A strategic approach to managerial compliance with equal pay policies

This study used relevant literature and data from the U.S. Employment Opportunity Commission to identify factors that can explain managerial non-compliance with equal pay policies and then assessed their effects on policy effectiveness. A model was constructed to investigate the strategic nature of managerial decisions as well as government policies, court procedures, and worker behavior. Theoretically, legal framework and certain non-management actors may increase reluctance toward compliance. In this study, an incentive constraint was used to represent managerial compliance decisions. In sum, policy success significantly depends on at least five factors: (1) compensation, (2) court effectiveness, (3) monitoring, (4) worker behavior, and (5) coordination. This study also assessed the impacts of the recent trend of pay transparency efforts in relation to the factors. It found that pay transparency cannot be the only response by legislators. Rather, it should be coupled with more robust policy responses and better calibration, acknowledging managers' strategic behaviors and tendency to evade inadequately calibrated regulations.