Blog

Get expert advice on every topic you need as a small business owner, from the ideation stage to your eventual exit. Our articles, quick tips, infographics and how-to guides can offer entrepreneurs the most up-to-date information they need to flourish.

Subscribe to our blog

HR

Following through with pay equity in your business

Posted by Carol Mahamedi

February 25, 2022

In discussions about pay equity, it’s common for people to bring up statistics on how much less full-time female employees make compared to their male peers. As of 2020, yearly earnings for women were 82.3% of those for men, and that difference is even bigger for women of color, according to Bureau of Labor Statistics data. However, gender discrimination is only one facet of pay equity.

Pay equity, defined



Pay equity is the practice of compensating employees the same when they perform the same or similar job duties, regardless of gender, race, disability, LGTBQ or other status. It is also sometimes referred to as equal pay for equal value, meaning two different jobs that contribute equal value to a business should be paid the same.

Top 4 benefits of pay equity:



• It enhances the business’s reputation as being fair and progressive.
• It helps narrow the growing wealth gap.
• It attracts the best caliber of employee, which in turn boosts efficiency and productivity.
• It ensures businesses are compliant with a growing number of state and local governments moving to expand the parameters of the federal Equal Pay Act, thereby helping them avoid potential litigation.

Pay equity and the law



While wage discriminations is against the law in the U.S., the Equal Employment Opportunity Commission secured more than $535 million in monetary compensation for workers who were victims of discrimination in 2020.

At the federal level, these five laws target pay equity:

The Equal Pay Act

(1963) – Administered and enforced by the EEOC, the EPA “prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort and responsibility under similar working conditions.” 

Title VII

of the Civil Rights Act (1964) – This act “prohibits employment discrimination based on race, color, religion, sex and national origin.”  

The Age Discrimination in Employment Act

(1967) –  The ADEA “prohibits employment discrimination against persons 40 years of age or older.”

The Americans with Disabilities Act

– The ADA “prohibits discrimination against individuals with disabilities in all areas of public life, including jobs, schools, transportation, and all public and private places that are open to the general public.” 

The Lilly Ledbetter Fair Pay Act

(2007) – The Ledbetter Act “amends the Civil Rights Act of 1964 to declare that an unlawful employment practice occurs when a discriminatory compensation decision or other practice is adopted; an individual becomes subject to the decision or practice; or an individual is affected by application of the decision or practice, including each time compensation is paid.” 

5 best practices for implementing pay equity in your business:



Avoid asking job candidates about their salary history

– Awareness of a candidate’s compensation history has the potential to influence a hiring manager’s pay decisions, which then perpetuates long-standing pay gaps. 

More state and local governments in the U.S. are adopting regulations and laws that make it illegal for employers to ask job candidates for compensation history information. Data indicates that, since these regulations have been implemented, they’ve had positive wage effects on female workers and non-white male workers. 

A Boston University study published in June 2020 found that after a city or state banned salary history questions, pay increased for female workers by 8% and for Black employees by 13%.

Avoid questions about salary expectations

Questions to job candidates about their compensation history can perpetuate wage disparities, due to a preexisting gap in salary expectations.

Research finds that 65% of the time, women applying to the same position at the same company tend to ask for a lower salary than men.This contributes to an estimated 3% wage gap in compensation offered to men versus women.

Develop salary ranges

– By coming up with salary ranges and job grades,  businesses can develop more equitable compensation decisions while recruiting and at promotion time. 

Prioritize pay equity

– Businesses need to communicate to employees that they can speak up if they encounter salary discrepancies in the company.

Conduct pay equity audits

– In a hectic workplace, pay equity can easily get pushed to the back burner. To combat this, implement steps to ensure it is addressed at least one every year. You may wish to hire a third-party firm to perform a pay equity audit.

We provide you with essential business services so you can focus on growth.