6 Strategies And Pay Equity Best Practices In The Workplace

The importance of achieving pay equity within the organization

Modern pay equity is defined as equal pay for comparable jobs that is internally equitable, externally competitive, and transparently communicated. Achieving this is challenging and puts pressure on HR professionals. According to our survey report, 65% of HR professionals feel more pressure than ever to address pay equity, with 20% of them describing the pressure as "tremendous."
 
here are the best strategies and practices for achieving and maintaining pay equity in the workplace. 

 

The Current State of Gender Pay Gap

The gender pay gap exists despite ongoing efforts to address it. In the US, the current state of the gender pay gap for women is 84% for full-time, year-round workers and 78% for all workers (including part-time and seasonal), according to a recent report.
  
Even though some people have debunked the existence of gender pay gaps, saying there really is no gender wage gap, rather, there’s a gender earnings gap and that pay gap has almost nothing to do with gender discrimination, 2023 Salary.com data shows that:
  

• Women still earn less than men for the same work.
• Race affects pay too, with Latina and Black women earning even less.
• Geography matters: In Vermont, women earn 90% of what men earn, while in Wyoming, they earn 65%.
• Education boosts pay because higher-paying jobs need more degrees, licenses, or training.
• Age impacts the gender pay gap; younger women earn almost as much as men, but the gap grows over time.
• Over a 40-year career at median income, a woman would earn about $400,000 less than a man. A Latina would earn $1 million less than a man in the same job.

  
This challenge has persisted for two decades. A report shows that in 2022, women earned an average of 82% of what men earned, similar to 2002 when women earned 80% as much as men. The U.S. Census Bureau analyzed the gender pay gap for full-time workers. In 2021, full-time, year-round working women earned 84% of what men earned, on average. At the current pace, achieving pay equity might not happen until 2088, which is more than 6 decades away.   

6 Strategies for Achieving Pay Equity

There’s no right formula for achieving pay equity; it’s about understanding and adapting to the unique needs of each organization. Here are 6 actionable strategies for achieving pay equity:

1. Conduct a pay equity audit
Regularly check pay equity practices to identify and correct any unfair pay gaps between employees. A pay equity audit helps ensure that everyone is paid fairly based on their job and performance. It involves collecting and analyzing salary data, job descriptions, performance reviews, and other relevant information within the organization. 

Aside from identifying pay gaps, a thorough audit can investigate the causes of these disparities, like job evaluation methods, promotion practices, and performance appraisal systems. Pro tip: Be sure to involve employment attorneys in the pay equity audit to help with the process.

2. Ensure compliance with pay equity laws
Follow local, state, and federal laws that require equal pay for equal work. Keeping up with these laws helps avoid legal problems and ensures fairness. Failure to pay employees equally for equal work can lead to violations of:
 

• Title VII: Prevents discrimination based on race, color, religion, sex, and national origin.
• The Equal Pay Act: Requires equal pay for men and women doing the same work.
• Federal and State Contractor Requirements: Ensures fair pay practices for contractors with government contracts.
• State Employment Discrimination Laws: Prohibits discrimination based on state-specific protected categories.
• State Equal Pay Laws: Requires equal pay for equal work within the state.
• Salary History and Transparency Laws: Prevents asking about salary history and requires pay transparency to promote fair pay.

 
If a lawsuit is lost, the company must fix the pay gap and may face damages, penalties, and legal fees for past issues. In the EEOC v. Mechanical Design Systems, Inc. case, the EEOC sued the company for paying female project managers less than male ones. The settlement gave $210,000 to two women and included better policies, training, and notices about employee rights. The company also agreed to increase the pay of a female project manager to match her male counterpart's salary.
  
In another case, EEOC v. Dell, Inc., the EEOC sued Dell for paying a female IT systems analyst $17,510 less per year than a male coworker with the same job and experience. Dell agreed to pay $75,000 to the woman, provide training on equal pay laws, and post a notice about employees' rights to equal pay.

3. Use pay equity software
A pay equity tool can make audits easier, help reduce calculation errors, and provide useful insights. These advanced tools can analyze data, spot trends, simulate pay adjustments, and track progress. Some offer Pay Equity Audit and Certification to assess the company’s pay equity. It’s important to choose a pay equity software that fits your organization’s needs and works well with your current HR systems.  

4. Develop transparent pay policies
Clearly explain how pay decisions are made and share these policies with employees. Transparent pay policies should outline the factors influencing salary determination, such as job responsibilities, experience, performance, and market rates. Providing employees with access to salary ranges for different positions can help reduce salary disparities and prevent feelings of inequity.

Also, improve transparency by reducing or eliminating reliance on salary history. Research shows that salary history bans, as noted under E.O. 14035, have led to higher wages—8% more for women and 13% more for African Americans. Such bans have been enacted in 15 states, Puerto Rico, and at least 17 cities or counties. Using skills and abilities instead of past pay helps reduce discrimination.

5. Provide unconscious bias training
Unconscious bias training should be one of the cornerstones of any pay equity effort. It should not only raise awareness but also provide practical tools to help employees challenge their biases. This includes training on implicit bias, stereotype threat, and intersectionality. Organizations should also promote a culture where employees can report bias without fear of retaliation.

6. Create access to opportunities for all
Pay equity is linked to diversity, equity, and inclusion. To achieve true pay fairness, organizations need to create a level playing field where all employees have equal access to opportunities for growth and advancement. This includes implementing inclusive hiring practices, providing mentorship and sponsorship programs, and ensuring equal access to training and development. Big companies, like Accenture and Autodesk, are known for their strong diversity and inclusion programs, which include mentorship and leadership development. 

The importance of achieving pay equity within the organization

Achieving pay equity within an organization is important for promoting a fair and inclusive workplace. It ensures that employees are compensated fairly for their work, regardless of gender, race, or other personal characteristics, which helps to build trust and morale among the workforces. 
 
Research shows that 77% of organizations say they pay employees fairly; however, employees do not agree. This misalignment causes friction within organizations and limits productivity. Solving this problem can lead to the opposite effect. The Plunkett Pay Equity Framework outlines a six-step process, supported by data analysis, to achieve and maintain pay equity in the organization.  Download your copy today.  

Best practices for maintaining pay equity 

Achieving pay equity organizations need to stay vigilant and plan strategically.  Here are some best practices for maintaining pay equity:

● Conduct regular pay audits
Regular pay equity audits are essential for spotting and fixing any pay gaps that may develop over time. Consistent assessments help maintain a fair compensation structure.

● Promote transparent conversations about compensation
Encouraging open communication about pay is also critical for maintaining pay equity. Transparency builds trust among employees and creates a space to address concerns. When employees feel comfortable discussing their pay, it helps prevent equity issues from getting worse.
 
● Support and invest in employee growth
Investing in employee development is another key to maintaining pay equity. Offering equal opportunities for training and career growth helps ensure that pay matches employees' skills and contributions. This move not only promotes fairness but also builds a high-performing, engaged workforce.

Carol Ferrari is VP of Product Marketing at Salary.com.