Thursday, April 13, 2017

Summing Up: Equal Pay

Last week’s observance of Equal Pay Day - and a review of the commentary it generated - has reminded us that gender-based pay disparity is a complicated topic, worthy of employers’ attention but difficult to put in perspective.

Let’s review the basics.  Federal law, through the Equal Pay Act of 1963, prohibits sex-based wage discrimination by virtually all US employers. It requires that employees who perform jobs requiring substantially equal skill,effort, and responsibility under similar working conditions must be paid equally.  Title VII of the Civil Rights Act of 1964 prohibits discrimination in pay or benefits based on sex (as well as other protected characteristics), and has a somewhat more flexible standard for determining whether jobs are comparable.  Most states have comparable pay equity laws, and some, like California’s Fair Pay Act, have been recently amended to strengthen worker protections.

Despite these long-standing equal pay laws, women continue to make less than men overall.  By some estimates, a gender-based pay gap will continue for decades to come.  The persistence of gender-based pay disparities is, of course, rooted in societal history and norms, and cannot be blamed on or solved by employers alone.  EEOC charges and lawsuits alleging gender-based pay disparity continue, and sometimes result in significant settlements or employer liability. It can be challenging  for employers and employees, as well as the courts, to identify when pay disparities are the result of discriminatory practices rather than the result of history and market forces.

Against this backdrop, government and corporate efforts to address pay disparity have increased.  A recent article in The Atlantic describes corporate pay equity initiatives, highlighting Salesforce and its annual audit of gender-based pay discrepancies.  NBC News just published a summary of state legislative initiatives, pointing out that at least 180 pay equity-related bills were introduced in state legislatures around the country in 2016.  At the municipal level, the New York City Council has just approved legislation that addresses pay equity by prohibiting employers from asking job applicants for salary history. The City of Philadelphia has a similar ordinance, currently being challenged by a Chamber of Commerce lawsuit.  During the Obama administration, federal contractors were required to comply with so-called “paycheck transparency” obligations under the 2014 Fair Pay & Safe Workplaces order, but those requirements have been revoked by Executive Order of the current administration.

So what’s a reasonable employer to do? Educated compliance with existing law is essential.  Beyond basic compliance, employers can take voluntary actions to prevent claims, attract and retain the best talent, and improve morale and productivity.  Here are some suggestions:
  • Know the law in the jurisdictions in which you have employees.  Be aware of the requirements of state and municipal equal pay legislation, as well as the mandates of the Equal Pay Act and Title VII. Pay policies and practices that apply nationwide, though convenient, must comply with the requirements of the most employee-friendly jurisdictions.
  • Watch for new legislation and regulations.  Chambers of Commerce, employers’ organizations, and organizations like the Society for Human Resource Management (SHRM) are good sources of up-to-date information on pay equity.
  •  Consider conducting an internal pay audit.  This can be the work of outside experts, but can also be a simple review by HR professionals.  If employees doing substantially similar jobs are being paid differently, be sure you understand why and be sure the reasons for the disparity are lawful, documented, and unrelated to gender or other protected class status.
  •  Review job titles and duties regularly.  Outdated job descriptions and titles can drive pay disparities. Titles and descriptions may be inconsistent across departments or over time, resulting in similar jobs with dissimilar compensation or advancement opportunities.  Clear, current, consistent job descriptions provide support for both pay equity and pay differences.
  • Involve employees of both genders in the creation and implementation of pay policies. Make certain that those who set salaries and wages, determine benefits, and establish criteria for advancement reflect the diversity of your workforce.
  • Check your culture.  Consider what drives success and advancement in your organization.  Is it the ability to work very long hours? Is it constant availability, even on evenings and weekends? Is it participation in after-work or weekend socializing? And are those things really essential to the business, or just habit? Women (and men who are primary caretakers of family members) may have difficulty being successful if those are the requirements, and may seek a work culture in which advancement is possible without them.
  • Value the job first and the candidate second.  Every search for applicants should begin with a clear understanding of the nature of the job being filled and the value of that job to the organization.  The value of the job, rather than the demands of the candidate, should be the primary driver of compensation.
Published by Judy Langevin