Recently, several states around the country have amended their equal pay and pay transparency laws in an effort to ensure employees are being compensated fairly for the work they do. Most recently, Massachusetts has become the first state to prohibit employers from asking about applicant’s salaries before offering them a job. Instead, hiring managers must state a compensation figure upfront based on what an applicant’s worth is to the company, rather than on what he or she made in the previous position.
Believe it or not, many employers are unaware they are paying different salaries for the same work. For business leaders, sometimes subconscious factors play into our decisions when we make job offers, provide annual pay increases, or provide performance bonuses. Subjectivity has a way of creeping in. How can your company ensure they are offering equal pay for equal work? Here are a few practices to consider:
Know Your Jobs
Ensure your job descriptions are up-to-date and reflect the duties employees actually perform. Without accurate job descriptions, it is impossible to effectively group jobs and pay levels. Keep in mind that certain factors (e.g., safety risks, job stress, autonomy, level of supervision, work schedule, etc.) may determine what category a position resides.
Start with the Offer Letter
Equal pay starts with the new hire offer letter. When hiring a new employee, ensure he is offered an appropriate salary based on the existing employee population to maintain internal equity. If the new hire negotiates a higher salary, make sure to document the specifics of the negotiation and reasoning behind providing the higher compensation.
Merit Increase Must Fit
Another area to examine is performance-based pay increases – specifically, how these are equally distributed and rewarded for similar performance. A few steps you can take include:
• Train managers on how to rate employees objectively and fairly
• Challenge decisions that do not seem to be based on fact
• Ensure pay increases fall in line with existing pay structures
Ultimately, you may want to conduct an internal compensation analysis to see where your employees fall and what discrepancies, if any, need to be adjusted. When evaluating your current situation and phasing in changes to your compensation processes, it is critical to be thoughtful in your approach – both from an ethical and legal perspective.
For more information on your state’s Equal Pay and Pay Transparency Laws, visit the Department of Labor’s website.
Interested to see how your company stacks up? Email us or give us a call at 703-587-5615. We help companies like yours every day analyze their internal processes to ensure they are complying with local, state, and federal laws. We can help you too.