This article was updated on July 10, 2018.
Equal pay laws are a national discussion at both the federal and state levels. Massachusetts is the latest state to enact further legislative action to close the gender pay gap, prohibiting employers from asking job candidates about salary history. Maryland's revised equal pay law prohibits any employer from barring employee discussions about salary, according to the National Law Review, and California enacted a similar law against wage secrecy and mandated that employers must pay men and women equally for substantially similar work despite job title, CNNMoney reports.
Finance leaders should look to adapt their compensation strategies and compliance efforts to match this ever-expanding regulatory landscape and establish wage neutrality that is fair to all employees.
The Fight to End Bias
The Massachusetts equal pay law took effect on July 1, 2018, and was birthed out of the assumption that using salary history only serves to "lock in" historical wage discrimination against women. In any negotiation, the first number offered tends to tether the entire negotiation to that initial number. This creates a potential bias, and it can then be difficult to move past that number.
To fight this bias, organizations should look beyond the past and instead set policy to base compensation on value. Determine exactly what the job is worth to your organization, and then create salary ranges informed by that valuation. You should also monitor and track pay equity issues using data from HCM and payroll systems that encompass each employee's journey. This proactive approach to pay equity is exactly what easy access to workforce analytics enables.
Big Data and Analytics
Equal pay laws might prevent you from collecting salary data from candidates, but other types of salary data are still readily available. You can use big data to derive insights and direct strategy for anything from compensation to benefits. Having the ability to accurately benchmark your salaries and benefits against competition could be key to your compensation strategy, not to mention your compliance, recruitment and employee engagement efforts.
3 Steps to Comply With New Laws
While it's important to look ahead, you also have to make sure you are compliant now. So here are three steps finance and HR leaders should take to comply with the Massachusetts salary disclosure law.
1. Remove any questions on job applications or interview notes that request past salary information when recruiting in Massachusetts.
2. Indicate that Massachusetts applicants should not answer salary history questions if your business uses a standard application across states.
3. Train recruiters in Massachusetts on the new equal pay law and instruct them not to seek salary histories from candidates.
The new state equal pay laws may be strong indicators of things to come, so consider taking a more proactive stance on equal pay. If you recognize you have a potential compliance problem, address it. You should also make every effort to have as much relevant data and benchmarking intelligence as possible, so that you'll be armed with the insights you'll need to remain compliant and keep your wage policies gender neutral.
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