Strategist advises proactive pay plan
Pending U.S. legislation and state actions may require employers to strengthen fair pay policies.
A bill amending the federal Equal Pay Act of 1963 to hold employers accountable for the pay gap is causing a stir and coinciding with a flood of parallel initiatives by state governments, including Michigan’s.
Today, women who work full time, year-round are paid, on average, only 80 cents for every dollar paid to men, resulting in a gap of $10,169 each year, according to a fact sheet published last fall by the National Partnership for Women & Families in Washington, D.C.
The National Partnership data shows women in Michigan earn 78 cents for every dollar earned by men, ranking the state in the bottom third when it comes to the gender pay gap.
In January, Gov. Gretchen Whitmer signed an executive order banning state departments and agencies from asking about a job applicant’s salary before an offer is made and barring them from asking previous employers about a candidate’s salary history or searching for it in public records, in an effort to close the pay gap. Although the directive applies only to state workers, Whitmer has said she hopes it will become a model for the private sector to follow.
The Society for Human Resources Management has been tracking similar efforts nationwide made through the legislative process and said in February state legislatures have introduced more than 40 pay-equity bills since 2017 and at least five states have signed them into law.
A federal bill that would ban discriminatory practices and require employers to address the wage gap — the Paycheck Fairness Act, which has three lead and 45 co-sponsors — was introduced in Congress on Jan. 30, passed the House on March 27 and awaits a vote in the Senate.
The proposed legislation would update the Equal Pay Act (EPA), which made it illegal for employers to pay unequal wages to men and women in the same workplace who perform substantially equal work. The American Bar Association has said the EPA “has proven ineffective in eradicating gender-based wage discrimination” because it lacks teeth in several areas, including the remediation and retaliation provisions.
According to the National Partnership and Congress.gov, if it passes, the Paycheck Fairness Act would, for employees:
Protect against retaliation for discussing salaries with colleagues.
Prohibit employers from screening job applicants based on their salary history or requiring salary history during the interview and hiring process.
Require employers to prove that pay disparities exist for legitimate, job-related reasons.
Provide plaintiffs who file sex-based wage discrimination claims under the Equal Pay Act with the same remedies that are available to plaintiffs who file race- or ethnicity-based wage discrimination claims under the Civil Rights Act.
Remove obstacles in the Equal Pay Act to facilitate plaintiffs’ participation in class-action lawsuits that challenge systemic pay discrimination.
Create a negotiation skills training program for women and girls.
For employers, the Paycheck Fairness Act would:
Recognize excellence in pay practices.
Provide assistance to businesses of all sizes that need help with their equal pay practices.
Lisa Cooper, people strategist with Grand Rapids-based HR Collaborative, said she believes the Fair Paycheck Act will help undo inequities that are often “unconsciously” perpetuated in the workplace.
“At least for our clients, no one wakes up in the morning and says, ‘I want to make sure that I’m only paying women 70 or 80 cents on the dollar for every man I employ.’ This kind of thing happens unintentionally, unconsciously and it’s perpetuated over the long term,” Cooper said. “I think what this act will do is prevent the continuity of that practice.”
Some of the strategies HR Collaborative helps clients establish to ensure or improve pay equity include setting a comprehensive compensation strategy; using reputable benchmarking tools to help set fair compensation; creating a centralized committee, usually in the C-suite, that oversees wages, raises and bonuses across departments; conducting annual pay-equity analyses and audits to track whether there are any gaps to address; implementing talent calibration strategies in a thorough performance review cycle; and more.
Cooper said while there is no one-size-fits-all solution for communicating compensation practices to employees, it helps if employers are “as transparent as possible about the process.”
“If they could tell their employees, we have a strategy, and our strategy is X, and we have administrative guidelines that we are consistently applying to every individual contributor across the board, and we engage with these resources and consultants to ensure that we’re paying a fair and competitive wage for organizations our size and our geography based on the knowledge, skills and abilities that we know are required for success in this role — and then we do an analysis every year just to ensure that we haven’t missed something — if they can give people some confidence on how compensation is set and administered, it gives employees quite a bit of peace of mind,” she said.
Cooper added organizations that admit past shortcomings and share current efforts to change are much more likely to attract and retain employees in today’s job market.
“It’s OK for an organization to say, ‘We weren’t as strong as we would have liked to have been, but we’re starting today, and we’d like you to come on this journey with us.’ I think that really resonates well with employees,” she said.
“When employers shirk that, or they’re not as transparent, that’s where you see rifts developing, you see trust break down, you see cultural problems develop.”