US federal legislation has laid the groundwork for businesses to establish pay equity between men and women. As an amendment to the Fair Labor Standards Act of 1938, the Equal Pay Act of 1963 made it illegal to pay men and women different salaries for the same work, and stipulations in Title VII of the Civil Rights Act of 1964 also prevent employers from engaging in unfair pay practices. Moreover, a Title VII amendment requires businesses to provide employee data that gives demographic information to the Equal Employment Opportunity Commission.
In addition to these protections, employers can independently create a platform for addressing pay equity. Even with the legal protections established almost 60 years ago, there is still a pay gap, with women earning 80 cents per every dollar a man earns.
Women have made strides in closing the gap, but in some industries, the disparity is in the millions and billions, according to a 2018 CNBC article. For example, in financial services, male financial managers earn $100,575 while female financial managers earn $65,237. However, as a group, women lost roughly $19.6 billion in 2018. Moreover, an American Association of University Women study based on 2017 Census data found, for physicians and surgeons, this gap in pay translates into women as a collective earning $500 billion less than men.
In STEM fields, women also seem to lag behind their male counterparts in monetary compensation. A 2020 Cybersecurity Professional Salary Skills and Stress Survey found that men earned on average $91,000 while women earned $62,000. Additionally, figures from the National Center for Women & Information Technology found that recent female graduates in computer science earned $79,223, and men earned $82,159.
Some posit that old attitudes regarding men being breadwinners are central to this disparity. At the same time, other experts argue that women might not work as much, might retire early to raise children, or might not apply for leadership positions as another reason that women do not earn as men over the life of their professional careers.
However, more companies have become proactive in devising ways to close this gap. Data from a 2019 Pay Equity Practices Survey of C-Suite Reward Leaders reported that 72 percent of employers engaged in identifying and resolving the causes of pay equity, and 93 percent have performed a pay equity analysis.
Many suggest that a pay equity audit (PEA) is a proactive step in establishing pay equity within a business. Companies with 50 plus employees rely on HR professionals to perform the audit, while larger companies employing 500 plus employees contract with a consulting firm specializing in performing these types of audits.
A PEA involves the business comparing pay schedules among employees keeping in mind the types of duties required of each position. Essentially, the assessment considers factors associated with work experience, education, and job performance. If there are pay discrepancies, the company investigates why a disparity exists.
Another action a company might take to establish a platform for promoting pay equity involves preparing HR and legal counsel to take action if an issue arises. When issues where the words “pay equity,” “equality,” or “fairness” are involved, make sure that HR is in the loop to investigate any claims or complaints. Finally, make sure employment counsel and any in-house legal teams are briefed on any situations that might arise with an employee.
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