June 3, 2018

Pay Equity Hits Hospitality: New Laws Threaten to Upend Hotel Compensation

Hotel Business Review
Michael Starr

New pay-equity statutes are taking effect across the country and will greatly affect the hospitality industry. Since Congress enacted the Equal Pay Act (EPA) in 1963, men and women who perform the same jobs are supposed to be paid the same. In recent years, this "old" equal-pay principle is being replaced by the concept of pay equity – a higher standard that mandates equal pay for men and women working in "substantially similar" jobs in which skills, effort and responsibility are alike.

By mid-year, pay-equity statutes will be in effect in more than 15 states, including key hospitality states such as California, Illinois and Massachusetts. Other states will be coming on board soon as well. This trend will have very significant consequences, especially for hospitality employers, because it may allow for pay discrimination claims to be made as between individuals in different job classifications that would not ordinarily be regarded as comparable to one another. For example, these new statutes may be used to force hotels to justify pay disparities across jobs that were never before regarded as similar – such as, possibly, kitchen stewards and room attendants.

Hotel executives and other hospitality leaders should start defensive and preventative actions now, including taking six key steps to reduce potential legal exposure going forward.

READ: Pay Equity Hits Hospitality: New Laws Threaten to Upend Hotel Compensation

Related Insights