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The Future of Work

Obama Aims To Close The Wage Gap With A New Proposal For Salary Transparency

Companies with 100 or more employees will have to start reporting salaries by race, gender, and ethnicity.

[Photo: Official White House Photo by Pete Souza via Wikimedia Commons]

Today marks the seventh anniversary of President Obama signing his very first bill into law. That was the Lilly Ledbetter Fair Pay Act which restored protection against wage discrimination.

The President marked the day by announcing a proposal aimed at closing the gender wage gap by requiring companies with 100 or more employees to report their staff's pay broken down by race, gender, and ethnicity to the Equal Employment Opportunity Commission (EEOC).

The New York Times reports that this new requirement builds on Obama’s previous executive order that called for federal contractors to submit salary information for women and men.

The new filing would be an update to the EEOC’s existing reporting tool that already collects wage data from businesses. Debra L. Ness, president of the National Partnership for Women & Families, notes that the salary data will come from businesses that collectively employ more than 63 million workers. "With these new data, the EEOC and the U.S. Department of Labor (DOL) will be much better able to identify and stop wage discrimination of all kinds," Ness said in a statement.

"The EEOC proposal is the next nail in the coffin for salary secrecy," said Sarah Moore, an attorney for Fisher & Phillips, a national labor and employment law firm that represents employers, in a statement.

There is a trend, particularly among smaller businesses and tech startups, to make their wage data open to all staff members. Companies such as Buffer and SumAll have opened their books, not only to close the gender wage gap, but to level the playing field between those who were skilled negotiators and those who were not.

Salary transparency for executives is also par for the course under certain SEC requirements, according to Moore. Fast Company has reported on the gulf between CEO and staff pay at some S&P 500 companies. "Federal and state laws protecting employee compensation discussions are being enforced with greater regularity," says Moore, noting that workers can also easily pass pay information to others using email or apps, and can see aggregated salary data on platforms such as PayScale.

Ness urges the EEOC to finalize the updated forms so that data collection can begin in 2017, because the wage gap is still glaring. Recent analysis conducted by the National Partnership for Women & Families found that the 77 cents to the dollar figure is a median for all women collectively. However, African-American and Hispanic women have an even more significant gender-based wage gap, not just when measured against men, but also compared to white women.

"It is a disgrace that the Paycheck Fairness Act has languished for so long," said Ness, "We need Congress to pass that bill—to prohibit retaliation against workers who discuss their salaries, to train women and girls to negotiate, to strengthen investigation and enforcement by federal agencies, to recognize employers with good pay practices and to help small businesses adopt such policies—this year."

Now is the time for employers to act, too, says Moore. "With pay data due in September, 2017, under the to-be-revised EEO-1 form, there is limited time for companies to analyze current pay systems, identify and address actual or perceived inequities, and implement a pay transparency plan that both establishes the needed line of communication with employees and minimizes operational interruption."