HR Services to Avoid Wage Discrimination

ByContent Manager
HR services

Wage discrimination is a prevalent problem in the United States, despite the fact that it is illegal. Consider the following statistics across the United States:

  • Women earn only $0.79 for every dollar a man earns.
  • This figure is $0.62 for black women, $0.57 for American Indian and Native Alaskan women, and $0.54 for Hispanic and Latino women. It is $0.90 for Asian women.
  • Asian men can earn $1.17 for every dollar compared to other ethnicities in the same category, yet this figure is $0.73 for black men and $0.69 for Hispanic men.

The data is clear. Large racial and gender wage gaps persist in the United States. The root cause of this is wage discrimination. Wage discrimination results in paying someone less because of their gender, race, age, or religion. And employers engage in this practice, sometimes unintentionally, due to persistent impressions about different characteristics of workers.

To prevent this type of discrimination, there have been several federal laws to promote equality in pay, including:

  • The Equal Pay Act
  • Title VII of the Civil Rights Age
  • Age Discrimination in Employment Act
  • Americans with Disabilities Act

Ensuring compliance with these laws is crucial. Non-compliance can result in lawsuits and penalties, such as the recent lawsuit against Google’s parent company. Over 10,000 women are seeking more than $600 million in damages related to disparate pay for comparable work. These types of cases underscore why employers must be diligent in avoiding wage discrimination. There are several strategies that can prevent intentional and unintentional wage differences, including:

1. Conduct a Wage Audit

Despite the additional cost of an audit, these investigations can monitor pay issues and practices in a way that allows the employer to amend any unfair practices before it becomes a legal issue. Employers can request that the audit cover the compensation and benefits of employees in similar positions to ensure that those employees in protected categories are paid similarly for the same work. In instances where there is variance, the audit can determine whether there is a non-discriminatory reason for the difference.

If an audit reveals that there are compensation variances across ethnicities and gender without reasonable justification, the differences should be addressed. These discrepancies may violate one or more of the anti-discriminatory wage laws and leave the company vulnerable to legal action.

2. Be Fair and Consistent

Wage discrimination lawsuits incorporate a wide range of elements in determining actual compensation, including salaries, overtime pay, bonuses, stock options, profit sharing, life insurance, vacation and holiday allowances, gas allowances, benefits, and travel expense reimbursements. The basic premise behind wage discrimination laws is that employees who hold the same position should receive equal pay and benefits, regardless of sex, age, or other protected category. Differences are permitted if there are variances in the scope of responsibility, for seniority, or based on merit. But consistency in applying and administering all types of compensation is essential in preventing wage differences and potential lawsuits.

3. Keep Detailed Documentation

Documentation is essential in protecting a company from many different claims. If a wage decision is made that can be viewed as discriminatory, it is essential that the employer documents the reasons and justification for that decision. If a claim of wage discrimination is made, the burden is on the employer to prove that the actions and decisions they made were not discriminatory.

4. Implement a Wage Plan or Schedule

One of the best ways to prevent wage discrimination is to develop a wage plan or schedule. The employer can also conduct market and industry research to ensure that their wages are in line with industry standards (which also helps to attract the best possible job applicants). A wage schedule should account for the following factors:

  • Determining the Company’s Compensation Philosophy: This element will guide how wage adjustments are made and determine how the employer will differ from competitors when attracting new candidates.
  • Job Analysis: The different positions across the organization should be reviewed, documented, and analyzed to provide a scope of responsibilities as they relate to other jobs. This process can also help employers refine their job descriptions.
  • Market Research: Market research should account for differences in job titles. It should also encompass multiple sources of information and input from professional organizations, when appropriate.
  • Creating Job Grades: Job grades are groupings of positions with a similar worth. Organizations can develop as many pay grades as they feel necessary based upon difficulty, responsibility, and qualifications. This type of grading provides a standardized framework that does not account for the protected characteristics of individual workers. It ensures that people with comparable qualifications are placed in the same job grade.
  • Developing Salary Ranges: Salary ranges can be tied to job grades. But the employer must develop minimum, midpoint, and maximum pay ranges. This process can help employers and employees understand where they fall across the range related to their job.
  • Conducting Regular Reviews: Like all aspects of employment, conditions rarely remain static. Rates of pay and average salaries across all industries constantly and consistently change based on economic activity and other factors. The wage play should be regularly reviewed to ensure ongoing compliance.
5. Implement Proper Hiring Policies

Huge compensation determinations are made upon hiring. And while employers may feel that they need to offer more to secure a great candidate, if this is done unfairly across different classes of employees, the end result can lead to wage discrimination. Whether the employer’s actions were intentional or unintentional does not matter; the actions are still illegal.

One way to prevent this is to ensure proper procedures for the application and hiring policies and compensation offers. Newly hired employees should receive the same pay as other employees performing the same or similar duties. Any pay differences for legitimate reasons should be documented accordingly.

Addressing wage gaps across the nation will not happen overnight. But as an employer, you have a duty to ensure that your policies and procedures do not violate anti-wage discrimination laws and regulations. To find out more about avoiding wage discrimination, contact CAHR Services today and find out how HR services can change the way you do business.

CA HR Services specializes in working with small and medium-sized companies to help develop legal, efficient, and appropriate HR processes and procedures that meet local, state, and federal labor law requirements.

Call us today at 858-293-8046 or e-mail us at info@cahrservices.com.