Recommendations

May 2016 County Pay Practices Although the Counties We Visited Have Rules in Place to Ensure Fairness, Data Show That a Gender Wage Gap Still Exists Report 2015-132 COMMITMENT INTEGRITY LEADERSHIP Th e fi rst fi ve copies of each California State Auditor report are free. Additional copies are 3 each, payable by check or money order. You can obtain reports by contacting the California State Auditor’s Offi ce at the following address: California State Auditor 621 Capitol Mall, Suite 1200 Sacramento, California 95814 916.445.0255 or tty 916.445.0033 OR Th is report is also available on our website at www.auditor.ca.gov. Th e California State Auditor is pleased to announce the availability of an online subscription service. For information on how to subscribe, visit our website at www.auditor.ca.gov. Alternate format reports available upon request. Permission is granted to reproduce reports. For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Aff airs, at 916.445.0255. For complaints of state employee misconduct, contact the California State Auditor’s Whistleblower Hotline: 1.800.952.5665. Elaine M. Howle State Auditor Doug Cordiner Chief Deputy May 31, 2016 2015-132 Th e Governor of California President pro Tempore of the Senate Speaker of the Assembly State Capitol Sacramento, California 95814 Dear Governor and Legislative Leaders: As requested by the Joint Legislative Audit Committee, the California State Auditor presents this audit report concerning county pay practices at four California counties—Fresno, Los Angeles, Orange and Santa Clara. Th is report concludes that a gender wage gap continues to exist. After reviewing data on total compensation across nearly 4,000 diff erent job classifi cations and covering more than 100,000 employees, our audit found that women earned between 73 percent and 88 percent of what men earned, on average, from fi scal year 2010–11 through fi scal year 2014–15. Th is aggregate measure of the gender wage gap—which does not account for the specifi c jobs held by men and women—has slightly widened at each of the four counties between fi scal years 2010–11 and 2014–15. Our audit also found that men and women do not occupy highly-compensated jobs with the same frequency. Although women make up between 54 percent and 60 percent of each county’s full-time workforce, men were more likely to occupy county job classifi cations with average total compensation greater than 160,000. Nevertheless, the level of pay disparity we found between men and women was often less than fi ve percent when we reviewed compensation levels within specifi c job classifi cations, or groups of classifi cations having similar compensation amounts. A variety of factors can contribute to pay disparities between employees, such as full-time versus part-time employment; county pay practices that consider an employee’s prior pay when establishing current pay, which can further perpetuate pay disparities; and new employees who may only be off ered the minimum starting salary regardless of their qualifi cations. Our audit also attempted to evaluate whether counties were making employment decisions based on objective and job-related criteria. However, three of the four counties do not maintain records—nor are they required to under civil service rules—documenting why they chose a particular male or female candidate. County offi cials could only provide documentation explaining their rationales for 39 of the 154 competitive employment decisions we reviewed. While we saw that more women than men were successfully passing screening exams and being contacted for job interviews, the limited documentation at the counties hinders a more thorough evaluation of whether counties treat men and women equally during the hiring process and further leave counties vulnerable should their hiring decisions be challenged. Further, the four counties we visited did not specifi cally track gender-based wage and promotion complaints. Counties could benefi t from knowing how frequently these complaints are fi led and whether there are patterns of complaints that pertain to specifi c county departments. Finally, to enhance public transparency on gender pay equity issues, the Legislature should require public employers to provide gender information when reporting data to the State Controller’s Offi ce. Respectfully submitted, ELAINE M. HOWLE, CPA State Auditor 621 Capitol Mall, Suite 1200 Sacramento, CA 95814 916.445.0255 916.327.0019 fax www.auditor.ca.gov Blank page inserted for reproduction purposes only. California State Auditor Report 2015-132 v May 2016 Contents Summary 1 Introduction 7 Audit Results Male Employees Generally Earned More Than Female Employees During Fiscal Years 2010–11 Through 2014–15 19 Signifi cant Pay Disparities Within Job Classifi cations Often Occurred Because of County Workers’ Full-Time Versus Part-Time Employment 28 Counties Applied Some Aspects of Their Hiring and Promotions Processes Equally, but Their Rationales for Selecting Successful Candidates Remain Unclear 31 Counties’ Salary-Setting Decisions Complied With Their Policies, but Factors Other Than Employees’ Abilities Infl uenced Salary Levels 37 For the Few Cases We Identifi ed, Counties Often Found That Gender-Based Pay Equity Complaints Lacked Merit, but the Frequency of Such Complaint Filings Is Unclear 45 The State Periodically Reviews Counties’ Merit-Based Personnel Systems, but It Could Strengthen These Reviews to Evaluate Gender Equity Issues 48 Existing Reports on Gender Pay Equity Have Limitations, and Better Information Might Be Available From the State Controller’s Offi ce 51 Recommendations 53 Appendix Counties’ Fiscal Year 2014–15 Compensation Data by Gender, Ethnicity, and Years of Service 57 Responses to the Audit Fresno County 63 California State Auditor’s Comments on the Response From Fresno County 65 Los Angeles County 67 California State Auditor’s Comment on the Response From Los Angeles County 71 Orange County 73 continued on next page . . . vi California State Auditor Report 2015-132 May 2016 California State Auditor’s Comment on the Response From Orange County 75 Santa Clara County 77 California State Auditor’s Comments on the Response From Santa Clara County 79 California State Auditor Report 2015‑132 1 May 2016 Summary Results in Brief Audit Highlights . . . After reviewing employee compensation data from four counties— Our audit concerning county pay practices Fresno, Los Angeles, Orange, and Santa Clara—our audit found that, and policies at four California counties— in the aggregate, female county employees earned between 73 percent Fresno, Los Angeles, Orange, and and 88 percent of what male county employees earned from fiscal Santa Clara—revealed the following: year 2010–11 through fiscal year 2014–15.1 In fact, the data show that this gender wage gap has slightly widened at each of the four counties » From fiscal years 2010–11 through over the five‑year period we reviewed. For example, for Los Angeles 2014–15, the aggregate gender wage County positions, women earned roughly 80 percent of the average gap has widened slightly at each of the total compensation for men in fiscal year 2010–11, but this figure four counties. dropped to 76 percent by fiscal year 2014–15. Our calculations of » In the aggregate, female employees these differences are based on gender pay disparities in the aggregate. earned between 73 percent and 88 percent We also focused our review on 1,855 specific job classifications, of what male employees earned. or groups of job classifications, with similar compensation and found 45 percent more classifications in which men earned more » Men outnumbered women in than women. classifications with average total compensation greater than $160,000 in The counties’ compensation data also show that female employees fiscal year 2014–15, even though women were more likely to occupy classifications that provided relatively accounted for between 54 percent and low‑ to mid‑levels of average total compensation, whereas their 60 percent of all full‑time employees. male counterparts tended to be concentrated in mid‑level to highly » When we looked more closely at groups compensated county classifications. We generally found that men of job classifications with similar outnumbered women in classifications for which the average total compensation amounts, we found that compensation was $160,000 or more for fiscal year 2014–15, even pay disparities between men and women though women accounted for between 54 percent and 60 percent varied between less than 1 percent and of all full‑time employees we reviewed. With women more often nearly 9 percent. occupying classifications that pay at the mid‑ to lower‑end of the salary strata we reviewed, the aggregate wage gap in the » Three of the four counties did not four counties we reviewed appears to be influenced by the types of document why a particular candidate job classifications women occupy. was selected for employment over other qualified candidates. Additionally, when we looked more closely at groups of job classifications with similar compensation amounts, we found • County officials could only provide that pay disparities between men and women were often documentation explaining their between less than 1 percent and nearly 9 percent. For example, rationales for 39 of 154 competitive in classifications with average total compensation of $240,000 or employment decisions we reviewed. more in Orange County, men earned average total compensation of $268,122, while women in the same classifications earned, on » The counties followed their own average, $265,165—a difference of roughly 1.1 percent. salary‑setting pay policies, but a variety of factors unrelated to an employee’s skills or abilities can influence salary rates. continued on next page . . . 1 To identify wage disparities between male and female county employees who occupied comparable positions—and to mitigate the effects of midyear promotions, transfers, or other employer actions that can influence salary amounts and pay differences—we limited our analysis to include only full‑time employees who were active in a single job classification for the entire fiscal year. Moreover, to maintain consistency with federal law, we include in figures for salaries and wages the employees’ benefits, such as employer contributions to health care and retirement, and additional payments, such as overtime and paid leave. 2 California State Auditor Report 2015-132 May 2016 » Current law does not require counties We also reviewed groups of county employees working within the to consistently monitor gender-based same classifi cations and county departments (regardless of pay equity issues in the hiring and the employees’ full-time status) to understand why diff erences in salary-setting process. salaries existed. We reviewed records for 161 individual employees within 46 classifi cations, many of which displayed variances of » Requiring public employers to report 20 percent or more between men’s and women’s pay. Although we gender information when submitting found no evidence of gender discrimination, our review revealed employee-specifi c data to the State a multitude of factors that can result in diff erences in pay among Controller’s Offi ce would enhance employees working within the same job classifi cation. Th ese transparency on gender pay equity issues. factors include the starting salary for each employee in his or her current county job, which can often be infl uenced by prior pay in a previous county job; the length of time spent by the employee in his or her current job; and whether the employee worked full-time or part-time during the entire fi scal year. Our review found that the disparities in pay were often infl uenced by a combination of these factors, but part-time versus full-time employment was the single most signifi cant factor. As a result, our analysis of the counties’ compensation data that we previously discussed was based only on data for full-time employees. We found that the counties we visited often did not keep records documenting why a particular candidate was ultimately selected for employment over other qualifi ed candidates. Consequently, we could not always determine whether counties were using valid job-related criteria when deciding whether to employ particular male or female candidates. Applicable civil service rules do not require that counties document their hiring rationales; instead, counties are to focus on establishing rules and maintaining supporting documents covering the events leading up to actual hiring decisions. Nevertheless, if challenged, employers—including the four counties we visited—must successfully demonstrate that their decisions to hire certain individuals (or not to hire others) did not result from discriminatory employment practices. In our view, it is reasonable to expect hiring managers to have some basis for selecting candidates and to document these decisions. During our audit we evaluated 240 hiring decisions (60 for each county), of which 195 hiring decisions were for positions covered by the civil service rules of each county, and 154, or 79 percent, of the 195 decisions were fi lled through competitive recruitment. However, even when the counties followed competitive processes, they could only provide documentation explaining why they chose the successful candidates or alternatively why they did not select others, in 39 of the 154 competitive recruitments we reviewed. We noted that only Santa Clara County instructed its hiring managers to document why the individuals who were interviewed were or were not selected for employment. Moreover, the county’s rules provide examples of appropriate and inappropriate rationales California State Auditor Report 2015‑132 3 May 2016 regarding candidate selection. Although our testing of hiring processes at the three other counties showed that both men and women successfully passed screening exams, got on certified eligibility lists, and were contacted for hiring interviews, the hiring decisions themselves were generally unclear, and we could not further scrutinize and evaluate the counties’ decision making. Similarly, all four counties did not document hiring decisions for positions not covered by civil service rules. Of the hiring decisions we reviewed, 45 were for unclassified positions, or those positions excluded from civil service rules and considered at‑will appointments because employees who fill them can be terminated without cause. These positions are often senior‑ and executive‑level management positions, but the four counties we visited could document their rationales for hiring candidates for these positions in only three of the 45 decisions we reviewed. Nevertheless, the State has an opportunity to ensure that counties not only document the bases for their hiring decisions but also actively prevent and monitor pay disparities and then report their findings to the public and local officials. State law requires the California Department of Human Resources (CalHR) to periodically perform audits of counties’ hiring and compensation practices under the State’s mandated civil service rules. The Legislature could amend state law to establish the expectation that counties must be capable of objectively explaining, at the time of hire, why candidates who were interviewed were or were not selected for employment. CalHR’s audits could then evaluate and report on whether the stated hiring decisions were, in fact, objective and job‑related. Further, the Legislature could require counties to periodically evaluate, by job classification, the differences in men’s and women’s compensation and to determine which county pay policies have contributed to any significant variances identified and whether such policies require modification to eliminate or reduce gender‑based pay disparities. Finally, counties should share these analyses with local leaders, such as locally elected boards of supervisors, so that the committee leaders and the public can have an ongoing discussion and understanding of where significant pay disparities exist and the pay policies that contribute to them. Our audit evaluated an additional 60 salary‑setting decisions for each of the four counties—or 240 total decisions—to understand how counties determined pay. Our review found that counties consistently followed their own pay policies, but such policies may place at a disadvantage those who are returning to the workforce following extended absences. For example, 57 of the 240 salary decisions we reviewed involved individuals who were newly hired in their respective counties, and 42 (12 males and 30 females) were employees earning the minimum amounts for their salary ranges. We further noted that women were hired at their positions’ 4 California State Auditor Report 2015-132 May 2016 minimum salary rate in 30, or 79 percent, of the 38 cases we reviewed, and men were hired at their positions’ minimum salary rate in 12, or 63 percent, of the 19 cases we reviewed. A variety of factors unrelated to the qualifi cations or capabilities of the employees could have caused these results. Some counties noted that they have policies to set the salaries for new county employees at the minimum rate for their respective positions. In other cases, counties indicated that even though the successful candidates exceeded the minimum qualifi cations for many of the classifi cations that we were evaluating, the counties did not have diffi culty recruiting for these classifi cations, and thus the counties were often unwilling to pay higher amounts regardless of candidates’ qualifi cations. We also examined 54 salary-setting decisions for classifi cations in which each salary amount fell within a broad-range without any pre-defi ned salary steps (broad range schedule), and we noted that the diff erences between the minimum and maximum salaries in these broad-range positions was sometimes large. For example, the diff erence between the minimum salary of 122,408 and the maximum salary of 250,016 for the chief child psychiatrist position in Fresno County was 127,608. An employee’s salary within a broad range can be the result of negotiations that federal law, state law, and county policies do not require the counties to document. Nevertheless, we analyzed how often the 54 employees (30 male and 24 female) received salary amounts above the midpoints of their respective salary ranges. Th e data in our selection indicated that women were less likely than men to obtain salaries above the midpoints for their job classifi cations. Specifi cally, 24, or 80 percent, of 30 men in our selection and 15, or 63 percent, of 24 women successfully negotiated or otherwise received salaries above the midpoint levels of their salary ranges. During our audit, we also attempted to obtain all wage and promotional discrimination complaints fi led with the four counties we visited as well as the complaints’ outcomes; however, we had diffi culty identifying whether complaints pertaining to pay or promotional disparities were specifi cally based on gender. Although we found that all four counties we visited had policies to respond to alleged instances of pay discrimination in the workplace, the counties do not specifi cally track gender-based wage and promotional complaints, and neither federal nor state law currently requires that counties track this information. Nevertheless, our review of county complaints found that relatively few— 36 complaints out of 14,674—appeared to pertain to complaints alleging sex-based discrimination regarding wages or promotional advancement. Of the 36 complaints we identifi ed, 10 complaints are still under investigation, 25 complaints were not substantiated, and one was substantiated; however, this substantiated complaint is still California State Auditor Report 2015-132 5 May 2016 in litigation, and we cannot discuss the specifi cs of the allegation. Because of the limitations in the counties’ tracking processes, it was diffi cult to determine how often employees fi led sex-based pay equity complaints, and the actual number of these types of complaints could be higher. Counties could benefi t from identifying and tracking complaints that allege sex-based discrimination involving equal pay issues or promotional opportunities. Knowing how frequently these complaints are fi led and whether such complaints are focused at particular departments could be useful information for county offi cials as they attempt to monitor gender equity issues among their employees. Finally, both the public and county employees could benefi t from better data collected by the State Controller’s Offi ce (Controller). Th e Controller currently collects public employee compensation data by employer and classifi cation on its Government Compensation in California website, but it is not currently required to collect information on the sex of those employees. To enhance transparency and accountability regarding gender pay equity, the Legislature should amend state law to require public employers to report sex information when submitting the employee-specifi c data to the Controller. Recommendations Legislature To ensure that counties consistently monitor pay disparities between male employees and female employees and to ensure that counties perform these reviews and publicly report their fi ndings, the Legislature should amend state law to do the following: • Require counties to periodically compare, by specifi c job classifi cation, the diff erences in total average compensation between male employees and female employees. • Require counties to publicly report to local decision makers those classifi cations for which the diff erences in total compensation are signifi cant, further indicating which county pay policy or policies contributed to the variances and whether any modifi cations are needed to reduce the disparities. If the Legislature desires that counties be able to demonstrate that their hiring decisions for civil service positions are based on objective and job-related criteria, it should amend the state law to require that each county document the reasons why it chose the selected candidate over others from the certifi ed eligibility list. 6 California State Auditor Report 2015-132 May 2016 To ensure that the general public and legislative decision makers have readily available data on male and female employees’ compensation by specifi c classifi cation and public employer, the Legislature should direct the State Controller’s Offi ce to obtain information on the sex of each public employee reported on the Government Compensation in California website. Counties To ensure that they can consistently demonstrate that candidates are hired for permanent civil service positions based on valid and job-related criteria, regardless of their sex, each county should develop policies requiring hiring managers to document the reasons why they chose the selected candidate over others from the certifi ed eligibility list. To ensure that they can readily monitor gender-based pay equity complaints and reliably evaluate how often such complaints are fi led by its employees, each county should develop tracking mechanisms that allow management to reliably determine how often these complaints occur and whether there are patterns of complaints that pertain to specifi c county departments or classifi cations. Agency Comments Fresno, Los Angeles, Orange, and Santa Clara counties generally agreed with our conclusions and recommendations and off ered additional comments regarding specifi c policies and practices at their individual county. California State Auditor Report 2015-132 7 May 2016 Introduction Federal and State Laws Prohibit Sex-Based Pay Discrimination in the Workplace Congress has passed various laws to protect employees from discrimination based on their sex. For example, Congress passed the Equal Pay Act of 1963 (Federal Pay Act), which prohibits sex-based wage discrimination among employees.2 Th e Federal Pay Act generally mandates that, except under certain conditions, employers provide their employees with equal pay for equal work in classifi cations that require equal skill, eff ort, and responsibility, and that are performed under similar working conditions. Th ese provisions have been interpreted via federal regulations to mean that the jobs need not be identical, but they must be substantially similar. Job content (not job titles) determines whether classifi cations are substantially similar. Nevertheless, pay disparities among employees performing similar work are still allowable under the Federal Pay Act, as long as the diff erence is not based on sex as noted in the text box. Th e federal law applies equally to both men and women and generally applies to all employees—including administrative, professional, and executive employees. All forms of payment are covered under this law, including salary, overtime pay, bonuses, reimbursement for travel expenses, and benefi ts, Federal Prohibition of among others. Wage Discrimination Based on Sex The Equal Pay Act of 1963 says the following: In addition to the Federal Pay Act’s equal pay and compensation requirements, Title VII of the No employer shall discriminate within any establishment Civil Rights Act of 1964 (Title VII), as amended, between employees based on sex by paying wages at a rate prohibits all employment discrimination based on less than what is paid in such establishment to the opposite sex for equal work on jobs, the performance of which an individual’s race, color, religion, national origin, requires equal skill, eff ort, and responsibility, and which are or sex. Th e law also makes it illegal for an employer performed under similar working conditions, except where to discriminate against an employee because he or such payment is made pursuant to the following: she opposed an unlawful employment practice, fi led a charge of discrimination, or participated in an 1. A seniority system. investigation, proceeding, or hearing pertaining to 2. A merit system. discrimination. In addition, this law also prohibits 3. A system measuring earnings by quality or quantity employers from using selection procedures that of production. have the eff ect of disproportionately excluding persons based on race, color, religion, sex, or 4. A pay diff erential based on any factor other than sex. national origin, where the tests or selection Source: Title 29 United States Code section 206(d). procedures are not job-related and consistent with a business necessity. 