What is
Pay Equity
There is a growing movement across organizations of all sizes to address pay equity. From Wall Street to Main Street, to legislative offices and C-suites, the issue of pay equity is front and center. As with any complex issue that has a broad social and economic impact, there are a lot of questions around what exactly pay equity is, what factors influence it, and how to achieve it.
The team here at Salary.com talks to hundreds of HR and compensation professionals every day and during these conversations we field many questions related to pay equity. To help generate a broader understanding around this important topic, we’ve compiled these questions and related answers here for easy reference.
Questions and Answers on Pay Equity
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What is pay equity?
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What is pay discrimination?
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Why is pay equity important?
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Where is the pressure for pay equity coming from?
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How big is the gender pay gap?
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What is pay transparency?
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Why is pay transparency important?
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Are there national laws demanding pay equity?
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Are there state laws demanding pay equity?
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What steps can I take to help achieve pay equity?
What is pay equity?
How we define pay equity has evolved over recent years. From the employee perspective, we're seeing them view pay equity through a broader lens. Yes, employees want to know that they are being paid fairly, but now they also want assurances that everyone else in their company is paid fairly, too.
Salary.com defines modern pay equity as equal pay for comparable jobs that is internally equitable, externally competitive, and transparently communicated.
What is pay discrimination?
Pay discrimination occurs when individuals with comparable skill sets and experience perform similar jobs yet are paid differently. Pay discrimination becomes a pay equity issue when individuals are favored or discriminated against relative to their protected class status such as gender, ethnicity, age, etc.
Why is pay equity important?
Paying equitably has both ethical and business-related benefits. Employees that are paid equitably often have increased productivity and innovation. Moreover, employers who ensure pay equity create an environment that helps attract & retain top talent.
Where is the push for pay equity coming from?
Salary.com's Pay Equity Pulse Survey showed that the push for organizations to address pay equity is on the rise. HR professionals reported the top sources of pressure to address pay equity came from current employees, job candidates, organization leadership, and society at large. With interest coming from all sides, organizations who ignore pay equity do so at their own risk.
How big is the gender pay gap?
On average, in the U.S., women make 83 cents for every dollar men earn. The gender wealth gap is even worse, as women have only 32% of the wealth men have accumulated. The gender pay gap compounds over time as companies give raises as a percentage of existing wages. Based on recent rates of change, the pay gap is projected to close in the year 2111. (Source: AAUW)
What is pay transparency?
Pay transparency is critical to achieving pay equity. Being transparent about pay means that employees (or job candidates) understand why they are paid what they are paid. Developing a clear compensation philosophy allows an organization to properly communicate with their employees and become more transparent about pay.
Why is pay transparency important?
When an organization is transparent about pay, the positive impact on culture, employee engagement, productivity, and innovation can be profound. How you communicate pay is a critical step in working towards pay equity and should be given careful consideration. Successful pay transparency effectively manages expectations for both employees and stakeholders and minimizes risk in the process.
Are there national laws demanding pay equity?
According to the US Equal Employment Opportunity Commission, “The US Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work. The jobs do not need to be identical, but they must be comparable. Job content (not job titles) determines whether jobs are substantially equal. All forms of pay are covered by this law, including salary, overtime pay, bonuses, stock options, profit sharing & bonus plans, life insurance, vacation & holiday pay, allowances, hotel accommodations, benefits, and so on.”
Are there state laws demanding pay equity?
On a state level, currently, over 35 states have some form of pay equity, pay transparency, and/or pay discrimination laws. These laws generally prohibit an employer from restricting employees from discussing or disclosing wages or from discriminating against protected classes such as gender or race. Check with your state’s department of labor to see what laws are in place for your specific region.
What steps can I take to help achieve pay equity?
Communicate with your organization’s leadership about the benefits and requirements of pay equity to secure their support.
Salary.com offers the software, real-time data and expertise needed to effectively achieve and sustain pay equity and build trust among employees and recruits. Our Plunkett Pay Equity Framework prescribes a six-step methodology, backed by data analytics, for attaining and sustaining pay equity.
We recommend completing our Pay Equity Audit and Certification with our consulting team to assess where your company currently stands when it comes to pay equity.
These are complex times and achieving pay equity can be a challenging endeavor. One thing is perfectly clear, however: now is the time to address it. If you want to get started, talk to one of our Salary.com compensation consultants to find out where to begin.
Organizations Getting It Right
