April 4, 2017, is “Equal Pay Day,” which is an apt time to remind employers of the risks that lurk beneath unexamined practices, subconscious biases, and general human fallibility.
By the numbers:
20% = average wage gap between men and women in the United States. (Institute for Women’s Policy Research)
58% = companies that track salaries in comparable roles by gender. (LeanIn.Org and McKinsey & Company) I’m surprised the number is that high because I have yet to come across a company that conducted a pay audit by gender before coming to me.
1,075 = charges filed with the EEOC under the federal Equal Pay Act in 2016. (EEOC)
$8.1 Million = benefits paid out as a result of charges for Equal Pay Act violations with the EEOC in 2016. (EEOC)
Why are we still talking about pay gaps in 2017?
Fortune.com provides a short outline of why the gender pay gap still exists, citing the “motherhood penalty;” deficits in negotiation; and employer bias.
Our company doesn’t engage in pay discrimination.
If you have done a pay audit and can say that with confidence, then you are ahead of the game. However, in my experience, pay inequity isn’t even on most company’s radars, which means that they may have been engaging in pay discrimination, even if it is subconscious or merely the result of employees’ varying negotiation skills.
California has one of the most ambitious equal pay laws in the country. Thus, California business owners should be familiar with the state’s Equal Pay Act, which prohibits employers from paying one gender more for substantially similar work unless they can show a bona fide reason for the pay differential, such as experience, education or quality of production. In January 2017, the protection was expanded to protect pay disparity based on race or ethnicity. Additionally, employers are barred from justifying pay disparity based on the employee’s salary history alone. So be aware that asking applicants for their salary history may hurt you instead of help you.
Why this matters.
Understanding the landscape and the effect of various employment practices within your workplace allows you to correct course, budget, and plan accordingly. Failure to identify the areas of exposure is the equivalent of making a bet that you won’t get hit with a charge. If you lose that bet, your company may wind up having to make up the difference in pay, plus interest, and penalties in one fell swoop. How will this impact your business?
Put the odds in your favor.
- Conduct a pay audit across gender, race, ethnicity;
- Review your hiring process and criteria; and
- Review promotion criteria and practices.
Contact me at (949) 529-0007 if you have questions about the California Equal Pay Act, feel free to contact me or call 949.529.0007.
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