2 Although the words sex and gender have diff erent legal meanings, throughout this report we use the terms interchangeably except when referring to the requirements of specifi c state and federal laws. Sex-based wage discrimination is commonly referred to as a gender equity issue, and the diff erence between the lower salaries earned by women when compared to men’s salaries is commonly called the gender gap or gender wage gap. 8 California State Auditor Report 2015-132 May 2016 Since 1949 California has had its own laws aimed Some Distinguishing Provisions of the at protecting employees in the workplace against California Equal Pay Act wage discrimination based on sex. Th e California Equal Pay Act (California Pay Act), most recently The California Equal Pay Act includes requirements that amended in October 2015, requires equal pay for employers do the following: substantially similar work when viewed as a • Demonstrate affi rmatively that wage diff erentials are composite of skill, eff ort, and responsibility, unless based upon bona fi de factors other than sex. the employer can demonstrate that diff erences in • Demonstrate that each factor relied upon for a wage pay are job-related and based on factors other diff erential is applied reasonably, that the sum of than sex. Th e California Pay Act expands beyond the factors accounts for the entire wage diff erential, the express requirements found in the Federal Pay and that the diff erential is consistent with a Act in certain areas, and we highlighted some of business necessity. those key provisions in the text box. • Do not discharge, discriminate, or retaliate against an employee for disclosing the employee’s own Although California law does not expressly wages, discussing the wages of others, or inquiring require employers to monitor employee wages about another employee’s wages. and to identify disparities, the potential fi nancial penalties for employers found in violation of Source: California Labor Code, Section 1197.5. the California Pay Act can be signifi cant. If an employee is successful in a civil action, the employer could be expected to pay the amount of lost wages owed to the employee as well as additional damages and attorney’s fees. Studies Have Identifi ed Gender-Based Pay Diff erences Across Occupations, but No Clear Consensus Exists About the Size of the Problem or Its Causes According to various studies and reports, women in the labor force have historically received less pay than men.3 Th e U.S. Census Bureau (Census Bureau), in its September 2013 report titled Income, Poverty, and Health Insurance Coverage in the United States: 2012, states that women earned less than 59 cents for every dollar earned by a man in 1963, the same year Congress passed the Federal Pay Act. However, almost 50 years later, the Census Bureau’s 2012 data suggest that the wage gap has persisted, albeit to a lesser degree, with women earning less than 77 cents for every dollar earned by a man, a situation causing a roughly 23-cent pay gap. Despite the gains made, progress toward further closing the pay gap has stalled in recent years. According to the Census Bureau, women consistently earned about 76 cents on the dollar between 2001 and 2012. Figure 1 illustrates the limited progress that has been achieved at further closing the wage gap in recent years. 3 Some of the reports we reviewed regarding the gender-based wage gap included the following: Francine D. Blau and Lawrence M. Kahn, The U.S. Gender Pay Gap in the 1990s: Slowing Convergence (October 2004); CONSAD Research Corp., An Analysis of Reasons for the Disparity in Wages Between Men and Women (January 2009); and Congressional Research Service, Pay Equity: Legislative and Legal Developments (November 2013). California State Auditor Report 2015-132 9 May 2016 Figure 1 The Gap Between Male Employees’ Pay and Female Employees’ Pay in the U.S. From 1960 to 2012 100% 90 80 70 60 50 0 1960 1970 1980 1990 2000 2010 Year yaP ’seeyolpmE elameF fo egatnecreP yaP ’seeyolpmE elaM ot derapmoC Female-to-male earnings ratio Source: U.S Census Bureau, Income, Poverty, and Health Insurance Coverage in the United States: 2012. Despite the stark contrast between women’s earning on average 23 percent less than the amounts men earn, the magnitude of the problem and the degree of impact resulting from the wage gap’s numerous potential causes remain undefi ned. Some researchers have examined the pay gap and concluded that a signifi cant portion of it can likely be explained by employee choice and behavior, such as an individual’s deciding how best to balance work, personal, and family commitments. For example, an individual’s choices about what to study in school, what profession to pursue, and whether to temporarily leave the workforce to care for children or other family members can infl uence that individual’s pay. Nevertheless, according to a 2009 study by the CONSAD Research Corporation for the U.S. Department of Labor, “It has not been possible to develop reliable estimates of the total percentage of the raw wage gap for which all of the factors that have been separately found to contribute to the gap collectively account.” Although CONSAD estimated that between 4.8 percent and 7.1 percent of the raw wage gap is unexplained, it commented that it is not possible to determine reliably whether any portion of the observed gender-based wage gap can be attributed confi dently to overt discrimination against women. At a practical level, CONSAD commented that “the complex combination of factors that collectively determine wages paid to diff erent individuals makes the formulation of policy that will reliably redress overt discrimination that does exist a task that is, at least, daunting and, more likely, unachievable.” In another report prepared by the American Association of University Women (AAUW) in October 2012, the fi ndings indicate that many factors play a role in the wage gap and that even after controlling for factors such as college majors chosen, numbers of hours worked, and employment sectors, the pay gap shrinks but it does not disappear. Th e AAUW’s report says that 10 California State Auditor Report 2015-132 May 2016 about one-third of the pay gap cannot be explained by any of the factors commonly understood to aff ect earnings, thus indicating that other factors more diffi cult to identify—and likely more diffi cult to measure—contribute to the pay gap.4 Obtaining better information to understand the pay gap and its causes has been a focus at the federal level; however, no apparent consensus exists about the types of data that researchers should collect. According to an April 2012 White House report that describes the accomplishments of its equal pay task force, the U.S. Equal Employment Opportunity Commission (EEOC) initiated a study by the National Academy of Sciences to determine the types of pay data that should be collected to enhance the monitoring and enforcement of wage discrimination laws. Th e results of this study were made public in 2012. Th e study concluded that without a clearly articulated vision from federal agencies for how employers could use wage data, the benefi ts of obtaining additional wage information from employers are uncertain, and the process creates a signifi cant administrative burden on the EEOC and potentially increases the reporting burden on employers. Further, legislative eff orts that have stalled in Congress, such as the so-called Paycheck Fairness Act, have also contained provisions for the EEOC and Department of Labor to perform more training and research on pay equity and to survey data currently collected by the federal government that could be used to aid in better monitoring pay equity issues. However, this legislation does not specify the particular types of data necessary for better monitoring. The Four Counties We Visited Are Required to Adhere to Merit System Principles When Hiring and Establishing the Salaries for Certain Types of Employees Th e four counties we visited—Fresno, Los Angeles, Orange, and Santa Clara—generally had two types of employees: classifi ed employees, those appointed to positions covered by the counties’ merit system rules, and unclassifi ed employees, those appointed to positions that may fall under such rules but for which the rules are not required. Merit system rules are personnel standards that describe how the county will recruit, select, and compensate employees for positions that have permanent status.5 Merit system rules are founded on the idea that permanent and career service employees are to be recruited, selected, and promoted based on their 4 In 2016 the American Association of University Women released a report on the gender pay gap that reaffi rmed the fi ndings in its October 2012 report that approximately 7 percent of the diff erence between men’s earnings and women’s earnings one year after graduation is unexplained. 5 Title 2 of the California Code of Regulations defi nes permanent status as an employment condition in which the employee, after the successful completion of a probationary period, can only be removed for cause, the curtailment of work, or the lack of funds. California State Auditor Report 2015-132 11 May 2016 relative abilities, knowledge, and skills as opposed to other factors, such as their personal relationships or political connections. Such employees also typically enjoy certain rights to appeal—through an impartial process—their employers’ decisions when the employees are subject to discipline or other adverse employment actions, such as termination. Th e Government Code and federal law require all counties participating in certain state-funded or federally funded programs, such as the Social Security Act and the Federal Civil Defense Act, to adopt merit-based personnel systems in accordance with the regulatory guidance issued by the California Department of Human Resources (CalHR). CalHR arranges for periodic reviews of each county’s compliance with these regulations. Classifi ed employees are commonly the permanent, career employees of each county and make up a signifi cant part of a county’s workforce. For example, according to Santa Clara County, nearly 90 percent of its workers are classifi ed employees. In contrast, counties may exempt unclassifi ed employees—those who lack permanent career status, including those appointed to temporary positions or to such executive-level leadership positions as department heads—from the same standards and protections aff orded to classifi ed employees. Our audit focused on two aspects of each county’s merit-based rules, namely its hiring and selection process and its salary-setting process for employees covered by these rules. CalHR’s regulations list diff erent “merit principles” associated with these two types of decisions. For selection and recruitment, regulations generally require that recruitment eff orts be planned and carried out in a manner that assures equal employment opportunity and open competition for an applicant’s initial civil service appointment. Basic recruitment eff orts for career entry must include the posting of examination announcements, and the candidate selection procedures must be job-related and must maximize validity, reliability, and objectivity as much as possible. According to regulations, when hiring (or otherwise appointing) an individual for a permanent career service position, counties must select from an appropriately ranked eligibility list, choosing from either the top 10 eligible individuals or from a top-scoring group of individuals who are willing to accept the conditions of employment. Figure 2 on the following page provides an overview of a hypothetical county’s hiring process based on merit system rules and principles. 12 California State Auditor Report 2015-132 May 2016 Figure 2 A County’s Recruitment and Selection Process for Classifi ed Positions When a county department identifies an upcoming need to fill a vacancy or vacancies, the department notifies the county’s human resources (HR) department.* The county’s HR department creates a job posting that includes the minimum qualifications for the job classification. Candidates who meet the minimum qualifications specified on the job posting take an exam created for the job. The county’s HR departmenntt aaddmmiinniisstters the exam and places candidates who pass on a list (eligibility list). Candidates are ranked based on their individual exam scores. The county’s HR department provides the department that has the job opening (hiring department) with a certified eligibility list, or a The hiring department conducts listing of only the top-scoring candidates from the larger eligibility list. selection interviews of the candidates on the certified eligibility list and selects a candidate from that list. Source: California State Auditor’s analysis of Fresno, Los Angeles, Orange, and Santa Clara counties’ policies and procedures related to hiring and promotions for classifi ed positions. * In Los Angeles County, certain county departments handle their own recruitment, selection, and hiring process. In contrast, counties may follow—but are not required to follow— such prescriptive rules when recruiting, selecting, and hiring for an unclassifi ed position, or an appointed position not covered by the county’s merit system rules. In such cases, the individual or county body that appoints an employee to an unclassifi ed position need only determine that the individual meets the requirements for the job and that the employee thereafter serves at the pleasure of that appointing authority. For example, in Santa Clara County’s merit system rules, county appointments of individuals to unclassifi ed positions can be exempt from rules dictating how the county is to advertise and administer hiring exams. California State Auditor Report 2015-132 13 May 2016 Our audit also examined the salary-setting process for the four counties we visited, and it reviewed CalHR’s regulations, which similarly establish a merit-based principle, stating that “equitable and adequate compensation will be provided.” Elaborating on this principle, the regulations describe the need for a compensation plan that considers the responsibility and diffi culty of the work as well as the level of compensation needed to compete in the labor market, among other pertinent factors. During our review of the four counties’ salary-setting processes, we often saw that the county offi cials had established salary ranges for specifi c job classifi cations and that some of these salary ranges for those in classifi ed positions included incremental salary steps within the salary ranges. For example, a county may have a job classifi cation called human resources analyst I with a salary range between 4,611 and 6,048 per month and a seven-step salary schedule that spans the 1,437 diff erence between the minimum and maximum salary amounts. If they demonstrate at least “competent” performance, human resources analysts can advance to higher steps each year until they reach the highest possible salary level for the position. How quickly a human resources analyst can reach the highest level depends both on the employee’s performance and on the salary step at which he or she began employment. Employees who work in positions covered by merit-based rules do not always begin their employment at the lowest possible salary step. Th e four counties we visited have policies allowing executive-level managers to decide when to hire someone above the minimum salary step (sometimes referred to as the classifi cation’s hiring rate) by taking into account the candidate’s particular skills and experience in relation to the classifi cation. In other circumstances, the counties’ policies may dictate that an existing county employee who transfers or promotes to a diff erent classifi cation be placed in the nearest salary step that allows for a preestablished increase in pay. Our earlier example’s human resources analyst who earns 6,048 per month might later promote to an administrative analyst position that has a salary range of 5,139 to 6,740 per month. When the county completes the transfer, the county’s compensation rules might require the employee’s placement into the fi fth salary step, or 6,385 per month, which provides at least a 5 percent increase over the employee’s pay in the previous position. In contrast, counties can, but are not required to, follow CalHR’s regulations for county employees appointed to unclassifi ed positions. In some cases, these unclassifi ed positions have broad pay ranges without incremental salary steps. For example, a county’s public health director may have a broad salary range that spans a minimum of roughly 174,000 per year to a maximum of nearly 223,000 per year. Th e county’s salary-setting process in this 14 California State Auditor Report 2015-132 May 2016 circumstance can involve—among other possible ways to decide on a starting salary—negotiations with the successful candidate or the selection of a specifi c rate within the established salary range by the local board of supervisors. Scope and Methodology Th e Joint Legislative Audit Committee directed the California State Auditor to review county pay practices and policies in Santa Clara and three other counties that are representative of California’s counties. Th e audit scope includes four audit objectives. Table 1 lists the audit objectives and the methods we used to address them. Table 1 Audit Objectives and the Methods Used to Address Them AUDIT OBJECTIVE METHOD 1 Review and evaluate the laws, rules, We considered federal and state prohibitions on sex-based wage discrimination, such as the and regulations signifi cant to the requirements found in the federal Equal Pay Act of 1963, as amended, and the California Equal audit objectives. Pay Act as codifi ed in the Labor Code. We also considered provisions of the Government Code and applicable state regulations regarding the hiring and payment of county employees under merit-based personnel systems. 