Reference no: EM133177268

Case Study:  Implementing Comparable-Worth Legislation

In the future year 20XX, the number of women senators and congressional representatives reached a critical mass to influence legislation affecting women. Through a coalition of Republican and Democratic female legislators, a majority of male Democrats, and a small minority of Republicans, the landmark Gender Equality in the Workplace Act was narrowly passed by both houses of Congress. The law was the result of the work of the Gender Equality Workplace Task Force, cochaired by Laura Bush, wife of former president George W. Bush, and Michelle Obama, wife of former president Barack Obama. Members of the task force included former Republican senator Olympia Snowe (Maine), Facebook chief operating officer Sheryl Sandberg, and Randy Johnson, the senior vice president for labor, immigration, and employee benefits of the US Chamber of Commerce. 

The wage gap between men and women has been apparent for years, and one figure continues to be cited: Women earn about 77 cents for every dollar that men earn (The White House 2014). Among the studies most often cited is a 1998 report by the Council of Economic Advisers, which estimated that between one-quarter and one-third of the wage gap cannot be explained by relevant job-related factors, and in many cases may be attributed to the dominance of males or females in the job category. Comparable worth legislation has already passed in some jurisdictions, including the state of Washington, the Canadian province of Ontario, and state government in Minnesota. While no study has denied the existence of a wage gap, its extent is subject to dispute and depends on how the figure is calculated (Kessler 2014). 

The new law is intended to remedy the well-understood issue of the gap in earnings between men and women. The law goes beyond simply stating that men and women should be paid the same for doing the same work; this principle has been established for decades. The Gender Equality in the Workplace Act mandates that men and women must be paid the same for doing work of equal value to the organization. The idea is that women in historically female occupations have been typically paid less than men in historically maledominated occupations. The new law was based in large part on Ontario's Pay Equity Act, which states:

The Act requires that employers assess their pay and benefits practices to ensure that female job classes are not underpaid compared to male job classes of equal or comparable value in the same organization. Employers that are subject to the Act are required to value and compare female job classes to male job classes in their workplaces using the factors set out in the Act, and to pay female job classes at least the same as a male job class of equal or comparable value, based on the results of the job comparisons. This may require modifications to existing compensation systems or practices. (Ontario Pay Equity Commission 2012)

This new law is an amendment to the Fair Labor Standards Act and is based on the concept of comparable worth, or comparable value to the organization. Comparable worth is the idea that men and women who perform work of the same value to the organization should receive similar levels of compensation. According to this doctrine, jobs have an organizational value that can be compared across jobs of very different content. Value may be based on factors including skill requirements, effort, responsibility, educational requirements, and working conditions. The essence of the law is that women and men performing work of equal value-and not simply the same job as stipulated in the Equal Pay Act-should be paid approximately the same. 

The law is to be implemented in stages. In the initial stages, organizations with more than 100 employees are required to put a methodology in place to assess gender equity in the organization. Although strict criteria for assessing job worth are not specified in the legislation, other jurisdictions have assessed job worth using criteria such as skills and effort, working conditions, responsibility, and educational requirements (as noted earlier). To a limited degree, the legislation permits employers to take labor market factors into consideration in assessing job worth. This stipulation was based on a demand of the Chamber of Commerce and Republican members of Congress. However, human resources (HR) directors have been warned that the Department of Labor will scrutinize carefully the use of labor market factors in assessing job worth.

Senior managers at Savant Health System are discussing with some urgency how they will comply with the new law. 

Margaret, vice president of HR, stated, "We know that we are currently violating the act. Our full-time registered nurses with ten years of experience make on average $67,000 a year, while we have facilities management people earning close to $90,000. We know that 90 percent of our nurses are female, and right now, all of our facilities management people are male. I'm thinking this is just the tip of the iceberg. If we don't have a way to identify these discrepancies in the next 12 months, we'll be in violation of the Gender Equality in the Workplace Act." 

Jack, president of Savant Health System, responded, "This law baffles me. You're saying that we have to identify female-dominated jobs, calculate how valuable they are to Savant, and then compare their salaries with what the act calls a male-dominated job. How in the world do we calculate value, or worth, to the organization? We value everyone and pay our employees fair wages based on their education and experience." 

"That's right," responded Dorothy, VP of nursing services. "I hear complaints all the time from our nurses about salaries; they're always comparing themselves to some of the males in our organization who have much less training but are earning about the same as or even more than nurses." 

"Let's not panic about this," said Margaret. "What we need in the next 12 months is not necessarily to fix any inequities, but to submit to the Department of Labor a methodology that explains how we will go about identifying inequities. Of course, down the road, we'll have to actually implement the methodology and solve any problems we might find. And keep in mind that the leadership of the Department of Labor's new Pay Equity Division is quite aggressive. The chief of the division is a former ICU nurse. She's been an active advocate for comparable worth legislation for decades, and she played no small part in the election of several key female senators in the last election. So this is not just paperwork. The Department of Labor has hired a sizeable field staff to monitor implementation of the law."

Ray, VP of finance, entered the conversation. "You know, if this pay equity exercise results in a finding that our compensation practices are out of compliance, it will wreak havoc on our budget. If we have to bump up the salaries for our female-dominated jobs, like nursing, we may face unanticipated consequences. And how do we deal with the medical technicians and nursing assistants? We all know that these two groups are unionized and represented by the Service Employees International Union. They're going to be scrutinizing this process carefully. How should we involve the union in developing this methodology?"

Margaret responded, "We haven't actually done a job evaluation exercise in years. Our salary scales have been guided largely by the labor market. So even without this legislation it is probably worth looking at our salaries in a systematic way. I'm willing to take on this project, as long as I can call on each of you to help develop the methodology. And I'd like your advice on how to involve the union. I don't want to put all this work in only to have the Department of Labor tell us we've done it all wrong." 

Develop learning objectives. What additional information do we need to address the problem? Participants will always face a gap in the information known and the information needed to address the problem. In this stage, group members identify the gaps between what the group knows and what it needs to know to address the problem. These gaps in knowledge are developed into specific learning objectives for the group. Learning objectives should be written in clear, specific language and should be submitted to the course instructor. 

(6-7 questions we need to know/ answer to address the problem)

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