What New Equal Pay Laws Mean for Recruiting and HR

February 16, 2017

The issue of fair pay for equal work is a hot topic right now. So hot, it’s even gracing our screens during the Super Bowl—more often a time for Budweiser beers and E-Trade babies.

This year, Audi made a splash (and faced some negative backlash) with its minute-long ad of a young girl racing go-karts against boys as her father wonders whether he’ll have to one day explain that—despite her talents—she’ll be valued less as a woman.

Of course, the ad isn’t making that up: women still make 79 cents for every dollar men do, a fact that’s even leading states and cities to pass laws aimed at closing that gender gap. For recruiting and HR, that raises some questions: what can you do to help close the gap? And, how do these laws change the salary conversation?

This was the topic of this week’s Talent on Tap episode, in which LinkedIn’s Head of Recruiting, Brendan Browne, and CHRO, Pat Wadors, chatted about what fair pay means for recruiters and HR professionals.

Before diving into Brendan and Pat’s vision for the future, let’s take a look at some of the latest legislation.

Some background on the equal pay laws

Last summer, Massachusetts’ governor signed an innovative equal pay law that’s been called the strongest in the country. It not only bars employers from asking candidates about their current salary, but also says they can’t stop their current workers from chatting about their pay.

The law stems from a lawsuit filed back in 1989 by group of cafeteria workers alleging that their male custodian coworkers were being paid more for similar work. Almost a decade later, a court ruled that there was no law to protect them, so the brand new law—which also requires equal pay for “substantially similar” work—finally fixes that.

And, it’s sparked a trend. Last month, Philadelphia became the first city to pass a similar law. Lawmakers have also introduced similar measures in Connecticut, New York, California and Pennsylvania.

The Massachusetts law, which takes effect in 2018, has big impacts. Not only does it alter the interview process and the way companies make decisions on salary offers, but it gives them incentives to evaluate their compensation practices for pay discrepancies based on gender; if they show that they are taking steps to eliminate any pay gaps, they get immunity from equal pay lawsuits for three years.

What the new laws mean for recruiters

For recruiters, the most important part of the law is the halt it puts on asking candidates their salary, though candidates can still choose to volunteer that information. The goal here is to make up for past biases (whether conscious or unconscious) that may have kept a woman’s salary lower than her male peers. 

Regardless of the law, Brendan Browne doesn’t believe recruiters should be discussing a candidate’s current pay in the first place and that recruiters need to adjust to a new reality.

“What I’m being paid today has really not much—and probably nothing—to do with the job that I’m interviewing for and what that company may pay,” Brendan says.

Instead, recruiters should go into a negotiation with a different tactic: being clear and honest with what the job pays, he says.

“We as recruiters shouldn’t attack it from: What are you making today? And then determine what we’re going to pay you based on that. You should be paid on the job, the skills, and what the company’s pay range is,” he says.

However, it's worth pointing out that the law does present some thorny challenges. In a competitive marketplace, many recruiters naturally want to present the best deal possible to a hiring manager. If you can reel in a great candidate at a lower salary, that’s obviously a plus. And, not knowing a candidate's past salary makes this tactic very difficult, meaning recruiters will need to rethink their strategy to make everyone happy. 

And, what this all means for HR   

For Pat Wadors, fair pay is a subject she’s very passionate about, and if the impact of the new law alters the negotiation process, that seems to be a welcome development.

That’s because she sees that “women tend not to self-advocate enough" and there are numerous studies that back this up. Like Brendan, she believes increasing the level of transparency and honesty in the negotiation process will remove some of its biases.

Under this system, Pat also supports increased transparency and accountability from HR pros, who would make salary ranges readily available. Employees would know: “Here’s the medium range, this is what we pay on average for your peer group.”

This kind of system puts “more ownership and accountability of the decision-making on the manager,” she says, which increases pressure on them. But if HR pros are good at their jobs, she doesn’t believe they should shy away from more transparency. “If you make good decisions, and they’re sound, then share them,” she says.

The Massachusetts law, of course, and many other equal pay laws being drafted around the country, push companies to allow more salary transparency.

Pat also sees another factor focusing us all in that direction: “The millennial generation talks, and they share, and they’re smart. And so they’re bringing to bear the technology, the resources, and the community—the social network—to figure out what is equal and fair.”

Therefore, both HR pros and recruiters face a choice: to address the issue before it hits them, or adjust to it once it’s already been decided—by governments or by new technology. “It’s going to come to us,” says Pat. “We’re have to decide how we want to play in that space when it hits us.”

Talent on Tap is a weekly series where Pat Wadors and Brendan Browne break down some of the hottest topics, biggest challenges, and most enticing opportunities in the world of talent. Talent on Tap will also give you an opportunity to hear from other organizational leaders, subject matter experts, and thought leaders in the space. Stay tuned each week for the latest.

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