Do New Laws Actually Get Us to Pay Equity?

Ensuring compliance is an important piece when it comes to how we pay our employees. Laws have been changing rapidly around compensation transparency and in an effort for pay parity over the last few years. These changes are exciting to see, but is it rapid enough?

While we have seen pay equality laws in the past, where we strive for equal pay for equal work, pay equity goes deeper and asks about the reasons people are paid differently. We are beginning to see laws address pay equity, which is great because it is our true goal in this work.

We are seeing three main trends in pay equity laws:

1. Previous salary history ban

The following states have all banned employers from asking candidates about their previous salary: Alabama, California, Colorado, Connecticut, Delaware, DC, Hawaii, Illinois, Maine, Maryland, Massachusetts, New Jersey, New York, North Carolina, Oregon, Pennsylvania (state agencies only), Vermont, Virginia, and Washington. Check out the details of state and local salary history bans here.

Laws banning previous salary history are important because they recognize the impact that discrimination early in someone’s career continues to have later down the line.

2. Transparency requirements on jobs

In January of 2021 Colorado was the first state in the U.S. to require employers to post salary ranges on their job postings, Connecticut followed them in October by requiring employees provide the information to candidates, and New York City will be adding a transparency requirement on the job posting in May of 2022. 

California and Nevada have required employers to give a salary range for candidates since 2018 and 2021 respectively, but only after the first interview. Check out this cheat sheet to see all of the places some kind of salary transparency is required.

How does this posting requirement impact pay?

This law has the greatest impact on pay equity. Enforcement will be one of the big questions with NYC providing a hefty penalty for employers who don’t comply. But having employers post pay is a huge step to compel them to figure out salary bands prior to hiring for a job.

This greater transparency will also lead to greater pay equity across orgs who follow this law.

3. Reporting requirements for EEO1 reporting

Last year both California and Illinois added reporting requirements of salary information to employers who are required to complete the EEO1 report. 

This forces employers who haven’t already, to put their pay data together and take a look at it. Even if they aren’t doing a full pay equity audit, the impact of laying all the data on the table can be surprising. Unapparent items, like huge wage disparities that sometimes weren’t obvious before can jump out at you. 

What does all this mean for pay equity?

All of these things help to enforce legal compliance and laws move the needle because great employers ensure they follow laws and best practices by not asking for a previous salary, sharing clear salary ranges for all roles in their organization, and analyzing their pay data for equity annually.

But as laws change some employers have trouble keeping up. They may be violating the law willfully or due to a lack of knowledge. This means that HR practitioners and employees must do our due diligence to educate ourselves, and it is our job to ensure employers are enforcing the laws. Thanks to the internet, job seekers are becoming more wise to the legal requirements employers must follow. 

But the reality is that legal compliance moves too slow to get us to the pay equity we want and deserve. Fortunately, new demands from employees are asking for transparency. And for those employers that want to be a best place to work, they’ll need to listen. 

Maria Colacurcio, Founder and CEO of Syndio, tells us what she thinks companies must do to get to pay equity, “First, they need to allow employees to have visibility into their own pay metrics. Everyone knows what they, personally, are paid. But incredibly, many employees do not know what grade, band, or level they are in. For those that do, many do not know where in their grade/band/level they sit. True transparency allows employees to know where in the pay grade or band does their pay fall, how they’re paid relative to that band, and what limits there are to move within that band.”

As this topic of pay parity becomes more top of mind for employees and employers alike, we will move to greater transparency and greater equity.

Are you interested in delving deeper into learning about pay equity? Check out our course Cultivating Equitable Compensation. We teach you how to conduct a pay equity audit from start to finish.