Don’t Let #EqualPay Catch Your Business by Surprise

Over the past year, women in the workforce have been able to illuminate some persistent issues in their industries thanks to overwhelming support for the #MeToo movement against workplace sexual harassment. Not to be overlooked is the related push for equal pay which has been slowly but steadily gaining steam. Hashtags such as #EqualPay, #20PercentCounts, #NoCeilings, and #LeanIn, are showing up on social media with increasing frequency thanks to Equal Pay Day which was observed on April 10th. If a business has not recently taken a close look at the Equal Pay Act and state law compliance, now is the time.

Despite being on the books for over half a century, the Federal Equal Pay Act still has not eliminated pay discrepancies between men and women. Research shows that, on average, women are still only earning $0.79 to every $1.00 of male earnings. Many experts are blaming the continued wage inequality on the fact that this law is notoriously difficult to enforce. To prove an employer is compensating a woman less based on her gender, first the woman needs to learn about the pay discrepancy. Thanks to a culture of, and policies enforcing, pay secrecy, many women never find out what they make in comparison to their male counterparts.

The next hurdle they face, assuming they learn of a pay difference, is proving the male employee is a direct comparator who is performing substantially equal work. And last, they need to overcome the defense which is currently available to employers absolving them of liability in a case where the employer can point to a “factor other than sex” as the reason for the pay discrepancy. The “factor other than sex” loophole has been interpreted differently across the country, with some states leaving this defense wide open for, quite literally, any factor other than sex as a sufficient justification. Other states, however, interpret the defense more narrowly, requiring it be tied to bona fide job-related factors.

Pennsylvania in particular has been shown to be worse than the national average in terms of pay equality. A report from the Institute for Women’s Policy Research gave Pennsylvania a C+ grade, noting that Pennsylvania women make on average $0.76 for every $1.00 earned by Pennsylvania men, and also commenting that although the nation will not reach pay equality until 2058, Pennsylvania will not get there until 2072. Legislation has been proposed to address the issue, but so far it has not been passed into law in Harrisburg.

The consequences of insufficient laws are twofold. First, the culture is shifting surrounding women’s rights, and when legislatures realize that women, empowered by a more supportive national climate, are going to speak out and bring suits to enforce the rights they do have, laws will need to be revisited and reinforced to maintain public support. Second, until legislation catches up to public sensibilities, businesses will need to take it upon themselves to ensure women are compensated equally or risk internal strife, lengthy litigation, negative social media publicity, and a loss of valuable female talent.

On a national scale, legislators are considering the Paycheck Fairness Act. This bill is attempting to eliminate pay secrecy policies, collect wage information from businesses, raise damages available to women, prohibit retaliation against those who file suits, and tighten the “factors other than sex” defense loophole which is too often being used pretextually to pay a woman less based entirely on her gender. Any business which has studied or faced discrimination charges based on other protected classes should find the proposed changes to modify the Equal Pay Act very familiar, as they track other similar employment discrimination laws currently in existence.

Businesses that have not examined their current pay policies should take some time to review them. Punitive pay secrecy policies which strongly discourage women from asking questions or speaking up about their compensation should be reevaluated. Fear of employer retaliation is a big factor working against women’s fight for equal pay, and a policy prohibiting this type of retaliation shows an employer’s seriousness about supporting the movement. Businesses should also promote open communication between managers and female employees about their salaries, by having ‘open-door policies’ for compensation conversations. With increased transparency, the lack of support and feelings of uncertainty and isolation which are contributing to the poor progress in wage equality can be dissipated. Another way to empower women to directly address the pay gap is to sponsor negotiation classes which teach women how to speak up for themselves and ask for higher wages.

The reasons for supporting this movement, apart from pay equality being morally sound, are to stay in compliance with current laws, prepare for compliance with proposed laws, and attract both women employees and good publicity to a business. Empowered, respected women in the workplace contribute unique perspectives, and an environment of inclusion leads to fewer instances of sexual harassment. This social responsibility is marketable both to today’s society which favors equality and to prospective new hires. As Warren Buffett famously commented, “One of the reasons I was so successful was that I was only competing with half the population.” Now is the time to include this other half of the population and support female talent by ensuring that they are compensated fairly for the richness they bring to an organization.

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