The era of pay transparency is here to stay. Legislation is expanding across the US and globally, as the EU leads the way.
Pay transparency is part of a movement to close the gender pay gap. At current rates of progress, women in today’s workforce will not see equal pay in their lifetime. Yet employers are struggling to stay the course in a complex regulatory landscape.
In this article we explore pay transparency trends and how to ensure pay equity in salary ranges. We also look at the vital role of pay equity software.
Developments in pay transparency legislation
Recent updates to US and global pay transparency laws include:
Massachusetts pay transparency: Following overwhelming support in the Massachusetts House and Senate, HB4109 is now in the hands of a joint committee to align its two versions. Governor Healey is expected to approve legislation, which will take effect one year after signing. Massachusetts will be just the third state to require pay data reporting, alongside California and Illinois.
EU pay transparency: The EU Directive is a gamechanger in global pay equity, and could shape future US pay equity legislation. Legislation includes the requirement for a Joint Pay Assessment where an unjustified gender pay gap of 5 percent or more exists. Workers who suffer gender pay discrimination are entitled to uncapped compensation, including full recovery of back pay and related bonuses. Employers have until June 7, 2026 before EU pay transparency is transposed into law. Proactive organizations can act now by carrying out a pay equity audit.
Ontario pay transparency: Ontario plans to introduce pay transparency laws requiring employers to disclose pay ranges in job listings. Employers will also have to inform candidates, via their job listings, if AI is used during the hiring process. If passed, the legislation will expand Ontario’s Working for Workers Act. Ontario’s proposals follow recent pay transparency laws in British Columbia.
Strategies to ensure pay transparency compliance
A primary concern in an era of pay transparency is ensuring pay equity. Pay equity means employees are compensated fairly for their work, regardless of gender, race, or other factors. Employers must take proactive steps to prevent pay disparities from occurring and to address any existing gaps.
The challenges of failing to comply are evident in Washington state. Law firm Emery Reddy has filed at least 31 lawsuits since June. Washington’s Equal Pay and Opportunities Act came into force on January 1, 2023. Each lawsuit alleges violations of pay transparency laws, and the failure of employers to include wage information in job listings.
Pressure to ensure fair pay is mounting. Over 950 pay discrimination charges were filed with the EEOC in fiscal year 2022; the first increase in three years.
The role of pay equity software
There’s more to pay transparency compliance than a “one size fits all” strategy.
Addressing pay equity effectively requires the right tools. Pay equity software can play a pivotal role in identifying and rectifying pay disparities. It can also assist in setting equitable salary ranges for new hires and monitoring progress towards your pay equity goals.
Here’s how:
Ensure equitable salary ranges in job listings: Your hiring process must be consistent for all employees and job candidates. Employers can utilize tools like Trusaic Salary Range Finder® to ensure that salary ranges are both equitable, explainable and compliant. Salary Range Finder analyzes employee details against labor market rates and internal ranges in real-time. Results ensure equitable compensation decisions and new hires receive fair pay offers, reducing unplanned and expensive pay remediations. Salary Range Finder is coupled with Trusaic’s DEI and pay equity software, PayParity.
Implement a policy of pay equity: Pay equity audits identify the causes of pay inequities in your organization. Intersectionality is one of the key differentiators for Trusaic’s PayParity pay equity audit software. Intersectionality recognizes that people experience inequality based on the intersection of multiple identities, such as race, gender, disabilities, age, and more. The results help employers to identify and address the root causes of pay disparities, and pinpoint potential areas for unconscious bias. Insights provided by PayParity can also help employers to comply with complex pay transparency legislation. That includes EU pay transparency requirements and organizations operating across multiple jurisdictions.
Support sustainability claims with a pay equity audit
Pay equity audits also play a vital role in supporting sustainability claims relating to equal pay.
Unsupported sustainability claims are a big compliance risk for employers, as pay equity emerges as a measure of social responsibility. Let’s take Nike pay discrimination allegations as an example.
In its most recent Corporate Responsibility Report, Nike claims it has achieved 100% pay parity. These are bold claims to make, but the company does not report unadjusted pay gaps. One shareholder believes more detailed pay gap reporting would reveal ongoing structural bias faced by women and minorities. Their proposal, seeking more information on Nike’s median pay gaps across race and gender, has been rejected by investors.
Employers who claim they have achieved pay equity must be prepared to provide data-driven evidence, or risk litigation. That is only possible with an intersectional pay equity audit.
The stakes are high.
What’s next for pay equity?
Pay transparency remains a priority as governments and organizations look for ways to close the gender pay gap more rapidly.
In the US, the EEOC’s strategic enforcement plan ensures equal pay remains a focus at the federal level. To reiterate its goal of “dismantling discriminatory patterns, practices, or policies”, the EEOC has also joined forces with the WHD. It’s an alliance that impacts every US employer.
Supporting pay transparency with pay equity software demonstrates a commitment to fair pay.
Start with a pay equity analysis.
Read more about the benefits of pay transparency and why we believe opportunity transparency is 2024’s emerging HR trend.
Trusaic is GDPR compliant and can assist any organization in any EU state in meeting its obligations under both the EU Corporate Sustainability Reporting Directive and the EU Pay Transparency Directive.
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