The #MeToo movement has raised the profile of pay equity issues in America, resulting in a nationwide trend among state and local municipalities to pass legislation aimed at ending the cycle of pay discrimination against women.
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Federal laws prohibiting unequal pay based on sex, race and other protected characteristics have been on the books for years. Employee fair compensation rights are protected by the U.S. Equal Employment Opportunity Commission, which enforces the Equal Pay Act of 1963 (EPA), Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967 and Title I of the Americans with Disabilities Act of 1990.
And yet, the gender pay gap persists. Most studies conducted in recent years show that women earn about 85 cents on the dollar compared to their male counterparts.
Pay Equity Laws
The EPA made it illegal for employers to pay unequal wages to men and women in the same workplace who perform “substantially equal” work (jobs that require similar skill, effort and responsibility and are performed under similar working conditions). It was passed in 1963, at a time when women earned 59 cents on the dollar compared to men. So, the EPA has had some impact, but vague language and loopholes that favor employers have prevented federal laws from fully closing the gap.
As efforts to address pay inequity stalled in the 2000s, many states and cities began taking action to equalize compensation structures. For example, state and local governments increasingly are adopting laws and regulations that prohibit some employers from asking job applicants about their salary histories, which sometimes have provided a rationale for lower starting salaries.
By April 2019, 15 states and 12 cities had adopted such ordinances. Some of the new laws apply only to state or city agencies, while others apply to most employers (typically, they must have at least 15 employees) in a particular jurisdiction.
In some areas, new regulations also prohibit certain employers from relying on an applicant’s pay history to set compensation if discovered or volunteered; still others prohibit an employer from taking disciplinary action against employees who discuss pay with coworkers. The resulting patchwork of pay equity laws often contradicts each other regarding which factors might justify pay differences between white men and other employees.
Pay Equity Best Practices
To comply with local, state and federal laws and limit your exposure to discrimination suits, adopt the following best practices:
- Stay abreast of new local and state fair compensation laws that affect your business, and train human resources personnel and hiring managers how to comply with them. If no laws specifically require your business to pay women and men equally, it’s likely just a matter of time before this is the case.
- Proactively remove salary history-related questions on job applications, in reference and background checks and during interviews.
- Conduct a pay equity audit to expose pay gaps based on gender and other protected categories.
- Make compensation adjustments to ensure employees in similar positions are all paid within set ranges.
To protect against potential big-settlement payouts and costly litigation, consistently take measures to ensure your employees are fairly compensated as required by the plethora of local, state and federal laws. Besides the legal ramifications, paying women the same rate as men for equal work is morally advisable. It’s time to close the pay gap for the more than 75 million women who represent nearly half of the U.S. labor force.