Equal pay amongst genders has been a topic of conversation in the United States and around the world for decades. Now Iceland has done something about it. The country has passed a law that more effectively enforces gender pay discrimination law.

At the start of the new year, the Land of Fire and Ice became the first country to mandate that companies with 25 or more full-time employees must submit proof that both men and women are paid equally. Every three years, the companies must confirm that they are paying men and women equally for jobs of equal value. Companies with more than 25 employees must be certified by the end of this year. If they aren’t certified, a fine of about $500/day will be imposed until the issue is resolved.

In addition to addressing pay discrimination among genders, the law may also lead to ending pay discrimination on other bases such as race, disability and sexual orientation.

According to the Nordic Information on Gender, Iceland has been attempting to monitor equal pay amongst genders since the country’s equal pay laws were passed in 1961 with the goal of closing the gender pay gap by 1967. That goal was never achieved. The current pay gap between men and women is a full 15 per cent, which the World Economic Forum’s 2017 Global Gender Gap Report says is the best in the world. With the new law, Iceland is hoping to close the gender pay gap completely by 2022.

Women in the United States can sympathize. In the U.S., the Equal Pay Act of 1963 was passed to end pay discrimination between men and women. Under the law, the burden of proof is on women to flag their employers for such activity in order for any investigation to occur.

Can Iceland’s approach work in the United States? We likely have a long way to go.

  • The World Economic Forum’s 2017 Global Gender Gap Report ranks the U.S.. as having the 49th lowest gender pay gap of the 144 countries in its rankings. That is below countries like the United Kingdom, Canada, Nicaragua, Mozambique, South Africa, Cuba and Colombia.
  • In 2015, women earned 83% of what men earned, according to a Pew Research Center analysis of median hourly earnings of both full- and part-time U.S. workers. Pew said that based on this estimate, it would take an extra 44 days of work for women to earn what men did in 2015.
  • Of the 91,053 charges filed in 2016 with the U.S. Equal Employment Opportunity Commission (EEOC), only 1,075, or 1.2%, addressed violations of the Equal Pay Act. Those enforcement actions were limited to pay discrimination between employees who are performing the same job at the same location.

Not that there aren’t high profile pay discrimination cases being pursued by government agencies, such as the U. S. Department of Labor’s Office of Federal Contractor Compliance Programs (OFCCP) investigation into pay practices at Google.

Whether the U.S. will ever get to the point where it will require companies to provide proof that they are providing equal pay for equal work remains to be seen. It’s interesting to note that the law was approved in Iceland after a 2016 election that saw women win 30 seats in Iceland’s parliament, bringing the split between men and women legislators to about 50%. By comparison, women make up about 20% of the U.S. Congress.

However, as more and more attention is paid to pay equity and workplace discrimination issues, and as state and local governments continue to lead the way with more progressive pay equity legislation, companies would be well served to review their current pay policies and practices to determine if they are in line with federal laws, as well as state and local laws in the locations where the operate. Now may be the time for companies to undertake an audit of their compensation structures to identify and address possible issues that could lead to expensive litigation in the future.

To learn more about achieving pay equity, click here.