What is Pay Equity?

The Equal Pay Act of 1963 set in place the requirement that employers pay employees equal pay for performing substantially equal job roles. This law makes it illegal to pay different wages to men and women when they perform equal work.

A job title doesn’t determine equality, but rather the duties performed within the job role.

The job roles don’t need to be identical, but they must be substantially equal.

Types of pay covered by the law include but are not limited to salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.

The Equal Employment Opportunity Commission (EEOC) is a federal agency working to combat and prevent workplace discrimination. They protect the rights of individuals by investigating any reported charges of discrimination and pay inequality.

The EEOC states, “[It is] illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability or genetic information. It is also illegal to discriminate against a person because the person complained about discrimination, filed a charge of discrimination, or participated in an employment discrimination investigation or lawsuit.”

History of The Equal Pay Act


In 1964, Title VII of the Civil Rights Act banned employment discrimination based on race, color, religion, national origin, or sex. The original Equal Pay Act primarily focused on the pay differences between men and women, however in 2018 we’re still talking about this. Why is that?

Obviously in the past, Pay Equity didn’t resolve itself. It has only become more complex as our nation refines the definition of Pay Equity through the court system and each states’ legal systems.


Women earn less than men.

In the most recent official report published by the United States Department of Labor, women who worked full-time, year-round jobs earned on average 79% less than men.


Pay inequality exists in every industry and in every occupation.

It persists even as women surpass men in education, with nearly 41% of women in the workforce having a college degree compared to men who have just over 36%. Women’s great strides in educational attainment have aided in reducing the wage gap. Increased participation of women in the workforce has also narrowed the gap.


Since 1964, the wage gap has gotten smaller, but progress has slowed in the past decade.

Women are underrepresented in some of the highest paying industries, as well as in C-Level positions, making up less than 1 in 3 chief executives. Women of color continue to face significant racial wage gaps on top of the gender wage gap.

The National Partnership for Women & Families reports, “The wage gap can be even larger when broken down by race. Among women who hold full-time, year-round jobs in the United States, Black women are typically paid 63 cents and Latinas just 54 cents for every dollar paid to white, non-Hispanic men. White, non-Hispanic women are paid 79 cents and Asian women 87 cents for every dollar paid to white, non-Hispanic men, although some ethnic subgroups of Asian women fare much worse.”


As an employer, it’s in your hands to make this right.

It is going to take the active participation of business owners to narrow the wage gap. Employers need to commit to making a change in the way they set wages.


How to stay in compliance and identify the gaps

Many employers have pay gaps within their own company they may not be aware of. If we are going to move closer to pay equality in 2019, we must intentionally set wages and make a conscious effort to pay our employees equally, fairly and without bias. The following questions may help you identify hidden wage gaps within your company.


Look at your employees’ wages and salary ranges

  • Do you have salary range outlined for similar job roles within your company?
  • Is there a pay gap between men, women, or other protected classes who are performing similar job roles and duties?
  • Have you created a strategy to help you properly assign wages for new hires?
  • Have you documented your wage setting strategy?


Examining your company leadership and opportunity for growth and promotion

  • Has there been a trend of men earning more raises than women and others in protected classes in your company?
  • Do men generally receive more promotions than women and others in protected classes?
  • Are you giving more training opportunities to men?
  • Do you have a mix of men, women and other protected classes in positions of leadership?


Communicate with your employees about pay

  • Are you prepared to communicate the decision-making process behind an employee’s pay?
  • Do you listen to your employees’ needs?
  • Do employees feel confident coming to you with questions or concerns regarding pay?


Monitor wages over time

  • Do you routinely examine employee wages to stay on track with pay equity?


Aliat can help employers stay in compliance with Pay Equity and your state’s pay equity laws

Aliat specializes in HR and Compliance for small and midsized businesses.

  • We can answer your questionsabout Pay Equity so you can communicate properly with employees.
  • We can ensure you have a compliant employee handbook.
  • We can help you document your compensation policy and ensure you’re in compliance.

As an employer, now is the time to make adjustments in your compensation. We’re here to help.

Request a consultation with our HR Pros