Here’s one. From my perspective, pay gaps need to be addressed for people before they even get hired, not just for employees after they’re on board. Focusing on the latter is like closing the door after the horse has left the barn.
Example: On most employment applications candidates are asked to provide their current salary. If they don’t answer the question, their applications may be tossed out.
If they answer and their salaries are too high, they may not be considered further. In truth, some candidates may be willing to take less than their current salary if the job is challenging and provides a good career path. They never get to find out because the door has already been slammed shut.
If they answer and their salaries are too low, it may cause the company to make some unfair assumptions --- such as low pay due to poor performance. On the other hand, the company may put a candidate at the top of the list because they can offer lower pay than they might otherwise have to offer to get the job filled.
As I see it, there are two issues involved with new hire pay gaps:
1) Potential discrimination in hiring if candidates are in a protected class
2) Pay gap problems with new hires in general if a company decides to make pay transparent
The Paycheck Fairness Act was introduced and rejected by the U.S. Congress twice. If you remember, it was designed to expand the scope of the Equal Pay Act of 1963. Among other things it would raise the bar for the “factor other than sex” defense, meaning that companies would be required to show that any wage discrepancies are based on genuine business requirements and/or related to performance. It would make it more difficult for employers to use legal defenses used in the past, such as alleged differences in negotiating skills or differences in pay rates at previous employers. And . . . even if a Paycheck Fairness Act is never introduced again, there will still be transparency issues.
Even if the gaps in #1 are corrected for protected class new hires, gaps for other new hires might still exist. If companies don’t take care of these as well there won’t be legal issues but, again, there will be a transparency problem.
It wouldn’t take employees long to spot all of them and ask why.
Here is what one State is proposing that makes sense to me. A bill recently filed in the Massachusetts Legislature aims to address situations like this by prohibiting employers from seeking job candidates’ salary histories. The bill also would require companies to disclose an open position’s minimum pay.
If candidates are good enough to get a job, aren't they good enough to get at least the minimum pay for the job --- even more if their qualifications and experience are similar to others doing the same job with higher pay?
Pay gaps aren’t just a legal issue. They’re a transparency issue too. Like I said, the devil’s in the details.
Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She typically works with companies that are growing overseas either organically or through acquisitions. Her expertise encompasses many areas of HR --- compensation, benefits and wellness, labor law, learning/development, strategic workforce planning and mergers and acquisitions. Her true passion is studying globalization and its current/future impact on companies and jobs. She has managed both local/ in-country national and expatriate programs and has been an expatriate twice during her career. She has certifications from HCRI, World at Work and Human Capital Institute as well as a B.S. and M.S. in Psychology and an MBA. Jacque has been a speaker in the U.S., Asia and Europe and is a regular contributor to various HR and talent management publications.