Sixty years ago on July 2, President Lyndon B. Johnson signed into law the Civil Rights Act of 1964, a landmark piece of legislation that prohibits discrimination on the basis of race, color, religion, sex or national origin. Specifically, Title VII of the Act prohibits such discrimination in compensation.
At the time, the move expanded the vision of the Equal Pay Act, which was passed a year prior. Today, the Civil Rights Act serves as the foundation for pay equity and pay transparency legislation.
“Title VII of the Civil Rights Act of 1964 is one of the most important laws we have in our country,” said Jonathan A. Segal, partner and managing principal at Duane Morris LLP. “Many of the best compensation practices, such as ranges for positions, are a direct result of the focus on compensation created by Title VII and are increased by state and local pay equity and transparency laws.”
Laying the Groundwork
Where the Equal Pay Act only prohibits pay disparities between men and women, Title VII of the Civil Rights Act expanded those protections to include race, religion and national origin, Segal said.
Subsequent legislation would eventually also protect older workers, pregnant employees and individuals with disabilities, among others.
Title VII also expanded the field of potential comparison from the Equal Pay Act’s male counterpart performing “equal work” to “similarly situated” colleagues performing “substantially equal work.” If a comparator is not available, Title VII still empowers the employee to bring a discrimination claim if they can prove that they were paid less because of sex, race, color, religion or national origin, Segal said.
Compensation includes not only salary but also discretionary compensation, such as bonuses, equity interest and benefit options.
“From this perspective, the light of Title VII shines on every level of an organization,” Segal said. “In my experience, concerns about equality and equity often involve discretionary comp and equity interests. These employees often have the resources to fight, and employers should not assume that just because someone is making ‘good money,’ they won’t fight.”
“The light of Title VII shines on every level of an organization.”
— Jonathan A. Segal, partner, Duane Morris LLP
Expanding Pay Equity and Pay Transparency
When Title VII was first passed, the first wave of lawsuits was focused on hiring discrimination. Over time, the lawsuits shifted to address unconscious bias in promotions and, more recently, pay.
“The Civil Rights Act empowered those who influence pay systems to remedy ingrained disparities and develop and implement more robust policies and practices aimed at achieving genuine pay equity, beyond mere compliance,” said Marta Turba, vice president of content strategy at WorldatWork. “While wage disparities persist, the Act continues to be an essential tool in the ongoing effort to achieve pay equity and has played a key role in reducing wage gaps across many groups.”
“While wage disparities persist, the Act continues to be an essential tool in the ongoing effort to achieve pay equity.”
— Marta Turba, VP of content strategy, WorldatWork
Inspired by the Civil Rights Act, many state and local governments have enacted laws that push for greater transparency and fairness in compensation disclosure and proactive measures to ensure equity, Turba continued.
“These initiatives aim to extend the spirit of the Civil Rights Act, fostering a compensation environment that is not only compliant, but truly equitable and open,” she said.
States with current pay equity and pay transparency laws on the books include California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New York, Oregon and Washington.
In many of these laws, where the analysis includes a comparator, the standard is even more lenient — simply either “comparable” or “substantially similar,” Segal added.
“We’re seeing the rise of pay transparency laws, which were built on the guiding principles of Title VII, but take the legal mandate one step further,” he said.
Pay Transparency Is Just Good Business
Research shows that organizations that don’t commit to at least the basics of pay transparency, such as including salary bands on job postings, will lose out in the race for talent — a ResumeLab study found 80% of employees won’t even apply to jobs where the pay range is not disclosed.
Regular pay equity audits and the disclosure of pay ranges in job postings are key practices that promote openness, Turba said. This transparency helps employees understand their pay scales and how they compare to others in similar roles, fostering a clearer and fairer work environment.
“The Civil Rights Act leveled the playing field and bolstered the principle of equal pay for equal work, which is fundamental to compensation design and job valuation practices around the world,” Turba said. “It’s amazing to see how this one act has influenced so many important changes, ensuring fairness and equity in pay are always front and center.”
Editor’s Note: Additional Content
For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:
- Diversity, Equity, Inclusion and Belonging
- Employee Compensation
