W2 Issues/Concerns

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Check out our weekly blog posts and see the latest news and discussions happening in the HR world of business.

Are you ready for new Equal Pay Mandates?

When the equal pay act was first ushered in 1963, it laid the ground-work for men and women to receive equal pay for equal work. Specifically, the Equal Employment Opportunity Commission (EEOC) states that the bill “prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort and responsibility under similar working conditions.”  

While that seems fairly comprehensive, we know that it hasn’t always been entirely effective. According to PayScale, which conducts one of the most comprehensive analyses of compensation in the US, women made only $0.79 for every dollar men made in 2019. PayScale attributes this differential to the fact that “women are less likely to hold high-level, high-paying jobs than men. There are structural barriers which keep women from advancing in the workplace– this is what we call the opportunity gap.” This is further demonstrated by the fact that after controlling for other factors – including job title, years of experience, industry and location – women make $0.98 for every dollar their male peers make.

In an effort to further close the wage gap, a number of states have enacted their own, more stringent equal pay mandates. California, New York, and Maryland have expanded their laws to really lean on employers to follow the act (and includes a great deal more documentation requirements!), as well as allow employees to discuss their paychecks to improve pay transparency.

So how can you protect your business? The best course of action, regardless of the state that you live in, is to formalize your pay structure. But before you begin, there is a chance you might need to go ahead and right some wrongs. You should conduct a comprehensive pay audit that examines the compensation of all your employees, across all your locations, at all levels. If you identify any discrepancies, now is the time to give those underpaid workers a bump OR identify a cause that explains why they should be making less. Just causes, according to the EEOC, include education level, years of experience, or seniority within the company. Once you have everyone on a fair level, you should go ahead and formalize how you will be determining pay – both moving forward and for new hires. This structure should be put in writing and outline what metrics employees need to meet to earn a certain salary and what they need to achieve in order to get a pay bump.

Finally, with more states getting on board with these equal pay mandates, we can’t recommend enough that you identify and implement a reliable system for keeping detailed records on your employees, including wages, job descriptions, and performance reviews as they may be needed to justify different compensation amounts. In doing this, you can save yourself a whole lot of work should the EEOC come sniffing around with questions about your compliance.

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