What is Payroll’s Role in Pay Equity?
Pay equity has become a top priority for business leaders in recent years. Pay transparency laws in Colorado, California, and most recently New York (among many others) require employers hiring in these states to publicly list pay ranges in their job descriptions. And while these new pay transparency laws can create some challenges for HR and business leaders, research shows they are proven to increase equity over time, and this may just be the push employers need to prioritize pay equity across their organizations.
Pay discrimination has been illegal since the Equal Pay Act was passed in 1963, but in practice it persists. People of color, ethnic minorities, the LGBTQIA+ community, and individuals with disabilities or those over 50 years of age all statistically experience pay disparities. Women continue to earn just 82 cents for every dollar that men earn (and the figures for women of color are worse). The true impact of these disparities is even larger when you consider the fact that this 82-cent figure doesn’t account for things like bonuses, 401(k) matching, and social security—all of which are typically calculated as a percentage of someone’s salary.
UKG sponsored a study with Harvard Business Review Analytic Services, which uncovered the intersectional impacts of pay equity, the unequal distribution of pay equity efforts, and more. The study found that there was widespread uncertainty regarding who should lead the pay equity charge: Is it the CEO or the CHRO?
The right answer, of course, is both. But there’s also a third variable that often gets left out of the pay equity conversation: Payroll.
Keep reading for a preview of our UKG HR & Payroll eSymposium session “Payroll’s Role in Advancing & Retaining Women in the Workplace."
Payroll’s role in pay equity: Improving and advancing equitable employee practices
Payroll can play a key role in helping lead pay equity initiatives by looking at where and why pay disparities exist in the data.
Here are a few ways payroll professionals can impact pay equity in the workplace:
- Data: Having accurate and timely pay-related data can help align payroll overall with HR and diversity, equity, inclusion, and belonging (DEI&B) initiatives in an organization. It also can contribute to promoting pay equity and recognizing patterns in creating equitable workplaces.
- Consistent processes: Accurate and efficient processes in payroll not only help to mitigate delays in receiving information and timely pay, but consistency ensures that compensation policies and procedures are clear, like starting pay, merit increases, promotions, incentives, and sign-on bonuses.
- Training at all levels: Transparency in an organization is also about providing communicated initiatives. Yes, pay equity should start at the top, but those business imperatives need to be communicated throughout the entire workforce. Training should happen and be communicated to leadership and managers, such as what is pay equity, why is it important, and what should the organization do. After all, they are most likely the ones who have direct daily contact with staff.
As regions around the world are taking closer looks to ensure pay equity, payroll services are also playing an important role in driving the direction of pay equity strategies. Payroll must be part of the innovative ways in how we support and engage our employees.
In December 2021, UKG committed to tackling the pay equity challenge with our Close the Gap Initiative, a multimillion-dollar pay equity campaign designed to drive awareness and action. UKG payroll solutions are used by more than 15 million employees each year, and we committed to contribute $0.18—the current gender wage gap—for each of these employees toward programs and organizations fighting for equal pay.