Equal pay laws have been around for decades, yet the gender wage gap persists. According to the US Census Bureau’s Income and Poverty in the United States: 2015 report, published in September 2016, in the United States (US), women earn approximately 80% of the pay received by their male counterparts. In the European Union (EU), the average gender pay gap in 2015 was 16.3%; when taking into account women’s lower hourly earnings, fewer hours worked in paid jobs, and lower employment rates, for example, when careers are interrupted for care-giving responsibilities, this figure rose to 39.6% (2014). Studies suggest it may take decades to bridge this divide.
Governments worldwide are experimenting with regulations to eliminate inequities. Under the UK’s Equality Act 2010, women performing equal work are entitled to the same compensation, including holiday pay and pension benefits, as men, unless there is a non-discriminatory justification. This law also prevents restriction of employee discussions about pay and requires employers with 250 or more employees to publicly report metrics concerning gender pay gaps, such as the mean and median hourly rates of full-time employees, along with bonus differentials. This type of wage transparency measure helps shed light on employer practices, whether intentional or inadvertent, that might create a pay disparity.
The US federal Equal Pay Act similarly prohibits pay discrimination. Most equal pay efforts in the US have occurred at state and local levels, however.
Several states strengthened their equal pay laws in recent years. A relatively new Maryland law, for example, precludes employers from ‘providing less favourable employment opportunities’ because of sex. Some states include ‘safe harbours’, protecting employers from liability if they took steps to eliminate disparities before the claim arose. California nearly enacted a law like the UK’s pay gap reporting duty, but it was vetoed by the governor just weeks ago.
Wage transparency laws also caught on in the US, but the most noteworthy trend is the proliferation of salary history bans, which prohibit employers from asking applicants or their former employers about wage histories. The rationale is that pay inequities are perpetuated when pay is based on past employer decisions that could have been discriminatory. Such laws have been adopted in states ranging from Oregon to Delaware, and in a few municipalities, including New York City.
We are poised to learn about the benefits and burdens of the various approaches as they play out. Let’s strive to learn, through each other’s experiences, the most effective ways of closing the wage gap sooner rather than later.
Paul Quain is partner at GQ Employment Law