By HR Brew Staff
3 min read
Definition:
Pay equity is the principle that employees should receive equal pay for work of equal value, regardless of protected characteristics, including gender and race.
Why is it important?
Pay equity seeks to address systemic issues that have created inequities in the workplace and beyond. It is also critical to recruitment and retention efforts, and compliance with state and federal laws.
How is it different from pay equality?
Pay equality is the principle that employees should receive equal pay for equal work. Pay equity is thought to be a more holistic approach, extending, for example, equitable compensation to those who may not perform the same or similar work, but create the same or similar value for their business, thus ensuring fairness across the organization.
What legislation exists to ensure it?
Federal, state, and local legislation has been enacted with aims of ensuring pay equity.
In 1963, for example, President John F. Kennedy signed into law the Equal Pay Act (EPA). An amendment to the Fair Labor Standards Act (FLSA), it mandated that employers with two or more employees compensate men and women with equal pay and benefits for equal work.
Title VII of the Civil Rights Act of 1964 was then signed into law by President Lyndon B. Johnson to prohibit employment discrimination on the basis of race, color, religion, sex, and national origin. Unlike the EPA, it covers employers with 15 or more employees, and expands the definition of equal pay for equal work by extending it to those performing work of an equal value.
Nearly half a century later, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009, amending Title VII to remove the statute of limitations for filing unfair pay practice complaints.
These laws are enforced by the Equal Employment Opportunity Commission (EEOC), which requires employers with 100 or more employees to file annual reports, called an EEO-1, detailing employees’ pay and hours worked for the purposes of identifying pay disparities.
In addition to this federal legislation, most states have equal pay acts. More than a dozen states and localities have pay transparency laws requiring employers that do business in them to include salary ranges in job postings.
Can you put pay equity into context?
“Software company SAP touted a pay equity analysis it performed in mid-2022 that showed 99% of its US employees were paid fairly—that is, the company found few instances where statistically significant differences existed across gender and race for ‘employees performing comparable work,’” HR Brew reported in 2025.
