Pay Equity Laws Abroad are Rapidly Evolving. U.S. Employers Should Take Note

Pay Equity is increasingly becoming a major operational imperative for businesses at home and abroad. Achieving Pay Equity means eliminating unlawful discrimination from the wage-setting process. The rising importance of Pay Equity for employers globally can be attributed to rapidly evolving laws regulating the payment of wages. In this article, Trusaic takes you on a world tour, surveying how countries abroad have tackled one of the most important issues of our time. These laws will no doubt influence how federal and state legislators in the U.S. consider ways to address the gender wage gap.

The United Kingdom

The first stop on this pay equity world tour is the United Kingdom. Effective April 2017, the United Kingdom set a global example on the issue of pay equity by requiring organizations with 250 or more employees to publish their gender pay gap data in online reports. The gender pay gap reports must include data points such as mean and median gender pay gap, mean and median gender bonus gap, and proportion of males and females receiving a bonus. These gender pay gap reports are publicly accessible online. The critical idea underlying the pay data reporting obligations in the UK is that transparency serves to debias systems that maintain or perpetuate the gender pay gap. This brand of public accountability for pay practices set off a chain of events affecting businesses across the globe.

France

In France, Decree No. 2019-15 requires organizations with 50 or more employees to calculate their gender pay gaps along dimensions specified by the French government. According to the French law firm Soulier Avocats, each dimension or “Indicator” is assigned a score with a maximum of 100 points. The five indicators, taken together, form a gender pay index that must be published on each covered company’s website. Sanctions of up to 1% of payroll can be levied for violation of the decree, including the failure to meet certain Pay Equity goals set by the government.

Spain

In Spain, effective 2019, employers with 50 or more employees must develop and release equality plans which track compensation metrics by gender. A prima facie case of gender wage discrimination exists when the average gender pay gap is at least 25%.

Australia

The next stop on the Pay Equity world tour is the land down under. In March, Trusaic discussed the Australian state of Victoria’s new gender equality bill. The Australian state of Victoria, which includes the City of Melbourne, recently signed and enacted their first ever Gender Equality Bill.  The Victorian Parliament passed legislation requiring thousands of employers—including in the public sector, universities, and local governments—to prove that they are “actively pursuing” gender equality. Covered employers must develop and implement “Gender Equality Action Plans” every four years, starting in March 2021. These plans must include data on the gender pay gap within the reporting organizations, as well as strategies for achieving workplace gender equality.

Canada

Ontario, Canada is a true Pay Equity pioneer. Employers in the public and private sectors with at least 10 employees must comply with the Pay Equity Act, which has been in effect since 1990. The Pay Equity Act requires employers to comply with the following minimum steps:

  • Determine job classes, including the gender and job rate of job classes.
  • Determine the value of job classes based on factors of skill, effort, responsibility and working conditions.
  • Conduct comparisons for all female job classes using job–to–job, proportional value.
  • Adjust the wages of underpaid female job classes so that they are paid at least as much as an equal or comparable male job class or classes.

Penalties for certain violations of the Pay Equity Act, such as intimidating a person exercising his or her rights to Pay Equity, may be up to $50,000.00. Additionally, in 2018, Ontario passed, but has not yet enacted, the Pay Transparency Act, which would create new compensation disclosure obligations for businesses with upwards of 100 employees. Stay tuned for news on the PTA.

Iceland

The final stop on this Pay Equity world tour is Iceland, effective 2018, where employers with 25 or more full-time employees must submit proof that both men and women are paid equally. Every three years, the companies must confirm that they are paying men and women equally for jobs of equal value. Companies with more than 25 employees must be certified by the end of this year. According to NPR, if organizations aren’t certified, a daily fine will be imposed until the issue is resolved.

Even if your business operates elsewhere, such as the United States, these recently enacted global pay equity laws show a trend, which could reach the U.S. shores. All the more reason to consider a pay equity audit. A pay equity audit is a diagnosis of compensation risk areas based on a deep dive into payroll, HR, time/attendance and other data sources. Experts across the human capital, legal services, and business intelligence industries recommend a pay equity audit as a critical tool in an employer’s risk management tool belt. A pay equity audit provides actionable intelligence to address such risk before a government agency gets involved.

Not sure how to get started? Let Trusaic provide your organization with a free Pay Gap Analysis, which can be conducted confidentially.

Here is what you will get:

  • 1-hour consultation to our pay equity team comprised of regulatory compliance experts and data scientists;
  • Answers to your pay equity questions;
  • A pay gap analysis of your workforce.