When most people think of the topic of equal pay and fair compensation, their minds usually go straight to one thing: the gender wage gap. While this is the very factor that set the movement ablaze leading up to the adoption of the Equal Pay Act of 1963 and Title VIII of the Civil Rights Act of 1964, protection has expanded to include workers facing discrimination not just due to sex, but race, color, religion, national origin, age, and/or disability, as well.
It’s great news for employees, but confusing equal pay laws can be bad news for business leaders who do not adhere to them. To help you make sense of the equal pay landscape, we are here to provide you with a guide that cuts out all of the fat so you can get to the heart of what equal pay means for your organization. The following is information that every CEO, Human Resources professional, manager, and decision maker must know. By educating all parties, you are taking the very first step in guaranteeing that your company supports an equal and just workplace culture in which compliance is inherent.
This guide discusses:
Equal Pay and Fair Compensation Laws Explained
When it comes to equal pay and fair compensation laws, there are several to consider on the federal, state, and local levels. Let’s take a look at the federal equal pay and fair compensation laws, as well as their impacts:
- Equal Pay Act of 1963 – This historical act was signed into law by President John F. Kennedy on July 10, 1963. The U.S. Equal Employment Opportunity Commission (EEOC) oversees it and outlines all of the Act’s particulars, including fines, exemptions, and the statute of limitations. At its core, the EPA is a law that was adopted to safeguard women from being under-compensated for performing “substantially equal work” in the same establishment as their male counterparts. The EPA doesn’t just cover equal hiring and pay compliance, but it also encompasses overtime pay, bonuses, life insurance, work travel accommodations, and even stock options. If a company is ever questioned on the fairness of its equal pay practices, it must show proof that the male employee getting paid a higher amount has more advanced skill levels or seniority.
- Title VIII of the Civil Rights Act of 1964 – Just one year after the Equal Pay Act of 1963 made history, Title VII of the Civil Rights Act of 1964 took the concept of fair employment practices even further. On enactment of Title VII, employers with at least 15 workers were banned from discriminating against employees on the basis of sex, religion, color, or national origin. Included are similar employment terms as the EPA, such as maintaining fair pay practices. This includes hiring, promotions, and any other in-house decisions that could impact pay. Similar to the EPA, Title VIII of the Civil Rights Act of 1964 is overseen by the EEOC.
- Executive Order 11246/11375/13672 – Originally signed by Lyndon B. Johnson on September 24, 1965, Executive Order 11246 was crafted to protect federal contractors, federally-assisted constructed contractors, and federal subcontractors from being discriminated against provided the contract exceeds $10,000. In 1967, the executive order was amended when the word “sex” was added, and in 2014, it was amended once again when the words “sexual orientation” and “sexual identity” were added. This executive order is governed by the U.S. Department of Labor.
- The Age Discrimination in Employment Act of 1967 – The Age Discrimination in Employment Act of 1967, otherwise known as the ADEA, protects non-exempt applicants and employees who are 40 years of age or older from being discriminated against in the workplace. This includes hiring, promotions, terminations, bonuses, overtime pay, etc.
- The Americans with Disabilities Act of 1990 – The EEOC oversees the Americans with Disabilities Act (ADA). This Act safeguards disabled members of the workforce from being paid less due to their disability granted they are, in fact, qualified for the job and can perform the essential duties that the job entails.
- Lilly Ledbetter Fair Pay Act of 2009 – Signed by President Barrack Obama on January 29, 2009, the Lilly Ledbetter Fair Pay Act serves to amend the aforementioned Title VIII, but it goes even further to protect the disenfranchised by giving them the power to file a complaint with the EEOC once every new paycheck is received. Now, employees are allowed to file a charge from 180 to 300 days of receiving their pay (depending on the jurisdiction in which the company is located).
It’s important to realize that your organization’s compliance doesn’t stop at the federal level – there are also specific state and local laws that concern equal pay and fair compensation that must be followed, as well. To find out more information about your state, reference this handy list of state labor agencies. Once you’ve studied your specific state’s laws, you can then contact your corresponding local agency for further guidance.
Workers Who Are Most Likely to Be Undercompensated
Sadly, and perhaps unsurprisingly, businesses both public and private have a long history of compensating certain demographics at categorically higher rates than others. In some cases, it’s unintentional, but the first step in determining if your organization has an equal pay problem is to educate yourself on the current trends.
A recent study published by Georgetown University and the Center on Education and the Workforce reveals that women get paid less than men for doing the exact same job, no matter their circumstances. For instance, women who have associate’s degrees make an average of $43,000 per year, while men with just high school diplomas make a cool $47,000.
Of course, there is an argument that females tend to dominate fields that are typically lower-wage careers and workplaces that tend to pay lower wages, such as social services offices and schools. But the fact still remains that women get paid less than men, even at the executive level. To prove this, researchers analyzed salary data from high-paying positions and found that women who had the same exact educational experience and work background as men still get paid 8 cents/hour less than the men in the very same positions.
