Pay Equity: 7 Things you Should Know

Pay Equity is certainly a hot topic for US firms as well as global firms with US clients and candidates. With a number of states and cities have already implemented the legislation and more committing to the introduction of similar regulations, here are 7 things the executive search professional should know.

1. A summary

The new Pay Equity legislation on Salary History prohibits employers, or their agents, from seeking current salary or salary history from a prospective external candidate as part of the hiring process. This expands on existing Pay Equity legislation that outlaws pay discrimination on the basis of gender or protected status. Currently it is only being applied in specific states and cities but it is expected to expand across the country.​

2. What’s it all about?

It is an expansion of law preventing differences in pay based on gender or protected status.​ The intent is to ensure that existing salaries (which are assumed to reflect gender bias) cannot be used to select candidates or to determine the salary for a new position.

3. Why is it coming about?

There is clear evidence of a pay gap between genders and between minority and non-minority groups for the same roles and functions. And when salary history is used to determine compensation this inequality is continued and potentially exaggerated.​

4. What’s prohibited under the legislation?

The new legislation prohibits employers (and their agents) from:​

– screening candidates based on their wages​

– requesting or requiring a candidate to disclose salary or salary history​

– seeking salary history from a candidate’s current or former employer​

– using salary history to determine a compensation package​

– discriminating against employees for not disclosing salary​

These restrictions also apply even if the salary history is in the public domain​.

5. Where will it be applied?

It will apply if the employing company is in a state or city that has the legislation. It is also likely to apply if the candidate is in one of those states or cities. ​

6. When does it start?

Some locations have enacted it already, other have enacted but don’t start the penalties. Most will implement by July 2018 and other states are likely to follow.​

7. What are the fines?

The fines across different states and cities vary quite wildly and it’s yet to be seen as to how this will be enforced. At present fines range from $100 to $250,000 depending on the location and how many offences have occurred.

The introduction of Pay Equity regulations will certainly require some changes to the way employers and search firms approach the hiring process and the handling of salary negotiations. For more information relating to Pay Equity, register for a free webinar on Thursday, February 22nd at 11:00am EST, 4:00pm GMT, 5:00pm CET.

The Invenias solution

Invenias are committed to providing dedicated tools and functionality to manage and support organizations in meeting the requirements of the Pay Equity legislation. Invenias customers can be confident that these solutions will provide an easy and intuitive way to comply with the new legislation with minimal impact on work flow.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.