COMP NEWS – Top Employers are changing the conversation about pay equity, leading to an evolving discussion about ways to tackle pay equity in a changing landscape.
“Pay equity” means that employees, regardless of protected class, receive the same pay for the same work. However, it is not always the case that any two employees are exactly comparable in terms of assigned tasks or productivity. Therefore, in practice, pay equity is a measure of the systemic differences in pay across protected group status for workers who perform the same or substantially similar work depending on various federal or state laws.
Here are three ways in the discussion around Pay Equity is evolving, and how businesses can keep current with rising trends:
Pay equity has traditionally focused on areas where men make more than women. However, evaluating racial and ethnic pay differences have become more important with recent social justice movements.
For example, Kaiser Permanente recently resolved a class action where Black workers alleged, among other claims, that basing merit pay on salary ranges exacerbated racial pay gaps.
Aggressive Government Enforcement
State legislatures and the federal government continue to move aggressively to investigate pay equity compliance and enforce pay equity laws. Federal government agencies are engaging in unprecedented coordination to investigate and litigate cases related to pay equity.
For example, the Office of Federal Contract Compliance Programs (OFCCP) changed its directive for federal contractors to expand how it investigates and analyzes compensation discrimination.
Changing Labor Market
The tight labor market has affected pay equity. Many employer self-audits uncover practices that foster wage compression, where more tenured workers may earn less than newcomers.
It is even more important to evaluate how starting salary and retention pay decisions affect pay for the entire organization because of increasing pressure for employers to offer higher starting pay to attract new employees in the current tight labor market.
Current employers who want to remain competitive should become aware of how pay equity affects its talent retention and acquisition,
Moving forward, all signs point to the growing importance of pay equity for employers. It remains a core of evolving ESG requirements and stakeholders such as governments and employees are seeking additional transparency. And large fines and lawsuits await the unwary.
Employers who conduct in-depth and rigorous self-audits best prepare themselves to meet these challenges.
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