Smart Companies Catch Pay Inequities Before Plaintiffs Do

Salesforce is known as one of the greatest companies to work for in America. Its CEO, Marc Benioff, is a San Francisco civic leader and philanthropist; the city’s top pediatric medical center was renamed the UCSF Benioff Children's Hospital.

But when Salesforce conducted a recent salary audit, it found gender-based inequities across the company. Dismayed, Benioff gave salary increases to 10% of Salesforce’s women employees, at a cost that first year of $3 million. The lesson: if pay inequity can happen at Salesforce, it can and is happening everywhere. And that leaves employers open to lawsuits.

Pay equity litigation is heating up around the country. And in recent years, state laws have changed, making it easier for plaintiffs to prevail in pay equity lawsuits. Additionally, the EEOC (Equal Employment Opportunity Commission) and Department of Labor are policing pay policies more closely than ever, and demanding salary data from government contractors, such as Google, going to court when they suspect the data they are given is not accurate.

Smart employers will do three things: ensure that salaries are set fairly when employees are hired, conduct salary audits to uncover disparities, and raise salaries when inequalities are discovered. Follow this policy: at time of hire, the pay should be for the position, not the person. Raises, by contrast, focus on the performance of the person. In some cities, it is illegal to ask about a job candidate’s salary history. Whether or not it is banned in your jurisdiction, banning questions about salary history or “salary requirements” is an important step toward equal pay.

Employers may find that they need additional training for those in HR, as well was those in management and supervisory roles, to ensure they are not falling victim to implicit bias that clouds salary decisions. Implicit bias also makes it harder for women to negotiate for higher salaries. Training here, too, will help level the playing field, so that women are not discriminated against for asking for the pay they deserve.