The Problem With Existing Pay Equity Laws
Welcome to my weekly Q&A roundup. (Scroll down to find the Q&A.)
If this is your first time here, welcome. I spend a fair amount of time speaking at events and conferences. At the end of my presentations, I leave space for audience members to ask questions — tough questions, brave questions, you name it. The level of candor and curiosity always inspires me, and I want to share that sentiment with you. So each week, I pick one question that I believe others would find most instructive and publish my response to it here.
The purpose of this weekly tradition is transparency and inclusivity.
- Transparency: a behind-the-scenes look at my day-to-day.
- Inclusivity: bringing others along in the journey.
Today’s Pay Equity Laws Don’t Go Far Enough
If gender pay discrimination is such a big problem, why don’t more women sue their employers under the Equal Pay Act or Civil Rights Act?
Simple. Because it’s not that simple. (And as you’ll soon understand, there’s a better way to solve this problem than retrofitting pay equity with the judicial system.) To understand why this is, we need to deconstruct what it means for an employee to take their employer to court for pay inequity.
The Equal Pay Act and The Civil Rights Act
First, you mentioned two key pieces of legislation: the Equal Pay Act (EPA) and the Civil Rights Act. The EPA prohibits pay discrimination on the basis of sex. It’s a US federal law under the purview of the Equal Employment Opportunity Commission. It’s been on the books since 1963.
The Civil Rights Act, specifically Title VII, takes a broader approach than the EPA by prohibiting not only pay discrimination, but also other forms of employment discrimination such as hiring and firing on the basis of sex, race, color, religion, and national origin. This one’s been on the books since 1964.
Plenty has changed since these laws came into existence six decades ago. But one thing that hasn’t changed is the precursor to any pay inequity lawsuit. What’s the precursor? It’s knowing you’re not receiving the wages you deserve.
How Information Asymmetry Impacts Pay Equity
Step one to file for pay inequity: you must first know that you’re not being paid fairly. It implies information symmetry, a relatively novel development in a world of information asymmetry. (In this case, information asymmetry = pay secrecy.)
Today, despite the proliferation of pay transparency laws, nearly half of all employees in the US work under some degree of pay secrecy.
This includes formal and informal pay secrecy policies, such as when companies discourage workers from discussing their salaries with other employees or on online forums.
Perhaps not surprisingly, more women (52.2%) than men (46.8%) work under pay opacity, and more women (15.7%) than men (10.9%) work for employers who have formally banned pay discussions.
Assuming you have identified a discrepancy between the wages you earn and the wages you believe you deserve, you next have to allocate time and money to actually file a claim.
Filing For Pay Inequity Is A Burdensome Process
The process requires technical know-how and pulls you away from other, more productive uses of your time. It’s worth mentioning that at this point, you’re investing in an intensive process with no guaranteed return.
In fact, only 22% of equal pay cases filed with the EEOC between 1997 and 2018 led to a resolution. If there is no resolution — and even if there is, there’s a good chance your claim will lead to retaliation of some form. (Exhibit A, B, and C.)
As you can see, an employee experiencing pay inequity must navigate a maze of convoluted networks in pursuit of justice.
Under the current federal system, the burden of proof for inequitable pay is on the person experiencing inequity. The law requires the subjects of inequity to fix a system they didn’t break.
Who Would Benefit From A True Pay Equity Law?
That’s why I support pay equity legislation that shifts the burden of proof to where it belongs: onto employers. (Similar to Iceland’s equal pay law.) Not only would such a law benefit the average woman, who misses out on $590,000 of wages over her lifetime due to the gender pay gap. It would also benefit:
- Taxpayers, who end up subsidizing inequitable pay practices via taxpayer-funded social assistance programs.
- The economy, because closing the gender pay gap would boost it by $512 billion.
- Companies, who can’t afford to sideline half the labor base with inequitable wage practices. (72% of women said they would not apply to work at a company where a gender pay gap exists.)
I hope this helps you understand why the Equal Pay Act and the Civil Rights Act are noteworthy steps in the right direction and why we must continue forging ahead to close the intersectional gender equity gap for good.