Many people within the professional world, employers and employees alike, can find it difficult to discuss issues of salary and wages, especially at the office. But it’s a topic that has been getting increasing attention in recent years.
In fact, high-profile court cases have shed additional light on the issue, making pay equity a significant consideration that companies large and small need to consider if they want to remain legally compliant and avoid costly litigation.
Pay inequity stands out
One of the reasons pay equity has been gaining ground in professional conversations of late is the fact that many of these issues are just now being brought to light in a large-scale way. In fact, it wasn’t until 2009 that Congress passed the Lilly Ledbetter Fair Pay Act of 2009, after an employee sued her company for pay discrimination after experiencing not only sexual harassment in the workplace, but also learning that her male coworkers were making significantly more money than she was.
The Act seeks to encourage pay equity by providing incentives for companies to pay men and women equally. Another important aspect of the legislation is its attempt to empower workers to address issues of inequality directly, opening the door for employees to challenge their companies’ compensation policies if such practices are thought to be discriminatory.
The two flavors of pay inequity
Inequality in compensation isn’t restricted just to discrepancies between female and male employees. While this is a significant factor driving much of the discussion and legislation, there is also a secondary issue at play. Namely, the huge difference in salaries between top executives and standard employees.
These issues, especially the latter, raise difficult questions for business owners who have to simultaneously maximize profits while minimizing employee dissatisfaction that can ultimately lead to turnover, lower engagement and even lawsuits. Human Resource Executive Online pointed out that companies that experience widely known pay inequity issues may frequently experience lowered employee morale as a result, making it a significant HR services issue that shouldn’t be ignored.
Establishing an employer’s responsibility under the 2009 Act and similar pieces of legislation can be tricky, especially for small-business owners. Fortunately, PEO companies can offer expert HR solutions without companies having to shoulder the cost of supporting in-house HR staff.