How employers can correct course on pay equity
SAN FRANCISCO — The U.S. has made some progress in the 55 years since the passage of the Equal Pay Act, but the overall results are "mixed," according to Commissioner Charlotte Burrows of the U.S. Equal Employment Opportunity Commission (EEOC).
"Pay discrimination is still a lot more common than you might think given the amount of time you might hear about it from us and others," Burrows said, "but there is also a real sense of urgency and momentum around this issue."
Employers have seen these developments first-hand, not only in EEOC lawsuits but also in debate over salary history questions and pay gaps based on gender, race and other categories. A number of state and local governments have passed laws limiting the use of salary history questions following a number of scientific inquiries into whether the questions' use locks in lower starting wages for women and minority job candidates.
Burrows, who spoke as part of a pay equity panel at the American Bar Association Section of Labor and Employment Law's annual conference last week, said there are very few occupations without pay gaps, and that controlling for factors like education and experience won't solve the problem and could perhaps make it worse.
"I think the most important thing, in terms of solving this, is to get creative," she said. "To fix the problem, we have to look at some of the other tools that we have … there's a lot of employers who want to move forward and be proactive about this."
How should pay be negotiated?
Employers generally still can ask about an employee's salary expectations under most state and local statutes, said Eric Reicin, vice president, general counsel and corporate secretary for MorganFranklin Inc. But another panelist told attendees to tread with caution.
"If you're going to ask people about their expectations, you better be ready to synthesize what you're paying people across the group," said Kelly Dermody, a managing partner at Lieff Cabraser. Employers still need to take into account that people with similar qualifications, experience and responsibilities should get paid the same for doing the same job, she said, even if a female or minority candidate gives a pay expectation that is on the lower side.
"You shouldn't have situations where you're having pay inversions purely because of the confidence level or the assumptions made by people walking in the door," Dermody said. "I think employers get into trouble when they basically stretch their salaries to accommodate what one-offs want, and don't look at their entire salary groupings to make sure that that is a rational pay for the group."
"Otherwise you're basically rewarding the more aggressive negotiators, and you're not actually paying people for what they're doing at your company," she explained.
Pay analyses have to be particularly focused as well, Reicin said. That means not only narrowing down the period of time and occupations being examined, but also the particular questions and topics to be answered.
Lessons from Salesforce
One of the more publicized attempts at solving pay inequities occurred recently when Salesforce CEO Marc Benioff agreed to spend $3 million on two separate occasions to correct gender-based pay gaps that the company discovered after conducting an equal pay assessment.
The example sparked curiosity among panelists: Should other employers do the same?
Salesforce's case was "my exhibit A of how you can get out in front and actually claim this as a positive," Dermody said. Reicin, however, said similar "retroactive" salary increases at other organizations are included as part of annual pay cycle modifications to adjust for market increases.
"I've not seen a lot of companies going retroactive," he said. "Obviously there's some liability on that." He added that executive and chief financial officers are more likely to want to keep such adjustments under the radar.
Burrows acknowledged that other employers have made adjustments similar to Salesforce's, and that the emphasis on being transparent about pay really began with the rise of platforms like Glassdoor and the launch of disclosure checklists by organizations like the Human Rights Campaign. "They were more worried about those than they were some of the state and local laws," Burrows said of employers.
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