Key Steps Organizations Can Take to Address Pay Equity

Many employers are familiar with the required annual submission of the EEOC’s EEO-1 filing, which gathers data on employees’ job categories, ethnicity, race and gender.

While the EEO-1 is a compliance layer, for a two-year period (2017-2018), the EEOC also required collection of employers’ pay data. The EEOC has ended pay data collection, but the original purpose of that policy was to help reduce gender (plus racial and ethnic) pay discrimination and enhance pay equity across the board.

As an issue, pay equity between men and women in the US continues to be unresolved. Women’s annual earnings in 2020, for example, were 82% of men’s (with a wider gap for many women of color), according to the US Bureau of Labor Statistics.

In addition, the US Department of Labor reports that, compared with white men with the same education, Black and Latina women with a bachelor’s degree have the largest pay gap at 65%, while Black women with advanced degrees earn 70% of what white men with advanced degrees earn.

With help from celebrity athletes such as US Women’s Soccer star, Megan Rapinoe, pay equity remains a front and center issue. To this end, what steps can companies and organizations take to help address pay equity for their employees?

Audit your pay scales: With the continued spread of equal pay legislation at the state level, it may be a good time to audit (and adjust accordingly) how your employees are paid. Consider evaluating positions on a “like for like” basis (adjusting for seniority, merit and related criteria). Auditing and adjusting pay scales for equity also lowers the risk of litigation.

Understand the Equal Pay Act’s (EPA) provisions: Under the EPA, note that pay differentials between employees are only permitted when they are based on seniority, merit, quantity or quality of production, or a factor other than gender, race or ethnicity. All other factors (such as gender, race or ethnicity) equate to equal pay for equal work (based on a job’s responsibilities and not title) as mandated by the EPA.

End salary history questions: As it stands today, 25 states (including Maryland and Washington, DC) ban employers from asking prospective job candidates about their salary histories. Salary history questions have long tended to impact, fairly or not, whether and how an offer is made to prospective new employees.

Amii Barnard-Bahn, a business consultant writing in Harvard Business Review, cites a quote by UC Berkeley’s Dr. Kellie McElhaney: “There is no way to feel more included than to be paid equal to the person sitting next to me.”

If you have questions about establishing pay equity for your company or organization, contact me at [email protected] or 443-741-3900.