The first Equal Pay Day observance in the United States was organized in 1996 by the National Committee on Pay Equity to raise awareness of the wage gap and its impact on women. Equal Pay Day marks the point when the average woman’s current earnings, combined with what she earned in the previous year, equals what the average man was paid last year. This year, Equal Pay Day will be recognized on March 14, 2023.
The unadjusted gender wage gap in the United States is holding steady at approximately 83 cents. On February 6, 2023, the Center for American Progress issued a fact sheet titled The State of Women in the Labor Workforce. While women’s participation in the workforce has returned to pre-pandemic levels, the Center found that women’s earnings, across age groups, continue to lag behind that of their male counterparts. The pay differential remains greater for women of color.
While the gender pay gap persists, there are tools to “attack the gap.”
Annual Pay Equity Analyses: Employers hold the key to closing the wage gap. An annual companywide pay equity analysis coupled with a root cause assessment remains the most effective tool for identifying unexplained pay gaps and implementing effective strategies to close those gaps at the individual employee level.
ESG Reporting Obligations: Investor driven reporting obligations offer an additional opportunity for employers to assess their “pay equity status.” Moreover, investors’ focus on pay equity underscores the importance of remaining vigilant.
State Legislators: The states have pulled ahead and are leading the charge to close the pay gap through salary history bans, reporting requirements, and pay transparency.
- Salary History Bans: States have been focused on pay equity for some time with their initial focus on prohibiting employers from asking applicants about their prior pay. Currently, 21 states and 21 localities have passed salary history bans.
- Pay Reporting Requirements: California and Illinois require employers to submit a pay data report.[1] California requires employers with 100 or more U.S. employees and at least one employee in California to (1) submit an annual report of the number of employees within each establishment by race, ethnicity, and sex by job category and pay band during the prior year and (2) submit a pay data report for employees hired through labor contractors such as temporary staffing agencies and provide the median and mean hourly rate for each combination of race, ethnicity, and sex for each job category for both traditional employees and those hired through labor contractors.
The Illinois pay data report also applies to employers with 100 or more employees in the state of Illinois. Covered employers must report employee-level pay information and apply to the Illinois Department of Labor for an Equal Pay Registration Certification. The application requires submission of wage records for all Illinois-based employees and a signed verification that the business complies with state and federal anti-discrimination laws.
- Pay Disclosure Laws: Pay transparency obligations are evolving rapidly. It is critically important that Compensation and Human Resource professionals, particularly those with operations in multiple states, stay abreast of new developments and seek the advice of counsel on strategies for compliance. Currently eight states have implemented a pay transparency law, including:
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State
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Effective Date
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Requirements
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California
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January 1, 2023
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Employers with 15 or more employees must include pay scale or hourly wage ranges in job postings and provide the pay scale for the position to applicants upon request after an interview and to current employees upon request.
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Colorado
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January 1, 2021
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Employers with at least one employee must disclose the hourly rate/salary or applicable pay range and a description of benefits and other compensation offered in all internal and external job postings.
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Connecticut
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October 1, 2021
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Employers with one or more employees must provide applicants with the pay range for the position applied for upon request or before extending an offer, whichever is earlier, and must provide the wage range to employees upon hire, a change in position, or upon request.
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Maryland
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October 1, 2020
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Employers must provide the pay range for the applicable position to applicants upon request.
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Nevada
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October 1, 2021
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Employers and employment agencies must provide the wage or salary rate/range to applicants after an interview and to employees who have applied for a promotion or transfer after application, completed interview, after receipt of an offer, or upon request.
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New York
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September 17, 2023
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Employers with at least four employees and employment agencies must include the minimum and maximum salary or hourly wage range in any advertisement for a job, promotion or transfer opportunity.
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Rhode Island
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January 1, 2023
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Employers must provide the wage range for a position to an applicant upon request or prior to discussing compensation. Employers must provide the wage range to employees at the time of hire, when the employee moves into a new position, or upon request.
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Washington
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January 1, 2023
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Employers with 15 or more employees must provide applicants with the minimum wage or salary for the position sought upon request but after receiving an initial offer. The same information must be provided to employees who have received an internal transfer or a promotion. Covered employers must also include the applicable wage scale or salary range and a general description of benefits and other compensation in job postings.
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Five cities and counties have also implemented pay transparency laws including New York City, NY; Ithaca, NY; West Chester County, NY; Cincinnati, Ohio; and Toledo, Ohio.
Conclusion
The persistent gender pay gap and pay equity, more generally, remain top of mind for employers, employees, state and local legislators, investors and enforcement agencies. Increased pay transparency holds some promise for moving the needle. The most effective tool, however, is an annual company-wide pay equity analysis. Through these analyses, employers are able to identify areas of concern and implement systemic changes at the organizational level and at the individual employee level. Vigilant employers can shrink the gap in their own workplaces while moving the needle toward equity for all.
If you have any questions regarding the issues addressed in this Alert, please contact the FordHarrison partner with whom you usually work.
[1] EEOC collected compensation data from employers in connection with their 2019 and 2020 EEO-1 Reports. The EEOC placed a hold on the further data collections pending review by the National Academies of Sciences, Engineering, and Medicine (NAS). NAS issued its report in July 28, 2022 finding that the data collected was of limited utility. As of the writing of this article the EEOC has not issued any statements regarding implementation of a new compensation data collection report.