Nov 1, 2017

Getting to Fair: The Gender Pay Gap in the Technology Industry

The tech industry, still largely controlled by white males, continues to be the subject of scrutiny when it comes to diversity in the workplace. The gender pay gap remains an issue, although how seriously it’s taken depends on which article or workplace survey you read. In addition, revelations of sexual harassment at Uber and in the venture capital/tech start-up world have re-focused attention on workplace equality for women and minorities. Businesses that fail to address equality concerns could face significant financial liability--not to mention the public relations disaster that normally accompanies revelations about such failures. Below, we focus on the gender pay gap. We discuss relevant laws and offer some tips on how to reduce the gender pay gap in your tech business.

Disparity among survey results about the gender pay gap in tech make it difficult to pinpoint exactly how much less women in tech are paid. There is no disagreement, however, that a gap exists. For example, a 2017 survey by Spiceworks, a professional network of IT workers, found that women are paid about 6% less than their male colleagues in tech, despite being more likely to hold college degrees. Alternatively, salary database Comparably found in its survey on the gender pay gap in the tech industry that the gender pay gap was as large as 29% for industry women between the ages of 18 and 25 but as small as 5% for women over 50. By comparison, the gender pay gap for all workers in the U.S. is reported to be about 20%.  

Legislative attempts to remedy pay disparity have been on the books for more than 50 years in the form of the Equal Pay Act (EPA) of 1963 and Title VII of the Civil Rights Act of 1964. The EPA essentially requires that men and women receive equal pay for substantially equal work in terms of skill, effort and job responsibility. For the purposes of the law, pay includes salary, overtime, stock options, vacation time, holiday pay and benefits. Title VII outlaws workplace discrimination in any area--including compensation--based on race, religion, sex, national origin, age and disability.

The pay gap’s persistence despite these laws has moved state and local governments in California, Connecticut, Delaware, Illinois, New York, North Dakota and Oregon, among others, to enact their own equal pay laws. In fact, in October, California Governor Jerry Brown signed a law that prohibits employers from asking about an applicant’s past salary and benefits--a practice which often perpetuates the pay gap. The law takes effect January 1, 2018.  More immediately, as of October 31, employers in New York City must comply with a similar regulation.  Such salary history bans already exist in Puerto Rico, New Orleans and Pittsburgh, and are slated to go into effect at various times over the next year in Delaware, Massachusetts and Philadelphia.

Still, not all attempts at a legislative fix for the gender pay gap have succeeded. On October 15, 2017, just three days after signing the salary history law, Governor Brown vetoed another measure that would have required large companies in California to disclose to the state disparities in pay between men and women.

Here are some ways you can reduce the pay gap in your tech business:

  • Review your pay practices and commit to fixing the issues you find. Ensure that only non-discriminatory factors such as education or experience account for pay differentials. Document any pay differentials you find.

  • Allow pay transparency. In other words, do not prohibit employees from discussing their pay. California, Illinois and New York have laws against such a prohibition. Fostering an open environment makes a potential argument that employees could not address a salary concern less likely.

  • Create policies that explicitly prohibit wage discrimination. In addition, prohibit any kind of retaliation for bringing forward a pay-related complaint. In fact, create an easy-to-use process for those employees who want to raise pay-related concerns.

  • Set clear policies governing raises and bonuses. Raises and bonuses should be based on tangible goals. In addition, regular employee reviews can help clarify expectations and make clear to employees where they stand. 

  • Don’t ask job applicants for their salary history (even if you don’t operate in a state that prohibits asking for it). Asking for prior salary perpetuates the gender pay gap because most hiring managers tend to offer applicants a percentage increase over a current salary.  

  • Train your staff. Make sure your policies are communicated clearly and accurately to the supervisors and recruiters who are most likely to be affected.

  • See the assistance of an HR services provider who specializes in helping technology companies stay compliant.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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