Most pay equity laws stifle employers' ability to make progress

Dive Brief:

Forty-four states have enacted pay equity laws since the federal Equal Pay Act of 1963 was signed into legislation, according to Syndio, a pay equity analytics platform, and Fair Pay Workplace, a nonprofit. But despite the "well-intentioned" laws, progress on closing the pay gap has stalled, "The State of Pay Equity Laws in the U.S.—2021," a March 11 report found. The pay equity laws are missing some of the key components to make them "effective for employees and feasible for companies to comply," according to the report.
Based on research, Syndio and Fair Pay Workplace outlined components to be included in laws to ensure fair pay and support compliance. The laws must analyze both the pay gap and pay equity; have "equal work" compare employees based on "substantially similar or comparable work"; use a broader comparison than the "same establishment" clause; and provide guidance on neutral, position-related pay policies, according to the report. The organizations also recommended laws require pay equity based on gender and race; permit underpaid employees to file lawsuits; require pay equity disclosure and reporting; provide "safe harbor protections"; and require accountability when pay equity disparities go unaddressed.
"Despite a growing number of state and federal rules encouraging pay equity, the U.S. is persistently behind in closing the pay gap," Syndio CEO Maria Colacurcio, said in a statement. "Many laws stifle employers' ability to make progress on pay equity, while others have flaws that don't fully protect the people who are not being paid fairly."

Dive Insight:

Many companies were working to move the needle on pay equity as a new law aiming to end the gender wage gap was reintroduced in Congress.

The Biden administration is expected to have an increased focus on pay equity, according to experts. The Paycheck Fairness Act was reintroduced into Congress Jan. 28. The bill would "strengthen the Equal Pay Act of 1963, help eliminate the gender wage gap, and guarantee that women can challenge pay discrimination and hold employers accountable," according to an announcement. In reference to Syndio and Fair Pay Workplace’s report, Colacurcio advised that "it's important to ensure any new laws protect the rights of individuals and are feasible for companies."

A 2019 Pay Equity Practices Survey of C-suite and reward leaders produced by WorldatWork and Korn Ferry found that more than half (60%) of employers surveyed were taking action to address pay equity. However, 7% said pay equity was not a priority. "A convergence of regulatory, political, social and economic forces is causing organizations to address pay equity management; ignoring the issues will ultimately impact employee engagement and an organization’s bottom line," Korn Ferry Senior Client Partner Tom McMullen said in the report.

But even if companies desire to work toward pay equity, Syndio and Fair Pay Workplace’s report argued pay equity laws need to include action items such as mandatory pay equity disclosures. Government-mandated disclosures of pay disparities have been shown to narrow the gender wage gap, a 2019 research report found.