How to give equal pay laws power

On Wednesday, we marked another Equal Pay Day, the point in the year when women have finally made what men made in 2020. And that’s just the average across all women — Black women will make what white men made in 2020 on Aug. 3, Indigenous women on Sept. 8, and Latina women on Oct. 21. 

In order to eradicate such incredible pay disparities, progressive legislation has to step in to keep employers accountable, enforce reporting, and provide safety mechanisms for both employees and employers. Currently, the Equal Pay Act of 1963 protects against sex-based wage discrimination, and 44 states have enacted their own laws to supplement the federal law. In 2019, Congress proposed the Paycheck Fairness Act to supplement the Equal Pay Act. It was reintroduced this January under President Joe Biden. 

But according to advocates, the effectiveness of these laws lies in enforcement (which is currently missing) as well as clear, standardized requirements for gathering data on pay inequities.

Syndio, an equity tech platform that helps companies analyze their own pay equity status, released its first State of Pay Equity Laws report this month, documenting where state legislation ranks on effective, enforceable Equal Pay law. The report also shared ten essential criteria to make sure Equal Pay laws empower both employees and employers.

Maria Colacurcio, the CEO of Syndio, says that the key to successful fair pay legislation is building in mechanisms for transparency and accountability that are flexible enough to account for diverse company structures, something most legislation has failed to do.

Fair Pay Workplace is a nonprofit that certifies the methods organizations use to analyze their own pay equity status, based on a “set of pay equity rules and standards set forth by an alliance of experts,” including CEOs, diversity and inclusion officers, and even the commissioner of the Equal Employment Opportunity Commission, Colacurcio explains. Syndio and Fair Pay Workplace partnered to produce the 2021 State of Pay Equity Laws report. Colacurcio is also one of Fair Pay Workplace’s expert advisors. Until state or federal law includes enforceable, standardized processes for aggregating and reporting data, the metrics used by Fair Pay Workplace are a good place to start for establishing standardized ways to measure pay.

Here are a few other ways legislation can more effectively address the systemic factors that enable pay inequality, promote more transparent wage reporting, and actually enforce equal pay laws: 

1. Look at pay equity, not just the pay gap 

Successful legislation, according to Syndio, asks employers to address both the pay gap (which measures the average pay between two groups, like men and women) as well as pay equity (the differences in pay between two people doing comparable work). These are two different but related problems in tackling pay disparities, Colacurcio says. 

As Syndio’s report explains, most U.S. laws focus primarily on pay equity and the notion of “fair compensation” between employees. In other parts of the world, like the United Kingdom, major legislation focuses only on reporting pay gaps. 

A more cohesive analysis uses pay gaps as a starting point to re-evaluate compensation. Addressing both pay gaps between groups and pay equity between comparable positions allows employers to take a deeper look at the systemic problems creating pay inequality. 

How a company handles starting pay is an example of these intersections, Colacurcio explains. She says that the wage entry-level employees start with is the most important factor in growing pay disparities, and it impacts both pay gaps and pay equity. If a woman employee enters their position at a wage lower than a man in a similar position (an instance of pay inequity) the gap between them rises as one works. As a company evaluates widened pay gaps during a self audit, it may find that the root of the pay gap was in a disparity that started at the very beginning and only worsened over time. 

To that end, legislation should include auditing or enforcement mechanisms to ensure that companies are tackling what Colacurcio calls the “two problems” of reporting on pay inequality. 

2. Compare employees based on the substance of their work

Legislation should also avoid using the term “equal work” to compare wages, instead opting for something like “substantially similar” or “comparable” work. Federal law still compares wages based on the idea of “equal work.” Fortunately, many states have introduced broader terms.

By setting the standard at “equal” comparisons, employers can find loopholes around fair pay, Colacurcio says. This includes making narrowly defined roles or smaller, “unique” departments that exist outside of other pay standards and thus offer no “equal” comparisons. “Companies can say “There’s no one else like him, so we don’t need to compare,'” Colacurcio explains. 

