Compensation Equity: How to ensure you are paying men and women equitably

We’ve all heard the statistics. Women earn 79 cents for every dollar a man earns. Women’s lower earnings are typically due to a number of different factors. Occupations primarily staffed by women have historically had lower levels of compensation. Why? A variety of factors play into this, including gender discrimination and a lack of paid family leave.

While women across the board earn less than men, the gap gets even wider when you account for ethnicity. For example, female Hispanic workers have the lowest earnings compared to females who are White, Black, or Asian.

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NYC Employers:

Watch our “3 Minutes to Complying with the NYC Salary History Ban” video to ensure your hiring process is legally compliant!

 

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There have been various attempts to close the wage gap recently, most notably:  

  • New York State established its Paid Family Leave in January 2018. How does this help close the wage gap? By giving women the support they need to take care of their families, women won’t be forced to take unpaid leave off from work, trade a higher paying job for one that is more flexible, or be discriminated against based on being a mother.
  • Large employers like Starbucks are setting good examples by enforcing equal pay and employment opportunities. They announced in March 2018 that they have reached 100 percent pay equity for all genders and races performing similar work across the United States.

 

Salary history bans:

The theory behind the salary history ban is that, by preventing employers from asking about a candidate’s pay history, it will encourage employers to set salaries based on skills and experience rather than on what the candidate used to make (which perpetuates the wage gap). Additionally, salary history bans should help women re-entering the workforce (for example, after taking a leave to raise a family) to negotiate a higher salary than their previous entry level jobs.

Salary history bans have been put into place in a few locations throughout the country, and legislation is on the table for more:

 

  • California, Delaware, New Orleans, and Pittsburgh all currently have salary history bans in place.
  • New York City put a salary history ban in place for all public and private employers of any size on October 31, 2017
  • Massachusetts, Oregon, and Puerto Rico are also moving forward with their own version of salary history bans which will be put into effect in 2018 & 2019.

 

Do salary history bans work?

A survey by PayScale found that:

  • women who didn’t disclose their salary history were paid 1.8% less than women who did
  • men who didn’t disclose their salary history were paid 1.2% percent more

While the various bans in place are still new and therefore the data is not definitive by any means, what we have so far shows promise. It appears that salary history bans may have a positive effect on closing the gender wage gap.

 

What can you right now to ensure you are paying women and men equitably?

COMPENSATION AUDIT

  • Review your salary data and determine if male and female employees doing the same job are paid differently, and if so, why?

 JOB STRUCTURE:

    • Make sure you have well-written job descriptions for each of your positions
    • Do your research (for example, industry standards, what the competition is offering) and determine a salary range for each position.
    • When hiring or promoting employees for or in those positions, stick to the range.

 HIRING:

    • Review your hiring process and train your staff. If there is a salary history ban in place in your hiring location, then make sure staff is following it. If there is NOT a ban, then consider banning salary history inquiries proactively.
    • Even if an applicant voluntarily discloses their salary history, don’t rely on it to determine the job offer. Stick to the PayScale that you have set for the position
    • Don’t release salary history for your current or former employees. Once a candidate becomes an employee – and even after they leave your employ – keep their salary history confidential. Where might this become an issue? Let’s say you get an employment verification request for a former employee. Unless you have written permission from this former employee, you should not fill in any salary history information that is asked for.

 SALARY NEGOTIATIONS:

    • Be open and honest with candidates about the salary range from the start. Nothing is worse than a candidate getting all the way through the recruitment process just for them to turn down your offer in the negotiation stage.
    • Take the candidate’s skills and experience into consideration when negotiating salary. It’s reasonable to adjust pay based on relevant factors (which are identified in the job description) such as education and years of experience.

 

 

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