October 4, 2024 • By Dennis Beaver
If you were to ask just about any business owner if their employees should receive equal pay for equal work or could be paid differently, based on gender, race, color, religion, and national origin, I’m certain that most would reply, “What are you talking about? Equal pay for equal work is the law. If I respect this concept of equal pay for equal work, I’m good, right?”
Well, not so fast.
Employers today are facing pay concepts that could upset the apple cart in many organizations. Recently, several states enacted Pay Transparency laws requiring companies to be open about compensation for current and prospective employees.
Companies may share compensation information, including how salaries are determined, ranges, and even individual employee pay. But they must not conspire with other companies in the same field to keep wages low.
“Today, a lot more has been added to the concept of equal pay for equal work,” observes Northern California employment attorney and author, Heather Bussing, “that, if not understood by employers, can lead to an unpleasant work environment at the least, and potentially expensive litigation at worst.”
She and co-author Kent Plunkett in Get Pay Right – How to Achieve Pay Equity that Works, provide employers with an easily accessible approach to meeting today’s requirements on employee compensation. The concept is known as pay equity and goes beyond equal pay for equal work, the law since 1963.
In a nutshell, individuals should be compensated fairly and impartially for their work regardless of factors such as gender, race, ethnicity, or other characteristics unrelated to job performance.
Sounds simple. Right?
A Variant of Teacher’s Pet
“A worrisome issue labor lawyers often find is the employer who pays people they like more and not based on their work or the value they bring to the organization,” Bussing points out.
“When others who aren’t teacher’s pets, realize this–doing exactly what they’ve been asked to do, and maybe even better, but they’re not paid fairly for it, bad stuff often starts to happen.
“They grumble. There is unrest. No employee wants to be treated unfairly, and so they focus on how they’re being treated at the workplace rather than their work. Productivity suffers, your customers suffer, and as time goes on you lose employees. And then you’re out of business. So, it is in a business owner’s best interest to pay all employees fairly.”
But what does that mean? How do you determine what is fair?
The Economic Value of Work
“We look at the relative importance of the work–the value employees contribute to an organization and its success,” Bussing says.
“For example, salespeople are some of the highest paid, having the most direct connection to revenue. They need people who create the products, marketing colleagues who make customers aware of the products, and administrative assistants who keep everything going in the organization.
“Often we overlook the value of the work brought to the organization by employees in their individual capacities – the value of each and their work in the chain of creation,” she underscores.
Are We Paying Our People Fairly? – The Pay Equity Audit
How can an employer know if compensation is fair to everyone and avoid being sued for discriminatory pay practices? Get Pay Right gives us a by-the-numbers approach, and Bussing notes, “It’s a lot like trying to figure out how to compare houses, but instead of bedrooms, bathrooms, and square feet, we look at skills, effort, responsibility, and working conditions.”
What companies should do
She recommends that employers should value the work, not the people doing it.
Establish each worker’s expected skills, their level of effort required, responsibilities and working conditions. Study the market and learn what people in related jobs are making.
At this point, the authors recommend: “Group comparable jobs and run a statistical analysis to see where pay gaps are and whether they correlate to race or gender — whether women and people of color are making less for the same work.”
With pay gaps identified, “Determine if there is a business reason for why those people make less than others doing similar work, such as having less experience or tenure. Sometimes the person making more has special skills that justify the additional pay.”
Doing a pay equity audit will tell you where the outliers on pay are and whether there is a statistical correlation to race or gender.
Concluding our interview, Bussing notes that, “Pay equity laws apply to all employers regardless of size. Companies with at least 100 employees should do regular pay audits, which can be accomplished with specialized software.”
Bussing is a lawyer who never gave up her goal of changing the world for the better. She is all about fairness. Get Pay Right shows employers how to achieve it when determining pay and keeping themselves out of trouble.
Dennis Beaver Practices law in Bakersfield and welcomes comments and questions from readers,
which may be faxed to (661) 323-7993,
or e-mailed to Lagombeaver1 – at – Gmail.com.