Unfortunately, the discriminatory scenario outlined above is a “best-case” one. Recently the U.S. Bureau of Labor Statistics released the 2016-2017 median weekly dollar-amount wages made by full-time and salaried employees. In this, the BLS breaks the numbers down by both race and sex. Here are the findings, organized from the highest wage to the lowest wage by race:
- Asian – Men: $1,207/week, Women: $903/week
- White – Men: $971/week, Women: $795/week
- Black – Men: $710/week, Women: $657/week
- Hispanic – Men: $690/week, Women: $603/week
Ostensibly, the wage gap naysayers of the world will be quick to point out that the above data doesn’t reflect pay discrepancies for the same job, performed at the same workplace – and they’re absolutely right. As stated above, women tend to gravitate to positions that aren’t compensated as well as those in other industries. Having said that, women make up nearly half of the United States’ workforce and they hold more advanced degrees than men. And, the argument doesn’t even scratch the surface of racial inequalities in the modern-day workplace, which still occur despite a growing awareness of the benefits of a diverse workforce.
So, why does this apply to you and your operation? It means that you may be underutilizing your female and/or black or Hispanic employees. Perhaps their full educational backgrounds were not considered during their hiring processes. Or, maybe they’ve come into your organization from a lesser job title because they faced discrimination in their previous workplaces. Either way, the statistics should be strong enough for you to take a closer look at your existing workforce, and make changes via internal promotions, raises, and re-organizations.
How to Review Your Equal Pay Practices
We just gave you a taste of what you can do to shore up any of your equal pay practices, but there are many more steps companies can take to create a workplace that promotes equality.
The Women’s Bureau of the U.S. Department of Labor urges employers to be diligent about reviewing their pay practices. Here are some of the ways that you can successfully do this in your organization:
- Consider an “open pay policy” – The topic of transparent pay might be a controversial one, but adopting a policy in which each employee can easily see the salaries of their colleagues is the fairest move you can make. Many organizations shy away from the idea out of fear of inciting a culture of jealousy or bitterness, but, if yours has nothing to hide, then you really have nothing to worry about. When salaries are publicly posted, employees will be able to quickly see that there are no discriminatory wage disparities and that rewards are based on performance. Of course, it’s rare that there are absolutely no wage disparities in an organization, so if you are committed to correcting yours, this is the quickest way to go about doing it.
- Elect members of your staff to monitor your equal pay practices – Usually, this falls into the hands of an HR representative. Make it part of their job to continuously monitor your equal pay practices so that they are always in line with the fair practices demanded by federal, state, and local agencies. Additionally, designate a committee of managers and the appropriate finance personnel to meet with this person annually to review other pay policies, such as overtime policies, raises, bonuses, etc.
- Re-think your salary and raise negotiations – This is where it can get tricky. Contrary to popular belief, women ask for raises just as often as men do. That said, women aren’t granted the raises as often. Research compiled by the Harvard Business Review finds that women are just as likely to ask for more money, but they are 5% less likely to get it than male employees working in the same position. Though there isn’t sufficient research on initial salary negotiations, one could surmise, based off of the above-mentioned $0.92 vs. $1 statistic, that women secure less. Remember, your organization is not compliant if you do not fairly compensate your employees, no matter where they are in their career. Your employee can go to the EOCC anytime between 180 days and 300 days after a paycheck to file a complaint. Tread lightly during salary and raise negotiations, and always look at the big picture before you accept or reject a proposal.
Further Tips on Building a Fair Company Culture
You can’t have fair, peaceful, or inclusive company culture without first adhering to a fully compliant equal pay platform. There are many ways to do this, aside from the aforementioned. Here are some more powerful ways to achieve a culture of fairness, via the Women’s Bureau of the U.S. Department of Labor:
- Guarantee that all of your workers understand their ability for advancement in your organization
- Conduct random equal pay compliance checks
- Evaluate your career training opportunities to see whether or not everybody is being invited/included
- Get to know your hiring practices so that you can get a better sense of whether or not your organization is actively recruiting women and minorities
- Take an honest look at the gatekeepers in your organization – have you ever observed discriminatory behavior from them?
- Don’t wait to correct weak spots in your equal pay plan
- Devise a bulletproof blueprint for designating compensation and review as often as needed
Where to Go for Compliance Help
There are a number of agencies that are here to help ensure that your equal pay and fair compensation practices are in line with current laws, regulations, and best practices:
Get in touch – these agencies are here to answer your questions on all things equal pay, wage discrimination, and pay gaps.
Equal pay should be a concern for every company, even those that have already taken steps to ensure equality in the workplace. If you haven’t reviewed your equal pay practices recently, now is a great time to reexamine your company’s policies and ensure compliance with federal, state, and local regulations. And because a workplace that promotes equality contributes to employee satisfaction, fostering loyalty among your top-notch workers, the benefits of implementing equal pay practices extend far beyond legal compliance.
The information provided on this webpage is for general information purposes only and should not be viewed as legal, financial, or other professional advice. All information provided on the site is provided in good faith, however we make no representation or warrant of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information on our site. You should not act upon information contained on this without seeking appropriate professional counsel. While this article may discuss issues relevant to employment, Wonolo Inc. (“Wonolo”) is a labor marketplace that helps businesses connect with both independent contractors and employees.
Additional Resources on Equal Pay and Fair Compensation
For more information on equal pay and fair compensation, visit the following resources: