Efforts at achieving pay equity are in danger of falling by the wayside as the tight labor market forces employers to boost salary offers to attract much-needed talent.
Since the Covid-19 pandemic left more open jobs than workers willing to fill them, companies are increasingly finding themselves having to offer higher and higher pay to entice workers to leave their current employers.
But if existing workers’ salaries remain stagnant, those recruiting efforts could translate into legal trouble.
Employers generally have flexibility in determining pay provided they don’t discriminate based on race, ethnicity, or gender. If companies don’t routinely run a pay equity analysis and address any disparities, they face the risk of pay discrimination suits or, if they are federal contractors, a fine from the US Department of Labor.
“Companies typically learn lessons the hard way: They get sued or a government agency finds them in an audit,” said Robert O’Hara, a partner at Epstein Becker Green P.C. “That gets their attention.”
A company may find itself wanting to hire somebody for a critical position at a salary $20,000 higher than what was advertised, for example. Pay equity is rarely top of mind when making the decision to increase a salary offer to attract a recruit,...
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