In the fight to even the playing field between men and women in the workforce, Representative Eleanor Holmes Norton, D-D.C., has designed the Pay Equity for All Act of 2016. The bill was introduced to Congress on September 14 and is currently under review by the House Committee on Education and the Workforce. Under this potential law, employers that ask questions regarding a job candidate's salary history could be subject to fines up to $10,000.
In addition, current workers could file a private suit against a company that violated the law during their recruitment. As a result, businesses could receive up to $10,000 in damages plus attorney fees.
Congress is currently reviewing the Pay Equity for All Act of 2016.Not the first of its kind
While the Pay Equity for All Act of 2016 would put a federal focus on the pay gap between men and women, certain states within the union have already enacted similar laws, according to the Society for Human Resource Management.
The Massachusetts Pay Equity Act will take effect in 2018 and will prohibit organizations from screening applicants based on their previous salary or asking related questions until after an official offer is made, according to a press release on the legislation. Companies will need written permission from the candidate to verify wage amounts with previous employers as well.
Bills pending approval in New York City and California would take similar action. The former would make it illegal for city employers to ask or rely on a person's salary history when making pay decisions. The latter wouldn't prohibit HR teams from inquiring about potential employees' current wages but would ban businesses from using that data to justify a pay differential between men and women performing similar work.
The pay gap is not expected to close until 2059 at the current rate of change, according to a report from the Joint Economic Committee. There are, however, certain steps organizations and their HR leaders can take to create a more fair workplace for all genders. Here are three such actions:
"HR teams should make sure promotions and raises are bias-free."
1. Analyze promotions and raises
While salary differentiations during the hiring process are a large issue, so are inequitable promotions and raises. Businesses should monitor these actions to ensure they are bias-free and that men and women are being analyzed and valued equally, according to Harvard Business Review. Continued talent development between employees of different genders with similar skills occurs when people are given access to similar earning opportunities, increases and add-ons to base pay as well as when they're assigned to positions where pay and chances for promotion are higher. In the simplest terms, employees – both men and women – will be of greater value to companies if employers treat them with respect and gratitude for their hard work.
2. Add women to executive boards
It's not uncommon for it to be a boys' club when it comes to corporate leadership. While this reality has its advantages, it can also continue to lengthen the pay gap between men and women. To combat this issue, companies should add more qualified female board members to their executive teams, according to Mary Ellen Carter, an associate professor at Boston College. Carter and her colleagues – whose research is focused on executive compensation – found that pay gaps are much lower when women serve on corporate boards.
Not only are other top-level female executives better paid when a business's board includes women, but the action could encourage female employees at all levels to strive to higher positions of leadership. Spreading the wealth can go a long way in reducing the pay gap.
3. Implement pay transparency
All employees want to be treated fairly, and the key may be making everyone aware of what their peers are earning, according to Forbes. Pay transparency helps self correct the gender pay gap problem, as men and women gain valuable information regarding their salaries. It is widely known that women are less likely to negotiate their wages as hard as men, but knowing what their male counterparts are taking in for performing the same role or similar responsibilities can encourage female workers to speak up about their worth and value to their company.
This strategy can increase productivity, as employees want to work harder to earn better pay, but it can also be challenging for organizations themselves. Pay transparency will result in people holding their employer more accountable for salary discrepancies, but could also change the way businesses decide how to pay their workers. Instead of good negotiators receiving better money, higher wages would be given to those people who are most productive and work the hardest for it.
The gender pay gap is still a large issue in the U.S. The federal government, however, along with certain states are taking action to reduce this discrepancy by prohibiting employers from asking about salary histories during the hiring process. This way, HR leaders can't base the wages they offer a candidate on their former earnings, which may have been far less than they should have made. In addition, companies can utilize strategies including monitoring promotions and raises, adding women to executive boards and implementing greater pay transparency to close the pay gap further within their own organizations.