After the Audit: How to Handle Pay Equity Issues

You've completed your pay equity audit! Congratulations, it's a big deal.*

You were surprised to find that you may have some pay equity issues. Most organizations do. It's not your fault. It's what happens when many humans make lots of hiring decisions about other humans and jobs over time. And since your pay equity analysis changes every time someone comes or goes, there's no way to achieve perfection then keep it that way. Pay equity is not a solid state.

What matters most is what you do next and how you handle it.

1. Call Legal

   You want your employment lawyer involved with the audit to protect the confidentiality of the pay equity audit and analysis. You most definitely want your lawyer to help you assess and resolve any pay equity issues. This is also to maintain privilege and confidentiality. But mostly, it's to get advice on how to analyze the issue, the risk, and potential solutions.

2. Assess whether it's discrimination

   The results of a pay equity audit will usually identify statistical correlations between pay and members of a protected class. It tells you where women and people of color are paid less than others doing similar work. It does not tell you why. And correlation is not causation.

   To figure out whether the pay gaps are potential discrimination or can be justified based on legitimate business factors, you have to look at both the work and the individuals doing the work.

   Work is comparable for pay equity when it requires similar skills, effort, and responsibility and is done under similar working conditions. This is where you double check whether you grouped comparable jobs correctly. For example, if you are paying your lab scientists in the Antarctic significantly more than the scientists in Albuquerque, it likely has to do with the working conditions. And if you are paying your tech assistants differently, look at whether they are required to do calculus or make copies.

   If the work is basically comparable (it won't ever be a perfect fit), next look at the people doing the work. See if the pay gap is related to specific skills, training, qualifications, certifications, or another factor that would justify paying one person more. This can include geographic and cost-of-living differences and significant differences in experience or performance.

   It's a judgment call. But unless there is some factor that really stands out so that the reason for the pay gap is obvious, it's probably better to address the pay gap.

3. Close the pay gap

   When you close the pay gap, you eliminate the risk and don't have to spend any more time or stress trying to assess or justify the differences in things that are already hard to compare–like people and their work.

   If you are using software that helps assess pay equity, it will probably give you the amounts it will take to close the pay gaps you find.**

   It's a good idea to see the costs involved before you spend too much time and money trying to justify the gaps. It may be cheaper to simply close the gaps if the work and people doing it are generally comparable.

   To close the pay gap, you pay the people who are making less enough more so that their pay is in the same general range as the other people doing similar work. There is some room for give and take here.

   Look at your salary ranges for the roles. Benchmark what other organizations are paying for similar roles.*** Then try on solutions and rerun your pay equity analysis to see if it solves the issue.

4. What if we can't afford the fix?

   If your budget can't handle closing all the pay gaps for all the people who need it closed, find the best solution you can afford and have a plan and timeline to correct the issues as soon as feasible.

   There are two important rules to remember when dealing with pay equity. 1. Affordability and budget are not a defense to a discriminatory pay gap; and 2. you can only raise someone's salary to address pay equity issues; you cannot lower anyone's pay to make things equal.

   If your pay equity issue looks bigger than your budget, turn to the friendly employment lawyer who has been guiding you through this and ask for her help in crafting the best approach. You need a plan to fix it and do as much as you can as quickly as you can.

   Some states, like Massachusetts, have a safe harbor period where you have a set amount of time to correct pay gaps without liability. This is a great approach and encourages employers to assess and correct pay equity, which is the point of the laws in the first place.

5. What if we need more help figuring it out?

   Compensation is hard. Every person is different, every job is different, and every organization is different. If it looks like your compensation strategy could use an overhaul, it might be time to call in the professionals. An experienced and knowledgeable compensation consultant can help you sort it out and put a great framework in place.****

6. Why pay equity matters.

   Pay equity is about more than compliance and money. It's about fairness and valuing people for their work and abilities instead of who they are or what they look like. Pay equity is an essential part of creating an inclusive culture where people want to come to work and stay.

   It's worth the time and effort to get pay equity right.

   If your pay equity software doesn't calculate the cost to close pay gaps, we can help you find one that does. Like ours. Want a demo?