APPLICABILITY
Indicator metrics apply to all of the following groups (see definitions in General Clarifications):
- Employees
- Contractors
- Interns
Where applicable, organizations should prorate salaries for part-time employees, contractors, and interns based on the minimum hours that meet the organization’s definition of a full-time employee.
COMPARABLE DATA FOR PAY CLASSES
Organizations must have at least one pay class with comparable data (i.e., more than one employee) to qualify for Level 2 or above. Since it is not possible to demonstrate pay variance in instances of single-member pay classes, organizations solely with pay classes consisting of one employee each are limited to Level 1. The organization’s label will indicate that the higher performance levels are not applicable.
COMPENSATION VARIANCE
By setting maximum compensation variance thresholds, Living Future’s intent is not to encourage variances with pay classes. While completely eliminating variance (i.e., a 0% variance) is the goal, Living Future recognizes that there may be other structural factors leading to minor variances in salaries within a pay class that are not necessarily related to equity (e.g., cost of living differences between office locations).
The intent of this Indicator is to eliminate race- and ethnicity-based wage discrimination; therefore, the variance evaluated is absolute (i.e., regardless of being a negative or positive value). The metric is not intended to result in, for example, BIPOC employees being paid substantially more than white employees, but rather to achieve parity among all races and ethnicities.
For specifics on calculating the variance, see Calculations.
ELIGIBLE EXCLUSIONS
The following salaries can be excluded from calculations:
- An organization’s top-level executive (e.g., Chief Executive Officer, Executive Director, etc.), as disparities between the highest- and lowest-paid employees are addressed in the Pay Scale Equity Indicator;
- Pay classes in which all employees have the same racial or ethnic identities; and
- Pay classes with one employee.
MINORITY
Living Future recognizes that diversity metrics often categorize systemically divested, disadvantaged, underrepresented, and underrecognized populations into a single group of “minorities.” In practice, unique identities should not be treated as one and the same. Who is included under that label changes based on location, circumstances, and workforce self-identification. The use of this generalized term within Just is a means to provide flexibility for each organization to intentionally investigate their community’s composition and define their approach accordingly.
For the purposes of Just, organizations should define minority designations based on the official census classifications used in the respective region (e.g., race, ethnicity, language, religion, etc.). Additional classifications may be used for a particular region on a case-by-case basis if approved by Living Future in advance.
ORGANIZATIONS WITH MULTIPLE LOCATIONS
Organizations with offices in multiple locations may choose to calculate racial and ethnic pay variance either by all the locations combined or by each individual office location. This provides a measure of flexibility to account for salary scale differences (e.g., due to variances in cost of living) that might exist between locations.
If an organization chooses to calculate by office location, the performance level is determined by the office location that has the highest absolute variance. See Calculations for examples of the outcomes stemming from these different calculation paths. Organizations must use the same approach for both Racial and Ethnic Pay Equity and Gender Pay Equity.
PAY CLASS
For the purposes of Just, pay class may be determined by title (e.g., manager, director, executive) or other work classifications relevant to the organization.
SCOPE OF COMPENSATION
While organizations are encouraged to factor in all forms of compensation (such as retirement contributions, health care benefits, transportation stipends, and stock options), for the purpose of Just, organizations need only calculate variances using base salary and bonuses combined. For the purposes of Just, this is referred to as the aggregate wage.
