There’s been a lot of buzz in the past month regarding equal pay and how an individual’s former wages should or should not inform their future wages. Here’s what’s been happening:
Progress for equal pay
On April 5th, rather appropriately the day after Equal Pay Day, Public Advocate Letitia James’s equal pay bill passed in New York City. The legislation prohibits employers from asking job applicants about their previous salary. We explored this topic before when Massachusetts enacted a similar law last August. Both pieces of legislation seek to close the wage gap – by removing the opportunity to ask the salary history question, employers will have to offer a salary independent of what the person was paid before, halting the “domino effect” of a historically underpaid individual continually being offered a lower salary than their skills and experience alone may align with.
Last Thursday, April 27, the San Francisco-based 9th U.S. Circuit Court of Appeals overturned a 2015 ruling. The former case involved a schoolteacher who discovered that her salary was significantly lower than a male employee with similar experience. Fresno County public schools argued that utilizing previous pay in salary decisions avoids subjectivity in deciding a new applicant’s value. In 2015, the judge ruled in the teacher’s favor, acknowledging the gender pay gap.
On the horizon
On Tuesday May 2, Eleanor Holmes Norton introduced a federal ban on salary questions entitled The Pay Equity for All Act. Although the legislation was first announced last fall, Eleanor Holmes specifically cited the April 27th decision discussed above as a confirmation of why further reaching, national legislation is needed to reduce the wage gap.
What are the takeaways?
With more and more companies looking to increase internal pay transparency and the above legislative moves regarding questions about pay history, take a look at your own hiring practices and compensation structures. To see how your compensation measures up, conduct wage surveys or seek out compensation consulting to ensure you are avoiding problems such as pay compression.
And finally, don’t lose sight of the big picture. This legislation focuses on a huge component of compensation – salaries and hourly wage rates – but your total rewards offerings also includes your benefits, company culture, and other perks. Keep a pulse on the individual components of your total rewards, absolutely, but also ensure you are thinking about your compensation holistically, particularly as you communicate it to new hires.