Salesforce Finds Closing Pay Gaps Is a Continuous Process

Salesforce Finds Closing Pay Gaps Is a Continuous Process

Salesforce has been on a quest to achieve gender pay equity across its entire workforce since 2015, when CEO Marc Benioff first announced that the company had spent $3 million assessing and closing pay gaps between its male and female employees, affecting 6 percent of its 17,000 employees, or about 1,000 people. However, as Benioff told CBS’s Lesley Stahl on “60 Minutes” last weekend, he and his leadership team at Salesforce soon discovered that closing the pay gap once wasn’t enough:

Marc Benioff: We did it the first time. We were so happy with ourselves. It was great. Then all of a sudden we kind of did our audit again and the same thing happened again. We’re, like, “How can this be?” But it turned out we had bought about two dozen companies. And guess what? When you buy a company, you just don’t buy its technology, you don’t buy its culture, you also buy its pay practices.

Lesley Stahl: So they would come in and the men were paid much more and then that got eaten up into your statistics, into your audit. So you had to redo the whole thing all over again, costing as much as the first time.

Marc Benioff: It cost us as much as the first time. In total, it’s now cost us $6 million.

Lesley Stahl: Are you gonna have to do this audit every year—

Marc Benioff: More than every year. We’re gonna have to do this continuously. This is a constant cadence. You’re gonna have to constantly monitor and keep track of that, but that’s easy today. We run our company the same way every company is run with computers and technology and software. … [T]here’s never been an easier time to make this change.

In a blog post on Tuesday, Salesforce Chief People Officer Cindy Robbins provided more detail about this year’s pay equity adjustment and how the company plans to manage the process going forward, now that they have realized the importance of addressing pay gaps continuously:

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How Do We Close the Gender Pay Gap?

How Do We Close the Gender Pay Gap?

Equal Pay Day is a symbolic event that highlights the pay gap between men and women in the US. Equal Pay Day is held on a Tuesday, representing how far into the next week the average woman has to work to earn what the average man earned the week prior, and in early April to represent how much farther into this year she needs to work to earn as much as he did last year. While individual studies differ slightly, nearly all of them calculate the overall US gender pay gap at around 20 percent, meaning women earn roughly 80 cents to every man’s dollar. (It bears mentioning that these figures are significantly worse for women of color.)

To a significant extent, this gap reflects women being offered lower salaries than men for the same or similar work. Fast Company’s Lydia Dishman points to some recent research by Hired that suggests women are often being lowballed:

The majority (63%) of the time in the U.S., men are offered higher salaries than women for the same role at the same company, according to wage gap data and survey responses compiled by Hired. On average, these companies offer women 4% less than men for the same role, with some offering women up to 45% less. These numbers are likely due to unconscious bias, inconsistent pay practices, and paying new hires based on what they made in their previous role. “Our data found that 66% of the time, women are asking for less money–6% less on average–than men for the same role at the same company,” says Kelli Dragovich, senior vice president of people at Hired. Undervaluing themselves is part of the reason, she says, as 50% of female survey respondents said they experienced impostor syndrome most of the time.

However, even companies that pay men and women equally for equal work still have pay gaps, because women are often concentrated in professions with lower earning potential. Our recent research at CEB, now Gartner, finds that these group-to-group gaps account for most of the global gender pay gap of 27 percent, although 7.4 percentage points remain unexplained by factors like size, industry, geography, education, or experience.

The main cause of this larger pay gap is the sorting of women into lower-paying roles, or occupational segregation, Maggie Koerth-Baker explains at FiveThirtyEight. That doesn’t mean women are choosing to earn less money, however, and “the fact that certain industries are dominated by men or women — and that the men’s jobs pay more — has never just been about what qualifications an individual did or didn’t have, or how tough the job was to do”:

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New York Governor Advances Legislation to Ban Salary History Inquiries

New York Governor Advances Legislation to Ban Salary History Inquiries

New York State Governor Andrew Cuomo on Tuesday announced the introduction of a bill that would ban all public and private employers who do business in the state from asking job candidates about their prior compensation. The legislation, advanced on Equal Pay Day, coincided with the release of a report (pdf) from the state’s Department of Labor on the status of the gender pay gap in New York and how to close it. Banning salary history questions on job applications is just one of the reports wide-ranging policy recommendations:

This new legislation builds on two executive orders signed by the Governor last year to eliminate the wage gap by prohibiting state entities from evaluating candidates based on wage history and requiring state contractors to disclose data on the gender, race and ethnicity of employees – leveraging taxpayer dollars to drive transparency and advance pay equity statewide. Today’s legislation builds on legislative efforts to address the issue and broadens the scope of Executive Order #161 to encompass all employers, not just state entities, in order to break the cycle of unfair, unequal compensation.

The report found that women in New York earn 89 cents for every dollar earned by men—a narrower pay gap than the national average of around 80 cents to the dollar:

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Salary Histories Can’t Justify Gender-Based Pay Disparities, Ninth Circuit Rules

Salary Histories Can’t Justify Gender-Based Pay Disparities, Ninth Circuit Rules

Differences in past salaries are insufficient to justify disparities in pay between male and female employees in the same role, the Ninth US Circuit Court of Appeals ruled on Monday. In an en banc rehearing of a case decided by a three-judge panel nearly a year ago, the court’s 11 judges unanimously ruled in favor of Aileen Rizo, a California school employee who learned in 2012 that her male counterparts were making more than she was and filed a discrimination suit under the Equal Pay Act.

