April 2nd marks Equal Pay Day in the United States. With the nation sharply focused on pay equity issues, this is a great time to assess whether your organization’s pay structure is in need of some spring cleaning.
Here are five steps you can take to ensure that your organization is prepared for an equal pay close-up:
Conduct a self-audit. One of the very best ways to get a handle on pay equity in your organization is to look at the numbers. A self-audit can help identify whether you have an issue or simply areas in which your job titles and/or categories don’t fully reflect real-world responsibilities, skills and/or qualifications. It is recommended that an attorney oversee any self-audit process to ensure that you are aware of potential legal ramifications and because such an analysis conducted without an attorney may be subject to mandatory disclosure in future litigation.
Ensure that you have defined pay practices within your organization. Pay should be based on a measurable and consistent set of factors. These factors must be universal across your organization and reflect legally permissible reasons for pay distinction, such as: skills, effort, responsibilities, seniority, merit and/or quantity or quality of production. Ensure that your practices also establish how pay rates are determined in all phases of employment: initially, at review time and in the event of on out-of-cycle pay change.
Train your managers. Your managers are often your front-line in determining which position an individual will fill and then setting and reevaluating his or her pay. Your practices as an organization will generally reflect how well your managers understand and adhere to your pay practice or policy. It is critical to ensure that your management team understands the importance of equitable pay and the role they play in carrying out these policies. Does each manager understand what is and what is not a permissible reason to pay one employee a different salary than another? This may seem intuitive, but often is not.
Know your state and local laws. State and local laws addressing gender pay equity have been updated and strengthened in recent years. Some jurisdictions have restricted what are considered to be permissible factors for pay differentials beyond those established under the Equal Pay Act. Others have created legal safe harbors for employers who make proactive, good faith efforts to ensure pay equity. Still others have enacted laws addressing disclosure of candidate pay history. Make sure that you are up-to-date on the latest laws where you do business.
- Fix it! If you discover that your organization has a pay equity problem … fix it now! The problem is simply not going to get better on its own. Promptly seek out assistance from an attorney to ensure that you remedy and communicate the issue properly. Fixing it is the right thing to do … and it’s the law.
Happy cleaning! If you want to dig a little deeper, check out SHRM’s Managing Pay Equity Toolkit.