2 Perform the following for a selection To address this objective, at Fresno, Los Angeles, Orange, and Santa Clara counties, we performed of four counties, including Santa Clara the following: County, for the most recent fi ve-year period: a. Evaluate the counties’ compliance • We satisfi ed this objective by selecting 60 employees at each county as discussed in more detail with laws, policies, procedures, and in audit objective 2b below. Our tests of compliance focused on evaluating whether a county’s practices related to county employee hiring, promotion, and compensation practices complied with certain key requirements found hiring, promotions, salaries, and in state regulations governing merit-based personnel systems. Specifi cally, we examined gender pay equity. Evaluate the whether those hired had passed screening exams, whether they had been placed on certifi ed adequacy of the policies, procedures, eligibility lists, and whether counties had placed male and female candidates on these lists. and practices in minimizing gender We also examined aspects of the hiring and promotions process not covered by the State’s wage discrimination. merit-based rules, such as evaluating the extent to which men and women were being contacted for hiring interviews and the extent to which counties could demonstrate that they used objective and job-related criteria to choose candidates for employment. • The State’s merit-based rules do not defi ne how counties should establish employee compensation. Thus, to the extent possible, we examined how each county determined salary amounts for those in our selection, following an employee’s initial hire into county service or upon his or her transfer or promotion into a diff erent county job classifi cation. • State laws do not require that counties adopt policies to specifi cally track gender pay equity. Counties did establish policies covering Equal Employment Opportunity requirements and the handling of employee complaints, which we discuss in audit objective 2f. California State Auditor Report 2015-132 15 May 2016 AUDIT OBJECTIVE METHOD b. For a selection of transactions, • For fi scal years 2013-14 and 2014–15, we judgmentally selected a total of 240 county determine whether each county employees (60 employees at each county). Our selection was random with the exception that consistently applied laws, policies, we ensured that a portion of our selection included those whose salary was at least $120,000 procedures, and practices related to per year. We made our selections after obtaining extracts from each county’s human resources county employee hiring, promotions, system. Our selection included those employees covered by merit-based rules as well as salaries, and gender pay equity. those who are not, such as employees the counties had appointed to at-will, temporary, and extra-help positions. • We decided to focus on a more recent two-year period in order to have greater assurance that the counties would still have documentation available that would explain their rationales for the hiring, promotion, and salary-setting decisions we examined in our testing. Further, our review of employment data for both men and women over the larger fi ve-year period did not show any signifi cant variation. As a result, we believe our focus on fi scal years 2013–14 and 2014–15 did not aff ect our report’s conclusions. c. Assess whether the counties justifi ed • To the extent that we saw counties deviate from normal county practice—such as setting the any deviations from the applicable salary for an employee above the minimum amount for a particular classifi cation or deciding to laws, policies, procedures, and practices forgo competition during a recruitment—we attempted to identify and document the county’s identifi ed in the previous step. justifi cation for each deviation. d. Determine which county entity, if • We interviewed key offi cials charged with tracking and investigating discrimination complaints any, is responsible for overseeing at each county. and enforcing each selected county’s • We obtained and reviewed the California Department of Human Resources’ audits of each adherence to relevant laws, policies, county’s merit-based personnel systems. We also examined how these audits might be procedures, and practices related to augmented to better evaluate county eff orts toward mitigating potential pay disparities county hiring, promotions, salaries, between the sexes. and gender pay equity, and assess the adequacy of the oversight and enforcement provided. e. For a selection of the same or similar • Our review considered all county classifi cations that had at least one full-time employee in the county departments within each classifi cation for the entire fi scal year. For the purposes of our report, we present data on total of the four counties, analyze and compensation for nearly 4,000 jobs across the four counties. To mitigate the eff ect of midyear compare data related to employee promotions, transfers, or other actions that can infl uence salary amounts and pay diff erences, wages for at least fi ve classifi cations, we limited our analysis to include only full-time employees who were active in a single job broken down by gender, ethnicity, classifi cation for the entire fi scal year. However, our analysis for Los Angeles County may include education, and years of service. some employees who took a leave of absence during the fi scal year because the county does In addition, identify the counties not remove its employees from active status in its personnel and payroll system when they take that have been most eff ective in a leave of absence. achieving gender pay equity and • The information presented in our report and in the Appendix generally focuses on data from fi scal those that have been least eff ective. year 2014–15. Our review of data from earlier years showed similar patterns without any signifi cant Identify possible reasons for deviation. We were unable to provide information on “education” since the counties did not always such diff erences. maintain this information. • Los Angeles County implemented its current personnel and payroll system on April 1, 2010. Although this system contains certain historical information, such as each employee’s intial hire date with the county, it does not contain the detailed information needed to calculate the employee’s years of service with the county before April 1, 2010, as this information is stored in its previous legacy system. Thus, for our analysis of Los Angeles County, we calculated each employee’s full-time service in a specifi c job classifi cation for the period April 1, 2010, through June 30, 2015. • We also identifi ed job classifi cations with varying pay discrepancies between male employees and female employees (regardless of full-time status) and selected a total of 46 such classifi cations across 35 county departments. • We reviewed personnel and salary records of a total of 161 employees within these classifi cations from among all four counties to assess the justifi cations for the diff erences among these employees’ salaries. continued on next page . . . 16 California State Auditor Report 2015-132 May 2016 AUDIT OBJECTIVE METHOD f. To the extent possible, obtain all • We examined county policies to determine each county’s processes for preventing and wage and promotion discrimination responding to alleged instances of discrimination in the counties’ workplaces. complaints that county employees • We obtained and reviewed each county’s discrimination complaint data and fi ltered the data fi led with the four counties and based on sex or gender and searched for such keywords as wage and salary within the narrative identify the complaints’ outcomes. section describing the complaints related to county employment. From each of the four counties’ complaint data logs, we attempted to select up to 30 complaints that appeared relevant to our audit. We initially identifi ed 30 complaints from Los Angeles and 30 complaints from Santa Clara counties that matched our keyword search, and just 18 and 27 complaints from Fresno and Orange counties, respectively. We reviewed the summarized narratives to determine whether they actually pertained to wage and promotional discrimination (based on sex or gender) at each of the four counties. We further discuss the limitations of the complaint data beginning on page 45 of the Audit Results. • Ultimately, we identifi ed four cases in both Fresno and Orange counties, 21 cases in Los Angeles County, and seven cases in Santa Clara County pertaining to wage or promotional discrimination (based on sex or gender). We reviewed the supporting documents, including the investigation reports, to understand the circumstances of the complaint and its ultimate outcome. g. Determine what eff orts, if any, each • The four counties we visited have policies for responding to discrimination complaints that selected county has taken related pertain to alleged violations of their policies on equal employment opportunities. We examined to mitigating wage discrimination this process during our work under audit objective 2f. based on gender and assess • We made inquiries with county offi cials to understand what analyses, if any, they had their eff ectiveness. performed to identify the frequency and magnitude of any gender-pay disparities among county employees performing similar work. h. To the extent possible, identify best • We were alert for potential best practices as we examined each county’s hiring and practices related to mitigating any salary-setting process. We identifi ed a best practice at Santa Clara County, which we discuss identifi ed gender-based pay gaps. further in the audit report. 3 Obtain and evaluate any relevant • We obtained and reviewed the Equal Employment Opportunity Commission’s State and Local reports concerning counties or other Government Information EEO-4 Report regarding county employee statistical data. public entities related to pay equity with • We reviewed the Government Compensation in California database of the State Controller’s respect to gender and provide options Offi ce regarding public employee classifi cation and compensation data. for the content and frequency of future reports on the same topic that could assist decision makers. 4 Review and assess any other issues that • We evaluated various studies and reports to identify historical diff erences in pay between are signifi cant to the audit. male employees and female employees and the potential causes for this pay gap. • During the audit we noted that female representation in higher-paying job classifi cations was limited when compared to male representation. As a result, we evaluated whether counties could demonstrate that they had consistently hired male or female candidates based on objective and job-related criteria. Source: California State Auditor’s analysis of Joint Legislative Audit Committee’s audit request number 2015-132 as well as information and documentation identifi ed in the table column titled Method. Assessment of Data Reliability Th e U.S. Government Accountability Offi ce (GAO), whose standards we are statutorily required to follow, requires us to assess the suffi ciency and appropriateness of computer-processed information that we use to support our fi ndings, conclusions, or recommendations. In performing this audit, we obtained electronic personnel and payroll data fi les from the four counties we visited for the purpose of selecting employees in order to review each county’s policies and procedures for hiring, promoting, and setting salaries. California State Auditor Report 2015-132 17 May 2016 We also calculated various compensation statistics relating to ethnicity and gender. We performed data-set verifi cation procedures and electronic testing of key data elements and did not identify any signifi cant issues. To test the completeness of the data, we traced a selection of employees from hard-copy documents to the system and found no errors for three of the four counties we visited. We did not conduct completeness testing in Orange County because not all of their personnel records are stored in a centralized location. Further, we did not test the accuracy of the data because the counties use partially paperless systems, and thus not all hard-copy documentation was available for review. Alternatively, following GAO guidelines, we could have reviewed the adequacy of selected system controls that include general and application controls. However, we did not conduct these reviews because this audit is a one-time review of the four counties’ personnel practices, and we determined that it did not warrant the same level of resource investment as an audit of a state agency whose system produces data that may be used during numerous future audit engagements. Consequently, we concluded that the counties’ personnel and payroll data was of undetermined reliability for the purposes of this audit. Although this determination may aff ect the precision of the numbers we present, there is suffi cient evidence in total to support our fi ndings, conclusions, and recommendations. 18 California State Auditor Report 2015-132 May 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-132 19 May 2016 Audit Results Male Employees Generally Earned More Than Female Employees During Fiscal Years 2010–11 Through 2014–15 According to the U.S. Census Bureau, in 2012 American women who worked full-time earned on average less than 77 cents for every dollar earned by their male counterparts. In other words, the aggregate pay gap between the wages of men and those of women (regardless of job classifi cation) was roughly 23 percent. Our review of the pay data for Fresno, Los Angeles, and Orange counties (three of the four counties we visited) provided a similar result when we evaluated total average compensation, which includes salaries, employee benefi ts, and additional payments, such as overtime and paid leave, for certain full-time county employees.6 In Santa Clara County the pay gap was less: female employees earned, on average, between 87 percent and 88 percent of what male employees earned. Th e data also show that the aggregate wage gap has widened slightly at each of the four counties over the most recent fi ve fi scal year period data was available. In fact, this measure of the pay gap in Los Angeles County grew from 20 percent in fi scal year 2010–11 to 24 percent in fi scal year 2014–15. When evaluating the diff erences in average total compensation between male and female employees working in the same job classifi cation or in groups of classifi cations with similar total compensation amounts, we found that there are more classifi cations for which men earned more than women, and that men more often held higher-compensated jobs. For nearly 4,000 county job classifi cations, we calculated the average total compensation for the full-time employees in each classifi cation, regardless of gender, and assigned each classifi cation and its employees into 13 diff erent pay strata.7 Doing so allowed us to identify potential male-versus-female pay diff erences across low-paying to highly compensated county classifi cations. Th e results for fi scal year 2014–15 showed that the diff erence in average total compensation between male and female employees—regardless of how well compensated the position— varied between less than 1 percent and nearly 9 percent. 6 To identify wage disparities between male county employees and female county employees who had comparable positions—and to mitigate the eff ects of midyear promotions, transfers, or other employer actions that can infl uence salary amounts and pay diff erences—we limited our analysis to include only full-time employees who were active in a single job classifi cation for the entire fi scal year. However, our analysis for Los Angeles County may include some employees who took a leave of absence during the fi scal year because the county does not remove its employees from active status in its personnel and payroll system when they take a leave of absence. Moreover, to maintain consistency with federal law, we include the employees’ benefi ts, such as employer contributions to health care and retirement, and additional payments, such as overtime and paid leave, in the average total compensation amounts presented. 7 Although the words sex and gender have diff erent legal meanings, throughout this report we use the terms interchangeably except when referring to the requirements of specifi c state and federal laws. Sex-based wage discrimination is commonly referred to as a gender equity issue, and the diff erence between the lower salaries earned by women when compared to men’s salaries is commonly called the gender gap or gender wage gap. 20 California State Auditor Report 2015-132 May 2016 The Gender-Based Pay Gap Has Widened Marginally at the Four Counties We Visited, and Men Held More Jobs in the Higher-Paying Classifi cations As shown in Figure 3, women earned between 73 percent and 88 percent of the aggregate pay men earned, without accounting for the specifi c jobs held, from fi scal years 2010–11 through 2014–15. Figure 3 also shows that this pattern has persisted over this fi ve-year period with no clear positive trend at any county toward achieving higher levels of pay equality. In fact, the fi gure shows that the aggregate wage gap has slightly widened at each of the four counties. For example, in fi scal year 2010–11, Fresno County’s female employees earned roughly 80 percent of what male employees earned, but by the end of fi scal year 2014–15, female employees were earning just 79 percent of male employees’ pay. In Los Angeles County, female employees also earned roughly 80 percent of male employees’ average total compensation in fi scal year 2010–11, but this fi gure had dropped to 76 percent by the end of fi scal year 2014–15. Figure 3 Average Total Compensation of Female Employees as a Percentage of Average Total Compensation of Male Employees Fiscal Years 2010–11 Through 2014–15 noitasnepmoC eeyolpmE elameF fo egatnecreP noitasnepmoC eeyolpmE elaM ot derapmoC 100% 90 Santa Clara County 80 Fresno County Los Angeles County Orange County 70 60 50 0 2010–11 2011–12 2012–13 2013–14 2014–15 Fiscal Year Sources: California State Auditor’s analysis of personnel and payroll data obtained from Fresno County’s PeopleSoft Human Capital Management System, Los Angeles County’s eHR Personnel and Timekeeping System, Orange County’s County-wide Accounting and Personnel System, and Santa Clara County’s Human Resource Payroll System. Notes: Average total compensation includes pay and benefi ts tracked in the counties’ personnel and payroll systems, such as regular pay, overtime pay, and employer contributions to health benefi ts and retirement. This fi gure includes only full-time employees who were active in a single job classifi cation for the entire fi scal year. We limited our analysis to that group of employees to mitigate the eff ects of midyear promotions, transfers, or other actions that can infl uence salary amounts and pay diff erences. However, our analysis for Los Angeles County may include some employees who took a leave of absence during the fi scal year because the county does not remove its employees from active status in its personnel and payroll system when they take a leave of absence. California State Auditor Report 2015-132 21 May 2016 Achieving greater levels of pay equality depends not only on men At Fresno, Los Angeles, and and women earning equal amounts in the same classifi cation, it Orange counties, more men also requires men and women to occupy equally both lower and than women occupied highly more highly compensated positions. Our analysis found—as shown compensated classifi cations. in Figure 4 on the following two pages for fi scal year 2014–15 at Fresno, Los Angeles, and Orange counties—no such equality because more men than women tended to occupy the highly compensated county classifi cations. Generally, we found that men outnumbered women in county job classifi cations for which the average total compensation was greater than 160,000, even though women accounted for between 54 percent and 60 percent of all full-time employees whose records we reviewed. However, the one exception was Santa Clara County, which had more women than men in the top three salary ranges. When we reviewed Santa Clara County’s underlying data to understand why it appeared so diff erent from the other three counties’ data, we found that it had a signifi cant number of highly compensated individuals employed in health care positions, such as physicians and nurses. Of the 411 women and 306 men in the highest salary range we reviewed—classifi cations with average total compensation of 240,000 or more—we determined that Santa Clara County had 74 female nurses of varying types and a higher number of female physicians (118) relative to male physicians (104). On the other hand, for the three other counties we visited, we found that the top salary ranges included many law enforcement and fi re positions, which were overwhelmingly fi lled by men. For example, for fi scal year 2014–15, Los Angeles County had 622 full-time fi re captains, and the average compensation for that position was nearly 245,200. Of those 622 individuals, only four were female. Similarly, at Orange County, in fi scal year 2014–15, 551 individuals worked full-time in the position of deputy sheriff II. Th is position had an average total compensation of more than 210,000 per year; however, only 49 of those 551 individuals were women. 22 California State Auditor Report 2015-132 May 2016 Figure 4 Distribution of Female and Male Employees Working in Low- to High-Paid Job Classifi cations Fiscal Year 2014–15 800 700 600 500 400 300 200 100 0 Job Classifications’ Average Total Compensation *tnuoC eeyolpmE Number of Female Employees Number of Male Employees Fresno County $0.01 to < 2 2 0 0 ,0 ,0 0 0 0 0 to < 4 4 0 0 ,0 ,0 0 0 0 0 to < 6 6 0 0 ,0 ,0 0 0 0 0 to < 8 8 0 0 , , 0 0 0 0 0 0 to < 1 1 0 0 0 0 ,0 ,0 0 0 0 0 to < 1 1 2 2 0 0 ,0 ,0 0 0 0 0 to < 1 1 4 4 0 0 ,0 ,0 0 0 0 0 to < 1 1 6 6 0 0 ,0 ,0 0 0 0 0 to < 1 1 8 8 0 0 , , 0 0 0 0 0 0 to < 2 2 0 0 0 0 ,0 ,0 0 0 0 0 to < 2 2 2 2 0 0 , , 0 0 0 0 0 0 to < 240, 2 0 4 0 0 0 ,000 or more 20,000 Los Angeles County 15,000 10,000 5,000 0 *tnuoC eeyolpmE $0.01 to < 2 2 0 0 , , 0 0 0 0 0 0 to < 4 4 0 0 , , 0 0 0 0 0 0 to < 6 6 0 0 , , 0 0 0 0 0 0 to < 8 0 8 , 0 0 , 0 0 0 0 0 to < 1 0 1 0 0 , 0 0 , 0 0 0 0 0 to < 1 2 1 0 2 , 0 0 , 0 0 0 0 0 to < 1 4 1 0 4 , 0 0 , 0 0 0 0 0 to < 1 6 1 0 6 , 0 0 , 0 0 0 0 0 to < 1 8 1 0 8 , 0 0 , 0 0 0 0 0 to < 2 0 2 0 0 , 0 0 , 0 0 0 0 0 to < 2 2 2 0 2 , 0 0 , 0 0 0 0 0 to < 240 2 ,0 4 0 0 0 ,000 or more Job Classifications’ Average Total Compensation California State Auditor Report 2015-132 23 May 2016 2,500 Orange County 2,000 1,500 1,000 500 0 *tnuoC eeyolpmE $0.01 to < 2 2 0 0 , , 0 0 0 0 0 0 to < 4 4 0 0 , , 0 0 0 0 0 0 to < 6 6 0 0 , , 0 0 0 0 0 0 to < 8 0 8 , 0 0 , 0 0 0 0 0 to < 1 0 1 0 0 , 0 0 , 0 0 0 0 0 to < 1 2 1 0 2 , 0 0 , 0 0 0 0 0 to < 1 4 1 0 4 , 0 0 , 0 0 0 0 0 to < 1 6 1 0 6 , 0 0 , 0 0 0 0 0 to < 1 8 1 0 8 , 0 0 , 0 0 0 0 0 to < 2 0 2 0 0 , 0 0 , 0 0 0 0 0 to < 2 2 2 0 2 , 0 0 , 0 0 0 0 0 to < 240 2 ,0 4 0 0 0 ,000 or more Job Classifications’ Average Total Compensation 1,500 Santa Clara County 1,200 900 600 300 0 *tnuoC eeyolpmE $0.01 to < 2 2 0 0 , , 0 0 0 0 0 0 to < 4 4 0 0 , , 0 0 0 0 0 0 to < 6 6 0 0 , , 0 0 0 0 0 0 to < 8 0 8 , 0 0 , 0 0 0 0 0 to < 1 0 1 0 0 , 0 0 , 0 0 0 0 0 to < 1 2 1 0 2 , 0 0 , 0 0 0 0 0 to < 1 4 1 0 4 , 0 0 , 0 0 0 0 0 to < 1 6 1 0 6 , 0 0 , 0 0 0 0 0 to < 1 8 1 0 8 , 0 0 , 0 0 0 0 0 to < 2 0 2 0 0 , 0 0 , 0 0 0 0 0 to < 2 2 2 0 2 , 0 0 , 0 0 0 0 0 to < 240 2 ,0 4 0 0 0 ,000 or more Job Classifications’ Average Total Compensation Sources: California State Auditor’s analysis of personnel and payroll data obtained from Fresno County’s PeopleSoft Human Capital Management System, Los Angeles County’s eHR Personnel and Timekeeping System, Orange County’s County-wide Accounting and Personnel System, and Santa Clara County’s Human Resource Payroll System. Notes: Average total compensation includes pay and benefi ts tracked in the county’s personnel and payroll system, such as regular pay, overtime pay, and employer contributions to health benefi ts and retirement. This fi gure includes only full-time employees who were active in a single job classifi cation for the entire fi scal year. We limited our analysis to that group of employees to mitigate the eff ects of midyear promotions, transfers, or other actions that can infl uence salary amounts and pay diff erences. However, our analysis for Los Angeles County may include some employees who took a leave of absence during the fi scal year because the county does not remove its employees from active status in its personnel and payroll system when they take a leave of absence. * The employee counts represent individuals in jobs in which the average total compensation falls within the salary ranges shown. For example, 17 Orange County employees (regardless of sex) worked as cashiers for the entire fi scal year and the average total compensation for all 17 employees was nearly $66,000, with the lowest paid employee earning $55,000 and the highest more than $80,000. All 17 employees still appear within the $60,000 to < $80,000 range because the total average compensation for a cashier was nearly $66,000. 