Pay equity compensates employees assigned similar job functions with comparably equal pay regardless of gender, ethnicity, race, and other statuses. As an employer, you must weigh factors like the employee’s education level, work experience, and responsibilities to come to a stable conclusion about their compensation worth.
More than before, fair pay has become a necessity for organization leaders to ensure equity in their workforce. Other than improving the workforce, an organization with equal pay as the critical aspect of its annual compensation reviews can limit the risks of legal exposure. As such, achieving pay equity in your organization will not be an exception.
A Broader Look on Why Reward Fairness is Beneficial
While payment equity is in the process of getting embraced worldwide, it’s vital in terms of business growth. If you implement fair payment policies in your company, you will:
- Avoid discrimination lawsuits.
- Attract new skills into your organization.
- Boost morale and productivity
- Comply with the equal pay regulations.
- Reduce turnover in the workplace.
Reward fairness brings about more benefits to the company than to the employees. You can learn that practicing fair pay breeds productivity, thus, the company’s growth.
What Federal Laws Govern Equal Pay?
The federal government enacted laws governing equal pay as early as the 1960s. You can learn the two notable laws starting with the Equal Pay Act of 1963. It states that every person working in a company should get equal pay with others who perform a similar role. The law clearly states men and women should get equal pay.
The second law is the Title VII of the Civil Rights Act of 1964. It offers broader equal pay protection and adds that there should be no pay discrimination based on race, religion, color, and nation of origin. In line with federal laws, all states have equal pay laws.
How You Can Implement and Improve On Your Organization’s Payment Equity
To implement and comply with the pay legislation, you must set and update the existing company policies. You can start by documenting payment strategies and having clear job descriptions and pay structures that align with them. Then, communicate to the new employees about your payment plans and how the company management has planned to achieve them.
On the other hand, if one particular gender, race, people of the same religion, or sharing country of origin constitutes have taken several roles in the department, you must adjust recruitment and talent management tactics. Also, conduct an equal pay analysis to note potential wage gaps and correct them to avoid discrimination.
Finally, you can partner with professional companies that offer additional support in analyzing and managing data for pay equity.
How to Perform an Equal Pay Analysis in Your Organization
A comparable worth analysis is the critical part of the pay fairness step. It’s a statistical way to identify pay gaps in the company. Once you have identified the pay gaps, you can address them to create a better working environment.
The comparable worth analysis involves cross-referencing pay scales. They are referenced against the criteria numbers (gender, education, seniority, ethnicity, etc.). You can start by laying the groundwork for making a firm agreement with the stakeholders on the methodology and scope.
Secondly, review the history and learn how the current pay scales in the company were created. This helps to address the potential issues relating to payments. Also, collect the current workforce data despite what’s already on the records. Check job function, gender, and race, among other factors.
Finally, compare employees with their job functions and confirm the equal pay laws in your state. Review and interpret your findings before correcting all the gaps. This will help to perfect the payment process in your organization.
