How to Stay on the Right Side of Gender Pay Regulations


The gender pay gap in the western world is still alive and well if you go by the raw data. According to the U.S. CensusOpens a new window , the median full-time salary for a woman in 2015 was $40,742. However, men were receiving $51,212 during the same period. Efforts to narrow this gap are well underway at both the state and federal level — so your business needs to be aware of its obligations.

The U.S. Department of Labor believes that discrimination based on sex is responsible for a significant proportion of the gender pay gap. And this is surprising, given the fact that paying men less than women for the same job has been illegal since 1964.

As a small business owner, you need to be proactive in ensuring your organization is paying women the same as men to do the same job. If an employee brings a lawsuit against you for pay inequality on the basis of gender, you’ll need to demonstrate that your remuneration policies are fair and consistent.

5 Gender Pay Laws You Need to Know

To keep you on the right side of the regulations, it’s a good idea to avail yourself of all the U.S. laws pertaining to equal payOpens a new window .

1. Civil Rights Act (1964)

Under Title VII of the Civil Rights Act (1964)Opens a new window , employers are not allowed to discriminate in any way on the basis of race, color sex, nation of origin or sex. This provision pertains to, among other things, pay. The Act also prevents employers from restricting access to certain jobs, and from steering female employees into lower-paid employment. This law mainly affects businesses with 15 or more employees, but there are a few exceptions.

2. Equal Pay Act

The Equal Pay ActOpens a new window dictates that employers must pay men and women in the same establishment exactly the same pay for “performing substantially equal work.” While there is a little room for interpretation here, the law considers this qualification to refer to roles that require the same skills, effort and responsibility while performed in similar working conditions. And it’s not just a base salary that must be paid equally; holiday pay, stock options, bonuses, allowances, overtime and expenses are all covered under the Act.

3. Lilly Ledbetter Fair Play Act (2009)

The Lily Ledbetter Fair Play ActOpens a new window beefed up the powers of the Civil Rights Act. This newer law dictates that every paycheck that signifies pay disparity is actionable under Title VII. Depending on which state your business is in, the affected employee has either 180 or 300 days to file a case with the Equal Employment Opportunity Commission. In effect, this new law means that the “clock” for bringing a case resets after every paycheck.

4. Executive Order 11246

Executive Order 11246Opens a new window pertains to federal workers and prohibits any federal contractors and subcontractors from discrimination during employment and remuneration decisions. The Order applies to government contracts of $10,000 and includes discrimination on the basis of race, color, sex, religion and country of origin.

5. National Labor Relations Act (NLRA)

The National Labor Relations ActOpens a new window enshrines in law the right of workers to come together in an effort to secure higher wages and better working conditions. Crucially, this right is not reliant on membership of a union. Section 7 of the NLRA stops employers for punishing workers who decide to share details about their pay or conditions in an effort to secure equal benefits. This means that, should women in your business suspect they’re not being paid the same as their male counterparts, they have the right to discuss specifics with colleagues.

How to Ensure Your Pay Practices Are Fair

The responsibility for pay equality as a business owner or senior manager lies with you. Therefore, it’s a good idea to adopt a few practices to ensure your organization catches and rectifies issues before they lead to litigation.

Provide an Open and Honest Environment

It’s important that your female employees feel comfortable in coming forward to complain about potential pay disparity. Remember, the law is clear: men and women must be paid exactly the same for doing the same job. If your employees are relaxed about raising an issue, they’ll come to you before seeking legal advice.

Designate Compliance Officers

Designate appropriate people in your workforce to monitor compliance with the five federal laws that pertain to gender pay equality. These people will be the first point of contact for the rest of your employees, but they will also let you know when you’re not complying with your responsibilities.

Perform Annual Audits

Once a year, take a close look at how much each of your employees was paid the year before. Be sure to include bonuses, holiday pay and other extras in your investigations. When you notice a problem, rectify it immediately — with additional payments if necessary.

Standardize Your Recruitment Processes

Do you have an equal opportunities policy? If not, create one, and ensure you include recruitment in it. Make sure you’re using the same recruitment template for each role — for every candidate. If starting salaries are negotiated, make sure the process doesn’t put existing employees at a disadvantage. If you decide to pay a new male recruit more than an existing female employee to do the same job, you might need to increase the female’s salary commensurately.

Managing pay equality in a small, growing business isn’t easy. It requires constant monitoring, a respectful working environment and decisive action. But if you’re aware of your obligations, staying on the right side of the law shouldn’t be too difficult.