The pay gap between women and men has been narrowing, but the progress has been slow.
When Congress passed the Equal Pay Act (EPA) in 1963, women with full-time, year-round jobs were paid 59 cents for every dollar that men in similar jobs earned. Fast-forward to 2021 — nearly 58 years later — and women now receive on average 82% of what their male counterparts earn, according to the National Committee on Pay Equity (NCPE).
The EPA prohibits pay discrimination based on gender and is enforced by the Equal Employment Opportunity Commission (EEOC) under the United States Department of Labor (DOL). But pay equity doesn’t stop at matching women’s wages to men’s; it also applies to benefits, bonuses, reimbursements, overtime, training, and other conditions of employment.
While the pay gap between women and men has been closing since the law passed, the progress has been slow. In fact, women’s wages aren’t expected to reach full parity with men’s until 2059, according to the Center for American Progress. To raise awareness of gender-based wage disparity, the NCPE founded an annual Equal Pay Day in 1996. This year’s national observance is Wednesday, March 24.
Women’s wages aren’t expected to reach full parity with men’s until 2059, according to the Center for American Progress.
Race-based pay gaps
Statistics from the American Association of University Women (AAUW) show that Asian American and Pacific Islander women are paid 85 cents for every dollar that white men receive, a rate that’s slightly higher than average.
However, the pay gap is wider than average for other groups of women:
- Working mothers (versus working fathers): 70 cents
- Black women: 63 cents
- Native American women: 60 cents
- Latina women: 55 cents
Since Equal Pay Day was established, each group of women now has its own day of observance at various times during the year.
The price of pay inequity
Employers whose pay practices are found to be discriminatory could face lawsuits, along with stiff monetary penalties.
Achieving full pay equity may take 38 years, but employers — especially small and medium-sized businesses— will need to set the process in motion now. Employers whose pay practices are found to be discriminatory could face lawsuits, along with stiff monetary penalties.
Among the more recent lawsuits is one including Dell, Inc. The EEOC sued the technology giant in 2020 for allegedly paying a female IT analyst $17,510 less than a male analyst, whose work required comparable skills, tasks, and responsibilities. Dell is charged with violating the EPA and the Civil Rights Act of 1964, which both prohibit discrimination based on sex.
The DOL found JP Morgan Chase liable for underpaying women in some of its divisions. To resolve the case, Chase agreed to pay the women $800,000 in back pay and fees and pledged to set aside $9 million to close pay gaps among its employees over time.
A pay discrimination charge can come with a bigger price tag than Chase’s. Qualcomm, another tech giant, settled its case for $19.5 million in 2017. The company was charged with paying its female lawyers less for doing the same work as their male colleagues.
Equal pay remedies
Besides financial settlements, court orders in pay discrimination lawsuits usually include remedies for closing the pay gap. Remedies might vary by case, but they often require defendants to:
- Review and assess their pay practices
- Report wage rates to the EEOC by a specified date
- Avoid future violations of the EPA and Civil Rights Act
- Conduct antidiscrimination training
- Revise their pay policies
- Report new pay-disparity complaints to the EEOC
Since women’s wages lag behind men’s throughout much of their career, barring discussions of salary history in job interviews is one way to drive wage parity. Currently, 17 states (a total that includes Puerto Rico) and 17 municipalities have “salary history bans.” SMBs should check the status of bans in their state or local jurisdiction to avoid being charged with violating the law.
Supporting Equal Pay Day
The NCPE recommends that businesses support Equal Pay Day by examining their pay practices to make sure all employees are treated fairly. The organization’s view is that pay equity makes employees feel valued and attracts the most qualified talent.
The NCPE recommends that businesses support Equal Pay Day by examining their pay practices to make sure all employees are treated fairly.
It also recommends a 10-step self-audit guide for businesses that includes:
- Conducting a recruitment self-audit for diversity in hiring.
- Evaluating compensation for internal equity.
- Evaluating pay for industry competitiveness.
- Conducting a new system for evaluating jobs, if needed.
- Comparing job grades or scores.
- Reviewing grades and positions for new hires.
- Assessing opportunities for granting workers bonuses and commissions.
- Evaluating how raises are awarded.
- Evaluating employee training, promotion, and development.
- Altering evaluation processes, maintaining equity and using successful outcomes to compete for talent.
SMBs and the Paycheck Fairness Act
According to the NCPE, individuals can support Equal Pay Day by contacting their lawmakers in the House of Representatives and the Senate and urging them to pass the Paycheck Fairness Act. The proposal expands wage protections and legal remedies for women affected by pay inequality, supports a study of pay data compiled by the EEOC, and provides voluntary guidelines for employers to eliminate pay disparities in their job evaluations.
While the bill strengthens the EPA, it also provides these key safeguards for SMBs:
- Exemption from the bill’s provisions to the extent that SMBs are exempt from the Fair Labor Standards Act.
- 6-month waiting period before the bill is enacted.
- Compliance assistance from the DOL.
- Recognition of excellence for employers conducting fair pay practices.
- Stronger federal assistance and outreach to help all businesses improve their pay practices.
Check out our People Ops Podcast episode “How and Why Small Business Can Close the Gender Pay Gap.”