Dive Brief:

• Government-mandated disclosures of pay disparities narrow the gender wage gap, according to research by Morten Bennedsen of the University of Copenhagen, Elena Simintzi of the University of North Carolina, Margarita Tsoutsoura of Cornell University and Daniel Wolfenzon of Columbia University.
• The researchers examined wage statistics for Danish companies before and after the enactment of the country's 2006 law, the Act on Gender Specific Pay Statistics. The legislation requires companies with more than 35 employees to report on gender pay gaps. The researchers compared pay data for companies with 35 to 50 employees to companies with 25 to 34 employees that weren't required to report. The results, the researchers said, showed that from 2003 to 2008, the gender pay gap at companies required to report shrank 7% while the gap at the non-reporting firms stayed the same.
• The research revealed that while total pay increased for all employees during the period of the study, men working in firms that had to report for gender gaps experienced smaller raises in compensation. Researchers said they also found that mandatory reporting lead to 1) an increase in the number of women being hired, indicating that the supply pool of female employees increases as gender pay transparency improves; 2) an increase in the number of female employees being promoted from the bottom of the hierarchy to more senior positions; and 3) lowered overall wage bills for the company, largely by slowing down the growth of male wages.

Dive Insight:

Some employers have undertaken voluntary steps to combat gender-based pay inequity. Salesforce said it conducted an equal pay assessment in 2015 and in 2017 and found that pay for both genders needed adjusting. It spent $6 million to remedy the situation and pledged to continue monitoring the situation. Starbucks, Adobe, Citigroup and JPMorgan have taken strong action to eliminate pay inequities for women and minorities. Other big-name players in the business world, such as Dell EMC and Oracle, have been hit with accusations of severe pay disparities.

Laws banning employers from questioning applicants about their salary history are aimed at ending pay discrimination and wage gaps, most often suffered by women and minorities. Many have said that setting wages based on salary history reinforces wage gaps. Several states and localities have already outlawed pay history questions. Some of the laws go further than merely banning pay history questions and also prohibit an employer from relying on an applicant's pay history to set compensation if discovered or volunteered. Other laws also prohibit an employer from taking disciplinary action against employees who discuss pay with other workers.

HR practitioners can help to solve pays gaps by reviewing their organizations' pay practices, working with managers to flag disparities and conducting periodic audits. Experts also suggest that employers conduct pay audits with the help an attorney to ensure the information is privileged and not discoverable in litigation.