Pay Equity: Meaning and the Path to Achieving It

Looking at a pay equity definition and finding the meaning and path to achieving it is key for both employers and employees. Once you are aware of what pay equity means, you can push for change and educate others about the importance of it. Changes won’t happen overnight, but it is vital to start thinking about how you can make a difference now.

Pay Equity Definition and Meaning

When we look at a pay equity definition, it is important to get it right. Here at Salary.com, our mission is to make fair pay a reality. As this is the case, here is our pay equity definition:

Pay equity is equal pay for comparable jobs that is internally equitable, externally competitive, and transparently communicated.

This pay equity definition outlines some of the key components of having fair and equitable pay. If an employer can ensure that they pay employees with these components in mind, they will be on the path to making fair pay a reality. They will only be successful, however, if they make sure that pay discrimination due to personal attributes such as gender or race doesn’t occur.

The Importance of Pay Equity

Pay equity is vital for employers and employees alike. For employers, having fair and equitable pay enables them to attract top-quality talent and comply with the law. For employees, it means that they can take home a fair salary for the work that they complete.

Looking past the pay equity definition allows you to see how there is both a moral argument and a business case for pay equity:

• The Moral Argument

The moral argument argues that pay equity is the right thing to do. From a moral standpoint, you should pay all your employees fairly and equitably regardless of who they are, where they come from, or what they look like. Couple this with our pay equity definition and you can see how closing the wage gap is something that must be done.

• The Business Case

When we look at the pay equity definition above, it is clear to see that pay equity makes sense in terms of business. If an employee feels that their employer is paying them fairly, they will be more likely to bring their A-game to the workplace. This will lead to high productivity and greater levels of job satisfaction.

Steps for Achieving Pay Equity

Achieving fair and equitable pay that aligns with our pay equity definition doesn’t happen overnight. It requires both commitment and an understanding of the steps that you need to take to achieve pay equity. Here are the necessary steps that employers need to take to work toward fair and equitable pay:

• Conduct a Pay Audit

The first step for employers to take is to analyze the current pay structures within their organization and identify any gaps that exist. You can review employee salaries and bonuses over recent years. Looking for patterns relating to characteristics such as gender, race, or age is vital when conducting a pay audit. To work towards pay equity, you should be transparent when you share the results with employees.

• Standardize Your Job Descriptions

You need to clearly define the positions and compensation levels of every job role within your organization. As the pay equity definition states, you need to communicate this transparently to potential and current employees. Evaluate every job objectively and ensure that there is equal pay for equal work.

• Promote Transparency Within Your Organization

When you communicate openly what your pay equity strategies and goals are with employees, everyone will be on the same page. When you do this, you should break down how you calculate the compensation levels for each position. From here, your employees can understand how they are paid fairly.

• Offer Bias and Diversity Training for Managers and Recruiters

Organizations should also educate managers, executives, and recruiters on the impact that unconscious bias has. This training should encourage inclusive behaviors and minimize any biases that exist during recruiting. With diversity and inclusion being a priority, you can make real strides in improving your pay equity practices.

• Review and Revise Your Practices Regularly

When looking at our pay equity definition, you can deduce that it is an ongoing process. You need to regularly review and revise your practices to ensure that they are up-to-date and that no gaps creep into existence. It takes time and effort, but your employees will thank you for it.

Comply With Pay Equity Laws and Regulations

Once you know the steps that you need to take to achieve pay equity, you can begin making a change. Before you do this, however, you need to be aware of the federal pay equity laws that exist in the U.S. The two main laws you need to be familiar with are:

• The Equal Pay Act of 1963

This law prohibits employers from discriminating between sex when it comes to compensation. If a job requires equal skill, effort, and responsibility under the same working conditions, employers will have to pay the same wage to everyone, regardless of sex.

• Title VII of the Civil Rights Act

This act prohibits employers from discriminating against workers based on race, color, religion, sex, and national origin. With this in place, it ensures that workers in the same roles and under the same conditions get paid the same. This does only apply to employers who have at least 15 employees, however.

In addition to these pay equity laws, you should research to see if your state or city government has any other pay equity or pay transparency laws in place. Pay equity is a complex issue but closing the pay gaps that exist is achievable if all the right people put in work. Take the step to make fair pay a reality in your organization today.