Pay Equity Efforts Gain Momentum

XpertHR, Blog, May 2018
Robert Teachout

With the #MeToo and #Time’sUp movements bringing more focus to the issue of equal pay for women, employers are taking gender pay equity more seriously, with some reporting success.

In March, Starbucks announced that it had reached 100 percent pay equity for employees or “partners” of all genders and races in its US operations. The Seattle-based coffee company had been working to reach that milestone for 10 years, according to the announcement. It now is focusing on maintaining pay equity in the US and encouraging and verifying pay equity at its stores around the globe.

Entertainment giant HBO announced on Equal Pay Day (April 10) that it had corrected its gender pay disparities throughout the network. HBO said it had conducted extensive pay audits to ensure pay equality. “We just finished our process where we went through and made sure that there were no inappropriate disparities in pay,” said Casey Bloys, HBO’s president of programming. And where the network found disparities, Bloys added, it corrected them going forward.

Trends Favoring Pay Equity

The legal landscape also is changing in favor of pay equity. A report by Seyfarth Shaw on trends and developments in pay equity found that more states are passing or strengthening their equal pay laws. New Jersey recently enacted what some have called the toughest pay equity law in the nation. Not surprisingly, given the increase in laws, the report also found increased interest in litigation under the federal Equal Pay Law and state counterparts.

A recent survey by global outplacement and executive coaching firm Challenger, Gray & Christmas reached the following findings:

  • 48% of companies are assessing their compensation policies to guarantee pay equity;

  • 27.5% said they already pay men and women equally; and

  • 17% reported not reviewing their policies.

“Employers in all industries at companies of all sizes are examining their compensation structures to ensure their workers are being paid fairly for their contributions, regardless of sex,” said company vice president Andrew Challenger.

Gender Pay Gap Reporting in the UK

The push for equal pay is not just a US priority. In the UK, all employers with 250 or more employees are legally required to report six key metrics annually about their gender pay and gender bonus gaps. The first deadline for filing the survey was April 4, 2018. Mark Crail, content director of XpertHR UK, reported that over 10,000 companies met the deadline for reporting their first gender pay gap figures. As part of its offerings, XpertHR provides a gender pay gap reporting service and also has the results of the first pay survey, which reveals a mean gender pay gap average of 14.5% in the UK.

Crail said that the survey has irrevocably changed the pay landscape. “All this is now public,” he said. “It’s not going to go away. Perhaps a lot of people thought: ‘Oh well, we will report, there might be a bit of fuss and then it will die down.’ I really don’t think that is going to be the case,” Crail said.

And employers that fail to take steps to resolve pay disparities are being “really foolish” said Crail, who observed that employers need to really understand the issues that are driving their wage gap. “It’s not enough to say, ‘Oh, we’ve got lots in technology roles and that’s largely male,’ or ‘We’ve got lots of men at the top and lots of women at the bottom’,” said Crail. “That’s not an explanation, that’s just a description.”

Employers Must Push Forward

Although progress is being made, it is too soon to say that the push for equal pay is reaching a tipping point. Employers therefore need to be proactive by setting policies and creating a workplace culture that fosters pay equity.

One step that an employer can take is to adopt the principles for compensation equity recently published by the Society for Human Resource Management (SHRM). The core concept of the principles is this: Pay decisions should be based on bona fide business factors and not on non-job-related characteristics.

SHRM president and CEO Johnny Taylor, Jr. explained that employers should be able to consider bona fide business factors in determining pay, such as education, certifications, relevant experience, skills, seniority and geographic location. However, he said, “What employers can’t do is pay people differently because of their sex, race, national origin or any other protected classification. This is prohibited by federal law, and it also makes no business sense.”

To move toward achieving pay equity, employers should do the following:

  • Substitute salary expectations for salary history;

  • Encourage transparency about pay, including sharing how pay decisions are made;

  • Adopt workplace flexibility; and

  • Audit pay practices regularly and make corrections as needed.