24 California State Auditor Report 2015-132 May 2016 In Specifi c Classifi cations or Groups of Classifi cations With Similar Compensation, Male Employees Often Make More Than Their Female Counterparts We focused our review on specifi c job classifi cations or groups of job classifi cations with similar compensation and found that men often earned more than women on average. We saw 78 classifi cations across the four counties that had disparity levels of 20 percent or greater. In 56 of these classifi cations, men earned more than women. In 22 of the 78 classifi cations, women had higher salaries. Th ose 78 classifi cations accounted for roughly 4 percent of all job classifi cations in the four counties and less than 2 percent of the county employees included in our analysis. For the fi ve classifi cations with both high disparity levels and a signifi cant number of employees (or more than 20), two of the fi ve were in Los Angeles County and pertained to fi re-fi ghting positions. Th ese two positions were signifi cantly diff erent from the remaining 76 classifi cations as they each had more than 600 male employees and six or fewer female employees. Th e other three classifi cations were in Santa Clara County and had no such commonality because they pertained to stock clerks, clinical nurses, and aides to the county’s board of supervisors. Table 2 provides the overall distribution of county job classifi cations by level of gender-based Men earned more in pay disparity. Th e table shows more classifi cations in which men 843 classifi cations, while women earned more than women: men earned more in 843 classifi cations, earned more in 492 classifi cations. while women earned more in 492 classifi cations. However, when we looked at the total population of employees making up the 1,855 classifi cations shown in Table 2, we found that for 71 percent of the employees, the diff erence in pay between men and women in the same position varied by no more than 5 percent. We further examined how often county job classifi cations had either men or women earning higher average total compensation than did employees of the opposite gender. When analyzing each county’s pay data, we grouped classifi cations falling into certain salary ranges based on the earnings of the individuals holding those positions. We arranged each classifi cation—and its male and female employees—into one of 13 diff erent salary ranges (or strata) based on each classifi cation’s average total compensation. We found that roughly 50 percent to 60 percent of all county classifi cations had men as the higher-earning gender. Table 3 on page 26 lists, by pay strata, how many county classifi cations had either men or women earning higher average total compensation than members of the opposite gender earned. For example, Table 3 demonstrates that at Fresno County men earned more than women in 12 of the 17 classifi cations in which the average total compensation was 240,000 or greater in fi scal year 2014–15. California State Auditor Report 2015-132 25 May 2016 Table 2 Numbers of County Job Classifi cations Grouped by Level of Pay Disparity Fiscal Year 2014–15 COUNTY TOTAL WITH DISPARITY GREATER THAN LEVEL OF PAY DISPARITY BY GENDER FRESNO LOS ANGELES ORANGE SANTA CLARA TOTAL 20 PERCENT Number of job classifi cations in which >30% 0 7 1 4 12 women earn more by these percentages: 22 >20–30% 1 5 2 2 10 >10–20% 10 61 8 23 102 >5–10% 13 91 19 37 160 >2–5% 20 116 33 39 208 Subtotal of job classifi cations in which women earn more than men 492 Number of job classifi cations with pay disparities of 50 269 105 96 520 2% or less for either gender Number of job classifi cations in which >30% 0 15 0 6 21 men earn more by these percentages: 56 >20–30% 3 25 1 6 35 >10–20% 15 102 20 37 174 >5–10% 16 161 47 59 283 >2–5% 27 173 61 69 330 Subtotal of job classifi cations in which men earn more than women 843 Total job classifi cations with both genders 155 1,025 297 378 1,855 Sources: California State Auditor’s analysis of personnel and payroll data obtained from Fresno County’s PeopleSoft Human Capital Management System, Los Angeles County’s eHR Personnel and Timekeeping System, Orange County’s County-wide Accounting and Personnel System, and Santa Clara County’s Human Resource Payroll System. Notes: The analysis shown above is based on average total compensation, which includes pay and benefi ts tracked in the counties’ personnel and payroll system, such as regular pay, overtime pay, and employer contributions to health benefi ts and retirement. This table includes only full-time employees who were active in a single job classifi cation for the entire fi scal year. We limited our analysis to that group of employees to mitigate the eff ects of midyear promotions, transfers, or other actions that can infl uence salary amounts and pay diff erences. However, our analysis for Los Angeles County may include some employees who took a leave of absence during the fi scal year because the county does not remove its employees from active status in its personnel and payroll system when they take a leave of absence. After comparing the results shown previously in Figure 4—illustrating the distribution of female employees across diff erent compensation levels—with Table 3, we see that women often occupy classifi cations at lower levels of compensation, yet men still have the higher average total compensation in more of those same classifi cations. For example, Table 3 shows that Los Angeles County has more classifi cations in which men earn more than women across all pay strata. When looking specifi cally at classifi cations in Los Angeles County with average total compensation between 80,000 and less than 100,000, men earned higher average total compensation in 201, or 64 percent, of those classifi cations, while women earned more in 114, or 36 percent, of the classifi cations. However, the data for Los Angeles County show that 8,609 women, or 64 percent of 13,506 employees, fall under those same classifi cations compared to 4,897 men, or 36 percent. Similarly, in Fresno County, men earned more than women in 41, or 58 percent, of the 71 classifi cations, with average total compensation ranging between 80,000 and less than 100,000; however, 640, or 65 percent, of the 987 full-time employees in those same classifi cations were women. Finally, in Santa Clara County, where there were more women than men in nearly all salary strata and where women 26 California State Auditor Report 2015-132 May 2016 represented 60 percent of the full-time workforce we reviewed, men earned the higher average total compensation in 499, or 52 percent, of the 960 diff erent county classifi cations. When looking at groups of job classifi cations that have low to high levels of total average total compensation, we also found that the diff erences in compensation between men and women ranged from less than 1 percent to nearly 9 percent. Moreover, we found that the diff erence in pay between men and women was often less than 4 percent, as shown in Table 4. For example, in job classifi cations with total average compensation of 240,000 or more at Orange County, men’s average pay was 268,122, while women in the same classifi cations earned, on average, 265,165—a diff erence of roughly 1.1 percent. After comparing average total compensation of both men and women in various classifi cations spanning 13 diff erent compensation ranges at four diff erent counties—52 diff erent compensation ranges in total—we identifi ed three salary ranges in which the diff erence in average pay between male and female employees exceeded 4 percent. Table 3 Number of Job Classifi cations in Which One Gender Outearned the Other Fiscal Year 2014–15 NUMBER OF JOB CLASSIFICATIONS IN WHICH FEMALE EMPLOYEES OR MALE EMPLOYEES HAD HIGHER AVERAGE TOTAL COMPENSATION FRESNO COUNTY LOS ANGELES COUNTY ORANGE COUNTY SANTA CLARA COUNTY JOB CLASSIFICATIONS WITH AVERAGE TOTAL COMPENSATION BETWEEN FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE 1 $240,000 or more 5 12 89 200 3 27 49 46 2 220,000 to < 240,000 6 3 26 29 3 5 22 26 3 200,000 to < 220,000 4 7 28 37 1 2 23 24 4 180,000 to < 200,000 6 10 27 51 3 3 39 44 5 160,000 to < 180,000 9 15 58 65 3 11 52 60 6 140,000 to < 160,000 16 30 67 106 11 21 57 87 7 120,000 to < 140,000 25 33 95 137 20 67 53 59 8 100,000 to < 120,000 22 30 111 184 45 68 83 72 9 80,000 to < 100,000 30 41 114 201 60 71 71 67 10 60,000 to < 80,000 41 32 124 137 59 39 12 14 11 40,000 to < 60,000 13 18 22 31 10 8 0 0 12 20,000 to < 40,000 0 0 0 1 0 0 0 0 13 0.01 to < 20,000 0 0 0 1 0 0 0 0 Totals 177 231 761 1,180 218 322 461 499 Sources: California State Auditor’s analysis of personnel and payroll data obtained from Fresno County’s PeopleSoft Human Capital Management System, Los Angeles County’s eHR Personnel and Timekeeping System, Orange County’s County-wide Accounting and Personnel System, and Santa Clara County’s Human Resource Payroll System. Notes: Average total compensation includes pay and benefi ts tracked in the county’s personnel and payroll system, such as regular pay, overtime pay, and employer contributions to health benefi ts and retirement. This table includes only full-time employees who were active in a single job classifi cation for the entire fi scal year. We limited our analysis to that group of employees to mitigate the eff ects of midyear promotions, transfers, or other actions that can infl uence salary amounts and pay diff erences. However, our analysis for Los Angeles County may include some employees who took a leave of absence during the fi scal year because the county does not remove its employees from active status in its personnel and payroll system when they take a leave of absence. If a job classifi cation only has one gender, we count that gender as earning more.  = In most positions in this compensation range, women earned more, on average, than men earned.  = In most positions in this compensation range, men earned more, on average, than women earned. California State Auditor Report 2015-132 27 May 2016 Table 4 Average Total Compensation for Female and Male Employees Fiscal Year 2014–15 FRESNO COUNTY LOS ANGELES COUNTY JOB CLASSIFICATIONS AVERAGE TOTAL COMPENSATION PERCENTAGE DIFFERENCE AVERAGE TOTAL COMPENSATION PERCENTAGE DIFFERENCE WITH AVERAGE TOTAL IN AVERAGE TOTAL IN AVERAGE TOTAL COMPENSATION BETWEEN FEMALE MALE COMPENSATION FEMALE MALE COMPENSATION 1 $240,000 or more $304,389 $292,430 4.1% $286,633 $288,685 0.7% 2 220,000 to < 240,000 225,632 230,597 2.2 228,689 236,588 3.5 3 200,000 to < 220,000 206,772 210,585 1.8 203,683 210,561 3.4 4 180,000 to < 200,000 184,816 189,213 2.4 184,433 183,886 0.3 5 160,000 to < 180,000 168,077 173,649 3.3 169,192 170,912 1.0 6 140,000 to < 160,000 146,705 148,342 1.1 146,652 159,513 8.8 7 120,000 to < 140,000 127,885 130,128 1.8 128,586 128,785 0.2 8 100,000 to < 120,000 110,148 110,596 0.4 112,904 114,811 1.7 9 80,000 to < 100,000 87,797 87,606 0.2 88,794 91,888 3.5 10 60,000 to < 80,000 67,659 67,903 0.4 69,223 69,873 0.9 11 40,000 to < 60,000 51,834 52,586 1.5 55,470 55,770 0.5 12 20,000 to < 40,000 0 0 NA* 0 32,728 NA† 13 0.01 to < 20,000 0 0 NA* 0 7,991 NA† ORANGE COUNTY SANTA CLARA COUNTY JOB CLASSIFICATIONS AVERAGE TOTAL COMPENSATION PERCENTAGE DIFFERENCE AVERAGE TOTAL COMPENSATION PERCENTAGE DIFFERENCE WITH AVERAGE TOTAL IN AVERAGE TOTAL IN AVERAGE TOTAL COMPENSATION BETWEEN FEMALE MALE COMPENSATION FEMALE MALE COMPENSATION 1 $240,000 or more $265,165 $268,122 1.1% $304,051 $330,172 8.6% 2 220,000 to < 240,000 232,336 237,610 2.3 227,252 228,087 0.4 3 200,000 to < 220,000 207,684 210,621 1.4 208,823 213,317 2.2 4 180,000 to < 200,000 193,647 193,341 0.2 187,717 188,790 0.6 5 160,000 to < 180,000 164,884 166,758 1.1 166,024 171,332 3.2 6 140,000 to < 160,000 149,038 151,131 1.4 147,206 151,779 3.1 7 120,000 to < 140,000 130,189 132,470 1.8 128,848 130,219 1.1 8 100,000 to < 120,000 107,737 109,215 1.4 107,915 108,097 0.2 9 80,000 to < 100,000 89,371 90,641 1.4 90,739 89,416 1.5 10 60,000 to < 80,000 68,688 67,597 1.6 77,218 75,637 2.1 11 40,000 to < 60,000 58,822 58,725 0.2 0 0 NA* 12 20,000 to < 40,000 0 0 NA* 0 0 NA* 13 0.01 to < 20,000 0 0 NA* 0 0 NA* Sources: California State Auditor’s analysis of personnel and payroll data obtained from Fresno County’s PeopleSoft Human Capital Management System, Los Angeles County’s eHR Personnel and Timekeeping System, Orange County’s County-wide Accounting and Personnel System, and Santa Clara County’s Human Resource Payroll System. Notes: Average total compensation includes pay and benefi ts tracked in the county’s personnel and payroll system, such as regular pay, overtime pay, and employer contributions to health benefi ts and retirement. This table includes only full-time employees who were active in a single job classifi cation for the entire fi scal year. We limited our analysis to that group of employees to mitigate the eff ects of midyear promotions, transfers, or other actions that can infl uence salary amounts and pay diff erences. However, our analysis for Los Angeles County may include some employees who took a leave of absence during the fi scal year because the county does not remove its employees from active status in its personnel and payroll system when they take a leave of absence.  = Women earned more, on average, than men did.  = Men earned more, on average, than women did. * Not applicable because there were no female or male county employees in positions averaging this amount of total compensation. † Not applicable because there were no female county employees in positions averaging this amount of total compensation. 28 California State Auditor Report 2015-132 May 2016 Signifi cant Pay Disparities Within Job Classifi cations Often Occurred Because of County Workers’ Full-Time Versus Part-Time Employment Although we found no evidence of gender discrimination pertaining to employee pay, our review of 161 county employees working in 46 job classifi cations revealed a multitude of factors that can result in diff erences in pay among employees working within the same job classifi cation. Th ese factors included the following: the starting salary for each employee in his or her current county job, which can often be infl uenced by prior pay in a previous county job; the length of time spent by the employee in his or her current job; and whether the employee worked full-time or part-time during the entire fi scal year. Our review of 46 job classifi cations found that the disparities in pay were often infl uenced by a combination of these factors, while part-time versus full-time employment was the single most signifi cant factor.8 To understand why diff erences in salary exist and to determine which, if any, of the above factors contribute the most to pay disparities between men and women, we examined groups of employees within the same job classifi cation and county department (regardless of full-time status) from fi scal year 2014–15. Our review focused on 46 job classifi cations that had at least 20 or more employees and that had at least fi ve from each gender. Th e classifi cations we selected for review included ones where the disparity in pay varied from as little as 2 percent to as much as 75 percent, with many displaying variances of 20 percent or more. We determined that the most However, upon closer review, we determined that the most signifi cant reason for high signifi cant reason for these high pay disparities within the job pay disparities within the job classifi cations resulted from employees who were either working classifi cations resulted from part time or less than a full year within the classifi cation. For employees who were either working example, we saw one instance where a female deputy public part time or less than a full year defender I’s annual salary was roughly 26,000 less than her within the classifi cation. male counterpart’s salary, despite having similar time on the job; however, the diff erence was caused by the female employee’s decision to take six months off without pay. To compensate for employees who either did not work an entire year or worked only part time, we recalculated the pay disparity in each of the 46 job classifi cations based on employees who worked full-time in each classifi cation during fi scal year 2014–15 and earned at least the expected minimum annual salary. Following this recalculation, the pay disparities often dropped to less than 2 percent, with no single classifi cation having a disparity of over 10 percent. 8 As a result of this discovery, we adjusted our aggregate analysis of pay disparities, discussed previously, to include only full-time employees who were active in a single job classifi cation for the entire fi scal year. California State Auditor Report 2015-132 29 May 2016 With pay disparities between the genders often occurring at 2 percent or less, we next attempted to determine what other factors signifi cantly contributed to the remaining pay disparities by reviewing the salary earnings for 161 employees in these 46 job classifi cations. We primarily selected employees who earned at least the minimum salary amounts for their classifi cations and identifi ed employee records for review based on attributes that could be indicative of inappropriate pay disparities, such as employees who had worked within a classifi cation for similar amounts of time but earned diff erent amounts of regular pay, and employees who worked within a classifi cation for a short time but earned pay that was beyond the normal hiring rate. Th e results of our review found that of the remaining factors, no single factor contributed the most to the remaining pay disparities. Instead, we observed certain county pay practices that can, but do Certain county pay practices not always, lead to one employee earning more than another in a can, but do not always, lead to particular job classifi cation. For example, we frequently observed one employee earning more county employees obtaining a starting salary that was above than another in a particular the normal recruiting rate—occurring for 106, or 66 percent, of the job classifi cation. 161 employees whose records we reviewed—because the employee had transferred or promoted from another county job. As discussed later in the report, counties have these rules to ensure their employees do not take a pay cut when they transfer or promote into a higher position. For example, in Los Angeles County, we reviewed the salary placements for two employees within the senior board specialist classifi cation. We noted a male and female employee who promoted into this classifi cation on the same day, but the male employee initially earned a monthly salary of 4,773, whereas the female employee initially earned a monthly salary of 4,521— 5.3 percent less. Th e male employee’s new monthly salary of 4,773 was based on his previous salary of 4,521 per month in his previous county job, whereas the female employee had previously earned 4,282 per month in her last job with the county. We calculated that the male employee and female employee in our example each earned a 5.6 percent increase as a result of their promotions, and we determined that this raise was consistent with the county’s policies for promotions at the time. Although the county’s application of the policy was consistent with its rules, it yielded diff erent salary levels in this instance based on the employees’ individual salary histories as opposed to their gender. We also saw that county employees who changed jobs within the county did not always receive starting pay that was higher than the amounts earned by new county employees. For example, Santa Clara County hired a new employee for an attorney position at the third salary step because of his previous experience as a trial attorney, while an existing county employee promoted into the same job classifi cation at the lower fi rst salary step. 30 California State Auditor Report 2015-132 May 2016 Aside from considering prior pay, we also frequently observed instances where the county set salaries for new employees at the minimum salary step (or hiring rate), occurring in 28 of the 48 new When we compared employees employees we reviewed. Th us, when we compared employees who entered a classifi cation as a who entered a classifi cation as a new hire to those who entered new hire against those who entered due to transfers or promotions, the new employees, at times, due to transfers or promotions, the earned less. For example, Los Angeles County hired a new county new employees at times earned less. employee as a welfare fraud investigator trainee at the fi rst salary step and at the same time hired three others—each of whom had previously held other county jobs—at higher salary rates when compared to the new employee. For 11 of the 48 new employees, we also noted that counties established starting pay above the normal hiring rate in order to address recruiting challenges such as employment shortages within a particular classifi cation. For example, Los Angeles County’s data show that the diff erence between men’s pay and women’s pay in the deputy public defender I position was nearly 30 percent, or less than 1 percent if we exclude employees who worked less than the entire fi scal year. We selected a male and female deputy public defender I to compare because the male employee had less time served in the position, yet earned more than his female counterpart in fi scal year 2014–15. However, upon closer review, we determined that, at the time when the male employee was hired in June 2014, the Los Angeles County Chief Executive Offi cer (chief executive offi cer) had authorized an adjusted minimum rate for the deputy public defender I position at step 6—or 6,018 per month—in order to assist the Public Defender’s Offi ce’s recruitment and retention eff orts. However, when the female employee was hired, earlier in February 2014, this adjusted hiring rate was not in eff ect and so the hiring rate at that time was only 5,255 per month. Th e diff erence in these two employees’ salaries did not depend on their gender; rather, the diff erent dates on which they were hired created the disparity. We also noted that the chief executive offi cer’s memo required that all employees earning below the step 6 salary rate of 6,018 per month be advanced, and we saw evidence that the female deputy public defender I’s salary was adjusted retroactively. Counties are also able to pay new county employees at a higher salary step for those employees who exceed minimum qualifi cations and we found that counties placed 9 of 48 new employees (three men and six women) at a salary level that was beyond the minimum hiring rate. For example, we selected the clinical social worker I classifi cation in Orange County and compared two employees with similar years of service in the classifi cation, noting that the female employee earned over 10,000 more during fi scal year 2014–15 than the amount earned by the male employee during the same period. However, when we reviewed the salary information, we found that the female employee was hired at a step 7 salary rate because of her two years of previous experience California State Auditor Report 2015-132 31 May 2016 in the same position as a contractor with the county. On the other hand, the male employee promoted into the same job classifi cation at the minimum salary rate, step 1 from another county position. Orange County’s policies allow its hiring mangers to request special salary step placement for an employee whose previous experience enables him or her to make a greater contribution to the county. Th e application of the policy is at the discretion of the hiring manager based on his or her assessment of the new employee’s qualifi cations. Finally, for seven of the 161 employee records we reviewed, we determined that while the job classifi cation of physician was the same, each employee had diff erent medical specialties or other circumstances that made them diffi cult to compare. For example, we reviewed two physicians (a man and a woman) who each worked full-time and were hired during the same month and year into the same medical department at the Santa Clara Valley Medical Center, but they earned diff erent rates of pay, with the male physician earning 149.04 per hour, or roughly 310,000 annually, and the female physician earning 13 percent less, or 129.81 per hour, a rate that totals nearly 270,000 annually. However, the male physician specialized in gastroenterology, and the female physician specialized in cardiology, making these two positions diffi cult to compare. In general, the smaller remaining pay disparities we identifi ed were the result of multiple pay practices in the counties that—taken together—cause employees, regardless of gender, to earn diff erent amounts. Counties Applied Some Aspects of Their Hiring and Promotions Processes Equally, but Their Rationales for Selecting Successful Candidates Remain Unclear As part of our audit, we examined whether the four counties we visited consistently followed key hiring and promotional rules for both male and female candidates. We examined 240 diff erent hiring or promotional decisions (60 for each county) over a two-year period covering fi scal years 2013–14 and 2014–15. We evaluated in particular whether the counties engaged in a competitive recruitment process, whether the successful candidate achieved suffi ciently high scores on competitive hiring exams, whether both male and female candidates were successful on Although there was suffi cient these exams, and whether both men and women were contacted documentation of the process for hiring interviews. However, although there was suffi cient leading up to hiring decisions, documentation of the process leading up to the hiring decisions, three of four counties did not always three of four counties did not always document why they ultimately document why they ultimately chose chose certain candidates over others. certain candidates over others. 