Equal pay in the workplace requires commitment and changes to the hiring and management process. Women earn 80.5 cents for every $1.00 that men earn, and this differential is referred to as the “Gender Pay Gap” (US Census Bureau, 2018). While a pay gap is not unlawful, the causes of a pay gap may be. Paying a female less than a male simply because of her gender is pay discrimination and unlawful. With that said, basing compensation off of salary history (unless voluntarily disclosed) is not allowable and is thought to perpetuate the gender pay gap.
The Do’s & Don’ts of Salary History
Do’s:
- Do educate managers, recruiters, etc. that they may not ask or prompt candidates for prior salary history
- Do set a salary range prior to interviewing, and document how you came to that range and what benchmarking data you used
- Do ask about salary “expectations”
- Do document if negotiations were made to a salary decision prior to hire, and how and why you landed on an agreement. What made you decide this candidate deserves to earn more than another who is already in that role?
- Do document your organizations promotion process and raise/ bonus process. Document determining criteria for such advancements. Unconscious bias can seep in here and if left unchecked, can lead to discrimination (see our last blog post for more on unconscious bias in the workplace).
- Do look at at least 2 compensation cycles if your organization decides to do a pay equity analysis
Don’ts
- Do not ask for prior pay during the interview process. Remove this question from job applications
- Do not refuse an interview or refuse to hire someone based on prior pay
- Do not refuse to interview someone if they refuse to provide prior pay
- Do not probe for information on prior pay
- Do not try to “hide” pay differences through a bonus rather than base salary, as a pay analysis is based off of total compensation which includes stock grants, commissions and the the like, not just base salary
- Do not do a pay equity analysis unless you have buy-in from leadership and have the resources to make any changes needed to remain in legal compliance
Some organizations also compensate based on performance, merit and contribution. While this is allowed, be sure to document why and how one employee outperformed another to earn higher compensation. Document your companies strong performers and what makes them such. If you do base total compensation off of performance, be sure to allocate large projects or accounts that would generate greater revenue equally and fairly so that there is a more even playing field and equal opportunity for earnings so that there is no room for allegations of pay discrimination.
