How to Comply With Pay Equity Laws
By Sami L. Barry, Construction Executive
As women have become a significant part of the workforce (47 percent according to the U.S. Department of Labor), pay equity has very slowly come to the forefront. According to the 2016 Census Bureau data, women earn 80.5 cents for every dollar a man makes. Notably, this is not just an issue for women, but for other individuals who would be considered a minority for various reasons. This year, many cities, states and individual organizations have taken or are taking matters into their own hands by developing laws, regulations and processes to mitigate unfair pay policies and move toward closing the pay gap.
While there are many areas of the country that still allow an employer or recruitment firm to inquire about salaries and other compensation, there are several that have drawn the line. Most recently, it was New York City. The Big Apple put a ban on inquiring about salary histories starting Oct. 31.
While it can pose a challenge at first, this type of law is valid, necessary and understandable. Every role in an organization has a value, no matter what gender or type of person is doing it—as long as they are actually fulfilling the role successfully.
Another purpose behind the law that can be more impactful is to ensure that, even if a person may be underpaid at one job, that circumstance will not follow them as they progress in their career. If someone is underpaid at the beginning of his/her career, and that salary or prior salary earning is the basis for salary every time they get a new job, it is possible for that individual to have reduced earning potential through his entire career.
The new laws may seem like a challenge to employers. In reality, the laws will support organizations in creating internal compensation structures that are fair to all employees. Subsequently, this is likely to make employees feel that they are being treated respectfully and are valuable to an organization. This scenario can promote productivity, enhance engagement and improve retention.
While the long-term impact of these laws won’t be realized for years to come, they are steps in the right direction. All job candidates will be put on a level playing field, as they should have been from the beginning.
For example, a woman who is asked about her salary and declines to disclose earns 1.8 percent less than a woman who discloses it. Refusing to disclose salary history is most common among the highest income brackets, and for jobs at the vice president and executive levels.
Checklist for Employers
- Remove salary history questions from job applications, including those that are online.
- Notify recruitment agencies and background check vendors to exclude salary history inquiries as part of their processes. It is also recommended that organizations review and revise all contracts in the same manner, along with including an indemnification obligation should a lawsuit ensue as a result of an agency or vendor failing to comply.
- Notify the human resources team and managers/employees who have hiring responsibilities of new laws and regulations. Develop a formal procedure for handling salaries and other compensation matters related to job candidates. Furthermore, it is recommended to have employees sign a document stating that they are aware of the laws and regulations, as well as the company’s processes.
- Review your organization’s website career section to ensure there is no content that could be considered illegal. It is recommended that wording be added that addresses how the organization abides by the law during the recruitment process. It is best to provide that information upfront for candidates so they understand this prior to submitting their resumes and cover letters if they plan to include compensation information in either.
- Consider developing tighter compensation levels for roles, related to years and different types of experiences. This will provide a guideline for determining different salary ranges for a role and support an offer being fairly and equitably structured.
What questions can be asked during the hiring process?
- What are your salary expectations?
- What amount of salary are you looking for?
- What is the range of salary you would consider?
- Are there particular salary, bonus or benefit requirements that you have?
An organization and its hiring manager can initiate a conversation with a candidate about what motivates him and how he may fit into the organization’s internal environment and culture. After all, compensation only represents a part of attracting a new hire and an employee’s overall job satisfaction.