32 California State Auditor Report 2015-132 May 2016 For county employees appointed to classifi ed positions or for those governed by counties’ merit system rules (as described in the Introduction), all four counties treated male and female candidates equally during the parts of the hiring and promotions we reviewed.9 Counties frequently followed competitive hiring practices to fi ll vacant classifi ed positions, placed more women than men on certifi ed eligibility lists, and contacted more women than men for hiring interviews. However, the counties often did not maintain documentation explaining their rationales for choosing particular candidates over others who were also qualifi ed for the positions. According to the county policies and practices we observed in Fresno, Los Angeles, and Orange counties, county management does not expect documentation of such decision making. As a result, for many of the hiring decisions we reviewed at these counties, the rationale for selecting a particular candidate over others who competed for the positions was unclear and hindered a more thorough evaluation of whether employers were objectively Employers are not required under selecting men and women based on job-related criteria. In contrast, federal or state law to document why the policies and practices at Santa Clara County do require such they choose particular candidates documentation and provide a model or best practice that, in our over others for employment, and view, should be used by other counties. Employers are not required the State’s regulations governing under federal or state law to document why they choose particular the counties’ merit-based candidates over others for employment, and the State’s regulations personnel systems do not cover this governing the counties’ merit-based personnel systems do not cover important topic. this important topic. Th e fi rst element of the hiring and promotions process we evaluated at each of the four counties was the extent to which they engaged in a competitive recruitment process to fi ll their vacancies. All four counties had the general expectation in their personnel rules that competition would be the standard process for fi lling classifi ed positions. Of the 240 hiring and promotional decisions we collectively reviewed at the four counties, 195 decisions pertained to the counties fi lling a classifi ed position. During our review, we found that the counties engaged in a competitive hiring process for 154, or 79 percent, of those 195 classifi ed hiring decisions, such as by issuing hiring announcements seeking qualifi ed candidates and describing the counties’ evaluation methods for selecting candidates. Th e announcements clearly provided applicants with an understanding of the minimum requirements for the position, and, at times, any other desirable qualifi cations that the county was looking for when attempting to fi ll the vacant position. All of the advertisements we reviewed also provided potential applicants 9 Merit system rules are personnel standards that describe how a county will recruit, select, promote, and compensate employees for positions that have permanent status. These rules are intended to ensure that the county bases employment decisions on the employee’s relative ability, knowledge, and skill as opposed to his or her personal relationships or political connections. California State Auditor Report 2015-132 33 May 2016 with additional information about the hiring process, such as the application fi ling periods, the ways to apply, and the times and places of examination, when necessary. For the remaining 41 of 195 classifi ed positions for which the county did not follow a competitive process, we concluded that the counties had made decisions to forgo competition that were consistent with their local policies and procedures. For example, Fresno, Orange, and Santa Clara counties generally had policies that were variations on the idea that competition for certain classifi ed positions was not needed for promotions that are within a series of related classifi cations (or positions), such as promotions from a position as human resources assistant I to a human resources assistant II. Th is practice was the most common reason for the lack of competition for classifi ed positions, occurring in 33 of the 41 instances in which competition did not take place. In these cases, the three counties generally determined that the employee in the lower-level position had attained the skills necessary for advancement to the next level and promoted that individual.10 For example, in Orange County, we reviewed a promotional decision for an employee moving from social worker I to social worker II. Orange County determined that an employee had demonstrated suffi cient skill and ability to warrant promotion to the next classifi cation within the “social worker” series, and our review of the employee’s fi le noted that the employee met the minimum qualifi cations six months experience as a social worker I with Orange County, and the employee’s supervisor recommended her for the social worker II position. In the remaining eight of 41 cases in which competition did not occur for a classifi ed position, the counties’ decisions still appeared appropriate as they pertained to instances when employees were temporarily promoted to a position in order to provide extra help, or when the appointment was the result of various other personnel decisions, such as the lateral transfer of an existing employee between positions or the rehiring of a former employee who was previously laid off , among other reasons. Regardless, we did not see We did not fi nd any evidence any evidence that the decision to avoid competition disadvantaged that avoiding a competitive female employees. In fact, for the 41 instances in which counties recruitment process disadvantaged did not follow competitive processes for classifi ed positions, female female employees. employees were appointed to the positions in 30 instances, or for 73 percent of the vacancies. 10 In the fourth county, Los Angeles, hiring managers always fi lled the classifi ed positions we reviewed through a competitive recruitment process. 34 California State Auditor Report 2015-132 May 2016 For each of the 154 competitive hiring or promotional decisions we reviewed for classifi ed employees, we also examined whether the successful candidate had passed screening exams to warrant further advancement in the county’s hiring process. In addition, we examined how many men versus women successfully passed these screening exams for placement on certifi ed eligibility lists and whether we saw evidence that roughly equal numbers from both male and female employees were being contacted for hiring interviews. According to our review, all 154 candidates who were ultimately successful in securing county employment had passed the counties’ initial screening exams. For example, according to Santa Clara County’s merit system rules, candidates must receive a cumulative score of 70 percent to be considered potentially competitive for a position. Continuing the example, the candidate we selected for review not only passed the accounting assistant examination but also attained one of the highest scores. His high examination score placed him on the eligible list and qualifi ed him for a fi nal interview. In addition to our observation that the 154 winning candidates passed their screening exams, Table 5 shows that, regardless of who ultimately obtained employment, women were often successful at both getting on certifi ed eligibility lists and receiving hiring interviews. In fact, the four counties placed more women than men, on average, on these lists and more often interviewed female candidates for the hiring decisions we reviewed. Th e results shown in Table 5 seem largely consistent with the overall demographics of the employees at the four counties included in our audit. Based on county records, women represent between roughly 54 and 60 percent of each county’s workforce. Table 5 Average Numbers of Male and Female Candidates Whose Files We Reviewed and Whom Counties Placed on Certifi ed Eligibility Lists and Interviewed for Classifi ed Positions FRESNO COUNTY LOS ANGELES COUNTY ORANGE COUNTY SANTA CLARA COUNTY AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE NUMBER PERCENTAGE NUMBER PERCENTAGE NUMBER PERCENTAGE NUMBER PERCENTAGE Candidates on counties’ certifi ed eligibility lists for classifi ed positions Female 21 65% 36 55% 30 64% 7 44% Male 9 29 30 45 16 34 6 38 Total of averages* 32 94% 66 100% 46 98% 16 82% Candidates who received interviews for classifi ed positions† Female 13 60% NA† NA† 10 58% 5 50% Male 7 33 NA† NA† 7 41 5 50 Total of averages* 22 93% NA† NA† 17 99% 10 100% Source: California State Auditor’s review of Fresno, Los Angeles, Orange, and Santa Clara counties’ hiring records for 154 competitive hiring and promotional decisions for classifi ed employees. * The average number and average percentage may not add to the correct number or to 100 percent because we could not determine candidates’ sex based on written records. † Not all counties are required to maintain data regarding the number of candidates interviewed for a particular job classifi cation, and Los Angeles County generally did not maintain such records for the competitive hiring and promotional decisions related to the 51 classifi ed positions we reviewed. California State Auditor Report 2015-132 35 May 2016 Finally, for those 154 competitive hiring decisions, we attempted to review documents explaining each county’s rationale for choosing the successful candidate at the time the hiring or promotional decision was made. Understanding each county’s rationale is critical, in our view, to evaluating whether county employers are treating men and women equally by basing selection decisions on objective and job-related criteria. Unfortunately, county County offi cials could only provide offi cials could only provide evidence explaining why they chose evidence explaining why they the successful candidates, or, alternatively, why they did not select chose the successful candidates, other candidates in just 39, or 25 percent, of the 154 competitive or, alternatively, why they did not hiring or promotional decisions we reviewed. For those hiring select other candidates, in just decisions that included a rationale, Santa Clara was the county that 39 of the 154 competitive hiring or most often documented why certain candidates were selected over promotional decisions we reviewed. others, doing so in all 26 of the competitive hiring and promotional decisions we reviewed. Santa Clara County’s documentation often notes the defi ciencies of the unsuccessful candidates. For example, the documentation included a statement that an applicant for an accountant assistant position lacked experience using SAP accounts payable software. Santa Clara County’s Human Resources Practices Manual instructs hiring managers that “[they] must be able to show appropriate justifi cation for all hiring decisions,” further requiring that managers “be certain that the candidate selected is objectively the most qualifi ed, or at least equally qualifi ed according to the criteria set.” Perhaps more importantly, Santa Clara County’s manual provides examples of appropriate and inappropriate rationales regarding candidate selection. Most of the “appropriate” rationales focus on ways to explain why a candidate was not chosen, such as by documenting the following: “Not selected, qualifi cations were good, but did not have direct experience in a medical setting, while other applicants did.” Examples of inappropriate rationales cited in Santa Clara County’s manual include such statements as the following: “Not selected, not as qualifi ed as candidate selected.” However, not all counties have the same expectations as those of Santa Clara County. We found that Los Angeles County’s merit system rules do not establish a requirement that hiring managers document their rationale for selecting a particular individual over other eligible candidates from a certifi ed eligibility list. We saw that the hiring managers in individual county departments often did not maintain such records, and as a result, we were unable to evaluate the hiring departments’ hiring rationales for 41 of the 51 hiring decisions we reviewed. When providing an explanation for the limited documentation, one hiring manager in the county’s Department of Public Social Services indicated that performing selection interviews and documenting the results and rationale behind the hiring decision are not required under the county’s hiring rules. Other managers within Los Angeles County provided similar explanations. For example, according to the human resources manager at the Los Angeles County’s registrar 36 California State Auditor Report 2015-132 May 2016 and clerk’s offi ce, civil service rules do not require the hiring authority to interview a specifi c number of candidates, and county hiring managers may appoint any reachable candidate without going through a formal selection interview process. Explaining her position further, this manager stated that all candidates who can be contacted for hiring interviews are all equally eligible for appointment under the county’s hiring rules. In our view, this makes proper documentation even more important because there should be a valid reason for selecting the successful candidate. Fresno County’s personnel rules require department heads to maintain records of employment selections, including comments relative to the qualifi cations of the eligible candidate selected, but they do not require departments to document the justifi cation for why one candidate was selected over another. When we reviewed the hiring and promotional fi les at Fresno County, available documentation for the selection process was often limited to hard copy interview notes and information contained in an electronic application system called NeoGov. For eligible candidates who received interviews, the NeoGov system provided such limited information as “rejected–not selected” without further information explaining the reasons for the rejections. Orange County’s recruitment rules and policies similarly do not establish an expectation that hiring managers document why they chose a particular male or female candidate over others from the eligible candidate pool. As in Fresno County, Orange County also uses the NeoGov system, and its records identify who was off ered the position but not the reason why—or why the hiring manager did not choose other candidates who were interviewed. Even though neither federal nor state employment law explicitly requires employers to document why they choose particular candidates over others when making employment decisions, if challenged, employers must successfully demonstrate that the decision to hire an individual (or not to hire another) was not the result of a discriminatory employment practice. We believe Santa Clara County’s policies establish a best practice to limit We believe that it is reasonable to counties’ risk against such claims. We also believe that it is expect that hiring managers have reasonable to expect that hiring managers have some legitimate some legitimate basis for selecting basis for selecting candidates and that managers document these candidates and that managers decisions, which could be used to defend a hiring decision if document these decisions, which challenged. Although county offi cials may claim that all candidates could be used to defend a hiring who can be interviewed from certifi ed eligibility lists are “equal” in decision if challenged. terms of their qualifi cations, those male and female candidates who are not selected may disagree. Ultimately, documentation needs to show a nondiscriminatory basis for all candidate selections. California State Auditor Report 2015-132 37 May 2016 Finally, our audit also reviewed 45 unclassifi ed positions, 39 of which were executive-level appointments to positions that received salaries (not including benefi ts or other forms of compensation) of at least 120,000 per year. Th ese unclassifi ed positions were exempt from the merit system rules that we describe earlier. For example, the newly elected Fresno County district attorney appointed an assistant district attorney. Th is at-will employee was a former chief deputy district attorney and did not undergo the same competitive process generally required for the county’s classifi ed employees before appointment—nor was she required to do so. Unlike classifi ed employees, at-will employees are not entitled to civil service status, and they may be terminated at the discretion of the employer at any time, so long as it is for a lawful reason. As in the case of selection for classifi ed positions, selection of candidates to fi ll unclassifi ed positions usually does not require the counties to justify these hiring decisions. Nevertheless, we found that counties did document the We were prevented from reasons for selecting certain candidates—or for not choosing other determining whether the counties candidates—in three of 45 unclassifi ed selections we reviewed. were objectively selecting men and However, because of the lack of documentation for the hiring women based on job-related criteria decisions for most of those at-will positions, we were prevented for unclassifi ed positions because from reviewing the number of male and female candidates of the lack of documentation for the interviewed, or determining whether the counties were objectively hiring decisions. selecting men and women based on job-related criteria. Counties’ Salary-Setting Decisions Complied With Their Policies, but Factors Other Than Employees’ Abilities Infl uenced Salary Levels One of our audit objectives was to evaluate whether the four counties we visited complied with laws and local policies regarding the salary-setting process. Although neither federal nor state law expressly mandates how employers should set employee salaries, each county has established a set of rules governing how employee pay is determined, and we observed that the four counties follow those local rules. For new employees appointed to classifi cations with incremental salary steps within a salary range, the counties we reviewed often had rules requiring that employees be paid the minimum rate unless an employee possessed unusual or unique qualifi cations. County hiring managers decide when to request a higher salary for a new employee whose qualifi cations are beyond the minimum required for the position. In other cases, salary determinations can be the result of undocumented negotiations between the employee and the county that result in the employee receiving a pay amount that is within a broad salary range. 