Complying with pay equity regulations is a constant challenge for employers operating in multiple jurisdictions. In this article we explore the parallels between the EU Pay Transparency Directive, and the diverse state-level regulations and federal laws in the US.
As they endeavor to ensure workplace fairness and equal compensation, American employers face increasingly complex pay equity legislation. For instance:
Pay transparency laws may also be interpreted differently across the 12 regional circuits. In the case of Korty v Indiana in the Seventh Circuit, prior salary justification was deemed an acceptable defense by the court, but cannot be used to justify a gender pay gap in at least six other circuits.
Employers may also struggle to stay on top of frequent changes at the state and local levels. Recent amendments to state-level regulations include:
Organizations operating across the EU face similar pressures to comply with the EU Pay Transparency Directive, which was formally adopted by the Council of the European Union on April 24th, 2023.
In effect:
Employers with fewer than 100 workers may opt to voluntarily submit pay data, but should note that EU member states can choose to make pay data reporting mandatory for all organizations, regardless of size.
The EU Pay Transparency Directive introduces five key elements:
While member states may impose their own additional pay equity regulations, the EU Pay Transparency Directive is the minimum requirement for gender pay gap reporting and applies across all 27 member states.
Similarities in US pay equity regulations and the EU Pay Transparency Directive include the following:
For EU employers, the Directive provides a degree of consistency in compliance and pay data reporting.
In the US, federal employment laws affecting fair pay practices include:
In addition, a national “Salary Transparency Act” was introduced in March 2023. If successful, HR1599 would require all employers nationwide to disclose pay ranges in job listings, provide wage ranges to job applicants, and provide that same information to existing employees.
While closing the gender pay gap remains a priority for employers, new legislation focused on AI is also emerging in the EU and the US.
Newly issued EEOC Title VII guidance is designed to eliminate potential AI bias in automated employment decision tools (AEDTs). The guidance applies to decisions on compensation and affects employers using AI tools such as pay equity software. Illinois, Maryland, and New York City have also taken steps to eliminate bias in automated employment decision tools (AEDTs).
On June 14th, the European Parliament approved the text of draft legislation for its Artificial Intelligence Act, which considers AEDTs “high-risk applications.”
Choosing the right pay equity software provider must be a priority to ensure fair pay practices and comply with pay equity regulations.
Trusaic partners with employers to help them:
We are GDPR compliant and can assist any employer in any EU state in meeting its obligations under both the EU Pay Transparency Directive and the Corporate Sustainability Reporting Directive.
We are also fully compliant with the EEOC Title VII technical guidance relating to providers of AEDTs.
The only way to determine whether your pay practices are truly equitable is to consider intersectionality. Intersectionality is one of the key differentiators for Trusaic’s PayParity pay equity audit software. PayParity can analyze compensation through the intersection of gender, race/ethnicity, age, and disability in a single statistical regression analysis.
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