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Pay Equity: HR Compliance Trend to Watch

Several jurisdictions are expanding and clarifying their laws prohibiting gender-based discrimination in pay, including restricting employers from making inquiries into an applicant’s pay history during the hiring process. This is because a candidate’s pay history may reflect discriminatory pay practices of a previous employer, which then could result in lower wages in the new job.

While these laws differ among jurisdictions, they typically prohibit employers from seeking compensation history from an applicant or his/her current or former employer. Generally, employers are also prohibited from screening applicants based on their pay histories, including by requiring that an applicant’s prior compensation satisfy minimum or maximum criteria.

The following jurisdictions have enacted these types of restrictions:

  • Oregon (effective October 6, 2017)
  • New York City, NY (effective October 31, 2017)
  • Delaware (effective December 14, 2017)
  • Massachusetts (effective July 1, 2018)
  • San Francisco (effective July 1, 2018)
  • Philadelphia (blocked due to pending litigation – watch for developments)

If you are covered by one of these laws, remove salary history questions from application forms and train supervisors and hiring managers to avoid salary history questions during the pre-employment process.

Pay Equity Best Practices:

Here are some general best practices for ensuring pay equity.  For detailed information, download the Pay Equity Guide here.

  • Conduct internal audits. Consider working with legal counsel to conduct an internal audit of pay practices to confirm that employees working in similar positions are paid equitably based on skill, merit, and other nondiscriminatory factors.
  • Examine policies and procedures. Review pay-related policies and procedures to ensure compliance with all applicable laws. Develop a clear written equal employment opportunity policy and include a complaint process for employees to raise concerns.
  • Train supervisors. Provide training on the company’s compensation-related policies and procedures and commitment to equal pay.
  • Consider pay transparency. Clearly communicate how the company determines employees’ compensation.
  • Promptly respond to all complaints. Take all complaints seriously and conduct a prompt, impartial, and thorough investigation.
  • Document. Confirm employment decisions are made for legitimate, nondiscriminatory reasons and properly document all pay and performance related decisions.

Conclusion:

Federal, state, and local laws continue to change. Regularly review workplace forms, policies, practices, and training to ensure compliance with current requirements.

To learn more about pay equity in the workplace, download the white paper: Are employers paying their employees equitably?

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