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LeadingEdition: E-Newsletter for Purdue University Supervisors

Pay equity - what does it mean?


We�ve probably all heard somebody at Purdue say that they don�t believe their pay is equitable with somebody else�s pay. What does �pay equity� mean? This article will provide definitions, background, and a basic framework for thinking about pay equity.

In the online resource Dictionary.com, the word �equity� is defined as either the state, quality, or ideal of being just, impartial, and fair, or as something that is just, impartial, and fair.

So we can infer that �pay equity� relates to receiving a rate of pay that has been determined using just, fair, and impartial criteria.

It is interesting to note that a poll conducted by Hudson, an HR consulting firm in New York City indicates:

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Only slightly more than 50 percent of workers believe they are being paid on par with others doing similar work

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Thirty-seven percent do not believe this.

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Only 36 percent of workers polled believe that better performance generates better pay.

What does the law have to say about pay equity?

Two legislative acts that address pay equity are the Equal Pay Act of 1963 and Title VII and the Civil Rights Act of 1991.

The Equal Pay Act prohibits differences in pay that are based on gender. It lists specific factors that are legitimate explanations for pay differences. Valid reasons for differences in pay include differences in:

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skill

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effort

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responsibility

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working conditions

The law also indicates that other acceptable reasons for differences in pay include:

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seniority systems

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merit systems

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quantity or quality of production

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any factor other than gender

Title VII and the Civil Rights Act of 1991 further prohibits differences in pay, as well as discriminatory practices in all aspects of employment and benefits policies, based on race, color, national origin, religion, sex, age, pregnancy, childbirth, disability, and veteran status.

At a basic level, what this means that differences in pay should come from differences in job requirements and duties, or differences in how those requirements and duties are performed. Demographic characteristics of job holders should not influence pay or other employment decisions.

How do we determine which jobs have similar skills, effort, responsibilities, and working conditions?

One approach we see used fairly often when employees or supervisors believe that pay is not equitable is for them to hand-pick other jobs for comparison that seem similar to them. This is not a consistent, defensible approach; it relies on one or two people�s perceptions of the work someone else is performing without adequate knowledge of all the relevant factors. The selection of jobs for comparison is often highly subjective and influenced by other factors, such as a desire to increase pay.

The appropriate method to group jobs that have similar skills, effort, responsibility, and working conditions is to use a job classification system. Most systems, including Purdue�s, are based on some version of a government job classification system called the �Standard Occupational Classification� (SOC) system. All these systems utilize broadly accepted definitions of skills, effort, responsibility, and working conditions to group jobs.

It is expected that a group of similar jobs will have a range of pay; we would not expect everyone in the group to receive the same pay. Factors such as years of experience and performance, as well as departmental budget constraints, will cause variations in pay for similar work. Acceptable ranges of pay vary by type of work, but there are standards to which individual pay can be compared. We often find that while pay is different, it is not always inequitable.

Why do employees so often feel that they are paid inequitably when compared to others?

One reason, as the poll mentioned at the beginning of the article indicates, is that it�s just human nature to believe we aren�t being paid enough.

However, there are other factors that contribute to the perception. Most of them relate to a lack of knowledge or to a lack of communication about how pay decisions are made.

If the classification system is not well communicated, employees will not understand how and why jobs are grouped the way they are, and how the groups relate to pay.

If there is no performance management system, or if it is not well understood, employees will not know what they need to do to receive good performance ratings, and they will be frustrated at their perceived inability to influence pay decisions.

If the salary structure is not clear, it is very difficult for employees to see how their jobs fit in the organization or how their pay compares to others'. This lack of clarity can lead employees to worry that they are not being paid fairly.

What can you do if you feel your pay is inequitable?

First and foremost, talk to your supervisor or your business office about your concerns. Often, they have access to the information you need to help you understand more about how you are paid.

If they don�t have the information, they can contact Compensation at 49-40097 to talk to an analyst about pay in their area or pay for specific kinds of work.

If you can�t get help from your supervisor or business office, you may want to contact Employee Relations at 49-41679. They can assist with workplace concerns, and they can work with you and Compensation to resolve your concerns about pay.

We�ll provide more information about job family systems and performance management in future issues.

- Compensation Team

Gold rule

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LeadingEdition is an electronic newsletter for Purdue University supervisors.  It is produced and distributed by Purdue University Human Resources four times annually.  If you have questions, comments or suggestions relating to the newsletter, please call 49-41679 or email us.  Thank you.