Want to attract (and keep!) the best talent, increase productivity, improve morale, and motivate your employees? Address the pay equity gaps in your organization!
More employers are planning to address pay equity gaps in 2022, 66% of them indicating that pay equity analysis is a high priority, a significant increase compared to 2021. Beyond that, more employers plan to conduct gender- and race-based pay equity analysis to identify the depths of the wage gaps that women and people of color consistently face. But, how can employers successfully introduce pay equity at every level while still complying with applicable federal, state, and local employment laws? And how will employees benefit from an increased focus on a seemingly never-ending issue?
Employers Should Be Careful When Navigating Salary History, Expectations
Compensation can be a tense topic of discussion even in the best of times, so knowing how to talk about this important subject is key.
Ignore Salary History
The less focus there is on salary history and the more focus on appropriate skill sets, the more achievable pay equity in the workplace becomes.
While the U.S. Department of Labor (DOL) raised the national minimum wage by $4 at the start of 2022, women, men of color, and people with disabilities are all still facing a disadvantage in their salary capabilities compared to their counterparts. Employers that know a candidate’s salary history can further extend such a disadvantage as that salary history influences their compensation decisions, perpetuating more wage gaps. As a result, salary history bans have been instituted across various jurisdictions across the U.S., leading to increases in pay for women and minorities.
What does this mean for hiring employers? You can no longer ask for a candidate’s salary history! You can, however, ask for a candidate’s compensation expectations in order to make a move. Even here, tread lightly as you do not want to falsely back a candidate into a corner on their existing compensation. Always remember the point of all these rule changes—to allow minorities to break from a cycle of undercompensation to compensation commensurate with their skills and experience.
Colorado and New York have gone one step further by requiring potential offer ranges be included in job posts. Colorado requires firms with one or more professionals to provide a general description of salary, bonus, commissions and benefits for a job posting. New York requires firms with four or more employees to provide a salary range for the position posting. You do not need to provide bonus or benefit details, and can hire at the top or bottom end of the salary range without repercussions.
Other locations require communication of compensation and benefit information directly to a candidate but do not require it in a posting. Please speak with your legal and human resource teams to get an up to date perspective on the specific laws that pertain to you and your search.
Work to Close the Opportunity Gap
Another critical thing employers should address to encourage and successfully implement pay equity is addressing the opportunity gap. Not only are people from marginalized groups facing a struggle to get equal paying opportunities, but they are highly under-represented in management and upper-level positions. With the opportunity gap, women, people of color, and people from the LGBTQ+ community face a lower ceiling than their counterparts, putting a cap on their ability to grow within a company.
In recent years, the number of women in senior management positions has increased, including more women becoming C-suite executives. On the contrary, people of color still face an uphill battle trying to secure management positions, with many employers’ efforts pledging to increase pay equity and diversity yielding minimal returns. Only when these efforts become more concrete, and there is more leeway for internal mobility within businesses for marginalized groups can pay equity become more realistically achievable.
Employers must examine their data to understand the pain points causing the opportunity gap and rectify those points. If women don’t receive promotions at the same rate as men or black men aren’t experiencing the same internal mobility as their white counterparts, offering sponsorship or mentorship programs can help address these issues.
Measure Pay Equity Consistently
To effectively track pay equity and attach metrics to determine how much pay equity is occurring within a company, employers should establish key performance indicators (KPIs) while also considering compensation management software to aid regular reviews. Some employers may also bring in outside firms for pay equity audits to monitor progress.
Employers should review pay equity at different points each year, preferably twice, to spot gaps and inconsistencies, with all pay equity statistics reported to upper management for a thorough analysis. Ensure the data is audited from different angles to analyze pay gaps based on gender and race while including bonuses and stocks for a more comprehensive analysis. Improving data quality and using different indicators to track pay equity allows companies to cut out biases when making salary decisions and encourage more openness when discussing compensation.
The information provided does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. While efforts are made to present only accurate and current information, laws can and do change, and interpretations of law vary among jurisdictions. KangarooStar LLC does not assume responsibility for any error, omission, or inaccuracy of law or fact in the information contained in this resource. Users of this website should contact their attorney or seek legal advice from counsel in the relevant jurisdiction to obtain advice with respect to any particular legal matter.