38 California State Auditor Report 2015-132 May 2016 For each of the salary-setting decisions we reviewed for 240 employees (108 men and 132 women), we identifi ed each employee’s salary amount, evaluated whether the salary was set at or above the minimum amount established for the particular position, and determined the reasons—to the extent possible—why any employee was paid more than the minimum salary for the classifi cation. We also looked for evidence of whether employees of one gender or the other more often received pay above the minimum rate. A county’s decision regarding Th e results of our review found that a county’s decision regarding whether to off er a higher salary whether to off er a higher salary amount to an employee was amount to an employee was based on a variety of factors that may have nothing to do with the based on a variety of factors that employee’s skills or abilities. Such considerations that are external may have nothing to do with the to the candidate can include the following: the number of qualifi ed employee’s skills or abilities. candidates in the labor market, whether the county has strictly enforced policies of only hiring new county employees at the minimum salary rate, and whether the salary-setting decision is for an existing county employee who is transferring or promoting into a new county classifi cation, in which case the new salary amount can be infl uenced by what he or she earned in the prior county classifi cation. Th e data from our selection showed that women were more likely than men to begin county employment at the minimum salary rates for their positions (79 percent of women versus 63 percent for men). Nevertheless, both genders benefi tted roughly equally from county pay practices that consider prior pay upon transfer or promotion, with 80 percent of the women and 83 percent of the men receiving starting salary rates above the minimum amounts. Women Were More Likely Than Men to Begin County Employment at Minimum Salary Levels, and Factors Other Than Ability Can Infl uence What Salary Rates Are Off ered Th e four counties we visited have compensation policies that generally, but do not always, direct new employees to start at step 1 of the salary schedule for their classifi cation. Nevertheless, these policies could place both men and women at a disadvantage when their qualifi cations exceed the minimum requirements for the position. Of the 240 salary decisions we reviewed, 57 pertained to cases in which the employee was new to county service and was entering a county classifi cation with the pay based on a salary schedule with a minimum and maximum amount and incremental salary steps between both endpoints. County policies permit hiring managers to consider paying new county employees above step 1 in certain circumstances, such as when the employee possesses unusual qualifi cations, including relevant education, experience, and California State Auditor Report 2015-132 39 May 2016 training, that are above the minimum required qualifi cations of the classifi cation. As shown in Table 6, the four counties established the starting salary at the minimum step for 42 of 57 employees we reviewed. We also found that, depending upon the education, previous experience, and recruiting challenges associated with the candidates, 15 of the 57 new employees were hired at higher than the base step. Of these 15 employees hired above their respective minimum rates, seven were men and eight were women. Table 6 shows that women were hired at minimum salary rates in 30, or 79 percent, of the 38 cases we reviewed, and men were hired at minimum salary rates for 12, or 63 percent, of the 19 cases we reviewed. Table 6 Initial Salary-Step Placements for Newly Hired Employees Fiscal Years 2013–14 and 2014–15 COUNTIES’ NEW HIRES WHO STARTED AT MINIMUM SALARY STEP ABOVE MINIMUM SALARY STEP PERCENTAGE PERCENTAGE GENDER NUMBER OF GENDER NUMBER OF GENDER TOTAL Female 30 79% 8 21% 38 Male 12 63% 7 37% 19 Totals 42 15 57 Source: California State Auditor’s analysis of salary decisions for newly hired employees at Fresno, Los Angeles, Orange, and Santa Clara counties appointed to positions with a salary-step schedule. To understand whether counties were consistently assigning the minimum rate to both men and women based on their qualifi cations and experience, we made further inquiries for some of the 42 employees where the counties assigned the minimum pay. Specifi cally, we identifi ed 13 instances in which it initially appeared, in our view, that the new employees’ professional background and educational experience exceeded the minimum requirements for the classifi cation. When evaluating county decisions to pay only the minimum amount, we reviewed fi ve salary decisions (all female employees) in Fresno County, two salary decisions (one male employee and one female employee) in Orange County, three decisions (one male employee and two female employees) in Los Angeles County, and three decisions (one male and two female employees) in Santa Clara County. In response to our inquiries about these 13 salary decisions, county offi cials from all four counties provided various explanations for establishing the employees’ pay at the minimum rates, citing such factors as the lack of diffi culty in 40 California State Auditor Report 2015-132 May 2016 recruiting for the positions in question or the lack of support for higher starting salaries given policies to pay at the minimum rate. For example, a female employee at Santa Clara County was hired for a clinical nurse II position and the minimum requirement for the position was that the successful candidate possess at least one year of acute care experience and possess a valid California registered nurse license. Th e individual who was hired in this case seemingly exceeded these requirements by possessing 11 years of experience as an operating room nurse, which was noted in her application materials. Th e county justifi ed the minimum salary level for the employee by stating that the county received many applications for this classifi cation from candidates who met or exceeded the minimum qualifi cations; therefore, the county did not consider this applicant’s years of experience to constitute “unusual qualifi cations” warranting a salary above the minimum. We confi rmed that there were three other eligible candidates on the certifi ed eligibility list for this nursing position, making them all competitive for the position. At Fresno County, we identifi ed fi ve female employees who appeared to have qualifi cations above the position’s minimum requirements. In answer to our inquiry, a county personnel analyst indicated that department heads do not routinely ask for a higher pay rate for new hires (regardless of qualifi cations), as they have been instructed to off er the minimum salary rate. Further, the Fresno offi cial noted that it is not unusual for individuals who far exceed the minimum qualifi cations to apply for and accept entry-level positions at the minimum salary rate. When we followed up with the remaining two counties—Orange and Los Angeles— county offi cials often indicated that applicants for the positions in question were not diffi cult to recruit. Although paying the minimum Although paying the minimum rate for new county employees was rate for new county employees common in the selection of employee records we reviewed, 15 new was common, 15 new employees employees (seven men and eight women) received pay rates above (seven men and eight women) the minimum amounts for their particular classifi cations. As we did received pay rates above the in our review of employees who were paid at the minimum amount, minimum amounts for their we attempted to determine whether counties were consistently particular classifi cations. providing higher pay to these male and female employees based on their education and other job-related professional experience. We reviewed records for the 15 employees who were paid above the minimum rate: six in Orange County, fi ve in Santa Clara County, with Los Angeles County accounting for the remaining four employees. We saw no consistent pattern among these 15 employees—their associated classifi cations included attorneys and information technology workers, among others. For 12 of the 15 pay decisions, county offi cials were able to show us the internal requests and approvals from county human resources managers authorizing the higher pay amounts. In the three other cases, California State Auditor Report 2015-132 41 May 2016 Orange County could not locate the support and approval for the higher pay. For 11 of 12 justifi cations and approvals, counties cited that the reason for the higher starting salary amounts was the hiring manager’s conclusion that the candidate’s professional or educational background was particularly impressive and relevant to the position. For example, Los Angeles County hired a male information technology specialist I above step 1. Th e county justifi ed the decision by citing the employee’s extraordinary education and work experience in a related fi eld. In another instance, Santa Clara County hired a female regional planner at salary step 3 and justifi ed the decision based on the candidate’s relevant master’s and bachelor’s degrees in architecture and urban planning, along with her nearly fi ve years of relevant experience. We reviewed the two employees’ resumes and concluded that their experience exceeded the position’s minimum qualifi cations. We also noted that, for three of the six employees who Orange County brought in above the minimum rate, the county cited the employees’ merit, experience, education, and recruiting diffi culties on their salary justifi cations and these decisions were consistent with their county policies. For example, the county justifi ed its hiring of a surveyor above the minimum rate by describing the candidate’s prior work experience in the fi eld and discussed the diffi culty in fi nding well-qualifi ed candidates. Th e county stated that it had recently made off ers of employment to three candidates for four vacant positions, all of whom declined the off er due to the increased demand for surveyors in the region. A less common reason why counties paid new employees above the minimum rate was the belief that the candidate would not accept a lower amount, a situation that occurred for two of the 12 cases we reviewed. For example, the higher salary step request from Orange County’s Health Care Agency cited the likelihood that a candidate for a clinical social worker II position would reject the employment off er if she was not hired at 31.28 per hour (the normal hiring rate is 25.17 for the position). Despite counties’ policies allowing hiring managers to use Despite counties’ policies allowing discretion when making salary decisions, we did not see any hiring mangers to use discretion instances of sex-based discrimination in the counties’ salary-setting when making salary decisions, decisions for the new employees that we reviewed. Salary decisions we did not see any instances of were often based on the employees’ qualifi cations and experience; sex-based discrimination in the however, we also noted that what an employee earns is not always counties’ salary-setting decisions dependent on their qualifi cations. Some of the counties indicated for the new employees we reviewed. that many of the positions that we were questioning were not diffi cult to recruit for even though the candidates exceeded the job’s minimum qualifi cations. 42 California State Auditor Report 2015-132 May 2016 Female Employees in Our Selection Were Less Likely to Receive Salaries Above the Midpoints of the Salary Ranges for Positions With Negotiated Salaries Th e data in our selection show that women were less likely than men to receive starting salaries above the midpoints of broad-range salary schedules. Of the 240 salary decisions we evaluated, 54 involved employees who were either newly employed or who had transferred or promoted into a county classifi cation for which the salary amount fell within a broad range without any incremental salary steps. For some county employees in this group, the salary amount could be the result of negotiations and thus could not be explained by a particular county policy, such as those that require a certain percentage increase over prior pay upon an existing employee’s promotion or transfer. Neither federal nor state laws expressly require that counties document how they determine salary amounts for those that are negotiated and the four counties similarly do not require such documentation. Th e diff erence between the minimum and maximum salary in these broad-range positions can be large. For example, as of April 2015, the broad-range salary for the position of chief deputy director at the Los Angeles County’s Department of Public Works has a span of 96,744, with the minimum salary of 188,370 and a maximum capped at 285,114. Additionally, the salary range for the chief child psychiatrist position in Fresno County spanned 127,608, with a minimum salary of 122,408 and a maximum salary of 250,016. We analyzed how often the 54 employees (30 men and 24 women) received salary amounts above the midpoint of the salary range. Of 39 employees receiving salaries Based on our review of 39 employees receiving salaries above the above the midpoint of the midpoint, 28 were from Orange and Santa Clara counties. Th e data salary range, 24 were men and show that women were less likely than men to obtain a salary above 15 were women. the midpoint. Specifi cally, 24, or 80 percent, of 30 male employees and 15, or 63 percent, of 24 female employees successfully negotiated or otherwise received salaries above the midpoint of the salary range. We attempted to identify any trends in the types of positions in our review where employees entered either above or below the salary midpoint, but none emerged. Employees who were attorneys or who were employed as the chief, director, or administrative manager of some county function had salaries that were both above and below the salary midpoints for their positions. All Four Counties Had Policies That Considered Prior Salaries When County Employees Transferred or Promoted Into New County Classifi cations Some advocates for greater pay equity argue that an employer’s consideration of an employee’s prior salary from a diff erent classifi cation can perpetuate pay disparities, noting that women California State Auditor Report 2015-132 43 May 2016 have historically earned less than their male counterparts. Although state law does not expressly prohibit an employer from requesting or considering a candidate’s salary background, in 2015 California’s Legislature approved a bill that would have prohibited employers from seeking a candidate’s salary history. Th at bill was vetoed and a similar bill is now pending. In federal government, the U.S. Department of Personnel Management recently advised federal hiring managers against using an employee’s prior salary as the sole basis for determining current pay, noting that such a practice could hurt those who are returning to the workforce after an extended absence. Th e four counties we visited each had salary-setting policies that expressly require consideration of prior pay when existing county employees transfer or promote into a diff erent county classifi cation. Some of the counties we visited stated that having such policies helps them to retain existing employees, to promote their upward mobility, and to ensure that employees are not penalized fi nancially when changing classifi cations within the county. For example, when explaining Los Angeles County’s perspective, the compensation division manager stated that not having such a rule and requiring all employees to promote or transfer at the minimum salary rate of the new classifi cation would likely cause some employees (men and women alike) to incur pay cuts when they change positions because the salary ranges between employees’ previous and current county classifi cations could overlap. To prevent such occurrences, each of the four counties we visited had variations of a policy ensuring that county employees earn at least the same amount, if not more, when they transfer or promote into a diff erent county position. We reviewed 180 salary-setting decisions made for fi scal years 2013–14 through 2014–15 for employees appointed to positions with a salary-step payment structure. We noted that for 123, or 68 percent, of those decisions, the employees had either transferred or been promoted into a diff erent county classifi cation. As shown in Table 7, for 100, or 81 percent, of the 123 salary-setting decisions that resulted in starting pay above the minimum salary step, we found that 80 percent of women and 83 percent of men started above the minimum salary step. Table 7 Initial Salary-Step Placements for the 123 Promotion and Transfer Cases NUMBER OF EMPLOYEES WHO STARTED A NEW CLASSIFICATION GENDER AT THE MINIMUM SALARY STEP ABOVE THE MINIMUM SALARY STEP TOTAL Female 14 55 69 Male 9 45 54 Totals 23 100 123 Source: California State Auditor’s analysis of salary decisions for employees at Fresno, Los Angeles, Orange, and Santa Clara counties who are paid under a salary-step schedule. 44 California State Auditor Report 2015-132 May 2016 When employees change classifi cations as a result of a transfer, and not a promotion, the four counties’ policies require employees to maintain their existing pay levels, which can also result in county employees entering their new classifi cations at a pay rate that is above the minimum amount. For example, at Santa Clara County, we found two individuals who began work on the same day as account clerk IIs at the county’s Social Services Agency, but they started with signifi cantly diff erent salaries. One individual—a woman who was also a new county employee—was paid at the minimum salary rate (or hiring rate) of 41,456 per year. Th e second employee (also a woman) had transferred from within the county and, due to earning a higher salary in her previous classifi cation as an offi ce specialist III, began work as an account clerk II earning 50,019 per year (salary step 5). Although both employees had the same amount of time in the new position, the two employees’ salaries were diff erent by more than 20 percent. Clearly, the employees’ gender was not the cause of the disparity since both employees were women; rather, the cause was the county’s policy of using the existing county employee’s prior salary when establishing her current pay. Seniority-based county pay policies Such county pay policies, while benefi cial to existing county eff ectively reward the employee employees, eff ectively reward the employee for prior service with for prior service with the county, the county (a form of seniority-based pay) and this additional pay and this additional pay above the above the minimum amount following a promotion or transfer may minimum amount following a or may not bear any relationship to that employee’s actual ability to promotion or transfer may or may perform the work relative to others in the same classifi cation. Put not bear any relationship to that another way, in our previous example, it is entirely possible that the employee’s actual ability to perform new county employee earning the minimum 41,456 per year is just the work relative to others in the as productive in performing the work of an account clerk II as the same classifi cation. county veteran earning 50,019 per year. During our audit, we attempted to understand whether seniority-based pay systems needed to be based on a particular classifi cation (or group of similarly related classifi cations) or whether they could be more broadly applied to prior service with the employer, as appears to be the case with the four counties we reviewed. State and federal laws are not that specifi c or prescriptive in terms of how seniority-based pay systems must work. Th e Equal Employment Opportunity Commission (EEOC) has advised that employers who rely on a seniority system as a defense must be able to demonstrate that the seniority-based system was adopted without discriminatory intent, has predetermined criteria for measuring seniority that has been communicated and is consistently applied to all employees, and is, in fact, the entire basis for the diff erence in compensation. We observed that counties had described in local ordinances or countywide personnel rules how salary amounts are to be calculated when existing employees California State Auditor Report 2015-132 45 May 2016 change classifi cations. Further, as discussed earlier, we saw evidence that both male and female county employees benefi ted from these pay policies in practice. Nevertheless, employers who use prior salary when establishing a new employee’s pay may risk further perpetuating pay inequities. Th e federal courts are split on whether an employee’s prior salary can ever serve as the sole basis for a pay disparity. Th e United States Court of Appeals for the Ninth Circuit, which is the appeals court that California must follow, has held that the Federal Pay Act does not impose a strict prohibition against the use of prior salary as one of several factors an employer may use to arrive at a employee’s salary and that it may constitute a legitimate business reason for a pay diff erential. Other circuit courts, however, have taken a diff erent position. In December 2015, the federal District Court for the Eastern Division of California held that an employer’s reliance on an employee’s prior salary as the sole basis for a salary diff erential confl icts with the Federal Pay Act, stating that “a pay structure based exclusively on prior wages is so inherently fraught with the risk that it will perpetuate a discriminatory wage disparity that it cannot stand, even if motivated by a legitimate business purpose.” Th is ruling allowed a female plaintiff to continue her litigation against a county superintendent of schools. For the Few Cases We Identifi ed, Counties Often Found That Gender-Based Pay Equity Complaints Lacked Merit, but the Frequency of Such Complaint Filings Is Unclear Our audit could not quantify defi nitively how often the four counties we visited received complaints pertaining to pay or promotional disparities based on gender. Th e counties we visited do not specifi cally track gender-based wage and promotional complaints, and neither federal nor state law currently requires that they specifi cally track this information. All four counties we visited had developed their own local policies to promote equal employment opportunities and to prevent and respond to alleged instances of discrimination in the workplace. Th ese local policies frequently encouraged county employees to fi le complaints—with their own county department or with a designated county offi ce— when alerted to potential violations of county equal pay policies. However, the counties’ processes for recording and tracking The counties’ processes for employee complaints were not always centralized, making it recording and tracking employee diffi cult to determine the universe of equal-pay complaints that complaints were not always were fi led by county employees. Except for Los Angeles County, centralized, making it diffi cult to in three of the four counties we visited, local offi cials provided determine the universe of equal-pay us with various lists of complaints, each covering diff erent time complaints that were fi led by periods or types of complaints, or they were maintained by diff erent county employees. 