Despite the fact that women are more likely to graduate college than men, and approximately 47 percent of US workers are women, they still earn an average of 82 cents for every dollar a man earns.
However, pressure is now being placed on banks, financial institutions and other Wall Street firms, including Bank of America, Wells Fargo and CitiGroup, to disclose and eliminate their gender pay gaps. That’s because the evidence shows that women executives leave careers in finance faster than in any other industry. There is also a real challenge in attracting and retaining top talent and putting women in leadership positions.
So What Can Be Done?
The federal Equal Pay Act and similar state and local laws mandate that men and women in the same workplace be given equal pay for equal work, subject to exceptions under seniority systems, merit systems, or any differential based on a factor other than sex. Many of these laws aim to increase pay transparency by allowing employees to freely and openly discuss wages and prohibit employers from banning salary discussions.
To address the gender wage gap, Massachusetts and cities such as Philadelphia and New York, have taken the extra step of prohibiting an employer from basing an employee’s salary on their prior salary as a way to stop the perpetuation of the wage gap.
Other states are considering similar measures, including:
• New Jersey;
• New York;
• Pennsylvania; and
However, these measures are not without resistance. For instance, the Philadelphia ordinance was originally slated to take effect at the end of May, but has been halted pending a lawsuit by the Greater Philadelphia Chamber of Commerce.
In addition, the 9th Circuit Court of Appeals recently ruled that an employer may use a job candidate’s salary history to set pay despite contrary results in the 10th and 11th Circuits. The 9th Circuit Court ruled that under the Equal Pay Act, prior salary can constitute a factor other than sex if it supports a business policy and the employer uses the factor reasonably in light of its stated purposes and practices.
So with the law still in flux, what steps can an employer take to close the wage gap? How can employers and HR encourage women stay in the workforce, produce at a high level, attain top leadership positions and compensate them fairly?
Secure a Commitment to Equal Pay from Management and Supervisors
Management and supervisors should be committed to creating an atmosphere of fairness in which all employees are valued based on their merit, skills, qualifications and contributions to the organization.
It is essential to provide training to supervisors and those with authority to make employment decisions affecting hiring, pay and promotion on the parameters of equal pay. For instance, there should be measurable criteria governing pay raises and promotions.
Ensure Job Ads and Job Descriptions Don’t Discriminate
An employer should make sure that job advertisements and job descriptions use neutral, fair and nondiscriminatory language and focus on the skills, qualifications and knowledge needed for each position. Salaries should be based on the value a particular position brings to the organization. There also should be a clear connection between written job descriptions and the actual job responsibilities.
Have Evidence to Support Employment Decisions
An employer needs to make sure that all employment decisions regarding promotions, raises etc. are free of bias and can be adequately supported by relevant documentation regarding performance. If two employees are in the same or comparable positions and are paid different wages, the employer should be prepared to back up its decision-making process with concrete documentary evidence and records. Such records can provide critical evidence if an employer faces a wage discrimination or equal pay lawsuit down the line. Thus, it is essential to keep comprehensive records of employee performance and document any issues, both good and bad.
Audit Pay Practices
An employer should undertake a careful review and audit of its pay practices, job descriptions and salaries of all employees to root out discrimination with respect to:
• Benefits; and
• Any other forms of compensation.
The employer should carefully compare the pay of men and women doing the same work, identify any pay gaps and eliminate those gaps that cannot be explained on grounds other than gender. If wage differentials are not supported by well documented and legitimate nondiscriminatory reasons, the pay differences should be corrected.
Self-evaluations and audits can reduce the chance of employer liability and the potential for costly litigation.
Finally, ensuring a flexible workplace is another vital step in closing the wage gap. An employer should recognize that with the advancements in modern technology many employees are able to do their jobs any time and from anywhere. An employer should also consider a variety of measures from offering part time work, job shares, remote working and compensation tied to a different scale. Compensation should be based on productivity and performance and if a worker is able to meet targets, goals and expectations.