The IRS recently released Reports of the Advisory Committee on Tax Exempt and Government Entities (ACT) Fifteenth Report of the ACT – June 8, 2016 – on five issues:

• “Employee Plans: Analysis and Recommendations Regarding Changes to the Determination Letter Program;
• Exempt Organizations: Stewards of the Public Trust: Long-Range Planning for the Future of the IRS and the Exempt Community;
• Federal, State and Local Governments: Revised FSLG Trainings and Communicating with Small Local Governments;
• Indian Tribal Governments: Survey of Tribes Regarding IRS Effectiveness with Current Topics of Concerns and Recommendations; and
• Tax Exempt Bonds: Recommendations for Continuous Improvement and Enhancing Resources in the Tax Exempt Bond Market.”

The 2016 report of the Exempt Organizations Subcommittee of the IRS Advisory Committee on Tax Exempt and Government Entities focused on planning for the future and the areas that Exempt Organizations should consider while planning for overseeing exempt organizations in the next few decades. The report provides the following recommendations:

1. Ensure that EO staff are equipped to carry out the responsibilities of EO.

2. Provide leadership and guidance on major issues impacting the exempt organizations sector, both current and those anticipated in the near future.

3. Give exempt organizations the tools they need to be tax compliant:

a. Detailed audit data.
b. Relevant, user-focused guidance, akin to former CPE (Continuing Professional Education) text.
c. An easily navigated website.

4. Assure cyber integrity through technology tools, data collection and secured cyber storage.

5. Release and share data where appropriate for public use.

a. IRS information sharing with state charities officials.
b. Electronic filing and dissemination of IRS information.

6. Foster two-way communication between the IRS Exempt Organizations division and the nonprofit sector.

a. Find ways to solicit input from a greater number of voices (including small nonprofits) and provide open channels for stakeholders to take issues to the IRS.
b. Revise the Determination Letter to educate exempt organizations on their tax obligations and responsibilities.
c. Use current technology to communicate with exempt organizations.
d. Increase the availability of strong expert resources through IRS TE/GE phone customer service.”

Full Report: https://www.irs.gov/government-entities/reports-of-the-advisory-committee-on-tax-exempt-and-government-entities-act 

Jackson Lewis PC presented an informative webinar “Mind the Gap: The Massachusetts Act to Establish Pay Equity.” The webinar discusses the pay equity gap that exists in the US, and the ongoing efforts at both the federal and state levels to eliminate the gap. See webinar https://vimeo.com/183538697.
At the federal level, the EEOC and OFCCP have become much more attentive to pay equity. According to Jackson Lewis:

• “EEO-1 reports will include ‘W-2 earnings’ and work hours for all employees starting in 2018
• EEOC and OFCCP will use the pay data to “assess complaints of discrimination, focus investigations, and identify employers with existing pay disparities that might warrant further investigation”
• OFCCP [is] adding pay equity inquiries to every audit and asking more information than ever before.”

At the state level, Massachusetts recently amended its Fair Pay Act, making it the strongest pay equity law in the country.

The law defines “comparable work” as “work that is substantially similar in that it requires substantially similar skill, effort and responsibility and is performed under similar working conditions; provided, however, that a job title or job description alone shall not determine comparability.”

The law prohibits employers from discriminating in any way on the basis of gender in the payment of wages, or paying any employee less than other employees of a different gender for comparable work, unless the wage disparity is based on:

(i) a system that rewards seniority with the employer; provided, however, that time spent on leave due to a pregnancy-related condition and protected parental, family and medical leave, shall not reduce seniority;
(ii) a merit system;
(iii) a system which measures earnings by quantity or quality of production, sales, or revenue;
(iv) the geographic location in which a job is performed;
(v) education, training or experience to the extent such factors are reasonably related to the particular job in question; or
(vi) travel, if the travel is a regular and necessary condition of the particular job.

