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Erie County IDA can audit payrolls for pay equity

The Erie County Industrial Development Agency is striking out on its own to make sure that men and women are paid the same for doing the same work.

The agency last week adopted a pay equity policy that makes the IDA the only one in the state that, beginning in September, will require companies to certify that they are complying with state and federal equal pay rules in order to receive tax breaks.

Nothing wrong with that. Who doesn’t think men and women deserve to be paid the same for doing the same work?

But the IDA, under heavy prodding from Erie County Executive Mark Poloncarz, didn’t stop there.

It added some teeth to the policy, subjecting companies that get tax breaks through the IDA to random audits that would require them to hand over payroll data to show whether they really are paying the same wages to their male and female employees who are doing the same jobs.

Poloncarz said the audits are essential, forcing companies to prove that they really are doing what they say when it comes to pay equity.

“The only way to do that is to have a verification process in place,” he said. “Without the certification, without the verification, the policy means nothing.”

But Dottie Gallagher-Cohen, president of the Buffalo Niagara Partnership, strongly disagrees. She says the audits are “a bridge too far,” subjecting companies to onerous regulatory requirements that duplicate rules already in place at the state and federal level.

And she doubts that an audit through the Erie County IDA will uncover violations that haven’t been detected by state and federal regulators.

“It’s not going to uncover new ground,” she said.

Above all, she worries that it will scare off businesses at a time when the Buffalo Niagara economy is just starting to rebound.

“The issue is, what are businesses going to think – not just local businesses, but businesses that are coming to the area,” she said. “It creates uncertainty, and uncertainty is bad for business.”

It also puts the Erie County IDA on an island by itself when it comes to pay equity. No other IDA in the state has such a strong policy, and it’s likely to widen the gap between the Erie County IDA and the five other suburban IDAs within the county.

The suburban IDAs are unlikely to adopt similar pay equity rules, said James J. Allen, the executive director of the Amherst Industrial Development Agency, the largest of the suburban IDAs and a critic of the new policy.

It also puts companies in a position where their decisions on where to locate projects could be influenced by the IDA rules.

Expand in Amherst or Lancaster or Hamburg, and the company won’t have to worry about having to turn over payroll data to auditors from the county’s Division of Equal Employment Opportunity, which will be doing the reviews for the Erie County IDA.

Poloncarz said turning over payroll data shouldn’t be a big deal – as long as the company has nothing to hide.

What the IDA will seek in an audit is a spreadsheet or worksheet listing the name of each worker, their gender, their total pay, their job category and how long they’ve worked at the business in a given year. And the company has to provide supporting records if the auditors ask to see them.

“A company with nothing to hide would have no problem whatsoever,” said Richard Lipsitz, the IDA’s chairman and the president of the Western New York Area Labor Federation. “It will not hurt the business community one iota if they are truly practicing pay equity.”

Gallagher-Cohen isn’t so sure. “Audits are sensitive, and companies turning over what they’re paying people is sensitive information,” she said.

And Erie County Legislator Edward A. Rath III said businesses likely will wonder just how random the “random” audits really are.

“A random audit is always going to be viewed with suspicion by the business community,” he said.

Poloncarz, who said he expects about 15 percent to 20 percent of the firms receiving tax breaks to be audited, said everything will be on the up and up.

“It will literally be as simple as names being picked out of a hat,” he said.

If you look at broad pay averages, it’s easy to assume that pay equity remains a big issue, more than 50 years after the first federal laws outlawing it were passed. The average annual earnings of women in Erie County is 77 percent less than that of men.

But those figures don’t distinguish between the type of job. Pay equity is about equal pay for the same work.

That’s why Gallagher-Cohen said pay equity has a lot of gray areas. At the Partnership, one female vice president is paid less than other male VPs because the woman prefers to work on an hourly basis to have a more flexible schedule and spend more time with her family.

“We are at a fragile moment. We are on the way up, but we don’t want to put anything in place to threaten that,” Gallagher-Cohen said. “The unintended consequences of this, we don’t know yet.”