Pay discrimination based on gender has long been an issue in workplaces across the United States. Despite the existence of the Equal Pay Act of 1963 and other anti-discrimination laws, pay gaps between men and women persist in many occupations and industries. To help address this, a pay equity bill is introduced in Congress nearly every year that aims to strengthen equal pay protections and enforcement. But what exactly does the latest pay equity bill propose and what impact could it have if passed into law?
Background on the Gender Pay Gap
First, it’s important to understand the current state of pay inequality between men and women. According to the U.S. Census Bureau, women earn just 82 cents for every dollar earned by men, based on the median annual pay for full-time, year-round workers. The gap is even wider for specific demographics such as Latinas (57 cents) and Black women (63 cents).
The gap exists across industries, job levels, and education levels, though some fields have wider disparities than others. For the same work, women frequently get paid less than male counterparts. Estimates suggest the lifetime earnings gap between women and men is now over $400,000.
Key Provisions of the Pay Equity Bill
The pay equity bill seeks to address the gender wage gap through the following provisions:
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Prohibits employers from requesting salary history Employers could no longer ask candidates about their prior pay during the hiring process This prevents past discrimination from perpetuating
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Allows pay data collection Employers would need to report pay data broken down by race gender and position to identify disparities. This data would not be made public.
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Strengthens pay discrimination protections: Makes it more clear that any factor other than sex, such as education or experience, must be job-related to justify a pay differential.
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Facilitates class action lawsuits: Makes it easier for employees to join together in class action suits against systemic pay discrimination. Individual arbitration agreements would not apply.
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Increases penalties for equal pay violations: Strengthens monetary penalties for employers that violate equal pay laws, adding further motivation for compliance.
What Supporters Say About the Pay Equity Bill
Advocates of the pay equity bill emphasize the following benefits it could provide if made into law:
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Helps eliminate pay discrimination and close the gender wage gap faster.
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Creates more salary transparency and accountability for employers.
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Gives employees stronger tools and protections to challenge pay discrimination.
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Forces companies to self-audit and address pay disparities proactively.
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Discourages retaliation against workers who discuss pay concerns.
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Sends the message that equal pay for equal work should be the norm.
What Critics and Opponents Say
On the other side, some claim the pay equity bill could:
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Increase burdensome regulations and reporting for businesses.
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Limit employer flexibility in setting pay.
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Lead to more frivolous employment lawsuits.
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Infringe on workers’ and companies’ privacy.
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Negatively impact merit-based pay systems.
What Happens Next for the Pay Equity Bill
The pay equity bill has been introduced in some form in nearly every session of Congress since 1997, though it has never gotten enough momentum to pass both chambers.
The bill was re-introduced to the current session of Congress in 2021 as the Paycheck Fairness Act. It passed the House but may face challenges getting through the Senate.
Pay equity advocates continue urging lawmakers to prioritize equal pay protections and working to build wider support for the bill. Whether the latest push succeeds remains to be seen, but the legislation represents a critical part of the ongoing fight against the gender pay gap. Equal pay strengthens working women, families, businesses, and the overall economy – benefits all parties can get behind.
Who Is Affected by Pay Equity?
Pay equity affects all working people and their families as well as the greater economy. It is commonly understood that pay discrimination not only affects women, but members of racial and ethnic groups, among other backgrounds.
Pay equity also affects employers who have to comply with federal, state, and local pay equity regulations. Some of the potential risks for employers associated with disregarding pay equity laws include:
- Regulatory audits and penalties
- Lawsuits (individual and class-action)
- OFCCP enforcement and audits that may lead to lost government contracts
- Compliance challenges for multistate operations as more states and local jurisdictions pass pay equity laws with accompanying penalties for non-compliance
- Employee dissatisfaction, leading to lower productivity and higher turnover
- Adverse effect on talent acquisition and retention
- Poor public relations and brand
As discussed above, enforcement of pay equity varies greatly across the U.S. and around the world.
On a federal level in the U.S., the OFCCP, a part of the U.S. Department of Labor, is responsible for ensuring that employers that engage in business with the federal government comply with the laws and regulations requiring nondiscrimination, such as Executive Order (EO) 11246. EO 11246 requires various equal employment practices of government contractors with at least $10,000 in government contracts.
These businesses must periodically self-audit their pay practices to address disparities based on race or national origin and gender. If selected for a compliance evaluation by the OFCCP, contractors must provide compensation information to the government.
Part of the OFCCP’s oversight mission is to ensure that federal government contractors and subcontractors comply with the legal requirement to take affirmative action and not discriminate on the basis of race, color, sex, sexual orientation, gender identity, religion, national origin, disability, or status as a protected veteran. In addition, contractors and subcontractors are prohibited from discharging or otherwise discriminating against applicants or employees who inquire about, discuss or disclose their compensation or that of others, subject to certain limitations.