Instead, an employee’s wages should be compared with other positions with “similar skill, effort, and responsibility” or similar working conditions, the report recommends. In order to enforce this, legislation has to address confusing employee categories within the law itself, Colacurcio says. Some states use “one-size-fits-all groupings” across all companies when requesting wage reports, rather than allowing employers to create their own reporting categories based on actual work, skills, or departments (with proper oversight). The report gives examples of proper, specific categories, such as grouping all copywriters together rather than separating marketing copywriters from sales copywriters, which could lead to companies missing instances of unfair pay. As the report finds, “The law makes it difficult for employers to get pay equity right because they don’t have the flexibility to design groupings based on the nuances of their business.”

3. Don’t include “same establishment” clauses

Same establishment clauses, a standard currently held in the federal Equal Pay Act, specify that comparisons between wages can only be made between employees in the same location — depending on the state, this could be as local as the same building or expand outward into geographic regions. Strangely, Colacurcio says, this is often based on what county you live in or other “political subdivisions” (like cities, townships, or special districts), which adds even more confusion. None of these distinctions account for the real way companies function, especially in light of increasing, multi-regional remote work. 

Instead, laws should reflect the current way corporations operate and manage employees. “We speak in terms of function, the functions of people, and the work that they’re doing,” Colacurio says. This is also how comparisons should work for more effective legislation. “The best legislation would say pull from what you already use,” Colacurcio explains. Rather than mandating these kind of hyper-local comparisons, legislation should include provisions for companies so that they can compare employees in different locations and account for things like local cost of living, remote work, or other geographic variables. Allowing employers flexibility to report pay metrics based on their own employee categories across multiple regions makes it easier to spot wage disparities and address how to solve them. 

4. Include “safe harbor” protections

Safe harbor protections broadly refer to temporary legal provisions that protect companies while they investigate pay inequality. As the report writes, employers often worry that “finding problems may lead to legal liability for employers while they’re also in the process of finding fixes” and thus feel discouraged from proactively investigating their own departments. 

Colacurcio says safe harbor provisions are a great way to incentivize companies to do in-house analysis and reporting before pay disparities even become a problem. They make clear that “if you’re in progress and doing the work, you get a pass,” she says. This creates an environment where more progressive employers feel supported, and, Colacurcio says, “reward companies looking under the hood already.”

Only three States — Colorado, Oregon, and Massachusetts — have safe harbor protections, although they are limited, according to Syndio’s report. All three states still allow companies to be sued during pay equality investigations, even if they are conducting self-audits in “good faith”. 

5. Require employers to report pay equity information

“What we need is for companies to do better with transparency and accountability,” Colacurcio says. Requiring companies to make pay equity information public within the law itself adds a degree of needed accountability (from both oversight bodies and employees themselves) and comparability between employers. “Anytime you shine a light on something, the mold begins to disappear,” Colacurcio says. 

Starting this year, California is currently the only state that requires companies to report their pay data. According to a law passed in September, employers with at least 100 employees have to report on pay equity by gender, race, and ethnicity in certain job categories. Although these categories are still too “one-size-fit-all” to be as effective as Syndio recommends, and the law lacks safe harbor protections, it’s a step in the right direction, Colacurcio says. 

6. Hold companies accountable with clear consequences

According to Syndio, the current enforcement mechanisms for pay equity laws (found in varying legal codes and at the discretion of presidential administrations), place more burden on employees to find inequities than on employers to proactively find gaps in their own companies. Ambiguity in the law also makes it hard for employers to comply with reporting processes, Syndio argues. 

Action is usually only taken when a complaint occurs, Syndio explains. Alternatively, additional fining processes or legal consequences for offending companies could help that by incentivizing more frequent, proactive equal pay auditing by companies themselves.  

Addressing fair pay across race, gender, and age takes institutional fixes and high-level accountability. Legislative fixes will also need to acknowledge the systemic issues of racism and sexism that permeate the workforce.

Until these laws are passed, consider advocating for fair pay yourself, and demand transparency on behalf of yourself and coworkers. Syndio hosts a monthly webinar series for both employees and employers called Fairness at Work. The series covers topics like identifying unfair pay policies, eradicating opportunity gaps for people of color, and addressing pay equity during COVID, led by industry professionals and advocates. All webinar recordings and resource materials are available online, as well.