How to Keep Pay Equity at the Forefront During Layoffs

Uncertainty continues to pervade the economic landscape after a tumultuous 2022. Recent sweeping layoffs in the tech industry underscore this uncertainty, leaving employees and employers alike to wonder what lies ahead.

Uncertainty in the Economy

With many economists forecasting a recession in the coming year–albeit later than originally thought–layoffs and staff reductions may continue to be a difficult reality for some companies. But when it comes to layoffs, more than jobs are in jeopardy. What often makes an unfortunate situation worse is the significant impact layoffs can have on pay equity and opportunity equity progress.

Who is Affected by Layoffs?

Research shows that layoffs disproportionately affect women and underrepresented groups, who tend to work in more vulnerable roles. Layoffs at companies including Meta, Amazon, and Twitter are risking disrupting diversity efforts, hitting women and Latino workers hardest.

According to business publisher Fast Company, many companies are cutting HR, recruiting, and customer-facing teams in half–and those departments tend to comprise more women–whereas male-dominated departments like engineering make up a very low percentage of layoffs, especially relative to their size.

In March of each year, Women’s International Day and Women’s Equal Pay Day highlight the disadvantages women already face in the labor market. The Pew Research Center reports the gender pay gap in the U.S. hasn’t changed much in two decades. In 2022, women earned an average of 82% of what men earned. That number is even greater for most women of color. Essentially, women must work longer to make the same amount of money as men. When their jobs are at stake, the situation grows more dire.

It is critical that company leaders facing layoffs ensure they are conducted fairly and with a lens on workplace equity. Thankfully, taking action now can prevent pay disparities from worsening in your workplace and continue the investments companies have made in recent years of hiring to promote DEI in the workplace.

How Companies can Promote Pay Equity in a Potential Downturn

The first thing your organization can do is to be proactive in promoting pay equity before and during layoffs. Protect your workforce and your organization by conducting a pay equity audit to analyze compensation for disparities, then using the data to inform layoff strategy.

The results of your pay equity audit will give you a better picture so that you can establish criteria for layoffs and a framework for making decisions. The Equal Employment Opportunity Commission (EEOC), which is reportedly doubling down on employment discrimination, offers the following tips for avoiding inequitable layoffs or staff reductions:

• Review the process to determine if it will result in the disproportionate dismissal of employees from groups protected by federal employment discrimination laws
• List the employees who would be laid off or terminated based on your layoff criteria
• Determine whether certain groups of employees are affected more than other groups
• If certain groups of employees are affected more than other groups, determine if you can adjust your layoff selection criteria to limit the impact on those groups while still meeting your business’s needs

In the spirit of transparency, prioritize clear and consistent company-wide communication about your decision-making process. This action allows leadership to set the narrative and build trust rather than leaving employees to come up with their own stories.

The pay equity process doesn’t have to be daunting. Trusaic’s PayParity software streamlines the process by providing an automated, comprehensive analysis of your workforce’s pay data. It also includes ongoing diversity, equity, and inclusion (DEI) tracking and pay monitoring to ensure your organization stays compliant moving forward. To learn more about ensuring pay equity in times of uncertainty, download our Pay Equity Definitive Guide below.