How businesses can address the gender pay gap

Business, Money, Rights

Equal pay for equal work is a deceptively simple idea. Pay should be based on the job or the value of the work rather than on the gender of the employee. But achieving and maintaining pay equity between men and women isn’t easy. Historical bias—often unconsciously or unintentionally expressed—or simple conflict avoidance both complicate the matter.

It can be done, however. Some on-the-ground, tactical measures are increasingly being used in the effort to achieve pay equity.

Massachusetts’ Pay Equity Bill

Massachusetts recently passed a new equal pay measure that prohibits prospective employers from asking about salary history in an interview. The Massachusetts Pay Equity Bill was approved in August 2016 and goes into effect no later than January 2018.

According to the Equal Pay Coalition, women in the workforce in Massachusetts earn only 82% of what men in equivalent positions are paid. For women of color in the state, the disparity is even more obvious: African American women make only 66 cents on the dollar of wages earned by men, while Latinas fare even worse, at 54 cents on the dollar.

These startling figures led Massachusetts lawmakers to follow the lead of Maryland and California, two states that, as reported by The New York Times, also recently passed strict pay equity laws. In addition to forbidding employers to ask about salary history, the Massachusetts bill mandates two other tactical measures: It provides employers with a definition of “comparable work” and encourages employers to review their compensation schemes, and also prevents employees from being terminated for discussing their salary with co-workers or colleagues.

But it’s the prohibition against asking job candidates about their pay history that sets the Massachusetts law apart. It’s important because employers often use a candidates’ recent wages as a guide to what pay to offer. So a candidate who has a history of lower-paying jobs will be offered a smaller wage than a candidate with a more lucrative wage history, even if they are applying for the same position and have similar skills and education. And while this prohibition applies to all job candidates, male and female, it could be of great benefit to women, who, as a group, have a history of lower-paying jobs.

Aren’t there federal laws against wage discrimination?

Yes, the United States has long had laws on the books that prohibit gender-based pay discrimination. The Equal Pay Act of 1963 prohibits sex-based wage discrimination, and in 2009 the Lilly Ledbetter Fair Pay Act greatly expanded the time period for filing complaints under this act. In addition, sex is included as a protected characteristic in Title VII of the Civil Rights Act of 1964.

Plaintiffs, however, often find it difficult to prove wage discrimination under the federal laws, which explains why Massachusetts and other states are enacting their own pay-discrimination statutes.

The Canadian model

A more comprehensive approach to gender-based wage inequality can be found in Canada, which directly addresses pay inequality and equal wages in the Canadian Human Rights Act. The Canadian government’s Pay Equity Program recommends that employers approach pay equity as a collaborative endeavor between the business, its employees, and any bargaining representatives.

The Labour Program of Canada outlines seven steps that provide a framework for “understanding how ‘equal pay for work of equal value’ works.” The steps walk businesses through a process of analyzing data, evaluating job criteria, and then implementing a plan to ensure equitable wages. Canadian law does not permit any wages to be reduced as a result of a pay equity plan.

Things all businesses can do

The Canadian model, which can be extensive and time consuming, seems unlikely to be embraced by US businesses. That said, American businesses needn’t be located in Massachusetts, California, or Maryland to do the right thing in terms of pay equity. Most businesses value employees and want to treat them fairly, and there are plenty of steps they can take to implement and maintain equity.

Talking about pay equity and its importance is a first and definitive step. Once the conversations have begun, businesses can look to legislative models for inspiration, reviewing the statutes for guidance on real-world actions, such as the tactical measures outlined in the Massachusetts bill. Borrowing from the Canadian model, managers should be trained in understanding and redressing historical bias, and compensation and human resources professionals should be empowered to collect, analyze, and correct any pay equity issues.

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There are no quick fixes for pay disparities, but careful review and monitoring, along with the implementation of actionable tactics, are steps that every business, of any size, can take.