An anonymous current L'Oreal employee
- Many companies began their journey toward pay equity over the past 18 months.
- Execs at L'Oréal USA have been working on pay equity since 2011.
- On Thursday, L'Oréal USA announced its pay equity measurements were certified by a third party.
- See more stories on Insider's business page.
The racial reckoning of 2020 sparked many executives to begin collecting data to ensure their workers are being paid equally, regardless of race, gender, ability, or sexual orientation. Some leaders even started hiring third-party firms to assess this data.
But L'Oréal USA's chief diversity and inclusion officer, Angela Guy, has been doing this type of work for over a decade. And the cosmetics giant is now seeing results. On Aug. 26, L'Oréal became the first company to achieve certification of pay equity across gender, race, ethnicity, age, ability, and LGBTQ identity through the global third-party auditing system, EDGEplus Certification.
"That rigor and that level of validation with our employees and externally through a third party gives us the confidence that our commitment is real," Guy told Insider on Thursday.
L'Oréal USA
Launched at the 2011 World Economic Forum, the gender-focused EDGE assessment and the EDGEplus assessment, which incorporates race and other factors, involves third-party auditors investigating a company's pay data and promotion practices to ensure they are equitable. It was created by Nicole Schwab, an entrepreneur and advisor to non-profit organizations, and Aniela Unguresan, a former business consultant.
"If you're serious about a commitment to equity, there is no fear of a third-party assessment because you have to have a starting place," Guy said.
The EDGE certification ensures that, on an organizational level, employees are receiving equal pay for equivalent work. According to Guy, there are about 60 other companies currently working on achieving the same certification.
Across industries, the gender wage gap is a glaring problem. Overall, women who were full-time, year-round employees made 82.3 cents for every dollar men made in 2019, based on median earning data from the Census Current Population Survey. That means women are paid 17.7% less than men, earning $10,157 less than men.
The gap is even worse for women of color, who are paid the least compared to white men. Black women earn 61.1% of what white men do. Hispanic women earn 53%.
The process of achieving pay equity certification was a "significant" investment for L'Oréal, Guy said, though she would not disclose how much the certification cost or the funds that went into achieving pay equity.
"It's greater than the cost we paid EDGE. There's an investment in time. There's an investment in resources. There's an investment in processes and tools," she said. "It all adds up to the commitment a company is willing to make."
Guy said that conducting the third-party pay equity audit shows current and future employees, customers, and investors that they are committed to diversity and inclusion. She added it will likely result in higher employee engagement and loyalty. In a tight labor market, that will likely serve the company well. Many employers are currently struggling to retain top talent.