Equal Pay for Equal Work - What Does It Really Mean?

Publication
Compensation Planning

Many people are shocked to find that equal pay is still an issue for companies. After all, there are laws against gender discrimination so how is this possible? While it’s understandable in theory, it can be difficult for employers and employees alike to recognize how it works in practice.

What does equal pay for equal work really mean? The Equal Pay Act of 1963 says it’s illegal in the United States to pay men and women working in the same place different salaries for performing a job that requires substantially equal skill, effort, and responsibility. On paper, it makes perfect sense. But there are exceptions:

  • Seniority. Rose was just hired to be William’s colleague, working together on the same projects with the same clients. Rose makes $10,000 less a year than William because she’s a new hire and he’s been with the company for five years.
  • Geography. A woman in San Francisco hired on the same day as a man in Boise, Idaho, will make more for doing the exact same job with the same company.
  • Performance. Ellie and Sophia are both office assistants at the same company. Ellie received a merit raise and Sophia didn’t. Sophia was incensed! However, management observed that Ellie is more proficient and performs her job better and, therefore, deserves higher compensation as a reward for her outstanding performance.

Unequal Pay and Unconscious Bias
There has been a lot of press about unconscious bias with Starbucks and Salesforce both admitting publicly that there is much work to be done, and for good reason—it’s a real thing. Unconscious bias is the way you perceive details in your mind even if you are not consciously aware that you do. One example is when hiring, managers often unconsciously gravitate towards individuals like themselves. Unconscious bias can also creep in with pay decisions that are based on assumptions.

For example, consider that there are two great candidates for two open positions for the same type of job. One is a female returning to work after having a child, and one is a male with current employment. Both have good experience and the skills to do the job. In this scenario, a hiring manager may unconsciously feel that the male candidate with more job stability is a better candidate and subsequently pay him a higher starting salary than the female who has an interruption in her work history. Unconscious bias can also come into play when hiring managers expect males to negotiate salary and females to accept an offered salary.

Changes in the Workforce
It’s true that women still face a substantial wage gap in comparison to men. However, the percentage of women completing college is at an all-time high and millennials, in general, are being more vocal about what they want and how they expect to be treated by their employer. The tight labor market and increasing boomer retirements means businesses that don’t make changes to compete for talent will lose out on qualified candidates.

So, what should employers do?

  • Bring awareness of unequal pay to your organization. Many company leaders think they are doing a good job when it comes to equal pay but when it’s analyzed, they realize they are off the mark.
  • Annually review your payroll practices. Look for glaring pay inequities.
  • Take a critical look into your current hiring and development processes.
  • Train your hiring managers to recognize how unconscious bias shows up in the workplace.

Understand that change takes a long time, but the time is now if you haven’t started. MRA members can always contact an HR Advisor to discuss a situation or talk through a process by calling 866-HR-Hotline (866.474.6854) or emailing InfoNow@mranet.org.

Source: Deb Larsen, HR Business Advisor, MRA – The Management Association

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