46 California State Auditor Report 2015-132 May 2016 county offi cials. Further, we noted that the counties we visited do not label complaints at a level of detail that would allow for the easy identifi cation of those involving potential violations of equal-pay laws. County complaint forms themselves often included only a checkbox for the complainant to mark for the protected characteristic (such as “gender” or “sex”), while an open-text fi eld provided the complainant with an opportunity to provide more specifi cs on the nature of the complaint (that is, whether the complaint was wage-related or involved some other concern). As a result, we used our professional judgment to identify complaints that appeared to pertain to gender equity issues with respect to wages or promotional opportunity, and then review how the counties investigated and resolved those complaints. Table 8 provides information on the total number of complaints that each county received from fi scal years 2010–11 through 2014–15 regardless of the protected characteristic (such as gender, age, ethnicity, etc.). Th e table also shows that of these total complaints, relatively few complaints appeared to us to allege gender-based discrimination regarding wages or promotional advancement. When searching for these types of complaints, we fi ltered the counties’ complaint logs based on sex or gender, and when possible, searched for key words such as “wage” and “salary” within the narrative section describing the complaint. In Los Angeles County we identifi ed 21 pertaining to wage and promotional discrimination based on sex or gender. We identifi ed these 21 complaints (which Los Angeles County had received from fi scal years 2011–12 through 2014–15) after performing keyword searches on more than 12,000 complaints. In the other three counties, we could only fi nd seven or fewer complaints that appeared relevant to our audit. However, limitations with the data made it diffi cult to defi nitively quantify how often county employees fi led gender-based pay equity complaints with their employers, so the actual number of these types of complaints fi led may be higher. Nevertheless, of the 36 complaints we identifi ed in Table 8 that appeared to us to allege gender-based discrimination regarding wages or promotional advancement, 10 complaints are still under investigation, 25 complaints were not substantiated, and one was substantiated; however, this complaint is still in litigation and therefore, we are not able to discuss the specifi cs of the allegation. California State Auditor Report 2015-132 47 May 2016 Table 8 Number of Employee Wage and Promotional Discrimination Complaints Filed With Each of the Four Counties and the Outcomes of Those Complaints FRESNO COUNTY LOS ANGELES COUNTY ORANGE COUNTY SANTA CLARA COUNTY JULY 2010JUNE 2015 JULY 2011JUNE 2015 APRIL 2011JUNE 2015 JULY 2010APRIL 2015 Total number of complaints identifi ed on 368 12,463 416 1,427 complaint logs we reviewed Auditor-identifi ed cases pertaining to wage or 4 21* 4 7 promotional discrimination (based on gender) Female complainant 1 11 4 5 Male complainant 3 10 0 2 Outcomes of complaint investigations Complaint Still Under Investigation 0 of 4 10 of 21 0 of 4 0 of 7 Complaint Not Substantiated 4 of 4 11 of 21 4 of 4 6 of 7 Complaint Substantiated 0 of 4 0 of 21 0 of 4 1 of 7 Source: California State Auditor’s analysis of county-provided complaint logs and review of source documents for cases we identifi ed as pertaining to gender-based wage or promotional discrimination at the counties of Fresno, Los Angeles, Orange, and Santa Clara. * In Los Angeles County, we identifi ed 21 complaints that appeared relevant to our audit. To provide context, we note that Los Angeles County recorded that 5,195, or 41 percent, of more than 12,463 total complaints pertained to discrimination, of which 2,182 contained enough information to warrant review by the County Equity Investigations Unit. Of the 2,182 complaints that the county designated as warranting investigations, 401 related to gender. Th e most common type of complaint we identifi ed was one in which a county employee alleged that he or she was denied a promotion based on his or her sex, a complaint that occurred in 31 of the 36 complaints we reviewed. For example, a Fresno County employee claimed discrimination based on sex, race, color, and national origin when applying for a new position. Th e complainant alleged that members of the opposite sex who had less experience were hired. In response, Fresno County’s legal counsel compiled a report detailing the complaint and concluded that it was unsubstantiated. Th e report documented how many applicants were male and female, as well as the ethnicity and the ranking of the applicants. Th e report also informed the complainant of the right to fi le an appeal with the Department of Fair Employment and Housing or the EEOC. Finally, the legal counsel’s report noted that the complainant was subsequently hired into the position. Our review of the 36 completed investigations of gender-based wage and promotion complaints at the four counties indicated that the counties usually took an average of eight months to address each complaint. However, Los Angeles County’s process for addressing complaints is lengthier—on average, the county took just more than a year (370 days) from the date the employee fi led a complaint until its County Equity Oversight Panel resolved the complaint through a formal resolution. A signifi cant component of the time spent resolving these complaints pertained to the time needed for county investigators to review the allegation. Specifi cally, 48 California State Auditor Report 2015-132 May 2016 the County Equity Investigations Unit (investigations unit) took an average of eight months (245 days) to investigate complaints, with individual investigations ranging from as few as 98 days to as long as 439 days, or nearly 15 months. Additionally, we noted 10 complaint investigations that were still ongoing even though the complaints had been fi led nearly 15 months earlier, on average, at the time of our review. For perspective, according to the EEOC, the average time it took to investigate and resolve a complaint was about 10 months in 2015. However, according to an assistant director of human resources who oversees the county’s investigations unit in Los Angeles County (assistant director), the volume of investigation requests has exceeded the capacity of the investigation unit’s current resources. He told us that investigation requests have steadily increased since 2011, with the investigations unit receiving more than 1,400 cases during fi scal year 2014–15. As a result of the increased volume of cases, the investigations unit requested and received additional investigator positions; however, each investigator currently carries a caseload of approximately 35 investigations. Further, the investigations unit uses a tier system to prioritize the assignment and investigation of cases in which high-risk allegations are investigated fi rst and cases involving wage or promotional issues are typically given a lower priority. Th e assistant director also indicated that the length of time to complete investigations is also aff ected by scheduling issues that include long delays for witnesses and subjects to respond to requests for information and their availability for interviews. Modifying existing complaint forms Ultimately, counties could seemingly benefi t from changing their to identify and track complaints complaint intake forms to specifi cally identify and track complaints alleging sex-based discrimination alleging sex-based discrimination involving equal-pay issues or could be useful for county offi cials promotional opportunities. Modifying existing complaint forms to monitor gender equity issues would likely cost little while potentially making it easier for county among their employees. offi cials to identify and monitor how often employees fi le such complaints. Knowing how frequently these complaints are fi led, or whether such complaints are focused at particular departments, could be useful information for county offi cials as they attempt to monitor gender equity and minimize pay disparities based on gender among their employees. The State Periodically Reviews Counties’ Merit-Based Personnel Systems, but It Could Strengthen These Reviews to Evaluate Gender Equity Issues Local governments, such as counties and cities, are required under federal law to have merit-based personnel systems for those local employees who administer certain federally funded programs, such as Unemployment Insurance, Medicaid (known as Medi-Cal in California State Auditor Report 2015-132 49 May 2016 California), and the Supplemental Nutrition Assistance Program. Th e California Department of Human Resources (CalHR) is responsible for approving a county’s merit-based personnel system. Th rough a contractor called CPS HR Consulting, CalHR also periodically audits counties’ compliance with these merit-based rules. Each of the four counties we visited—Fresno, Los Angeles, Each of the counties we visited Orange, and Santa Clara—have had audits of their merit-based have had audits of their personnel personnel systems, and the audits showed that each county had systems, but these audits did not compliant personnel practices; nevertheless, these audits did not evaluate these systems for issues evaluate those systems for issues related to gender-based pay equity. related to gender-based pay equity. Th e State’s regulations and related audits do not fully address two topics that are relevant to gender-based pay equity issues. First, state regulations do not require that counties document their rationales for choosing a particular candidate for a given position. One of many causes for the gender-based wage gap, as cited by various researchers and discussed in the Introduction, is the diff erent types of jobs or professions that women and men tend to occupy. Despite regulations requiring that county hiring decisions be objective, job-related, and based on the candidate’s relative ability, knowledge, and skills, the lack of documentation explaining the county’s rationale for choosing one particular individual over other eligible candidates is problematic. Without such documentation, it is not possible to evaluate whether a county has been truly objective during the most important part of the hiring process—the actual hiring decision—because the county’s basis for selecting a male or female candidate is unknown. Second, the State’s regulations require that counties provide “equitable and adequate compensation” and assure “equitable compensation for comparable work”; however, the regulations have no defi nitive guidelines suggesting how local governments are to achieve such standards. Instead, state regulations describe in general what counties should consider when evaluating the adequacy of compensation for a particular job, such as “the responsibility and diffi culty of the work, the compensation needed to compete in the labor market, and other pertinent factors.” Th e contractor evaluating the counties acknowledged that its audits do not cover all aspects of the counties’ hiring and promotions processes, such as the steps following the creation of an eligibility list, including the hiring interview and the salary-setting process.11 Our review of the CalHR audit reports for the four counties we visited showed that the auditor—when evaluating the recruitment and selection process—focused on compliance issues, such as 11 An eligibility list is a ranked listing of candidates who have all achieved the minimum score necessary on county exams to be potentially considered for a county position. Once a county creates an eligibility list, the county is to select and hire from among the top-ranked candidates on the eligibility list (or certifi ed list). 50 California State Auditor Report 2015-132 May 2016 whether county employment announcements were posted for a suffi cient period of time, whether county exams were job-related and resulted in the appropriate ranking of candidates based on their scores, and whether the county was selecting from the highest-ranked group or groups of candidates when making hiring decisions. When evaluating compensation practices, these audit reports often describe whether counties had regulations or procedures that clearly articulated their pay practices and whether these policies had been shared with employees. Th e CalHR contract auditor also frequently commented in the reports we reviewed about whether the county had recently performed compensation studies to evaluate whether pay levels for its employees were competitive with those off ered by other comparable public-sector employers. Current law does not require Because the law does not require counties to consistently and counties to consistently and actively monitor gender-based pay equity issues in the hiring and actively monitor gender-based salary-setting process, if the Legislature desires counties to do pay equity issues in the hiring and so, it should consider amending state law to clearly establish this salary-setting process. expectation and then require CalHR’s periodic audits of counties to assess compliance with these new requirements. Such requirements might include the expectation that county offi cials document, at the time of an employee’s hire, why they chose a particular candidate over others. Subsequent audits could then assess whether the choice to hire a particular male or female candidate from a pool of otherwise equally qualifi ed candidates was based on objective and job-related criteria. Requiring counties to document, at the time they hire employees, the counties’ hiring rationales would also enhance counties’ accountability for the hiring choices that are made. Finally, to ensure that counties are periodically identifying and evaluating disparities between men’s average pay and women’s average pay (by classifi cation), the Legislature could direct counties to periodically perform such an analysis and share the results with their boards of supervisors and the public, stating the causes for any signifi cant disparities in pay found between the male and female employees and indicating what additional steps, if any, that need to be taken. Subsequent CalHR audits could verify that such gender-related compensation reviews are performed and the results shared with the public. Consistent analysis and public reporting of signifi cant diff erences in pay between men and women promote greater transparency and understanding of the potentially numerous causes for the pay diff erences that exist between male employees and female employees, and they may also help to highlight potential solutions. California State Auditor Report 2015-132 51 May 2016 Existing Reports on Gender Pay Equity Have Limitations, and Better Information Might Be Available From the State Controller’s Offi ce Th e four counties we visited periodically report two sets of statistical data, one each according to federal and state law, and the data contained in these two reports include information on employee pay that likely have only limited value to legislative decision makers who are interested in monitoring gender-based pay equity and employee pay issues. Th e limitations in the data are diff erent depending on which of the two reports one reviews. Th e federal report does not provide detail that would allow the Legislature or the public to search for and identify specifi c classifi cations with a specifi c employer where the average pay for men and women was signifi cantly diff erent. However, the state report required by California’s Government Code provides a wealth of information about specifi c public employers—such as cities and counties—along with employee-specifi c pay information and their job classifi cations. Th e Although the State Controller’s State Controller’s Offi ce (Controller) provides this data to the public Offi ce’s website provides data about in a searchable format on its website; yet, this employee-specifi c data specifi c local government employers lacks information on sex because neither state law nor the Controller’s along with employee-specifi c instructions require public employers to provide this information for pay information and their job the report. Given the potential of the Controller’s website to serve as classifi cations, it lacks information a tool for enhanced pay transparency and accountability regarding on the sex of employees. gender-based pay equity, the Legislature should consider amending state law to require local agency employers to report the sex of the individual when submitting the employee-specifi c data that they are already required to provide. Th e employer pay information counties report to the federal government reinforces some of the broad patterns we saw in the data for the four counties we reviewed; however, it cannot serve as a pay transparency tool or as a means to potentially identify combinations of employers and specifi c positions for which women are paid signifi cantly less than men. By September 30th of every odd-numbered year, the EEOC requires all states and political subdivisions with generally more than 100 employees to complete a compensation report. Th is federal report, which is called the State and Local Government Information EEO-4 Report (EEO-4 report), requires public employers to report employee totals by salary level, sex, race, and by broad classifi cation categories such as offi cials and administrators, professionals, and technicians, to name a few. For example, within the professionals classifi cation category, a county reports how many of its employees had annual salaries within certain salary ranges (such as between 55,000 and less than 70,000 per year), how many within that salary range were women or men, and the ethnic makeup of each group. Once the EEOC has obtained these reports, it compiles the results and provides statewide data on its website that allow readers to potentially see broad classifi cation patterns for diff erent employee demographics. 52 California State Auditor Report 2015-132 May 2016 Th e trends are generally similar to the analysis of total average salaries we presented earlier for the four counties we visited. For example, Figure 5 indicates that from 2005 through 2013, women in full-time positions in California earned between 77 and 81 cents for every dollar that men earned. Th us, the salary gap between men and women varied from 23 percent in 2005 to 19 percent in 2013— percentages close to the aggregate wage gap that we show on Figure 3 on page 20 in the fi rst section of this audit report. Figure 5 Median Full-Time Salaries for Women as Percentages of Median Full-Time Salaries for Men in California’s State and Local Governments Women’s Pay as a Percentage of Men’s Pay 2005 2007* 2009 2011 2013 Reporting Year yralaS s’neM fo egatnecreP 100% 90 80 70 60 50 0 Source: U.S. Equal Employment Opportunity Commission (EEOC). Notes: By September 30 of every odd-numbered year, all state and local governments with more than 100 employees must fi le the State and Local Government Information EEO-4 Report with the EEOC. The data presented above represents the median salaries for full-time female employees as percentages of the median salaries for full-time male employees. * The EEOC website does not have salary information available from the 2007 biennial report. However, the EEO-4 report is limited as a tool for identifying disparities in pay between the genders in specifi c classifi cations. We noted that the salary ranges are uniform among all counties (and throughout the country) regardless of employee salaries—with a top salary grouping of 70,000 or more. For example, a county such as Santa Clara, where in 2015 more than half of its employees fell within this top salary stratum, the data are too limited to identify disparities in pay among male and female employees. Th e broad classifi cation categories contained in the EEO-4 report also prevent its use in identifying specifi c classifi cations in which pay disparities between men and women might exist. California State Auditor Report 2015-132 53 May 2016 In contrast to the lack of specifi c data on particular classifi cations and public employers in Employee-Specifi c Information Available From the the federal EEO-4 report, the data on the Government Compensation in California Database Controller’s highly detailed and user-friendly The Government Compensation in California database of webpage allows users to search information on the State Controller’s Offi ce provides employee-specifi c public employee wage data by specifi c employer information, including information for county employees, and position. For example, users can search by a such as the following: particular county the total number of employees • The employee’s position and department within and departments and classifi cations; and can then the county. drill down within the classifi cation to identify individual employees (not including the employee’s • Whether the employee is an elected offi cial. name) within the classifi cation and such • Minimum and maximum salary range for the information as their total wages and benefi ts. Th e employee’s current position. text box shows examples of the employee-specifi c • The employee’s total wages, including regular pay, information already collected by the Controller, overtime pay, lump-sum pay, and other pay. which is both summarized on its public website, and is available as raw data for users to download. • The employee’s total retirement and health costs, including his or her defi ned benefi t plan, employee However, the Controller does not currently collect retirement costs covered, deferred compensation or report—nor is it expressly required to collect plan, pension formula, and health, dental and under existing law—information on the sex of vision plans. employees reported in its Government Compensation in California database. Source: The Government Compensation in California database, a public website of the State Controller’s Offi ce. Recommendations Legislature To ensure that counties consistently monitor pay disparities between male employees and female employees, and to ensure that counties perform these reviews and publicly report their fi ndings, the Legislature should amend state law to do the following: • Require counties to periodically compare, by specifi c classifi cation, the diff erences in total average compensation between male and female employees. • Require counties to publicly report to local decision makers those classifi cations for which the diff erence in total compensation is signifi cant, further indicating which county pay policy or policies contributed to the variance and whether any modifi cations are needed to reduce the disparity. • Require that the California Department of Human Resources ensure that counties perform these periodic gender-based pay equity reviews during its audits of each county’s compliance with state-mandated civil service rules. 