OFCCP requirements for employers can include:
- Preparation of Affirmative Action Programs (AAPs)
- Retention, documentation, and analysis of applicant, hire, promotion, termination, and compensation data
- Preservation of all personnel or employment records; time frame depending on size of workforce
- Inclusion of equal employment opportunity statement in job advertisements
- Posting of anti-discrimination and pay transparency notices
- Permitting access to compensation data to OFCCP for the purpose of conducting compliance evaluations and complaint investigations
The U.S. EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the persons race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age, disability, or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.
Most employers with at least 15 employees are covered by equal and civil rights laws, such as the Civil Rights Act of 1964, but other laws apply to virtually all employers, such as the Equal Pay Act of 1963.
The EEOC performs two core functions:
- Collecting equal employment data from employers throughout the U.S. via annual EEO-1 reporting, which collects employment data from employers throughout the U.S.
- Investigating equal employment complaints that are reported to the EEOC by employees
Beyond the activities of the EEOC, individual states and local governments also have agencies that enforce state and local pay equity laws. California for instance, just started issuing non-compliance notices to employers that didn’t meet the annual pay data reporting requirements.
Its clear pay equity can have serious, costly implications for employers, but more importantly it can drastically impact your brand, perception, and even business performance. Organizations that prioritize workplace equity are higher performers, and prospective employees, investors, and other key stakeholders demand that employees demonstrate their commitment to fostering this type of work environment with action.
Pay equity is a world-wide initiative, and it’s being demanded. Not answering the call will harm all aspects of your business, new research conducted by Harvard Business Review finds.
An Introduction to Pay Equity
“Pay equity” is an umbrella term that includes issues related to the fairness of compensation paid by employers to their employees for performing comparable work, without regard to gender or race/ethnicity or other categories protected by law (such as national origin or sexual orientation).
Pay equity includes fairness both in terms of base pay and in total compensation, including bonuses, overtime, employee benefits, and opportunities for advancement.
Pay equity does not mean that all employees are paid the same. Generally, pay equity focuses on ensuring employees performing comparable work are receiving comparable compensation and that any differences in pay can be explained by legitimate job-related factors, such as:
- Skills, effort, responsibility, experience, education, etc.
- Quality or quantity of production
- Location (depending on jurisdiction/locality)
Pay equity is strongly interconnected with issues surrounding workplace equity. It is also concerned with rectifying past injustices with respect to unequal pay. Pay equity is influenced by laws, policies, regulations, and internal practices around the world.
Pay equity is also strongly interconnected with the “social” element of environmental, social, and governance (ESG) criteria. Investors, employees, and other key stakeholders are assessing organizations’ commitments to advance these criteria. While organizations may say they are focusing on social criteria such as diversity and inclusion, pay equity is a way for organizations to prove their commitment.
Now in 2024, pay equity is taking center stage as the Biden administration and several federal agencies, such as the Equal Employment Opportunity Commission (EEOC) and Office of Federal Contract Compliance Programs (OFCCP) introduce workplace equity focused initiatives.
‘Pay Equity’ bill signed; employers no longer able to ask about previous job salary
FAQ
What does equity pay mean?
What is pay equity? Pay equity means giving employees with similar jobs about the same amount of money, no matter their gender, race, ethnicity, or other status.
What is the pay equity law in Texas?
With the Texas Equal Pay Act, it is illegal to treat people differently at work because of their sex. It says that employers have to pay workers the same amount for jobs that require about the same amount of skill, effort, and responsibility and are done in similar conditions.
What is an example of pay equity?
This time, let’s add in gender, with one being a woman and the other being a man. It’s fair that they should both be paid the same if they have the same amount of experience and education. If these engineers aren’t paid the same, that’s both illegal and an example of unequal pay.
Is pay equity legal?
The Equal Pay Act (EPA) protects individuals of all sexes. All types of pay are covered, such as salary, overtime pay, bonuses, life insurance, vacation and holiday pay, cleaning or gas allowances, hotel stays, reimbursement for travel costs, and other benefits.
What is the pay equity for all act?
The Pay Equity for All Act (H. R. 6030), introduced by Rep. Eleanor Holmes Norton (D-DC-At-Large) on Sept. 14, 2016, changes the Fair Labor Standards Act of 1938 so that employers can’t ask job applicants about their past wages or require them to give them. If we didn’t have a wage gap, we wouldn’t need this coupon! Gender Wage Gap?”.
Why is pay equity important?
A lot of the time, these jobs have been undervalued and are still being underpaid because of the gender and race of the people who do them. Pay equity means that the criteria employers use to set wages must be sex- and race-neutral. What is the legal status of pay equity? Two laws protect workers against wage discrimination.
Does Pay Equity tamper with supply and demand?
No, pay equity doesn’t require that all jobs be paid the same, and it doesn’t change the way supply and demand work. The only thing it means is that wages should be based on skills, effort, responsibility, and working conditions, not on race, sex, or ethnicity. Doesn’t pay equity cost employers too much?.
