Written by
Ruth Thomas
Senior Consultant and Co-Founder, CURO
LinkedIn

28 October 2020

Pre-pandemic pay equity legislation evolved with many countries passing legislation worldwide, primarily to address the gender inequity that enwraps our societies and economies. A handy comparative summary of some of the pay equity laws and legislation that have emerged can be accessed in a recent Fawcett Society report, the UK’s leading membership charity advocating for gender equality and women’s rights at work, at home and in public life.

However, most new pay equity legislation was put on hold as governments struggled to deal with:
1) The COVID-19 crisis and,
2) The economic fallout caused by COVID-19.

Six months have passed and we’ve seen some of the immediate consequences of the crisis only serve to underline society’s inequalities. These combined with global events this summer including the upsurge of the Black Lives Matter movement – have all led to renewed calls for action. It is promising to follow two new pieces of pay equity legislation emerging on either side of the pond this month: the California Senate Bill 973 in the US and the Equal Pay Information and Claims Bill 2020 in the UK.


Pay Equity Legislation #1: New California Senate Bill on Pay Data Reporting

The California Senate Bill 973 (“SB 973”) was signed into law on September 30, 2020. This new California pay equity law makes pay data reporting mandatory for California employers beginning in 2021. The legislation is modelled on the EEO-1 Component 2 reporting introduced under the Obama administration in 2016, where pay and hours worked are reported by gender and race/ethnicity, against various wage bands and job categories. This reporting was paused in March, so in essence this new bill fills the gap. This is not an unexpected action from the Golden State, who have been one of the most progressive states taking action on pay equity and have the lowest pay gap in the country. The state has recently narrowed its pay gap by 4.6 percent since 2010. Yet, women make roughly $0.88 for every dollar earned by men with the total losses still amounting to more than $87 billion a year for women in the state.

The Bill will apply to private employers with at least 100 employees who are required to report to an annual “Employer Information Report” (EEO-1 Component 1) under federal law with submissions due on or before March 31, 2021. Reporting shouldn’t be too tricky as many employers already provided similar data to the EEOC for the 2018 & 2019 filing periods. Using pay equity technology makes the process smoother and faster with the capability to format data into the required reporting format on top of providing additional data-backed insights on employee representation and average pay. 

 

Pay Equity Legislation #2: Proposed UK Equal Pay Bill

Meanwhile in the UK, a private members bill was submitted on October 20, 2020 to the House of Commons by Labor MP Stella Creasy. If it does become law, the Equal Pay Information and Claims Bill 2020 (the EPIC Bill) will give employees the right to know what their colleagues are being paid.

Currently, women have the right to ask about their colleagues’ pay but employers do not have to provide these details. The Fawcett Society stated 60 percent of women in UK workplaces industries either don’t know what their male colleagues earn or believe they are earning less than men doing the same job. Two-thirds of women say this has a detrimental impact on how they feel about their job, 33 percent feel less motivated and 20 percent want to resign. And because of this, women who suspect they are being unfairly paid for their work have no option but to take their employers to tribunal to force a disclosure.

The Equal Pay Information and Claims Bill 2020 would also make it mandatory for companies with at least 100 employees to report both their gender and ethnicity pay gaps. To date, only businesses with at least 250 employees are legally required to report on their gender pay gap and there are no rules surrounding ethnicity pay gap reporting at present. A consultation on the subject was published, but no response has been provided yet. The next stage for the EPIC Bill is a second reading scheduled to take place on November 13, 2020. This stage will require support from the government to make it into pay equity law.

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How to approach new pay equity laws and legislation

Both of these pay equity laws are part of the continuing trend of evolving equal pay legislation. This makes compliance particularly complex for international employers due to lack of consistency and approach. That’s why our global clients choose to adopt a proactive and holistic Pay Equity Analysis (PEA) to ensure that they have a complete picture of how equity and equality play out in their own organizations. The insights gained from a complete PEA tackle the issues that most pay equity legislation aim to correct.

For example, average pay gap analysis highlights vertical and occupational segregation issues that need to be addressed in your talent hiring and progression policies. While statistical or adjusted analysis not only identify the legitimate business factors that contribute to pay variance, but often reveal occupational segregation issues – as well as whether pay programs are being administered fairly. Root cause analysis is another way of investigating the correlation between the factors that influence pay.

Only with complete pay equity analysis can you and your team provide the data to drive inclusive conversations and meaningful change in your organization. With the direction of HR transformation heading towards increasing workplace transparency and openness, it is becoming obvious that those who fail to address fair pay, even without mandatory pay equity law and legislation, will be left behind – both in the eyes of society and in the war for talent. Organizations of all sizes need to tune into their company culture and pay practices to protect their brand from reputational damage and pricey lawsuits.


Using pay equity technology

Prioritizing pay equity analysis and using technology to easily keep insights up-to-date while your workforce changes is a key way to achieve this. CURO Pay Equity is self-serve technology that analyzes pay equity trends and gaps using your employee data. Your team can get the pay equity analysis needed to think globally while acting locally, in order to create an equal and inclusive workplace for all.

 

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