Viewpoint: Pay Equity Issues Remain at Forefront for HR

Stay apprised of pay equity, pay secrecy and pay transparency requirements

By Alice Kilborn J.D., SHRM-CP, and Christine Walters, J.D., SHRM-SCP May 1, 2017
LIKE SAVE PRINT
Reuse Permissions

Pay equity remains a hot topic throughout the country and the world. Women's marches, Super Bowl advertisements and celebrity tweets continue to draw attention to discussions of who is paid what. Human resources is, as usual, at the forefront of this conversation. So how does HR prepare for the discussion? 

By having a solid understanding of the issues and staying up to date on pending legislation and litigation—not only laws on pay equity but also statutes and legislation pertaining to pay secrecy and pay transparency.

States' Pay Equity Laws Are Uneven

Passed in 1963, the Equal Pay Act prohibits a covered employer from discriminating on the basis of sex in the payment of wages to employees working within the same "establishment." But "establishment" is not defined. The Equal Employment Opportunity Commission's (EEOC's) website reads, "The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work." So here we are 54 years later still trying to figure this out and get it right. Current headlines still report alleged violations of the law.

But protection under the Equal Pay Act may only go so far. The 9th U.S. Circuit Court of Appeals issued a decision April 27 that prior salary can be a pay differential based on a factor other than sex, if it supports a business policy—even if women have lower salary histories—and therefore is allowed under federal law (Rizo v. Yovino, No. 16-15372). However, other appeals courts, including the 10th and 11th circuits, have ruled that salary history may not be the only factor for a pay differential.

[SHRM members-only platform: SHRM Connect]

Analysis doesn't end with federal law. States and local jurisdictions are passing laws that might sound duplicative but often expand the law. For example, Maryland enacted a related law last year that requires equal pay for equal work performed by employees at the same "location." Location includes any of the employer's worksites that are in the same county. But U.S. census data and wage surveys show that the number of men and women who are qualified for the same job varies within the same county, as does market-based wage data. So when an employer runs an ad for the same job at each of its two locations in that county, hires a well-qualified candidate and pays a market-competitive rate, it may look as if the employer has engaged in pay discrimination if it hires a man for one job and a woman for another and pays them different wages.

Similarly, in New Mexico, the legislature enacted the Fair Pay for Women Act in 2013. The federal Equal Pay Act allows for businesses to justify differences in employee pay based upon a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a differential based on any other factor other than sex. The New Mexico Fair Pay for Women Act allows for differences in pay based only upon a seniority system, a merit system, or a system that measures earnings based on the quality or quantity of production. The lack of an allowable nondiscriminatory differential based on business reasons is a troublesome exclusion from this state law. Other states, such as California and Massachusetts, have similarly enacted state legislation to address pay equity (and many more states and localities have proposed legislation waiting in the wings).

Pay Secrecy

Massachusetts, Philadelphia and, once Mayor Bill de Blasio signs a bill into law, New York City are barring employers from asking an applicant about how much money he or she currently makes. (Philadelphia has temporarily halted its enforcement of the requirement after the mandate was challenged by the city's Chamber of Commerce.) The thinking is that such pay secrecy will result in greater pay equity, as men may have higher pay historically than women. So, current compensation may be kept a secret by the applicant in these locations.

Once employees are hired, employers cannot ask them to refrain from discussing with one another what the employer pays them. The National Labor Relations Act (NLRA) gives all nonsupervisory employees, union or nonunion, the right to discuss their pay with one another. An employer cannot lawfully tell those employees or imply in a policy that pay is private or otherwise discourage employees from discussing their pay with one another.

Pay Transparency

California, Maryland and Massachusetts have proposed legislation that would mandate that employers publish their pay rate when advertising for a job and/or prohibit the payment of a wage lower than the advertised wage. The goal would be to make pay negotiations easier for job applicants. Under these proposals, the employer would have to be transparent and accurate regarding wages in a job announcement. That may be tricky since the wage paid to any particular employee is often determined within a range and based on a variety of factors.

What would be the unintended consequences of such legislation? If the employer had to pay a rate that is no lower than that which was advertised, the employer would likely advertise the lowest wage in that pay range for that job. The lowest possible wage may not attract the most qualified candidates.

Takeaways

There are several points employers should remember from the growing number of pay equity protections:

  • Check your handbook. Ensure that your handbook and policies do not prohibit employees from discussing pay. While you are at it, double-check that managers understand that they cannot prohibit such discussions either.
  • Understand the power of why. Of all charges filed with the EEOC last fiscal year, only 1.2 percent alleged a violation of the Equal Pay Act. So why the sudden, intense interest in pay equity? Engage in a dialogue with your federal, state and local elected officials. Advocate and understand if this matter is important to them and, if it is, why it is more important than so many other issues facing workers and employers today.
  • The devil is in the details. Be sure you read and understand pending legislation before it becomes a law. Consider each bill's fiscal effects and crunch your own numbers; understand the monetary impact a bill will have on your organization.
  • Advocate. If the proposed law will adversely affect you, advocate! Let your business's or HR voice be heard. The SHRM Policy Action Center has lots of resources and opportunities to contact your federal and state elected officials.

Alice Kilborn, J.D., SHRM-CP, founder of Kilborn Consulting LLC in Albuquerque, N.M., and Christine Walters, J.D., SHRM-SCP, owner of FiveL Company in Westminster, Md., are members of the Society for Human Resource Management Labor Relations Special Expertise Panel.

 

Was this article useful? SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more. Join/Renew Now and let SHRM help you work smarter.


LIKE SAVE PRINT
Reuse Permissions

SEMINARS

HR Education in a City Near You

Find a Seminar

Job Finder

Find an HR Job Near You
Post a Job

SPONSOR OFFERS

Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 3,200 companies

Search & Connect