Other provisions include:

• “’Wages’ is now defined as ‘all forms of remuneration for employment’
• Employers must not prohibit employees from discussing pay
• Employers can no longer ask employees about their pay history
• Tougher sanctions
• AG’s Office will provide forms and guidance to employers”

In February 2015, Governor Raimondo launched the Rhode Island Pay Equity Tip Line. According to The Providence Journal, this tip line is run by the Department of Labor and Training, which works to “enforce labor laws and investigate wage complaints and hiring violations.” Governor Raimondo said that the Tip Line “will empower us to hold employers accountable and lift up those who aren’t earning equal pay for equal work.”

The staff is trained to handle anonymous calls and “will follow up on leads, and investigate complaints.” In addition to calling, residents can use fill out an online form on the Department of Labor and Training website.

In a news article published in February 2016, WPRI reported that that tip line had received over 500 called in one year. Unfortunately, the vast majority of those calls concerned other compensation issues, like unemployment benefits. According to Mike Health, R.I. Department of Labor and Training spokesman, the Department had only investigated one pay equity case that was developed through the tip line.

http://www.providencejournal.com/article/20150211/news/150219853
http://wpri.com/2016/02/18/ri-tip-line-triggers-1-pay-equity-case-in-first-year

In another attempt to abolish the pay equity gap, the Fair Pay Act (H 7694, S 2635) was introduced in February 2016 by Representative Joy Hearn and Senator Gayle Goldin. The Act’s purpose was to increase the “the scope of protections and remedies available to employees who are discriminated against in their wages due to their sex.” As of 05/04/2016, the Committee recommended measure be held for further study.

According the American Civil Liberties Union of Rhode Island, the legislation “sought to address the issue in Rhode Island by making it easier for individuals facing wage differentials to file a civil action against their employer, during which it would be up to the employer to demonstrate that the wage gap was on the basis of something other than sex.”

http://openstates.org/ri/bills/2016/SB2635/
http://www.riaclu.org/legislation

An amendment to New York’s equal pay law took effect January 19, 2016.

As described by New York Labor & Employment Law Report, “The law amends Labor Law Section 194, which prohibits pay differentials based on gender in jobs requiring ‘equal skill, effort and responsibility’ which are ’performed under similar working conditions’.”

The amendment strengthens preexisting law in various ways. According to a New York State website press release:

“This bill (S. 1 / A. 6075) would strengthen New York State law to truly prohibit employers from paying women less than men for performing the same work. The bill eliminates a loophole in the current law that allows employers to prohibit employees from discussing their salaries under threat of termination or suspension. Specifically, the bill would allow employees to discuss their wages with each other. Further, the bill increases the amount of damages available to an employee if an employer willfully violates the law.”

The amendment also closes a loophole that allowed employers to defend a pay discrimination claim by “any other factor other than sex” and now requires employers to defend a pay discrimination claim with a “bona fide factor other than sex, such as education, training, or experience.”

Employers should evaluate their pay structure to ensure they are in compliance with this amendment. They should review their written policies to ensure that they do not restrict employees from discussing their salaries. Relevant legislation can be found here.

The Equal Employment Opportunity Commission (EEO) plans to look more closely at pay equity and has proposed new requirements for EEO-1 reporting. According the EEOC:

“EEOC proposes to collect pay data by sex, race, and ethnicity by job category from private employers, including federal contractors, with 100 or more employees through the EEO-1 report. Data collected from the proposed EEO-1 will help EEOC and OFCCP better understand the scope of the pay gap and focus enforcement resources on employers that are more likely to be out of compliance with federal laws.”

The EEOC plans to collect and publish the aggregate data to help target potential pay discrimination and to employers promote equal pay in their workplace.

A Jackson Lewis PC Webinar, “Mind the Gap: The Massachusetts’ Act to Establish Pay Equity”, addresses the new EEO requirement and deadlines, and notes that aspects of the reporting may provide difficult for employers, and so should be examined in advance.

Employers should plan for these new reporting requirements to ensure they have all of the necessary data to be reported, and that they can easily access this data. For many employers, the data may be kept in two separate systems. The EEOC suggests employers adjust their systems to make pulling data for two separate systems easier.

The EEOC announcement can be found here.