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Closing the Unequal Pay Gap: How Employers Can Manage Gender Pay Inequity

Study after study, the data reveals that a significant gap in pay between men and women continues to exist. It is estimated that on average women earn about $0.80 for every dollar a man earns. These discrepancies are even greater for women of color.  Though statistics show that disparities in pay ratio based on gender are shrinking, progress on closing the gap has been modest, changing roughly by only a nickel over the last four years.

Compounding the pay equity gap is the work opportunity gap. Limitations on advancement in the workplace mean that women are less likely to hold the same high-paying, high-level positions as men. Studies show a smaller percentage of women eventually reach a manager or supervisor level position throughout various stages in their career when compared with similarly situated men. Even fewer women reach C-suite or Board-level positions.

Despite all this data, most Human Resources experts agree that cultivating a diverse workforce at all levels helps stimulate productivity and foster creativity and positive working environments. For these reasons, many employers are looking for ways they can do more to address widespread gender inequalities in the workplace.

Relevant Laws and Trends

Although federally the Equal Pay Act, which prohibits discrimination based on gender in the payment of wages, has existed since 1963, many states have adopted their own equal pay laws that offer more protections to employees. Between 2017 and 2018, states like California, Delaware, Massachusetts, Oregon,  and Vermont amended their Equal Pay laws to prohibit employers from relying on salary history in determining whether to offer employment to an applicant or deciding what salary to offer, leading a trend in state-wide bans on seeking this information at the pre-offer stage.

Recently, states including Alabama, Colorado, Connecticut, Hawaii, Illinois, Maine, New Jersey, New York, and Washington, as well as dozens of local and municipal ordinances in many major metropolitan areas, have enacted similar legislation going into effect in 2019 and beyond.  Most laws, however, continue to allow for differences in pay due to seniority, merit, education or other bona fide business-related reasons.

What Can Employers Do to Address Pay Inequality Issues?

The first step employers can take to address the gender pay gap in their workplace is dive into company pay records and determine whether pay inequity exists in their companies.  By looking at company statistics internally, employers can examine the demographics of individual positions and identify any areas where a discrepancy in pay may not be linked to seniority, merit, quality or quantity of work, or any other bona fide business-related factor. Employers can also monitor employees’ progress through seniority and promotion systems to address any lapses in the opportunity gap as well. Conducting these types of audits quarterly or semi-annually can help minimize exposure for long standing pay inequities dating back several years. These audits can be incorporated into the year-end process check that employers will need conduct to prepare for the new overtime pay rules that take effect on  January 1, 2020.

Employers can also look to increase diversity in management. Since senior level employees often have significant input in hiring decisions and raises, balancing management with a diverse workforce can help ensure different perspectives are brought to the decision-making table. Furthermore, incorporating equal pay principles into the company’s mission and core values will help continually reaffirm the organization’s commitment to workplace equality as the business continues to grow.