Beginning this fall, companies getting tax breaks from the Erie County Industrial Development Agency will be required to prove that they pay their women employees just as much as they do male workers doing the same job.
The pay equity policy, pushed by Erie County Executive Mark Poloncarz, is intended to make sure that companies receiving tax breaks through the Erie County IDA are complying with existing laws requiring that men and women receive equal pay for similar work.
“We have an opportunity to send a message that, while we are very supportive of our business community, we will not tolerate discrimination against women,” Poloncarz said Wednesday after the agency approved the new policy in a 12-3 vote.
Critics, however, said the policy goes too far by making companies receiving tax breaks subject to random audits by the IDA that would require the firms to disclose payroll data that would allow the agency to determine whether it was meeting the pay equity standard. They said the policy creates an added bureaucratic burden on companies getting tax breaks and duplicates requirements that they already must meet under existing federal and state pay equity laws.
“We have a problem in New York State where we create a lot of regulations and hoops for companies to jump through that are duplicative,” said Dottie Gallagher-Cohen, the president of the Buffalo Niagara Partnership and one of three IDA board members who voted against the policy.
Under the IDA’s new policy, companies receiving tax breaks beginning in September must certify that they are complying with all federal and state equal pay laws and that they have not been found to have violated those laws within the past five years. Companies that have been cited for violating equal pay laws will not be eligible for tax breaks from the IDA.
The company also must disclose any pending equal pay claims against it, although that won’t automatically make a company ineligible for tax breaks from the IDA. It also must disclose any claims or findings made against the company during the period it is receiving IDA tax breaks.
Violating the equal pay policy could open the door for the IDA to reclaim any tax breaks it had granted to the company.
The policy also gives the IDA the ability to randomly check companies that receive tax breaks to see if they are complying with the equal pay policy. Those companies will be required to submit information about their payrolls to the county Division of Equal Employment Opportunity for review. The IDA likely will conduct audits on 15 percent to 20 percent of the companies that receive tax breaks in a given year, which typically would result in three to four audits annually, Poloncarz said.
The policy makes the Erie County IDA the most aggressive in the state in pushing companies receiving tax breaks to comply with pay equity rules. No other IDA in New York has adopted a similar policy. Most rely on standard wording that requires companies to comply with all existing federal and state standards.
“There’s got to be a first,” Poloncarz said. “Why shouldn’t we be first to say that we think it’s important that, if you get a tax break, that you pay your female employees the same as your male employees for comparable jobs with comparable experience?”
Poloncarz argued that the policy will not put an undue burden on companies. Bigger companies already must certify that they comply with existing pay equity rules. And the IDA already audits companies to make sure that they are meeting their job creation and investment promises.
“This policy will not hurt any growth opportunity,” Poloncarz said.
Poloncarz said the audits, the first of which are likely to occur in late 2016 or early 2017, are an essential part of the policy because they allow the IDA to verify that companies are complying with the pay equity rules. Otherwise, he said, the IDA would simply be forced to take a company’s word that it is meeting the pay equity standard.
“Trust, but verify,” Poloncarz said, quoting former President Ronald Reagan’s view on arms control with the Soviet Union during the Cold War.
But opponents said the part of the IDA policy that calls for random audits goes too far, adding a new bureaucratic burden to businesses getting tax breaks and requiring them to disclose sensitive payroll information.
The Buffalo Niagara Partnership had proposed an alternative to Poloncarz’s pay equity plan that would have eliminated the random audits, but the IDA’s policy committee rejected that plan earlier this month.
“This isn’t about pay equity. We all support that,” said Erie County Legislator Edward A. Rath III, who voted against the policy, saying that it created a “restrictive regulatory role” for the IDA.
“This is about the process,” he said. “This is another example of the ECIDA imposing unnecessary regulation on local business, instead of focusing on its economic development mission.”