What Is Internal Equity? | Establishing Fair Pay with Internal Equity
What Is Internal Equity? | Establishing Fair Pay with Internal Equity
Learn about the California Fair Pay Act: https://www.patriotsoftware.com/payroll/training/blog/wages-reflecting-value-the-california-fair-pay-act/
Learn about the New York Women’s Equality Act: https://www.patriotsoftware.com/payroll/training/blog/new-york-womens-equality-act-small-business/
Payroll Training blog: https://www.patriotsoftware.com/payroll/training/blog/
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Choosing how much you will pay an employee is tricky. In this internal equity tutorial, we explain how small business owners can create a pay system that maintains employee loyalty and happiness.
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Hi, I’m Aurora, and I’m here at Patriot Software to answer your questions about internal equity.
What is internal equity? Well, it’s the comparison of employee positions in your business to ensure fair pay. By using internal pay equity, you can create a pay system that maintains employee loyalty and happiness.
How can you achieve internal pay equity?
First, consider your employees’ tasks. If two employees perform similar tasks, they should earn similar wages.
Second, don’t base employee wages solely on job titles. Two workers that have different titles, but perform similar tasks, should have similar wages.
Third, consider educational background and relevant experience. Similar tasks are the main consideration when you set employee wages, but you should also account for an employee’s education and work experience.
And fourth, document all the factors that led to your decision to achieve internal pay equity. This will maintain transparency and fairness in your business. That way, if an employee ever questions their wages, you’ll be ready to answer.
Now, there are important employment laws to consider when establishing internal equity in your business. What is internal equity in the context of these laws? Let’s take a look.
The first is the Equal Pay Act, a federal law that requires you to consider internal equity between men and women. Men and women must be equally compensated, and you can’t use a person’s sex to justify higher wages.
Many states are creating fair pay laws as well, such as California and New York. Be sure to keep up with any employment laws in your state. We’ll include helpful links and information in the description below.
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