What Can I do to Promote a Culture of Pay Equity
Pay disparities in the workplace amongst men and women, or different races or ethnicities, can be the result of direct and indirect bias. Examples of indirect bias include assuming women perform certain jobs or duties instead of men; presuming women are not interested in advancement or promotions; making subjective pay determinations that are not based upon job-related factors; or basing an individual’s compensation solely on prior wage or salary history. The Task Force recommends that employers consider adopting some or all of the below Action Items to promote a culture of pay equity within the employer’s organization. These Action Items are not required by law and may not be feasible for all employers. However, adopting some, or all, of these action items may assist in promoting a culture of pay equity in the workplace.
- Increase Diversity of Applicant Pool: Develop tools to increase the diversity of the employer’s candidate pool, particularly in jobs that are majority male. Achieving at least 25% women candidates in an applicant pool has been shown to reduce the likelihood of unconscious gender bias and stereotyping, thus increasing the likelihood that more female candidates are hired.
- Remove Bias from Hiring Process: Increase the representation of women who make hiring decisions and participate in applicant interviews. Although not required by law, employers should also consider whether to make the initial pre-employment screening blind to the candidate’s gender, race or ethnicity (e.g., no name initially provided, just initials). The Task Force also recommends that employers provide training on implicit bias to employees involved in hiring decisions.
- Train Supervisors or Managers: Train managers on how to create a culture of pay equity. The Task Force recommends that employers train any supervisor or manager who has input regarding employee’s compensation about unconscious bias and the law’s pay equity requirements, under both federal and state law. Train supervisors and managers on how to make valid compensation decisions or recommendations that are based on objective, job-related factors and not on an employee’s gender, race or ethnicity. Training managers promotes job satisfaction and morale among employees generally, and reduces employee turnover.
- Encourage Employee Communication: Encourage employees to communicate with one another regarding compensation without the fear of retaliation. Encourage employees to ask the employer questions about their compensation without any concern of retaliation or an adverse employment action. Similarly, employers should consider encouraging managers and supervisors who are communicating compensation decisions to employees to explain the basis for any compensation changes.
- Job Classifications and Descriptions: Review job classifications and job descriptions on a regular basis to make sure the classifications and descriptions accurately reflect the work being performed.
- New Hire Evaluations: Base any offer of compensation to a new hire according to the objective, job-related factors and not on the applicant’s gender, race, or ethnicity. Additionally, although employers may consider an applicant’s prior compensation information, employers should not base any offer of compensation solely on the applicant’s prior salary or compensation. Employers may consider excluding prior salary from the hiring process to eliminate any risk of perpetuating any pay disparity to women and minorities who may have been underpaid in a prior role. Focus on paying applicants what a job is worth and not basing a pay decision on the candidate’s current salary. Review market data to determine the median wage for similar positions in the same geographical area as well as the compensation of other existing employees who are performing the same or substantially similar responsibilities.
- Consider Removing Negotiation from the Hiring Process/Lockstep Salary Bands: Consider either empowering women to negotiate, or removing negotiation from the hiring process. If using salary bands, employers should limit how high within a range new hires can be paid and require an objective justification for any difference between an incumbent and the new hire (e.g. years of experience, relevant industry experience, etc.)
- Review/Adjust Incumbent Pay: Require a review of incumbent compensation if new hires are brought in at higher salaries than their current workforce. Adjust current workforce upwards to match higher compensation offered to a new candidate unless there are objective factors that justify any pay disparity.
- Compensation Reviews: Regularly review employee compensation to evaluate any noticeable disparities amongst employees performing the same or substantially similar jobs. Review compensation to make sure the wages provided adequately compensate the employee for the job being performed.
- Increase diversity at senior levels and in the compensation department: Provide structural supports to move women and minorities up the talent pipeline, e.g. leadership training for top female and minority managers. Require that all important meetings include 30-50% women/minorities (e.g. Salesforce: Women Surge). Increase the representation of women/minorities who make compensation decisions for their workforce. A study of senior executive compensation at public companies revealed that women executives were better compensated when the compensation committee included women. There was a substantial gap in compensation when the committees included either no women or just one woman. Learn More
- Limit Discretion in Pay Decisions: For larger employers with a separate compensation department, consider requiring that manager compensation requests/recommendations be reviewed and approved by the Company’s compensation department.
- Promote Wage Transparency/Standardize Compensation: Although not required by law, employers may consider publishing salary ranges by level. Standardize discretionary compensation such as bonuses and equity and remove discretion in compensation decisions from individual managers. A recent study by the City of Boston found that in industries where there was high compensation “ambiguity” — meaning limited knowledge of the negotiating range and appropriate standards of compensation — recent women MBAs received salaries that were 10% lower than male classmates with the same skills and experience. In industries where salary ranges and standards were clear, male and female MBAs earned the same. See Boston, Closing the Wage Gap (2013), at www.cityof boston.com. Learn More
- Design Fair Performance Evaluations: Review performance evaluations to ensure fairness in the performance criteria. Publish and gain commitment for employee performance criteria.
- Offer Training and Other Accommodations: Offer management training, skills training, or other learning opportunities to all employees so that both women and men have the same opportunities for promotions. Support training programs for women in the trades. Pre-apprenticeships programs help strip away some of the barriers that preclude women from participating in apprentice training.
- Improve Workplace Flexibility/Change Subtle Drivers of Discrimination: Offer flexible work arrangements. Train managers to manage a flexible workforce and reorient workplace culture to emphasize results. Offer subsidized child care or back up child care. Review part time or flexible schedule policies to ensure that they reflect equal pay for substantially similar work on a pro-rata basis.
- Design Fair Incentive Compensation Plans: Review incentive plans to ensure fairness in criteria applied to determine incentive pay eligibility, including whether part time employees are being evaluated and paid on a pro-rata basis for substantially similar work.
- Offer Paid Parental/Family Leave for both Women and Men: Offer and publicize paid parental/family leave for both women and men and actively encourage both men and women to use it. Smaller employers, who may not have the capacity to provide paid parental/family leave, should consider accommodating employee requests for family leave when feasible.
- Parental Leave Policies: Adopt and publicize policies that specify that employees will continue to accrue seniority during parental leave, including but not limited to Pregnancy Disability Leave, Bonding Leave (CFRA), and FMLA. Learn More
Note that CFRA specifically requires accrual of benefits and seniority during CFRA leave. Cal. Code Regs. tit. 2, § 11092(e)
- Create a Culture of Equality: Embrace and publicize the pay equity issue as an issue that impacts men as much as it impacts women and acknowledge their role in closing the wage gap.
California Pay Equity Task Force, Content Approved on March 7, 2018
DISCLAIMER: The materials provided on this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain legal advice about any particular issue or problem. The materials do not represent the opinions or conclusions of individual members of the Task Force. The posting of these materials does not create requirements or mandates.