(Bloomberg) -- American Airlines Group Inc. and Anthem Inc. are among companies that have signed up to have a year-old nonprofit monitor their progress in closing gender and racial compensation gaps, seeking to add accountability to their efforts to rectify the pay disparities within their workplaces.Called Fair Pay Workplace, the Seattle-based group—backed by Laurene Powell Jobs’s Emerson Collective LLC—has signed up an initial cohort that also includes Databricks Inc., a data-analysis software startup valued at $38 billion, and the University of California at Irvine. When companies enlist, Fair Pay evaluates their data for pay gaps and creates a road map to fix them.To receive certification that they’re participating, companies must commit to the plan, abide by the nonprofit’s rules and standards, and undergo regular check-ins for progress, said Heidi Durham, Fair Pay’s executive director. For example, Fair Pay asks certified companies to pledge that they won’t ask job candidates about their prior compensation or expectations for starting pay, which is “one of the biggest reasons gaps are exacerbated,” Durham said.
While there has been more scrutiny of pay equity in the past 25 years, gaps remain—the U.S. Census Bureau said Tuesday that women who worked full-time last year earned 83 cents for every dollar men took home, up from 82.3 cents the year prior. Black women make 63 cents for every dollar made by White men, and Latinas make 55 cents, according to Fair Pay’s website. Many companies rely on internal reviews that aren’t checked by outside audits or are incomplete, said Chai Feldblum, a former commissioner at the Equal Employment Opportunity Commission who was part of the group that helped Fair Pay Workplace develop its certification.
Some companies don’t examine all types of compensation, or they justify pay differences based on internal job levels and ignore people who may be doing the same work but are leveled differently because women and underrepresented minorities aren’t promoted as often. Microsoft Corp. has released data for several years saying its female employees make nearly the same as men with the same job title and level in the U.S. But women at the company have complained the measure means little when they are still promoted less frequently than male counterparts, according to legal documents unsealed in 2017.
In March, Amazon.com Inc. was sued for allegedly discriminating against Black and female workers in hiring employees for its corporate offices. The lawsuit, filed in federal court in Washington, also alleges violations of the Equal Pay Act. The U.S. National Labor Relations Board is looking into complaints Apple Inc. shut down an attempt by engineer Cher Scarlett to set up an internal Slack channel to discuss pay equity.“Transparency is really important in this work,” said Cole Brown, American Airlines’ chief people officer. About 85% of American’s 100,000 employees are under union contracts, but the airline wanted to show the remaining approximately 15,000 it was committed to regular, publicly validated scrutiny of pay fairness, she said. “It just becomes a routine, regular way of working, not just something where when we hire or promote someone or as part of an annual process then we just dust it off.”
Some well-meaning companies don’t know how to fix things, Feldblum said. “There's a lot of good intentions out there. There's actually even a desire to do better, but there's not necessarily the best tools,” she said. “You could end up spending a bunch of money on something that's actually not going to work very well.”
The nonprofit got its start inside of Syndio Solutions Inc., a maker of software that helps companies track pay fairness. Chief Executive Officer Maria Colacurcio had customers asking for an outside certification that would validate their work, and Colacurcio felt it would have more value coming from an independent nonprofit. Fair Pay Workplace-certified companies don’t have to become Syndio customers and Syndio donates the software for use by the nonprofit, she said. The Wells Fargo Foundation also funds Fair Pay.
Using Syndio’s PayEQ software, the organization slices the company’s workforce into groups who are doing essentially the same work and then examines their pay—base salary and any types of bonuses, stock and other compensation—and the reasons for differences, Durham said.
Rather than imposing a template that fits all, the group’s certification process tries to take into account the different situations at a company, Feldblum said, such as whether pay disparities were the result of an acquisition or because men do better at negotiating raises and promotions. “How you respond needs to take into account lots of things that might be very unique about your company,” she said.
Databricks started looking at its pay equity two years ago, and because of its rapid growth, the company wanted more continuous information and analysis, said Chief People Officer Amy Reichanadter. “We wanted to be out in front of what other companies were doing.”
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