum Competitive Amount in S.F. Admin. Code Chapter 21).
• For nonprofit grant recipients, an agreement value equal to or in excess of $50,000.

What Are the Penalties for Failing to Comply with the SF EPO?

• Penalties of $50 per person per day.
• Suspension or termination of contract in whole or in part.
• Forfeiture of monies due under the contract to the city of San Francisco.
• Mandated compliance reporting (above and beyond Equal Pay Report) as determined by the San Francisco Human Rights Commission.

What is the Status of the SF EPO?
The SF EPO provides that the San Francisco Human Rights Commission shall develop rules and regulations for the implementation of the ordinance. The San Francisco Human Rights Commission has not developed these rules and regulations, or at least has not published them for public consumption.

Public facing documents from the San FranciscoHuman Rights Commission indicate that the SF EPO may be in a pilot stage. Pursuant to a 2016 Annual Report, the San Francisco Human Rights Commission describes the pilot stage as a two-step process:

1. In the first step, self-selected contractors upload de-identified employee data to a secure online database. The data requested for each employee are wages, gender, race, ethnicity, years at the company, and job title.
2. In the second step, the San Francisco Controller’s Office conducts informational interviews with the contractor or small group discussions with other contractor peers to assist us in understanding the nuances of collecting employee data and how to create the least burdensome reporting system for contractors.

Even though the San Francisco Human Rights Commission has not published rules and regulations concerning the Equal Pay Reports, these may appear at any time, and city contractors and subcontractors should be prepared. Additionally, the non-discrimination provisions are already in effect.

What Should I Do?
Conduct a Pay Equity Analysis. Many companies have been hesitant to do this for fear of finding a problem. Fight your fear and get this done for your organization. A comprehensive pay equity analysis is the best place to start to understand what your company is doing right, and where it can improve, before the San Francisco Human Rights Commission requires you to collect, analyze, and submit pay data. Many employers do not have the technical expertise to conduct this analysis on their own. If your company falls into this category, you should seriously consider engaging a company experienced in pay data and analytics to work with your counsel in completing the pay equity analysis and protecting its findings from unauthorized disclosure. This is true for the simple reason that having clean, validated, and segmented data will reduce the risk of misreporting under the SF EPO. As the saying goes, “Garbage in, garbage out.”

To learn more about achieving pay equity, click here.