The Equal Pay Act was passed in 1963, making it illegal for employers to discriminate against a person based on their sex when it comes to payment of their earned wages. Despite this legislation, however, we still see examples of women earning less through various news stories. While the pay gap has closed over the years, women still only earn 80 cents to every man's dollar, according to the Institute on Women's Policy Research. And the divide is even worse for women of color.
As of right now, it will take women until 2059 to reach pay parity, the IWPR found, with Hispanic women attaining that goal in 2248 and black women in 2124. It's important for human resources teams to understand these issues and what they mean for their workforce. Here's a closer look:
"HR teams need to ensure workers aren't discriminated against based on sex."
On the business side
The language within the Equal Pay Act of 1963 offers complications for employers across the country. The legislation states that people working within the same establishment cannot be discriminated against based on gender. Yet, companies often struggle to define "establishment" and take advantage of the law's allowance for businesses to legitimize pay differences based on a person's previous salary, seniority structure, merit system or one that decides on compensation based on quality or quantity of production.
While these factors can help organizations manage their salary budgets, it's crucial for HR teams to ensure workers aren't discriminated against and any pay disparities between men and women performing the same work in the same location can be justified under the law. After all, companies with above-average pay equity are 15 percent more likely to outperform their low-scoring competition, according to a McKinsey study.
The pros and cons of pay secrecy
There have been various opinions over the years about whether or not employees should be able to discuss their earnings with one another. Many companies enacted pay secrecy policies that frowned upon dialogues concerning salaries as they believed it would result in raising wages. For workers, this transparency allows them to see any pay disparities worth mentioning to HR leaders. The Women's Bureau of the U.S. Department of Labor agreed, as did former President Barack Obama. He signed an executive order in 2014 prohibiting certain employers from discriminating against workers who shared their pay information with one another.
Many states – including California, Minnesota and New Jersey – enacted their own pay secrecy laws protecting employee right to transparency. Massachusetts, Philadelphia and New York City have taken it a step further by restricting employers themselves from asking job candidates about current or previous earnings. The goal is stronger pay equity to combat the higher salaries men earn over women, according to the Society for Human Resource Management.
It is the responsibility of HR to ensure employees have an outlet to discuss their pay concerns in addition to guaranteeing that salary disparities within the workforce are not based on discrimination due to sex.