This is What Happens When You Adopt Equal Pay Legislation
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This year, 2016, has been a huge one for equal pay legislation, with Massachusetts the most recent state to pass an updated law. While most of the updates have been at the state level, all employers, no matter their location, should strive to level the playing field for all employees.
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If you're a business owner, take a page from the state legislatures active in this context, to make work and compensation fair for everyone at your company. Here are a few state-level reforms and how employers can adopt similar policies:
Forget about a candidate's pay history.
Massachusetts is the most recent state to sign an equal pay act into law. The new law, passed August 1, introduces several provisions to help strengthen the state’s existing equal pay laws. One requirement, however, stands out from the rest: Employers will no longer be able to ask job candidates about their salary history in application materials or the interview.
Unless a job candidate voluntarily provides information about salary history, employers can’t use it to determine their pay rate. The reasoning is that when compensation is based on past numbers, it only perpetuates past disparities, considering that women typically earn less than men in their first job.
How to adopt: Instead of using salary history as a frame of reference when determining pay for new employees, take the time to consider the position and responsibilities. What’s the ideal base salary for a new employee in this function?
Identify a reasonable range, and determine which specific factors will move potential new hires up that scale. How valuable to the role are experience, industry knowledge or specialized skills?
When negotiating with job candidates, explain to them how the starting salary was determined and what the offer means. That way, job-seekers can see the careful thought that went into the offer; the company didn’t just decide to pay what its H.R. managers felt like paying.
Think responsibilities, not titles.
At the beginning of the year, what many have called the most extensive equal pay act yet went into effect in California. The California Fair Pay Act requires that employers offer men and women comparable pay not just for jobs with the same titles, but for those that are “substantially similar.”
In other words, when employees have similar responsibilities, no matter what their official title or role, they have to be paid equally.
How to adopt: Regardless of their state, employers should strive to pay all their employees fairly for equal work. When determining pay, look beyond titles. What do employees actually do? Which responsibilities are worth more than others?
Develop a formula for how pay and raises are determined and share it with employees so everyone understands what is normal across departments and for the company as a whole. After all, an April Glassdoor survey found that nearly 70 percent of the 8,254 employees surveyed globally said they wished they had a better understanding of what fair pay was for their position and skill set at their company and in their local market.
Open up the conversation.
New York State’s own recent equal pay act went into effect in January. In addition to having stricter requirements about the reasons employers can give for differences in pay, the law also prevents employers from taking action against employees who discuss their salaries.
How to adopt: Employees are happier when they’re free to talk about pay -- it shouldn’t be a taboo topic. Open the conversation on salary and adopt transparency to make compensation fair and satisfying for all employees.
In this regard, PayScale's 2016 Compensation Best Practices Report found that among nearly 7,600 business leaders surveyed in the United States and Canada, 73 percent said their employees were fairly compensated -- but just 36 percent of employees agreed.
And that's too bad because when employees openly discuss salary, they’re less likely to think their paycheck is unfair. In the same survey, 82 percent of employees said they would be satisfied with below-market pay, as long as their employer was transparent about the reasons.
Instead of discouraging employees from talking about pay, remove the secrecy. Address head-on any problems, concerns or questions employees have about salary, and don’t shy away from the subject. That way, employees will feel comfortable discussing discrepancies and be reassured that they’re being paid fairly.
Go beyond salary.
Salaries aren’t the only things state governments are looking to make equal in the workplace. In May, the governor of Maryland signed an equal pay act into law that mandates not only similar compensation, but similar advancement opportunities as well.
How to adopt: Employees’ pay doesn’t stay the same from day one -- advancement opportunities have a huge impact on what employees earn over the course of their careers.
So, take a look at that advancement. Review policies at your company that determine raises, bonuses and promotions. Are they clear and specific? Do they allow all employees to advance in the company? Are learning and professional development opportunities available to everyone? Keeping policies clear and uniform will provide employees with an equal chance to advance.
Consider the answers to these questions and whether or not changes need to be made to give all employees the same opportunities at the company. Make sure your business is up to date on the improvements state legislatures are already adopting.