Closing the wage gap for women and minorities is a goal that many employers support, but accomplishing it in their workplace is a daunting task that requires sifting through complex HR data. Starting this year, they will be required to dive in and address discrepancies.
Private employers with more than 100 employees will be required to provide pay data and hours worked by March 2018 under new Equal Employment Opportunity Commission reporting requirements issued in September. Employers currently provide demographic data, including gender, race and ethnicity through an EEO-1 report but will now be required to submit pay information that will be analyzed to determine pay inequities.
For HR this offers an opportunity to play a strategic role in tackling a problem that is both administrative and a critical business need that affects diversity, recruitment and retention.
In 2015, African Americans earned just 75 percent as much as whites in median hourly pay and women earned 83 percent as much as men, according to a July 2016 report by the Pew Research Center. In fact, women and workers of all races and ethnicities combined — with the exception of Asian males — lag behind white males in hourly earnings, the report found.
“In the past, the thinking was that the marketplace establishes the value of a job, but today there is a concern that the marketplace may not accurately reflect that, that it may be based on historical biases,” said employment attorney William Martucci, an instructor at Georgetown University’s School of Continuing Studies. He said that a growing number of university HR management programs like Georgetown’s are teaching students how to identify and address pay disparities.
“It’s HR’s function to determine whether their pay practices are consistent with providing the company with a competitive advantage,” he said. “The role of HR was once administrative, but today it’s all strategic.”
To better understand pay practices, vendors like ADP are developing tools to sort through the data.
In March, ADP launched Pay Equity Explorer to examine potential wage gaps according to race, gender, locations and job description.
Don Weinstein, ADP’s chief strategy officer, said that while the tool’s development was prompted by compliance changes, clients are also focused on serving employees and their company’s bottom line.
Rita Pyrillis is a writer based in the Chicago area. Comment below or email firstname.lastname@example.org. Follow Workforce on Twitter at @workforcenews.