March 14, 2023

Equal Pay Day – Analyzing the Why Behind the What

Equal Pay Day is March 14, 2023. The day was originated by the National Committee on Pay Equity (NCPE) in 1996 “as a public awareness event to illustrate the gap between men’s and women’s wages…to illustrate how far into the year women must work to earn what men earned in the previous year.”  Since then, much has been studied and written about the compensation of women as compared to men for equal work.

Yesterday, the White House published an announcement, stating discrimination is part of the reason for this pay disparity.  The statement also recognized the disparity “stems from women’s disproportionate caregiving responsibilities for children and aging loved ones, which can force them to forgo job opportunities, reduce their work hours, or leave the workforce at times.” So, when an employer’s wages are based on years of work experience and women leave the workforce to raise children, they have less experience, and are subsequently paid less than a man. This begs the question, is that discrimination based on sex?

The federal Equal Pay Act “prohibits discrimination on account of sex in the payment of wages.” The U.S. Supreme Court was asked to answer the preceding question in 2020. Even the Society for Human Resource Management (SHRM) filed an amicus brief asking the Court to answer the question to, “create uniformity on an important national issue.” Unfortunately, 71 days later the Court declined to do so.

On the horizon?

  • The White House urges Congress to pay the Paycheck Fairness Act and provide paid family and medical leave.
  • States and local jurisdictions continue to enact salary history bans, restricting when and for what reasons employers can require applicants to disclose their salary history.
  • On the flip side, states and local jurisdictions continue to enact pay transparency laws requiring employers to disclose the wage range they pay for advertised jobs.

The future is unclear as to whether the Equal Employment Opportunity Commission, the Office of Federal Contract Compliance Programs, or any other federal agency may revisit requiring employers to submit compensation data aka Component 2 data.  In 2019 and 2021, these two agencies announced their decision to not continue collection of this data.

In the interim. Talk to your company’s employment counsel about conducting an internal pay equity analysis, under counsel’s direction and control, and what you will do based on your results and findings, when and how.