Pay Equity Legislation Changes You Need to Be on Top Of
Pay equity legislation has been advancing at a rapid pace. After years of lamenting the unfortunate gap between male and female employees working in similar jobs or in jobs with similar requirements with little observable change, state legislatures have been stepping up to?require?employers to document and report on their pay practices, an important step in closing that gap.
It’s important for employers to stay up to date on these changes, especially employers who operate in—or, increasingly, who have employees in—multiple locations. The laws are emerging and changing continually, and rapidly. Staying on top of these latest developments is critical.
Here we offer a look at the latest developments along with some insights about how to best position your organization to ensure ongoing compliance.
Colorado Pay Equity Legislation
Colorado’s?Ensure Equal Pay for Equal Work Act ?was sent to Governor Jared Polis in May and is expected to be signed into law, going into effect on January 1, 2024. It’s an amendment to the Equal Pay for Equal Work Act, clarifying employer obligations related to the announcements of job opportunities.?
The idea behind the amendment: to ensure that employers don’t discriminate between employees when they’re being promoted or moving into another job based on gender or other protected status for?any?form of compensation including bonuses, profit sharing, stock options, or benefits.?
Illinois Pay Equity Legislation
On May 17, 2023, the Illinois legislature passed a pay transparency bill, HB3129, that will require employers with 15 or more employees to include pay scale and benefits in job ads starting January 1, 2025. Employers failing to comply with this new requirement will be subject to tiered financial penalties that could be as high as $10,000. The bill is currently working its way through the process and awaiting signature by Governor J.B. Pritzker.
In addition, Illinois employers with at least 100 employees in the state will be required to?apply for ?an Equal Pay Registration Certificate (EPRC) by March 23, 2024. After applying, employers will receive a deadline by which they must submit required materials including a Certification Statement, a spreadsheet with data about their employees, and a $150 filing fee. Failure to follow these requirements could result in fines of up to $10,000.?
New Jersey Extends Pay Equity to Temporary Workers
New Jersey’s Temporary Workers’ Bill of Rights is a wide-reaching attempt to level the playing field beyond permanent employees to include temporary workers. It’s being pointed to as?“the first of its kind” ?and may prompt similar initiatives around the country.?
The law, which goes into effect on August 5, 2023, “will require ?that temp employees receive the same salary benefits that workplaces offer to traditional staff, and it will ban agencies from deducting transportation fees and other mandatory charges often imposed on workers’ paychecks.”
Ohio Pay Equity Legislation
In Ohio,?the city of Columbus ?recently joined Toledo and Cincinnati in banning questions related to job applicants’ wage or salary history. This includes employment agencies working on behalf of employers. Columbus’ ordinance will go into effect on March 1, 2024, and will prohibit asking about a prospective employee’s salary history, screening applicants based on their current wages, relying on salary history when making employment offers or determining pay or benefits, or retaliating against employees for not disclosing their pay.
These efforts, similar to others being passed around the country, are designed to minimize pay disparity and gender pay gap issues, promoting pay equality.?
National Pay Equity Legislation
On a national level, the?Office of Personnel Management ?(OPM) has also proposed regulations to bar agencies from using previous salary history when making hiring decisions or employment offers. The impact will be significant as the federal government is the largest employer in the country. As with similar laws that are being enacted by various states and municipalities, the impetus behind the move is to address the inequality in pay that can be exacerbated by relying on previous salary history to establish salary rates when hiring candidates.?
Women of color are particularly impacted, OPM says; their 2022 data shows “a pay gap of 15.2% between Black women and white men, and a 27.2% gap between American Indian and Alaskan Native women and white men.”?
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The OPM may be the first to move the bar on pay equity as an employer, prompting others to follow suit—especially?those that have already faced fines, fallout, and backlash ?in the court of public opinion.
The national government in the US is also showing signs of?moving toward national pay transparency legislation .
These emerging laws designed to address pay disparity aren’t only happening around the country—they’re happening around the world.
Pay Equity in Australia
Australia’s Workplace Gender Equality Act of 2012 was amended by the?Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 ?which was passed on March 30, 2023. The legislation allows the agency to publish gender pay gaps of?private and government ?companies with more than 100 employees.?
When introducing the bill, the minister for women said that, on average, “women working full-time can expect to earn 14.1% less than men per week in their pay packets,” indicating that this bill was designed to help close the gender pay gap.
Pay Equity in British Columbia
Effective with the passing of British Columbia’s?Pay Transparency Act, SBC 2023, c18 (PTA), ?all public and private employers in British Columbia will immediately have to stop asking job candidates for pay history information. Employers will also be prohibited from “punishing” those who disclose their pay to fellow employees or job candidates. They will have to begin posting wage or salary ranges in job advertisements on November 1, 2023.
Employers will also be required to submit pay transparency reports, with time frames depending on the size of their organization—with the largest employers (those with 1000 or more employees) by January 1, 2024, and the smallest (those with fewer than 29 employees) by January 1, 2026.
Pay Equity Legislation in the European Union (EU)
On May 17, 2023, the long-awaited?EU Pay Transparency and Pay Data Reporting Directive ?was published in the EU’s Official Journal. It will go into place on June 6, 2023—20 days after being published. Member States will have until three years from when it goes into effect to insert the rules into their national legislation.?
The wide array of laws addressing equal pay around the country, and around the world, give a clear indication of how seriously issues of pay disparity and wage equality are being considered. Pay equity has become part of the Corporate Social Responsibility (CSR) and Environmental Social and Governance (ESG) movements—the key for most employers in?achieving the “S” in ESG .?
For employers the message is clear—wherever they may have employees and whatever the current legislative landscape may be—take steps now to ensure equal pay practices for current and prospective employees by being transparent and equitable in pay practices.?
These issues are complex and as the examples above illustrate, continually shifting and emerging to address the burgeoning demand for transparency and equity in pay practices for companies of all kinds and sizes, around the globe. Staying on top of the changes, while ensuring compliance and responding to reporting requirements in a timely and compliant way can challenge many organizations.
That’s where Trusaic can come into play helping you to audit your pay practices, interpret your data, and create actionable strategies to help you ensure that you’re taking care of your employees—and your bottom?line.?Learn more.
Conducting a pay equity audit is a key component to ensuring equitable compensation within your organization. Just as important as the analysis is how you communicate findings and progress with various stakeholders. Download?The Pay Equity Communications Planner ?to learn best practices for discussing compensation, both internally and externally.