The Importance of Data Retention as It Relates to Pay Data Reporting

A rise in the number of pay disclosure laws around the country is exposing employers to increasing incidences of bias suits, according to Bloomberg Law. As employee salaries become more visible, employees who feel they’re not being paid fairly are more likely to file pay discrimination lawsuits, which leads to increasing pay data reporting requirements for employers.

While a desire for fair pay is obviously simply the “right thing to do,” requirements related to fair pay can be onerous for employers.

Fair pay requirements are nothing new. The Fair Labor Standards Act (FLSA) was signed into law in 1938, and the Lilly Ledbetter Fair Pay Act of 2009 (FPA) upped the specter of sanctions for non-compliant employers by requiring companies found to discriminate in pay decisions or practices to be at risk of claims being filed by employees for every paycheck issued based on that pay decision.

And yet discrimination in pay practices continues.

Pay Data Reporting Requirements Growing

Pay equity and pay transparency are issues that are receiving ongoing and increasing attention—and requirements for reporting—by both state and local governments and organizations like the SEC and NASDAQ. It’s also an issue that doesn’t just exist in the US—the EU Pay Transparency Directive also takes aim at unfair pay practices. In the EU, Parliament has adopted new rules on pay-transparency measures, including fines for non-complying organizations. Laws in the European Union (EU), California (SB 1162), and Illinois (SB 1480) —as well as other emerging states and municipalities—require companies to ensure fair pay and transparency.

Sanctions and requirements are growing, with new proposals and new adjustments to existing regulations popping up regularly. These new laws and amendments raise the likelihood that your company will be required to comply with pay data reporting and data retention requirements across all of the jurisdictions you operate in.

In addition to reporting, data retention requirements can also be challenging.

Importance of Data Retention Requirements

In California, records maintained by the California Civil Rights Department (CRD) must be kept for not less than ten years. Additionally, wage rate history records must be maintained by the employer for the duration of the employee’s employment plus three years. The FPA also effectively eliminates the statute of limitations for employees to access records for the duration of their employment.

It’s important to note that data retention requirements related to pay data reporting can vary by jurisdiction, and companies need to be aware of the specific requirements in all of their locations. 

That can be a daunting challenge. Trusaic can help address the challenge. 

Addressing the Challenge of Pay Data Reporting and Retention Requirements

The challenge employers face with both reporting and retention is, of course, twofold:

• Staying up to date on the constantly shifting and changing requirements
• Ensuring accuracy and compliance in tracking and reporting in each of the jurisdictions where they operate

One way that companies can comply with these laws is to conduct pay equity audits to identify and fix any illegal pay disparities—a process that can be vastly simplified and expedited with Trusaic’s PayParity. This tool helps companies analyze their internal pay equity, establish equitable salary ranges for each job, and address pay disparities based on gender, race, and other factors.

PayParity can also help companies retain records indefinitely, helping to avoid legal liabilities. 

Trusaic’s experienced team can provide expert guidance and support to help companies meet their data retention obligations with ease. By taking proactive steps to address data retention requirements, companies can reduce the risk of non-compliance and focus on other important business operations.