The movement toward pay transparency

This article is the second in a series of articles and discussions that the CXR Community will be driving around Transparency in Recruiting.

A short history

Gender pay bias in the US was first addressed directly in 1963 with the passage of the Equal Pay Act and again one year later in Title VII of the 1964 Civil Rights Bill. [See timeline from National Committee on Pay Equity]

CXR is starting a larger conversation about transparency in recruiting by focusing on pay transparency. However, we know there are other issues where transparency could improve our industry and its impact. Please take a moment to weigh in on what issues of transparency you see as important: Transparency in Recruiting Survey.

The I970s and 1980s saw activists striking and lawyers suing on behalf of female plaintiffs unfairly treated compared to their male counterparts. Thanks to one of those many lawyers, Ruth Bader Ginsberg, the all-male supreme court justices learned that the notion of women being on a privileged pedestal was, in reality, much closer to a picture of women being shuttered in a cage. Ruth’s ability to speak truth to power, forced a new level of transparency on how the law was being applied.

In the 1990s professor Ginsberg was elevated to the Supreme Court by President Clinton. She was seated in plenty of time for a breakthrough moment in history when Ledbetter v. Goodyear Tire and Rubber Company came before the Supreme Court in 2006. Lilly Ledbetter sued Goodyear for having discriminated over 19 years in how she was reviewed and paid. A lower court awarded her 3.5 million dollars (later reduced to $360,000). The Supreme Court ruled in 2007 that Title VII’s provision that complaints needed to be made within 180 days was sufficient for the majority to throw the suit out… regardless of its merit.

However, Ruth Bader Ginsberg strongly dissented calling the majority’s ruling “out of tune with the realities of wage discrimination and a cramped interpretation of Title VII, incompatible with the statute’s broad remedial purpose.” She suggested that “the Legislature may act to correct this Court’s parsimonious reading of Title VII.” And they did. On January 29, 2009, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act. The Act requires employers to ensure that their pay practices are non-discriminatory and to make certain that they keep the records (a critical element to ensure transparency) needed to prove the fairness of pay decisions.

By 2015 forty-two states had passed some form of equal pay laws and most states granted exceptions for pay systems based on relevant wage differentials other than gender, such as seniority or merit.

Starting in 2016, the California Fair Pay Act, the Massachusetts Equal Pay Act, The Maryland Equal Pay for Equal Work Act and the provisions added to the New York State Human Rights Law began to clarify what constituted similar working conditions and address bias practices in hiring related to wages, salaries and benefits. Perhaps even more important is that many of the provisions required access to data and the elimination of policies that restricted employee and candidate access. These efforts have laid the foundation for where we are today.

Where do we stand today on pay equity?

EVERY State but one (Mississippi) has passed a pay equity law by year-end 2021.

Generally, these laws cover:

  • All or most employees
  • Protected classes in addition to gender
  • Prohibit retaliation for taking legal action
  • Prohibit retaliation for discussing wages
  • Prohibits using the candidate’s salary history as a variable in making an offer
  • Makes salary ranges available
  • Prohibits reducing other employees’ pay to comply with the law

States and local governments that have enacted laws prohibiting employers from inquiring about an applicant’s prior wages or benefits include: Alabama, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Puerto Rico, Vermont, Washington, San Francisco, Kansas City, New York City, Albany, Suffolk, and Westchester counties in New York, Cincinnati, Toledo, Philadelphia and Columbia, and South Carolina.

The strongest laws passed are in these states: California, Colorado, Illinois, Maryland, Massachusetts, New Jersey, New York, Oregon, and Washington. They tend to include the following:

  • A clear definition of comparable or substantially similar work as a standard.
  • A mechanism for pay adjustments
  • A clear but narrow set of reasons that an employer can use to justify pay differences i.e. merit, etc.
  • Requirement for employers who are held liable to pay for employee attorney costs plus damages and additional damages for multiple violations
  • Permission for class action lawsuits
  • Creation of a state advisory committee on pay equity

More and more states are beginning to pass pay transparency laws that prohibit employees from restricting employees from discussing or disclosing wages including: California, Colorado, Connecticut, Delaware, Illinois, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, Oregon, Vermont, and Virginia.

Colorado’s new Equal Pay for Equal Work Act, recently joined by New York requires pay information to be disclosed in job postings.

Indeed is just the most recent job posting service to declare that all their job postings submitted by employers either include a wage or salary by the end of 2022 or they (Indeed) will estimate the salary and publish the likely salary from public data. (It is worth noting that College Recruiter, Google and a few others have already been including salary information.)

It’s time to roll up our sleeves

Isn’t it time for the talent acquisition industry and our profession to collectively raise our voice about what constitutes acceptable and unacceptable practices regarding pay transparency?

This article is the second in a series of articles and discussions that the CXR Community will be driving around Transparency in Recruiting. If you are a current or former member of CXR we hope you’ll join us for our first live discussion on Thursday, May 19th. Register below.

Gerry Crispin

Gerry Crispin

Gerry co-authored eight books on the evolution of staffing and has written 100s of articles and whitepapers on similar topics during a career in Human Resources that spans more than 40 years from HR leadership positions at Johnson and Johnson; to boutique Executive Search firms; a Career Services Director at the University where he received his Engineering and 2 advanced degrees in Organizational/Industrial Behavior; and, GM of a major recruitment advertising firm even as he launched CareerXroads 25 years ago.

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