Pay Equity – What it is and Why it’s Important


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Pay equity is important for companies to address when attracting top talent. It’s fairness, not just compliance, and it can have severe consequences for employers. We’ll examine what it is, how to implement it, and why it’s essential to keep an eye on numbers.

Pay Equity - What it is and Why it's Important

Pay Equity is a Compliance Issue

Pay equity is an important compliance issue. It engages employees and helps employers avoid a lawsuit. Unequal pay erodes trust between employers and employees, making it difficult to retain top talent. Some employers consult with legal counsel and conduct pay equity analyses to ensure compliance.

Federal contractors must follow the Equal Employment Opportunity Commission’s guidelines when paying their employees fairly and conduct a pay equity audit annually. Government contractors must also meet the requirements of Executive Order 11246 to ensure they are following equal employment practices. The government contracting community must periodically self-audit its pay practices, address any pay disparities, and provide customers with information.

To ensure compliance with the Equal Pay Commission’s guidelines, federal contractors must file the EEO-1 Report by March 31 each year. The data must be obtained from at least one pay period each year in October, November, and December. Under COVID-19, the deadlines were extended to October 25, 2021. Companies must use data from the fourth quarter of 2018 to create their EEO-1 Report for 2019. Pay equity has become an essential compliance issue for employers in today’s economy.

It’s About Fairness

Pay equity is a fundamental human right that promotes equal pay for equal work. It is a goal shared by many individuals, particularly women. Unfortunately, in many countries, women are paid less than men for the same jobs. This is an injustice and a violation of fairness. Pay equity is about doing what’s right, not what’s easy or financially profitable.

The Equal Pay Act, minimum wage, and child labor laws were implemented to prevent wage discrimination. The systematic underpayment of some workers hurts families and reduces purchasing power. Furthermore, raising the wages of women and people of color strengthens the economy. Moreover, pay equity is consistent with remaining competitive.
The Equal Pay Act eliminates artificial geographic limitations and allows comparisons of salaries within the same workplace. Moreover, under this act, an organization must prove that it has made efforts to provide equal pay to men and women. If it doesn’t, it faces penalties.

It Can have Profound Implications for Employers

Pay equity is a topic that is of growing concern for employers. It can improve employee morale and turnover rates and lead to better performance. Moreover, it can enhance employees’ commitment to the company. However, pay equity is a complex issue with profound implications for employers. To address the problem effectively, employers should audit their compensation systems. An audit will identify discrepancies and opportunities to improve pay equity. It will also help identify legitimate reasons behind pay disparities.

Pay equity is ensuring that employees receive equal compensation for similar job duties. This principle considers different factors such as experience level, job performance, and duration of employment. The #MeToo movement has increased pay equity legislation. Nearly all states have laws mandating more transparency in the workplace and granting protections to employees who report pay discrimination.

The Equal Pay Act was passed in 1963 to eliminate wage disparities between men and women. The law also made it illegal for employers to discriminate based on sex regarding compensation and employment. While Title VII of the Civil Rights Act protects against wage discrimination, there is still a need for more effective legislation to ease the burden on employers.

It Can Attract Top Talent

Employers committed to paying equity have an advantage in hiring and retaining top talent. Unequal pay can cause employee dissatisfaction and damage the trust between the employer and the employee. Furthermore, unequal pay puts a company at risk of discrimination lawsuits, which can negatively impact its bottom line. This is why some companies turn to legal counsel to ensure compliance with equal pay laws.

Compared to perks and salaries, equity compensation is less expensive and has the added benefit of helping to retain key employees. Furthermore, equity compensation attracts more high-caliber talent and helps protect cash flow.

While pay equity implications are essential when hiring, most companies are unaware of them. This is because the focus is often on recruiting and retaining employees instead of attracting top talent. Therefore, more employers should consider raising their base salaries to attract top talent.


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