The panel last year, citing a 1982 ruling by the court that said employers could use salary history information as long as they applied it reasonably, had overturned a 2015 decision by US Magistrate Judge Michael Seng, which held that the Fresno, California, school district’s pay structure perpetuates gender-based wage disparities. Monday’s opinion, authored by the late judge Stephen Reinhardt before his death last month, reaffirmed Seng’s ruling, concluding that ” allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum—would be contrary to the text and history of the Equal Pay Act, and would vitiate the very purpose for which the Act stands”:

We conclude, unhesitatingly, that “any other factor other than sex” is limited to legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance. It is inconceivable that Congress, in an Act the primary purpose of which was to eliminate long-existing “endemic” sex-based wage disparities, would create an exception for basing new hires’ salaries on those very disparities—disparities that Congress declared are not only related to sex but caused by sex. To accept the County’s argument would be to perpetuate rather than eliminate the pervasive discrimination at which the Act was aimed.

Reinhardt’s opinion will cheer critics of salary histories, who argue that using this information to set pay enables the persistence of unjustifiable gender-based pay gaps throughout an employee’s career.

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Goldman Sachs Faces Class Action Suit Over Alleged Gender Discrimination

Goldman Sachs Faces Class Action Suit Over Alleged Gender Discrimination

Goldman Sachs has joined the ranks of high-profile employers hit with major litigation over allegations of gender bias in pay, promotions, and performance reviews. On Friday, a federal judge in New York certified the eight-year-old case as a class action lawsuit, ruling that women who believed the investment bank had discriminated against them on the basis of their gender could pursue their claims as a group, Reuters reported.

US District Judge Analisa Torres ruled that employees and former employees could participate in the suit if they had worked as associates or vice presidents in Goldman’s investment banking, investment management, and securities divisions since September 2004, or since July 2002 for employees in New York City. Plaintiffs’ attorney Kelly Dermody told Reuters that the certified class encompassed an estimated 2,000 people.

This lawsuit is one of several brought against major financial firms over the past decade alleging gender discrimination in this male-dominated sector, where women make up about half the workforce but only a quarter of senior-level positions. Gender pay data from the UK shows that the world’s leading banks have substantial gender pay gaps, owing to the much lower representation of women in senior roles with higher earning and bonus potential—a deliberate imbalance, the litigants in these suits claim. A study last year also found that women in finance are routinely punished more harshly than their male colleagues for misconduct, even when that misconduct is less costly and less likely to be repeated.

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Survey: Most Employers Still Use Salary Histories to Set Pay

Survey: Most Employers Still Use Salary Histories to Set Pay

The practice of basing a new hire’s salary offer partly on what they have earned in the past has become controversial in recent years in light of the theory that this practice may encourage pay inequities to persist throughout an employee’s career. In 2016, Massachusetts became the first US state to bar employers from asking candidates for their salary histories in an amendment to its equal pay law, and other states have followed suit, including California, Delaware, and Oregon, as well as New York City.

Despite the proliferation of these bans, a recent survey from WorldatWork finds that most employers are still using salary histories as a factor in their pay negotiation process in locations where they are still permitted to do so. While 37 percent of employees surveyed said they had prohibited the practice in all their US locations, 35 percent said they did so only in areas where state and local bans exist and 27 percent said they do not operate in any of these areas.

Smaller organizations were the least likely to ban the use of salary histories nationwide, WorldatWork found, with just 25 percent of organizations with under 500 employees saying they did (49 percent said they did not operate in any locales with statutory bans). Large organizations, in contrast, have done so at greater rates: 46 percent of organizations with 10,000 employees or more said they had stopped using salary histories nationwide, while 37 percent said they had dropped them in jurisdictions where bans are now place.

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New Jersey Passes Sweeping Equal Pay Law, Explores Sick Leave Mandate

New Jersey Passes Sweeping Equal Pay Law, Explores Sick Leave Mandate

New Jersey’s state legislature on Monday passed what supporters are calling the strongest pay equity legislation yet enacted by any state in the US, NorthJersey.com’s Catherine Carrera and Nicholas Pugliese report:

The bill passed Monday, A-1, would allow victims of discrimination to recoup up to six years’ worth of back pay, up from two under current law. Damages that are proved could be tripled, and the bill would permit lawsuits not just by women but by any group covered under the state’s Law Against Discrimination, such as racial or sexual minorities.

It would also give employees a better chance at prevailing in pay discrimination cases, said Andrea Johnson, senior council for state policy at the National Women’s Law Center. Workers would have to prove they are being paid unfairly for “substantially similar” work, a change from the existing standard of “equal pay for equal work.”

“There are a lot of courts that have interpreted equal work in a very narrow way to mean basically identical work,” Johnson said. “So there’s some language added to the law just to make sure that courts are doing a deeper analysis into the justification. We see too many cases thrown out for reasons that actually might be sex-based.”

The Diane B. Allen Equal Pay Act, named after a recently retired Republican state senator who experienced age and gender discrimination during her career in broadcast journalism, passed the state Senate unanimously and the Assembly 74–2, with two Morris County Republicans voting against it. Assemblymen Michael Patrick Carroll, one of the two “no” votes, said it would lead to endless litigation.

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