Pay Equity Challenges: What Can You Do To Address Them

[Fit Small Business | ]( Payroll Insights from Our Experts In partnership with Sogolytics Welcome to this week's HR newsletter. We’re so happy to have you!     Pay Equity: What Is It & How Does it Impact My Business?   Pay equity is the concept of paying employees comparably for similar work. For many businesses, this has become more than just a compliance issue, given the growing number of pay transparency laws and bills. A study by WorldAtWork showed that 70% of surveyed companies [took action on pay equity]( in 2022—a 4% uptick from 2021 and a 10% increase from 2019. More than a quarter of the US labor force, or close to 44.8 million employees, are [working in a state covered by pay transparency laws](, according to a National Women’s Law Center report. This could increase to nearly 50% given the proposed pay transparency bills in Washington, D.C., and 16 states (Alaska, Georgia, Hawaii, Illinois, Iowa, Kentucky, Maine, Massachusetts, Missouri, Montana, New Jersey, Oregon, South Dakota, Vermont, Virginia, and West Virginia). If your business is located in one of the states with proposed pay transparency legislation, you may need to start doing some legwork now so you’re not surprised if and when these bills become law. Pay equity doesn’t mean all employees get equal pay. There can be differences in salaries between workers based on their tenure, skills, performance, and location. To know more, check out our [pay equity guide for small businesses](.     An Unexpected Challenge   Increased awareness about pay equity has spurred some employees to share their frustration on social media over unequal compensation as they compare their current salary with the going rates of similar positions in other companies. A few [social media accounts]( have been created to get people on the streets to answer questions about their profession and how much they make in a year. This could lead to some business owners and HR managers battling pay equity issues sooner than they want to. Regardless of whether workers are going on social media to vent their anger or approaching their managers to have a conversation about pay, it’s critical for business and HR leaders to prepare themselves on how to manage this challenge.     Best Practices In Managing Pay Equity   Managing pay equity is a complicated and arduous process. It requires gathering data, comparing employee wages, tracking legislations and [payroll compliance](, and taking a hard look at your company’s policies about compensation. Below are some best practices that can help you address and manage pay equity. - Compare worker groups with similar job functions, review pay differences, and identify the reason behind the wage gaps - Establish a pay structure with salary bands and pay ranges based on job roles - Create and/or update job descriptions with clear roles and responsibilities, including the required skills to do the job - Schedule regular pay equity audits to spot potential discrepancies - Review and adjust HR processes to ensure pay equity and address pay gaps across the employee lifecycle—from hiring to retiring - Share the company’s pay equity goals and the plans to achieve or maintain it with employees - Train business leaders and people managers on how to handle employee questions about pay equity If you do find pay gaps that may be the result of discrimination, it’s important that you address this immediately to avoid compliance issues. Note that some states with pay transparency laws require certain businesses to submit reports on what they pay employees. Also, don’t forget to consult your HR and finance teams on how to correct the wage gaps as it’s highly likely that you’ll need additional budget to cover the unplanned pay adjustment. For companies located in states that may soon have laws about pay transparency, we recommend doing a pay equity audit this year so you can add the expected pay increases (if any) to your 2024 payroll budget. Need help in planning your payroll budget? Our guide to [creating a payroll budget]( takes you through the different steps and the factors you should consider.     Learn how to deliver exceptional customer experiences and you’ll boost retention, loyalty, and revenue. What are you waiting for? [Discover Now](     What’s new in HR? Check out some of our latest HR content:   [Passive Candidates]( Passive candidates are people who are typically already employed and not actively looking for new roles but may be open to new opportunities. Recruiting these candidates can be valuable to your company. Read our guide for helpful tips on how to hire them, as well as the pros and cons of passive candidate recruitment. [READ MORE]( [Best Pre-employment Assessment Tools]( Not only do pre-employment assessments test candidates on the skills necessary to do the job, but they also help streamline hiring by ensuring you interview only the most qualified candidates. Our guide contains 12 of our top-recommended solutions for conducting pre-employment tests. [READ MORE](     Meet Fit Small Business’ HR & Payroll Experts   [-Jennifer Hartman, HR Staff Writer & Human Resources Expert] Throughout her career, Heather has worked to help hundreds of small business owners manage many aspects of their business, from bookkeeping to accounting to HR. Her experience has allowed her to learn firsthand the payroll needs of small business owners. Heather Landau [-Jennifer Hartman, HR Staff Writer & Human Resources Expert] Jen has more than 20 years of writing and content experience, working with small businesses and Fortune 100 companies. She worked as an HR generalist for over a decade, providing accounting, payroll, and HR expertise. Jennifer Soper [-Jennifer Hartman, HR Staff Writer & Human Resources Expert] Robie is a payroll and HR expert at Fit Small Business, focusing on software. She has over eight years of content writing experience, handling different topics. Robie also worked as an HR specialist for 10 years where she managed various facets of HR—from payroll and benefits to employee services and HR systems. Robie Ann Ferrer [-Jennifer Hartman, HR Staff Writer & Human Resources Expert] Juvy has more than 10 years of experience writing product reviews and providing online content for small businesses. Juvy was also a college instructor. She believes that her teaching background, writing experience, and supportive team members are crucial in providing the best answers to readers. Juvy Vallescas [-Jennifer Hartman, HR Staff Writer & Human Resources Expert] Genevieve has more than 13 years of writing experience, working with different clients in various industries. She has ghostwritten several books and ebooks on marketing and leadership. Genevieve also worked as an HR Head of a local manufacturing company and has helped small businesses set up their business and HR processes. Genevieve Que     With the first half of 2023 nearly over, it’s high time to do mid-year checks on employee performance. If you want to learn more, watch for next week's newsletter for our experts' deep dive into everything you need to know about employee reviews. Until next time, Heather Landau, Jennifer Soper, Robie Ann Ferrer, Juvy Vallescas, and Genevieve Que   For more quality resources on growing your small business: [Marketing]( | [Financing]( | [Accounting]( | [HR]( | [Retail]( | [Ecommerce]( | [Sales]( [Facebook]( [Twitter]( [LinkedIn]( [Alternate text] Want to change what you receive in your inbox? [Update Your Preferences]( [Image]   We spend hours researching and writing our articles and strive to provide accurate, up-to-date content. However, our research is meant to aid your own, and we are not acting as licensed professionals. We recommend that you consult with your own lawyer, accountant, or other licensed professional for relevant business decisions. 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