March 24 will mark another Equal Pay Day, which signifies how far into the year women must work to earn what men earned in the previous year. Pay gaps for women of color are even greater. Without decisive action, these persistent pay gaps will not close for decades. To move the dial on equal pay, the Biden Administration should take these critical steps:
1. Support passage of the Paycheck Fairness Act.
Passage of the Paycheck Fairness Act, which was first introduced in 2014, is long overdue. This legislation would prohibit retaliation against employees who discuss pay with coworkers and eliminate the perpetuation of pay discrimination caused by employers’ consideration of prior salary. The law would make it easier to challenge systemic pay discrimination through class action lawsuits, require legitimate, job-related reasons for pay disparities, and provide the same remedies that are available to employees who file similar civil rights claims.
2. Reinstitute the collection and analysis of pay data.
The Equal Employment Opportunity Commission (EEOC) should reinstitute pay data collection in line with revisions made to the EEO-1 Survey during the Obama Administration. Pay data should be used to identify significant problems and target enforcement efforts, considering specific challenges and different approaches in particular industries. Aggregate pay data should be published, in keeping with existing practices to identify trends within industries and for particular demographics.
3. Ensure equal pay in federal contracting.
The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) should take critical steps to ensure equal pay by federal contractors. OFCCP could issue executive orders or initiate rulemaking to promote equal pay in a variety of ways. OFCCP could require federal contractors to include compensation analyses in affirmative action plans, publish pay ranges on job postings, include an equal pay certification in affirmative action plans, or make public disclosures about aggregate pay information. Contractors also could be prohibited from considering salary history in setting pay.
4. Require public companies to disclose gender and race pay ratios.
The Securities and Exchange Commission (SEC) can build in sunlight by requiring public companies to disclose gender and race pay ratios and other compensation data on an annual basis. The SEC already requires many publicly held large companies to report on the pay ratio between the CEO’s annual earnings and the median annual compensation for all employees. Such disclosures would empower investors and customers to make informed choices about where to spend their money. The SEC also could provide guidance to companies regarding voluntary reporting on pay equity to investors.
5. Promote best practices and compliance with employers.
Private sector employers play a critical role in reducing the pay gap, and there are many ways that they can and should take action to ensure equal pay. The Administration should work with high road employers to promote best practices, building on commitments made by employers that signed the Equal Pay Pledge during the Obama Administration. The Equal Pay Pledge includes a commitment to conducting an annual company-wide gender pay analysis across occupations; reviewing hiring and promotion processes and procedures to reduce unconscious bias and structural barriers; embedding equal pay efforts into broader enterprise-wide equity initiatives; and pledging to take these steps as well as identify and promote other best practices that will close the national wage gap to ensure fundamental fairness for all workers.
The Administration should re-engage with Employers for Pay Equity, a consortium of nearly 40 leading employers committed to collaborating to eliminate the national pay and leadership gaps. These employers come together to share best practices in compensation, hiring, promotion, and career development as well as develop strategies to support other companies’ efforts in this regard.
6. Conduct outreach to human resources organizations, job search websites, shareholders, and investment firms.
The Administration also should engage with management-side organizations like the Society for Human Resource Management and job search websites like Indeed, LinkedIn, Glassdoor, CareerBuilder, Monster, Google for Jobs, etc. Many of these organizations are taking action on pay equity. This collaboration could promote best practices such as encouraging employers to publish pay ranges, discouraging employers from requesting pay history information, and minimizing discrimination in salary negotiation.
Shareholders also have mounted efforts to request public companies to report the median gender pay gap, equal pay policies, and reputational, competitive, and operational risks, including risks related to recruiting and retaining female talent. Shareholder resolutions have helped to promote pay equity in many sectors and leading corporations.
7. Reinstitute an equal pay task force to ensure coordination and enforcement of the law.
The Administration should ensure interagency coordination by reconstituting an equal pay task force, including the EEOC, the Department of Labor, the Department of Justice, the Office of Personnel Management, the Government and Accountability Office, and the Securities Exchange Commission. Interagency coordination on outreach, education, and enforcement efforts will maximize the effectiveness of existing authorities. The task force should meet regularly and establish a detailed strategic plan with accountability measures to adhere to established timetables and deadlines for implementation. Each member agency should convene internal working groups focused on promoting equal pay through outreach, education, and enforcement.
8. Ensure that the federal government leads the way as a model employer.
The federal government wields tremendous influence as the employer of millions of workers across the country. The Administration should continue to study causes of the pay gap in the federal workforce, including the impact on women of color, as well as pay gaps within different agencies, industries, and types of jobs. The Administration should identify problematic practices that perpetuate pay discrimination, such as use of prior salary in requesting an exemption to the usual starting salary. The Administration should also implement promising practices that combat pay discrimination. Cutting edge innovations in the private sector should be adopted in the public sector. The Administration should consider implementing bold changes.
9. Reinstate the protections that were provided by the Fair Pay and Safe Workplaces Executive Order.
The Fair Pay and Safe Workplaces Executive Order was rescinded by the Trump Administration and has since rolled into the Fair Pay and Safe Workplaces Act of 2020, which would require prospective federal contractors to disclose labor law violations and give agencies guidance on how to consider labor violations when awarding federal contracts.
10. Issue reports from the National Council of Economic Advisers
Issues of gender and racial equity should be a focus of the Council of Economic Advisers. The Council should issue briefs and reports about trends, causes, and effects of the pay gap, as the Council did during the Obama administration.
Working IDEAL provides trusted and innovative advice on inclusive workplaces, diverse talent, and fair pay. Our audits and assessments apply the best thinking on how to promote gender, race and other forms of equity in your pay practices. Our robust quantitative and qualitative reviews go beyond basic compliance to align effective compensation strategy with mission and values. Contact us to learn more about the services we offer.
Author: Sarah Crawford