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September 23, 2020

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Crossing the Pay Gap: Tips for Employers Considering Pay Adjustments to Achieve Pay Equity

With the #MeToo and #TimesUp movements re-energizing the focus on #EqualPay, employers increasingly may find themselves facing questions about how they are paying employees and what they are doing to help close the pay gap. A growing number of companies are adjusting their compensation programs to address pay equity concerns. In recent months, several large companies announced broad overhauls of pay and bonus plans in an effort to eliminate potential discrimination and achieve pay parity.

General considerations for employers before making large-scale changes to compensation plans include:

    • Ensure Consensus Among Internal Stakeholders.

    • All appropriate internal stakeholders should be informed and aligned on the direction the organization wants to take.

    • Conduct a Privileged Pay Equity Analysis. Employers should take a careful look at their current pay system with the assistance of legal counsel. Such an analysis should include review of the pay process itself as well as compensation to determine if a pay gap exists in the first place and needs to or should be addressed. A thorough and sound analysis should identify problematic pay gaps, whether adjustments may be needed, and if so, in what areas and to whom,

  • Evaluate “Total Compensation.” In conducting a pay equity analysis, it is important to evaluate both base pay and total compensation, including commission, incentive, overtime, and other types of variable pay.

  • Do Not Discriminate in Making Pay Adjustments. The Equal Pay Act expressly provides that pay for male employees cannot be reduced to correct a pay gap. In addition, federal and state laws prohibit making pay decisions on the basis of gender or other protected characteristics. Accordingly, pay adjustments should be designed to address unexplained pay gaps, rather than be based on gender. This means that male employees as well as female employees may receive pay adjustments.

  • Consider the Appropriate Communication Strategy. Implementing pay equity adjustments requires careful consideration of the content of internal and external communications, as well as ensuring input from all appropriate stakeholders.

Jackson Lewis P.C. © 2020National Law Review, Volume VIII, Number 250


About this Author

Bianca Iozzia, Jackson Lewis Law Firm, Philadelphia, Labor and Employment Litigation Attorney

Bianca N. Iozzia is an Associate in the Philadelphia, Pennsylvania, office of Jackson Lewis P.C. Her practice focuses on representing employers in a variety of workplace law matters including preventive advice and counsel.

While attending law school, Ms. Iozzia was a Staff Writer for the Villanova Environmental Law Journal, President of the Sports and Entertainment Law Society, and Research Assistant to the Director of Villanova’s Moorad Center for Sports Law.

Prior to joining...