54 California State Auditor Report 2015-132 May 2016 If the Legislature desires that counties be able to demonstrate that their hiring decisions for civil service positions are based on objective and job-related criteria, it should amend the state law to require that each county document the reasons why it chose the selected candidate over others from the certifi ed eligibility list. To ensure that the general public and legislative decision makers have readily available data on male and female employees’ compensation, by specifi c classifi cation and public employer, the Legislature should direct the State Controller’s Offi ce to obtain information on the sex of each public employee reported on the Government Compensation in California website. Counties To ensure that they can consistently demonstrate that candidates are hired for permanent civil service positions based on valid and job-related criteria, regardless of their sex, each county should develop policies requiring hiring managers to document the reasons why they chose the selected candidate over others from the certifi ed eligibility list. To ensure that they can readily monitor gender-based pay equity complaints and reliably evaluate how often such complaints are fi led by its employees, each county should develop tracking mechanisms that allow management to reliably determine how often these complaints occur and whether there are patterns of complaints that pertain to specifi c county departments or classifi cations. California State Auditor Report 2015-132 55 May 2016 We conducted this audit under the authority vested in the California State Auditor by Section 8543 et seq. of the California Government Code and according to generally accepted government auditing standards. Th ose standards require that we plan and perform the audit to obtain suffi cient, appropriate evidence to provide a reasonable basis for our fi ndings and conclusions based on our audit objectives specifi ed in the Scope and Methodology section of the report. We believe that the evidence obtained provides a reasonable basis for our fi ndings and conclusions based on our audit objectives. Respectfully submitted, ELAINE M. HOWLE, CPA State Auditor Date: May 31, 2016 Staff : Grant Parks, Audit Principal Ralph M. Flynn Tram Th ao Truong Christopher P. Bellows Flint Timmins, MPA Matt Gannon Sara E. Noceto IT Audits: Michelle J. Baur, CISA, Audit Principal Ben Ward, CISA, ACDA Sarah Rachael Black, MBA, ACDA Kim L. Buchanan, MBA, CIA Grant Volk, MA, CFE Legal Counsel: Stephanie Ramirez-Ridgeway, Sr. Staff Counsel For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Aff airs, at 916.445.0255. 56 California State Auditor Report 2015-132 May 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-132 57 May 2016 Appendix Counties’ Fiscal Year 2014–15 Compensation Data by Gender, Ethnicity, and Years of Service Both federal and state laws have been enacted to protect employees from sex-based discrimination in the workplace. Germane to this audit, the federal Equal Pay Act of 1963 requires that, except under certain conditions, employers must provide their employees with equal pay for equal work on jobs that require equal skill, eff ort, and responsibility, and that are performed under similar working conditions. Similarly, California enacted its own Equal Pay Act in 1949 to protect employees against pay discrimination based on their sex. However, according to the U.S. Census Bureau, as of 2014, women on average still earned only 77 cents for every dollar earned by men. In the Introduction of this report, we discuss some of the factors that researchers have identifi ed to explain the reasons behind the gender-based wage gap, such as employee choice and behavior. In the Audit Results of this report, we provide our analysis of the hiring and salary setting practices as well as an analysis of pay data for each of the four counties we visited—Fresno, Los Angeles, Orange, and Santa Clara—and discuss how those practices may aff ect any gender-based wage gaps at those counties. For the four counties we visited, the Legislature asked that we also analyze and compare data related to county employees’ wages. We obtained the counties’ compensation data from their respective payroll systems for fi scal year 2014–15 and present the information by gender, ethnicity, and years of service in the table beginning on the following page. We calculated years of service based on employees’ active full-time status in specifi c job classifi cations between the date each county implemented its personnel and payroll system and June 30, 2015. Th e data we obtained lacked the detail necessary to calculate years of service in a specifi c job classifi cation prior to each system’s implementation, resulting in zeros for some of the data we present. 58 California State Auditor Report 2015-132 May 2016 Table Total Compensation for Four Counties’ Full-Time Employees Active in the Same Job Classifi cation All Year Fiscal Year 2014–15 FEMALE EMPLOYEES’ YEARS OF SERVICE† TOTAL TOTAL TOTAL COUNTY TOTAL COMPENSATION* EMPLOYEES FEMALE MALE 15 YEARS 610 YEARS 1115 YEARS 1620 YEARS 20+ YEARS Fresno County $0.01 to < 20,000 0 0 0 0 0 0 0 0 20,000 to < 40,000 5 4 1 3 0 1 0 0 40,000 to < 60,000 310 174 136 141 16 11 6 0 60,000 to < 80,000 918 661 257 231 198 171 61 0 80,000 to < 100,000 894 568 326 200 178 136 54 0 100,000 to < 120,000 656 359 297 129 113 87 30 0 120,000 to < 140,000 530 223 307 82 78 45 18 0 140,000 to < 160,000 336 126 210 41 43 26 16 0 160,000 to < 180,000 242 58 184 19 19 19 1 0 180,000 to < 200,000 146 31 115 6 14 7 4 0 200,000 to < 220,000 63 7 56 3 3 1 0 0 220,000 to < 240,000 29 7 22 4 3 0 0 0 240,000 or more 25 6 19 3 2 1 0 0 Subtotal 4,154 2,224 1,930 Los Angeles County $0.01 to < 20,000 101 76 25 76 0 0 0 0 20,000 to < 40,000 487 348 139 348 0 0 0 0 40,000 to < 60,000 5,826 4,064 1,762 4,064 0 0 0 0 60,000 to < 80,000 18,306 13,527 4,779 13,527 0 0 0 0 80,000 to < 100,000 13,564 9,014 4,550 9,014 0 0 0 0 100,000 to < 120,000 9,494 5,679 3,815 5,679 0 0 0 0 120,000 to < 140,000 8,921 4,931 3,990 4,931 0 0 0 0 140,000 to < 160,000 7,271 3,461 3,810 3,461 0 0 0 0 160,000 to < 180,000 4,706 1,874 2,832 1,874 0 0 0 0 180,000 to < 200,000 3,075 932 2,143 932 0 0 0 0 200,000 to < 220,000 2,295 625 1,670 625 0 0 0 0 220,000 to < 240,000 1,467 371 1,096 371 0 0 0 0 240,000 or more 2,929 864 2,065 864 0 0 0 0 Subtotal 78,442 45,766 32,676 Orange County $0.01 to < 20,000 0 0 0 0 0 0 0 0 20,000 to < 40,000 2 1 1 1 0 0 0 0 40,000 to < 60,000 825 573 252 365 102 58 14 34 60,000 to < 80,000 2,796 2,052 744 521 828 432 105 166 80,000 to < 100,000 2,080 1,325 755 490 517 241 45 32 100,000 to < 120,000 1,955 1,076 879 273 454 270 54 25 120,000 to < 140,000 1,370 698 672 238 280 137 27 16 140,000 to < 160,000 816 370 446 141 168 53 5 3 160,000 to < 180,000 497 165 332 72 78 12 3 0 180,000 to < 200,000 409 92 317 48 37 6 1 0 200,000 to < 220,000 430 96 334 39 45 11 0 1 220,000 to < 240,000 334 74 260 45 21 4 3 1 240,000 or more 539 110 429 65 26 15 3 1 Subtotal 12,053 6,632 5,421 Santa Clara County $0.01 to < 20,000 0 0 0 0 0 0 0 0 20,000 to < 40,000 1 1 0 0 1 0 0 0 40,000 to < 60,000 24 14 10 12 0 2 0 0 60,000 to < 80,000 585 395 190 244 55 85 11 0 80,000 to < 100,000 1,621 1,185 436 518 321 286 60 0 100,000 to < 120,000 1,518 1,066 452 474 280 259 53 0 120,000 to < 140,000 1,228 792 436 418 172 147 55 0 140,000 to < 160,000 1,136 620 516 348 149 100 23 0 160,000 to < 180,000 929 406 523 230 105 58 13 0 180,000 to < 200,000 574 246 328 149 42 46 9 0 200,000 to < 220,000 382 171 211 87 51 31 2 0 220,000 to < 240,000 264 147 117 96 36 10 5 0 240,000 or more 762 413 349 189 118 65 41 0 Subtotal 9,024 5,456 3,568 Total for all counties 103,673 60,078 43,595 California State Auditor Report 2015-132 59 May 2016 ETHNICITY OF FEMALE EMPLOYEES ASIAN, FILIPINO, AMERICAN INDIAN / NATIVE HAWAIIAN / BLACK / ALASKA NATIVE OTHER PACIFIC ISLANDER AFRICAN AMERICAN HISPANIC / LATINO NOT SPECIFIED TWO OR MORE WHITE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0 0 0 1 25 2 50 0 0 0 0 1 25 1 1 17 10 14 8 82 47 1 1 0 0 59 34 5 1 68 10 44 7 336 51 3 0 0 0 205 31 4 1 62 11 46 8 288 51 2 0 0 0 166 29 4 1 38 11 41 11 163 45 1 0 0 0 112 31 3 1 21 9 17 8 72 32 0 0 0 0 110 49 0 0 18 14 10 8 39 31 0 0 0 0 59 47 2 3 3 5 6 10 21 36 0 0 0 0 26 45 0 0 2 6 2 6 5 16 0 0 0 0 22 71 0 0 1 14 0 0 1 14 0 0 0 0 5 71 0 0 0 0 0 0 0 0 0 0 0 0 7 100 0 0 1 17 0 0 0 0 0 0 0 0 5 83 0 0% 8 11% 29 38% 27 36% 0 0% 0 0% 12 16% 1 0 30 9 156 45 112 32 0 0 0 0 49 14 10 0 590 15 1,349 33 1,574 39 0 0 0 0 541 13 41 0 2,346 17 3,580 26 5,512 41 1 0 0 0 2,047 15 30 0 1,642 18 2,182 24 3,838 43 1 0 0 0 1,321 15 15 0 1,210 21 1,402 25 1,985 35 0 0 0 0 1,067 19 11 0 1,237 25 1,112 23 1,683 34 0 0 0 0 888 18 5 0 1,110 32 679 20 1,017 29 0 0 0 0 650 19 2 0 691 37 334 18 443 24 0 0 0 0 404 22 2 0 267 29 159 17 211 23 0 0 0 0 293 31 1 0 141 23 110 18 119 19 0 0 0 0 254 41 0 0 78 21 71 19 76 20 0 0 0 0 146 39 2 0 218 25 101 12 87 10 0 0 0 0 456 53 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0 0 0 0 0 0 0 0 0 0 0 1 100 1 0 91 16 31 5 278 49 0 0 34 6 138 24 3 0 433 21 72 4 980 48 4 0 90 4 470 23 6 0 234 18 47 4 585 44 2 0 64 5 387 29 3 0 199 18 52 5 381 35 0 0 65 6 376 35 1 0 169 24 33 5 156 22 0 0 26 4 313 45 1 0 88 24 9 2 89 24 0 0 22 6 161 44 1 1 32 19 7 4 21 13 0 0 8 5 96 58 1 1 16 17 0 0 13 14 0 0 1 1 61 66 1 1 14 15 2 2 12 13 0 0 3 3 64 67 0 0 7 9 4 5 6 8 0 0 3 4 54 73 0 0 10 9 7 6 10 9 0 0 8 7 75 68 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0 0 0 0 0 0 0 0 0 0 0 1 100 0 0 2 14 0 0 6 43 2 14 0 0 4 29 4 1 89 23 22 6 142 36 30 8 13 3 95 24 10 1 334 28 61 5 457 39 50 4 26 2 247 21 2 0 362 34 41 4 388 36 46 4 19 2 208 20 1 0 254 32 40 5 238 30 40 5 22 3 197 25 2 0 197 32 23 4 164 26 26 4 15 2 193 31 3 1 137 34 21 5 99 24 11 3 8 2 127 31 0 0 95 39 16 7 36 15 15 6 9 4 75 30 0 0 93 54 8 5 16 9 9 5 2 1 43 25 0 0 93 63 8 5 11 7 4 3 1 1 30 20 2 0 173 42 16 4 29 7 13 3 4 1 176 43 continued on next page . . . 60 California State Auditor Report 2015-132 May 2016 MALE EMPLOYEES’ YEARS OF SERVICE† TOTAL TOTAL TOTAL COUNTY TOTAL COMPENSATION* EMPLOYEES FEMALE MALE 15 YEARS 610 YEARS 1115 YEARS 1620 YEARS 20+ YEARS Fresno County $0.01 to < 20,000 0 0 0 0 0 0 0 0 20,000 to < 40,000 5 4 1 1 0 0 0 0 40,000 to < 60,000 310 174 136 82 27 22 5 0 60,000 to < 80,000 918 661 257 130 70 43 14 0 80,000 to < 100,000 894 568 326 123 99 62 42 0 100,000 to < 120,000 656 359 297 95 104 72 26 0 120,000 to < 140,000 530 223 307 82 104 88 33 0 140,000 to < 160,000 336 126 210 38 88 68 16 0 160,000 to < 180,000 242 58 184 41 65 55 23 0 180,000 to < 200,000 146 31 115 23 39 47 6 0 200,000 to < 220,000 63 7 56 19 14 18 5 0 220,000 to < 240,000 29 7 22 13 6 3 0 0 240,000 or more 25 6 19 7 5 6 1 0 Subtotal 4,154 2,224 1,930 Los Angeles County $0.01 to < 20,000 101 76 25 25 0 0 0 0 20,000 to < 40,000 487 348 139 139 0 0 0 0 40,000 to < 60,000 5,826 4,064 1,762 1,762 0 0 0 0 60,000 to < 80,000 18,306 13,527 4,779 4,779 0 0 0 0 80,000 to < 100,000 13,564 9,014 4,550 4,550 0 0 0 0 100,000 to < 120,000 9,494 5,679 3,815 3,815 0 0 0 0 120,000 to < 140,000 8,921 4,931 3,990 3,990 0 0 0 0 140,000 to < 160,000 7,271 3,461 3,810 3,810 0 0 0 0 160,000 to < 180,000 4,706 1,874 2,832 2,832 0 0 0 0 180,000 to < 200,000 3,075 932 2,143 2,143 0 0 0 0 200,000 to < 220,000 2,295 625 1,670 1,670 0 0 0 0 220,000 to < 240,000 1,467 371 1,096 1,096 0 0 0 0 240,000 or more 2,929 864 2,065 2,065 0 0 0 0 Subtotal 78,442 45,766 32,676 Orange County $0.01 to < 20,000 0 0 0 0 0 0 0 0 20,000 to < 40,000 2 1 1 1 0 0 0 0 40,000 to < 60,000 825 573 252 182 48 8 8 6 60,000 to < 80,000 2,796 2,052 744 239 285 151 28 41 80,000 to < 100,000 2,080 1,325 755 248 246 165 54 42 100,000 to < 120,000 1,955 1,076 879 241 292 235 71 40 120,000 to < 140,000 1,370 698 672 306 196 114 34 22 140,000 to < 160,000 816 370 446 261 116 42 20 7 160,000 to < 180,000 497 165 332 147 116 57 7 5 180,000 to < 200,000 409 92 317 119 123 41 19 15 200,000 to < 220,000 430 96 334 145 134 34 12 9 220,000 to < 240,000 334 74 260 143 75 27 8 7 240,000 or more 539 110 429 249 118 46 10 6 Subtotal 12,053 6,632 5,421 Santa Clara County $0.01 to < 20,000 0 0 0 0 0 0 0 0 20,000 to < 40,000 1 1 0 0 0 0 0 0 40,000 to < 60,000 24 14 10 7 3 0 0 0 60,000 to < 80,000 585 395 190 121 34 20 15 0 80,000 to < 100,000 1,621 1,185 436 197 105 95 39 0 100,000 to < 120,000 1,518 1,066 452 190 119 98 45 0 120,000 to < 140,000 1,228 792 436 242 72 101 21 0 140,000 to < 160,000 1,136 620 516 249 129 107 31 0 160,000 to < 180,000 929 406 523 263 117 111 32 0 180,000 to < 200,000 574 246 328 177 70 62 19 0 200,000 to < 220,000 382 171 211 117 46 36 12 0 220,000 to < 240,000 264 147 117 68 26 14 9 0 240,000 or more 762 413 349 132 86 78 53 0 Subtotal 9,024 5,456 3,568 Total for all counties 103,673 60,078 43,595 California State Auditor Report 2015-132 61 May 2016 ETHNICITY OF MALE EMPLOYEES ASIAN, FILIPINO, AMERICAN INDIAN / NATIVE HAWAIIAN / BLACK /AFRICAN ALASKA NATIVE OTHER PACIFIC ISLANDER AMERICAN HISPANIC /LATINO NOT SPECIFIED TWO OR MORE WHITE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE COUNT PERCENTAGE 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0 0 0 0 0 0 0 0 0 0 0 1 100 0 0 16 12 13 10 65 48 2 1 0 0 40 29 5 2 46 18 19 7 105 41 2 1 0 0 80 31 3 1 60 18 11 3 120 37 1 0 0 0 131 40 2 1 59 20 22 7 101 34 0 0 0 0 113 38 2 1 47 15 24 8 101 33 0 0 0 0 133 43 1 0 31 15 20 10 74 35 1 0 0 0 83 40 2 1 8 4 7 4 62 34 0 0 0 0 105 57 0 0 12 10 3 3 33 29 0 0 0 0 67 58 0 0 1 2 1 2 13 23 0 0 0 0 41 73 0 0 1 5 0 0 5 23 0 0 0 0 16 73 0 0 2 11 2 11 4 21 0 0 0 0 11 58 1 4% 1 4% 9 36% 8 32% 0 0% 0 0% 6 24% 0 0 16 12 49 35 49 35 0 0 0 0 25 18 6 0 352 20 471 27 652 37 0 0 0 0 281 16 13 0 1,064 22 934 20 1,920 40 1 0 0 0 847 18 14 0 794 17 870 19 1,990 44 1 0 0 0 881 19 7 0 836 22 671 18 1,277 33 0 0 0 0 1,024 27 7 0 822 21 662 17 1,321 33 0 0 0 0 1,178 30 12 0 684 18 458 12 1,350 35 0 0 0 0 1,306 34 6 0 461 16 322 11 901 32 0 0 0 0 1,142 40 4 0 285 13 209 10 647 30 0 0 0 0 998 47 5 0 184 11 120 7 452 27 0 0 0 0 909 54 3 0 91 8 84 8 283 26 0 0 0 0 635 58 5 0 278 13 172 8 393 19 0 0 0 0 1,217 59 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0 0 0 0 0 0 0 0 0 0 0 1 100 0 0 42 17 6 2 126 50 0 0 21 8 57 23 1 0 147 20 28 4 347 47 3 0 32 4 186 25 1 0 125 17 30 4 290 38 2 0 29 4 278 37 2 0 136 15 35 4 304 35 1 0 32 4 369 42 3 0 110 16 28 4 154 23 0 0 29 4 348 52 0 0 68 15 13 3 101 23 0 0 19 4 245 55 0 0 50 15 11 3 66 20 0 0 5 2 200 60 2 1 37 12 6 2 57 18 0 0 6 2 209 66 2 1 34 10 18 5 69 21 0 0 3 1 208 62 1 0 20 8 9 3 40 15 0 0 4 2 186 72 2 0 32 7 8 2 60 14 0 0 12 3 315 73 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 10 2 20 1 10 3 30 1 10 2 20 4 2 58 31 13 7 55 29 13 7 3 2 44 23 4 1 133 31 31 7 119 27 32 7 12 3 105 24 2 0 114 25 38 8 133 29 31 7 8 2 126 28 1 0 126 29 23 5 112 26 33 8 5 1 136 31 9 2 119 23 45 9 124 24 34 7 11 2 174 34 2 0 111 21 33 6 133 25 30 6 5 1 209 40 1 0 71 22 17 5 71 22 22 7 5 2 141 43 2 1 49 23 12 6 47 22 9 4 3 1 89 42 0 0 33 28 8 7 15 13 8 7 1 1 52 44 1 0 95 27 12 3 38 11 14 4 1 0 188 54 Source: California State Auditor’s analysis of personnel and payroll data obtained from Fresno County’s PeopleSoft Human Capital Management System, Los Angeles County’s eHR Personnel and Timekeeping System, Orange County’s County-wide Accounting and Personnel System, and Santa Clara County’s Human Resource Payroll System. Our analysis for Los Angeles County may include some employees who took a leave of absence during the fi scal year because the county does not remove its employees from active status in its personnel and payroll system when they take a leave of absence. Note: Some small percentages rounded to zero. Further, due to rounding, percentages may not sum to 100. * Total compensation includes pay and benefi ts tracked in each county’s personnel and payroll system, such as regular pay, overtime pay, and employer contributions to health benefi ts and retirement. † Years of service are calculated based on an employee’s active full-time status in a specifi c job classifi cation between the date each county implemented its personnel and payroll system and June 30, 2015. Personnel and payroll system implementation dates are as follows: » Fresno County: December 1996 » Los Angeles County: April 2010 » Orange County: December 1991 » Santa Clara County: February 1998 62 California State Auditor Report 2015-132 May 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-132 63 May 2016 * 1 * California State Auditor’s comments appear on page 65. 64 California State Auditor Report 2015-132 May 2016 2 California State Auditor Report 2015-132 65 May 2016 Comments CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM FRESNO COUNTY To provide clarity and perspective, we are commenting on Fresno County’s response to the audit. Th e numbers below correspond to the numbers we have placed in the margin of its response. Fresno County recommends that we add additional text to highlight 1 the eff ect of the California Public Employees’ Retirement Act. We have not changed our report’s text in response to this suggestion. Our report already identifi es a number of factors that can result in pay disparities between employees working in the same job classifi cation. For example, on page 28 we state that diff erences in pay can be the result of each employee having diff erent starting salaries, which can be infl uenced by earnings in a previous county job; having diff erent lengths of time working in the same job; and having diff erences with respect to full-time versus part-time employment status. Fresno County is concerned with our recommendation that it 2 require its hiring managers to document the reasons why they chose the selected candidate over others who were also qualifi ed, stating that to do so could increase its potential liability. We believe the county’s concerns lack merit and that it has misinterpreted our recommendation. Our recommendation does not, as stated in Fresno County’s response, require “state mandated reporting” of adverse comments concerning unsuccessful applicants. Instead, we simply recommend that county offi cials document how they reached their hiring decisions. As we state on page 35, understanding each county’s hiring rationale is critical to evaluating whether county employers are treating men and women equally by basing selection decisions on objective and job-related criteria. Counties that make hiring decisions appropriately under the law should not be concerned that the bases for such decisions are documented and subject to scrutiny. 66 California State Auditor Report 2015-132 May 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-132 67 May 2016 * * California State Auditor’s comment appears on page 71. 68 California State Auditor Report 2015-132 May 2016 1 California State Auditor Report 2015-132 69 May 2016 70 California State Auditor Report 2015-132 May 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-132 71 May 2016 Comment CALIFORNIA STATE AUDITOR’S COMMENT ON THE RESPONSE FROM LOS ANGELES COUNTY To provide clarity and perspective, we are commenting on Los Angeles County’s response to the audit. Th e number below corresponds to the number we have placed in the margin of its response. Los Angeles County is concerned with our recommendation that 1 it require its hiring managers to document the reasons why they chose the selected candidate over others who were also qualifi ed, stating that its current processes already result in suffi cient documentation of the hiring decision. We disagree. As we state on page 35, Los Angeles County’s merit system rules do not require that hiring managers document their rationale for selecting a particular individual over other eligible candidates from a certifi ed eligibility list and thus we could not evaluate 41 of the 51 hiring decisions we reviewed at the county. As we state on the same page, understanding each county’s hiring rationale is critical to evaluating whether county employers are treating men and women equally by basing selection decisions on objective and job-related criteria. 72 California State Auditor Report 2015-132 May 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-132 73 May 2016 * 1 * California State Auditor’s comment appears on page 75. 74 California State Auditor Report 2015-132 May 2016 California State Auditor Report 2015-132 75 May 2016 Comment CALIFORNIA STATE AUDITOR’S COMMENT ON THE RESPONSE FROM ORANGE COUNTY To provide clarity and perspective, we are commenting on Orange County’s response to the audit. Th e number below corresponds to the number we have placed in the margin of its response. Orange County’s response claims that it has the lowest average 1 percentage diff erence in average total compensation between full-time female and male employees of the four counties reviewed. We disagree with Orange County’s interpretation of our audit’s results. In our view, the data from Table 4 on page 27 shows that Orange County was comparable to the other three counties in terms of the average total compensation for men and women in low to highly compensated job classifi cations. Further, the data in Table 2 on page 25 makes it clear that, because all four counties have diff erent numbers of job classifi cations occupied by both men and women, it cannot be used by itself to compare county performance since all four counties have diff erent numbers of job classifi cations that are occupied with both male and female employees. 76 California State Auditor Report 2015-132 May 2016 Blank page inserted for reproduction purposes only. California State Auditor Report 2015-132 77 May 2016 * 1 2 * California State Auditor’s comments appear on page 79. 78 California State Auditor Report 2015-132 May 2016 3 California State Auditor Report 2015-132 79 May 2016 Comments CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE FROM SANTA CLARA COUNTY To provide clarity and perspective, we are commenting on Santa Clara County’s response to the audit. Th e numbers below correspond to the numbers we have placed in the margin of its response. Santa Clara County’s comments provide an example of a situation 1 in which there was no need for a competitive hiring process. We are uncertain about why Santa Clara County chose to raise this issue in its response since, as we note in our audit report, its decisions to exempt certain hiring decisions from competition appeared appropriate based on its policies. Santa Clara County’s response clarifi es that existing county 2 employees who promote into a position with a broad salary range are subject to a “10 promotional rule,” thus salary placement for these employees is based on specifi c county guidelines. Th e county’s response does not specify which rule or guideline it is referring to in its response. During the audit, our review of the county’s salary ordinance found a “10 percent rule” for classifi ed employees (those who are covered by the county’s merit system rules), but no such rule for employees entering unclassifi ed service. Further, our discussion with the county’s executive recruitment services manager confi rmed that executive positions in a broad range salary system are negotiated informally and that she was working toward developing practices and procedures to better document the salary setting process and justify an employee’s salary off er. Santa Clara County’s response implies there may not be a need 3 for it to better track pay equity complaints. We disagree. As we state on pages 45 to 46, three of the four counties we visited— including Santa Clara County—provided us with various lists of complaints that each covered diff erent time periods or types of complaints, or that were maintained by diff erent county offi cials. At Santa Clara County, we obtained four diff erent tracking spreadsheets. Our recommendation is intended to ensure that county managers can readily determine how often employees fi le gender-based equity complaints, and determine whether there are patterns of complaints that pertain to specifi c county departments or job classifi cations.