H.R.7 - Paycheck Fairness Act: What You Need to Know | Paypro

H.R.7, the amendments to the Paycheck Fairness Act, closed the wage gap between men and women. The bill ensures equal pay for equal work. Passed on March 27, 2019, it amends equal pay provisions of the Fair Labor Standards Act of 1938. So, what do you need to know about H.R.7? Here’s an easy overview.

Wage Gap Statistics

It is important to remain aware of and sensitive to the challenges women face in the workplace. While the wage gap applies to the disparities between men and women, race is also a factor. For example, while on average female workers tend to make 80 cents for every dollar earned by a man, the gap widens based on race. The variances are as follows:

• Black women: 61 cents
• Latina women: 53 cents
• Native Hawaiian and Pacific Islander women: 62 cents
• Asian women: 85 cents

Sensitivities to the challenges women face will help create fair hiring and wage policies throughout your organization. 

Why is Closing the Gap Important?

Despite the 1963 Equal Pay Act, the economic security of women continues to suffer due to the wage gap. It can be found in almost every industry and across every education level. It might be surprising to learn that wage gap statistics show that almost 64 percent of American homes have mothers as breadwinners. When these women are not fairly compensated for their work, it has a negative impact on their children. These numbers put 25 million children at risk of living in poverty.

However, with equal pay, these risks would be cut in half. An average of $900 billion is lost from women due to the wage gap. This negatively impacts the economy, as much of this money would be put back into spending on goods and services, education, housing and more. Finally, when women are paid equal wages it helps reduce the money the government spends on Temporary Assistance to Needy Families.

What is the Paycheck Fairness Act?

Although the Lilly Ledbetter Fairness Paycheck Act was passed in 2009, it was designed to strengthen worker protections against pay discrimination. Unfortunately, it did not address the wage gap between men and women. As mentioned, up until this time, women made on average 80 cents for every dollar earned by a man in the same position. H.R.7 made four amendments to the Paycheck Fairness Act to help overcome this difference:

1. Restrict the use of the bona fide factor defense to wage discrimination claims
2. Enhance no retaliation prohibitions
3. Make it unlawful to require an employee to sign a contract or waiver prohibiting the employee from disclosing information about the employee’s wages
4. Increase civil penalties for violations of equal pay provisions

The bill also prohibits organizations from asking for a wage history from prospective employees.

Department of Labor Initiatives

Under the new law, the Department of Labor took on new initiatives including:

• Establishing and carrying out a grant program for negotiation skills training programs to address pay differences
• Conducting studies to eliminate pay disparities between men and women
• Reporting on the gender pay gap in the teenage labor workforce
• Making information available on wage discrimination to help people understand and address discrimination

These steps help prepare not only women to represent their own interests in the fight for fair wages but also introduces the right to young girls. There will also be a Secretary of Labor’s National Award for Pay Equity in the Workplace to honor employers committed to eliminating pay differences between men and women.

What Organizations Must Do

Each organization has an obligation to ensure they offer equal pay for equal work regardless of age, sex, or race. By creating an open work environment where employees feel safe to discuss their wages, you avoid the need for employees to retaliate when they feel they are not treated fairly. Because this is illegal, remaining transparent, while also still protecting the privacy of each employee, you can make women feel comfortable knowing they are being paid fairly. You can:

• Track wages for like positions using a payroll software to help you remain compliant.
• Remove salary history from the application process to remain compliant
• Do not discuss salary history during the job interview process
• Create a pay scale based on experience, education, years of service and job role

As well, the bill requires the EEOC to collect data on compensation provided by employers regarding the sex, race, and ethnic identity of employees to help ensure the laws of pay discrimination are enforced. With effective payroll software, you are better prepared to provide this information, along with proof you are making every effort to remain compliant.

By introducing new policies, you can ensure you remain compliant with H.R.7. and reduce the risk for complaints and litigation.