Employers with a global footprint face unique challenges when it comes to balancing business objectives with complex – and sometimes conflicting – international and local laws. One area where this is becoming increasingly noticeable is pay equity, with most countries across the globe having some form of equal pay legislation in place.
Even within the same country, however, pay equity requirements can vary significantly. For example, federal and state laws within the United States differ in both form and substance. Some laws (like the federal Equal Pay Act) prohibit gender-based pay discrepancies that are not legally justifiable, while others (like those in California and Illinois) mandate the preparation and disclosure of reports outlining pay data information based on a number of demographics. Still other laws (like those in Washington and New York) require pay transparency, including disclosure of salary and benefit information in job advertisements. In addition, numerous states and localities have proposed pay equity and pay transparency legislation necessitating ongoing review of applicable legal requirements.
The U.S. is not alone in its regulation of pay equity issues. Australia, Brazil, Canada, many European countries, and more have long had such legislation on the books. With the European Union's adoption of Directive (EU) 2023/970 (the "Directive") in 2023, however, the clock is now running on coordinated cross-border regulation. The scope of the Directive is broad and includes new employer obligations to disclose salaries at recruitment (and prohibition against asking candidates about their previous salaries), comply with employee requests for pay data information, ensure that employees are not prevented from discussing their pay, conduct and publish gender pay gap statistical analysis reports, and face mandatory audits/penalties to the extent these reports identify sufficiently significant discrepancies. EU Member States have until June 7, 2026 to implement the Directive into their own laws, which may provide more robust obligations and/or penalties than those outlined in the Directive.
While the Directive only applies to employees within the EU Member States, such systematic regulation is likely to raise discussions (and potentially expectations) of pay transparency among workers globally. For example, in the UK, the Directive already appears to be sparking a cultural shift. A recent survey has reported that 70% of responding employers plan to share information around salary range as part of the recruitment process, whether or not a similar legal requirement is introduced in the jurisdiction. With the continued increase in remote work, it is more important than ever that multi-national organizations (and others aspiring to expand their business operations) have the resources in place to identify applicable legal requirements, address employee concerns and questions, and implement a nuanced pay transparency and pay equity compliance strategy, which should include privileged evaluations and remediation to the greatest extent possible.
As noted above, pay equity is just one example of the complex regulatory issues impacting global organizations.
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