🔒New pay-equity law aims to close CT’s gender wage gap

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By several key measures, women have made great strides in the workforce over the past 40 years.

According to the Bureau of Labor Statistics, the proportion of women with college degrees has more than tripled since the 1970s; labor force participation grew steadily, peaking at a rate of 60 percent in 1999; and women's earnings as a percentage of men's earnings rose from 62 cents on the dollar in 1979 to 81 cents nationally by 2015.

But the gender pay gap — the relative difference in the average earnings of women and men in the economy as a whole — remains a persistent reality. And a growing number of cities and states, including Connecticut, have passed legislation designed to help level the playing field.

The state's new pay-equity law, which was passed by the legislature in April and takes effect Jan. 1, 2019, bars employers from asking — or directing a third party to ask — about a prospective employee's wage and salary history. The rationale is that salary history bans, which have become law in California, Delaware, Massachusetts and Oregon, prevent women from being paid based on their previous job's already inequitable salary.

But not everyone is convinced the new law will be helpful.

Recent research by PayScale, a Seattle-based compensation data and software company, found that when a woman failed to disclose her salary history — when asked — she was paid 1.8 percent less on average than a woman who did disclose when asked, while a man who refused to disclose his salary history is paid on average 1.2 percent more.

Those numbers, according to PayScale Vice President of Content Strategy Lydia Frank, reflect an unconscious bias that women often face in the workforce.

“Research has shown that women are often penalized for negotiating and advocating for themselves in a way that men are not,” Frank said, noting withholding salary history is often seen as a negotiating tactic.

PayScale's research also found that the wide discrepancy between men's and women's pay may not be as bleak as the news headlines suggest.

“When we hear about these [20 cent on the dollar] pay gaps, that's representing [the average salary of] all men versus all women in the workforce,” said Frank. “When we control for job title, industry, job level, geography, and years of experience, the high-level pay gap is 98 cents [for women] on the dollar.”

Even still, Frank concedes that gender inequities — including pay — exist in the workplace.

The hope and expectation of policymakers and women's advocacy groups in Connecticut is that the new measure, which passed the state legislature with broad bipartisan support, will help lessen the impact of unconscious bias around pay by eliminating salary history as a factor in the hiring equation.

Employers must prepare

Eric Gjede, a lobbyist with the Connecticut Business & Industry Association (CBIA), which endorsed the final version of the bill that passed, understands and supports the intent of the new law, but sees the challenges it presents, especially for Connecticut's small businesses.

“Small business owners often ask about salary history because they often don't know what a market dictates for certain positions, so they use the questions more in line of a compensation survey,” Gjede said. As of January, asking for salary history in-person or on a job application could put Connecticut employers — from state agencies to businesses to not-for-profit organizations — at risk of an applicant lawsuit.

The biggest risk Gedje sees is people — particularly small business owners — not being aware of the legislation.

“Small business owners are wearing multiple hats in their company and they [often] don't have the ability to keep up to date [with new laws],” Gjede said.

CBIA is working to inform employers about the new law and steps to prepare for it.

Joy Chin, a partner with the law firm of Jackson Lewis, which specializes in labor and employment law, says employers need to look at updating any employment application forms and any policies and procedures to make sure candidates aren't asked for salary history.

“Employers must train their supervisors and recruiters about the new law because the [legal liability] for the law extends past the employer to a third party acting on behalf of the employer,” Chin said. “They still can't ask.”

While the new law may help narrow the gender pay gap, PayScale's Frank said these types of legislative maneuvers are only one part of addressing a larger challenge that women face in the workforce — under-representation in senior-level jobs.

PayScale data, for instance, shows that between the ages of 20-29, 72 percent of men and 74 percent of women are in individual contributor roles, but by mid-career men are 70 percent more likely to be in VP or C-suite roles — and 142 percent more likely by late career — than women. This under-representation in the highest-paying jobs is another factor, Frank says, in the gender pay gap.

Although a company's culture can have a dramatic impact on women's advancement opportunities and retention, Frank says the growing number of salary history bans is a good first step.

“It's really important to use market data to drive compensation decisions [versus salary history],” Frank cautions. “You can't take the bias out of people, but it's much easier to take the bias out of the process.”