Due to new laws, regulations, and public pressure to eliminate racial and gender pay disparities, there is a notable push for pay transparency and equity in the United States.Pay equality co-leads for WTW North America, Lindsay Wiggins (pictured above right) and Mariann Madden (shown above left), explore how this movement is progressing in the nation and how businesses might adapt for a more fair future.

Organizations are reaching a critical point as a result of this pay equality shift, and they must take proactive steps to prepare for future adjustments. In order to effectively traverse this terrain, businesses should establish clear goals, create frameworks that support them, and communicate openly with their employees.

The implementation of salary history prohibitions is a major step in addressing wage disparities. These prohibitions, which went into effect in Massachusetts in 2018, forbid employers from determining an applicant’s starting compensation based on their previous salary—a practice that has helped to maintain wage disparities. Currently, 29 states have passed legislation prohibiting the use of prior salary as justification for pay differences.

“A rule prohibiting federal agencies from utilizing salary history to calculate new recruit compensation was finalized on January 29, 2024 by the US Office of Personnel Management (OPM), the federal government’s human resources office and personnel policy manager,” according to Madden and Wiggins.

Although it’s not a federal mandate or even a state regulation, many US firms realized the possibility of bias and decided to forbid pay history in all hiring that happens in the US. Rather than taking into account the applicant’s past income history when making employment offers, they determine the starting compensation based on an evaluation of the applicant’s qualifications and experience, they claimed.