Pay Equity and State-by-State Laws

When you’re managing payroll, it’s tough enough keeping track of – and maintaining compliance with – federal and a single state’s laws. But organizations that have operations in more than one state often experience challenges when it comes to tracking the always-changing requirements of pay equity laws. Complicating matters even further, some states such as California and New York, have separate laws governing cities and counties. We’ve created this handy chart to help you get a quick view of each state’s laws.

State-by-State Pay Equity Laws

Pay discrimination based on gender has been prohibited by federal law under Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963 (EPA), and under many state laws for decades. However, 42 states have now expanded on the federal Equal Pay Act to include legislation specific to safeguarding women (in addition to other protected classes [gender, race, etc.]) from wage discrimination. But, of course, not all states’ pay parity laws are created equal. That would be too easy. California, New York and Massachusetts have some of the most stringent equal pay laws in the country, but states such as Alabama, North Carolina and Florida have either no or very limited laws on the books. Basically, in each state that has a law governing the gender pay gap, equal pay for equal work is the general rule.

We read Payscale’s recent report, “The State of the Gender Pay Gap 2019” and here are our top four takeaways.

1. While pay disparities between the sexes are on the decline, there’s still an opportunity to close the gender wage gap.
2. The uncontrolled wage gap over time (median earnings of all women to all men) has shrunk by 5 cents since 2015. But, in 2019, a woman still only earns 79 cents for each dollar a man earns.
3. The controlled gender pay gap (same title, experience, industry and location with the single difference being sex) has only decreased by a paltry .008 cents since 2015.
4. In the controlled gender pay gap, women earn 98 cents for every dollar a man makes. Much better, of course, but still not equal.

• Asian women are paid 94.6 cents to the dollar compared to the dollar paid to men.
• Black women are paid only 70.6 cents to the dollar.
• Hispanic women are paid 60.7 cents to the dollar.
• Overall, Black, Hispanic, American Indian, and Hawaii and Alaska Native women take home 26% less than white men.
• The uncontrolled pay gap between white women and white men is 80 cents on the dollar.

• Black women make 97 cents for every dollar a white man with the same qualifications makes.
• The gap for Hispanic and white women is about the same, with both groups earning around 98 cents for every dollar a white man with the same credentials earns.

The Opportunity Gap

So, why is the uncontrolled wage gap so big? Mostly because women are less likely to hold high-level, high-paying jobs when compared to their male counterparts. Women also tend to climb the career ladder at a slower rate than men do.

Men and women almost equally enter the workforce as individual contributors and not as people managers. At the beginning of their careers (20-29), 74% of men and 75% of women work as individual contributors. But a much smaller number of women hit manager level or higher by the middle of their careers.

By the middle of their careers (30-44), 47% of men are working as managers (or even higher in the food chain), and only 40% of women are at the same level. 57% of men who are deep into their careers (age 45+), work as managers or higher, while only 41% of women do.

And forget the C-suite; few women make it that far. By late career, 8% of men hold a C-suite position versus just 3% of women.

The Sticky Salary History Question

You might be scratching your head wondering what in the heck salary history has to do with pay equity. The answer is: Quite a bit, actually. Several states and municipalities have already enacted laws prohibiting recruiters and hiring managers from asking the question. And it’s now reached the point that Congress is considering a nationwide ban on employers asking applicants for previous salaries. So, what’s the big deal about a job application requiring an applicant how much they’ve made at their former jobs? It’s not just an uncomfortable question and answer during an interview; it’s gender bias.

States that have enacted laws prohibiting the question are operating under the belief that a job’s pay should be based on the job’s value to the company and not the wages that a job candidate will accept based on their last salary. Again, you’re probably scratching your head. A new hire’s salary based on their previous salary history can limit career growth and perpetuates the pay gap between women and men.

Case in Point:

A woman and a man are competing for the same job. They held identical previous jobs, have the same information on their résumés, and bring equal education and experience to the table. In her past job, the woman had an annual salary of $35,000 and the man’s annual salary was $50,000 for the exact same work. The salary range the company is offering for the job is $44-52,000.

In this situation, the man would most probably have better negotiating leverage and would likely get an offer at the higher end of the salary range. Based on her previous salary, it’s highly probable that the woman’s offer would be at the bottom of the range. But if hiring managers had no idea of previous salaries and based negotiations solely on skills and experience, the woman would have a much better shot at landing a significantly higher salary.

Pay equity legislation is changing nearly every week, and states and municipalities are hustling to respond. So are folks in HR. If you have any questions about compliance with laws, ask us. Better yet, let our payroll and compliance experts handle everything for you. We’ll take care of the details so you can focus on your business and get your time back.

The information provided in our chart is for educational purposes only; it is not legal advice. Always check regulations to help ensure compliance.