How is "pay equity" defined?

Pay equity is defined as a principle providing equal pay for work of equal value. This concept is rooted in the idea that employees should receive the same compensation when they perform jobs that are comparable in terms of responsibilities, skills, and effort, regardless of gender, race, or other potentially discriminatory factors. The principle aims to eliminate wage disparities and promotes fairness in the workplace, ensuring that all workers are compensated equitably based on the value of their contributions rather than irrelevant characteristics.

In contrast, some of the other options focus on different aspects of compensation. For instance, the focus on higher pay for top performers emphasizes performance-based compensation rather than equity in pay across roles. A method for calculating employee bonuses pertains to incentive pay structures rather than base pay equity. Moreover, a strategy to compensate for the cost of living addresses geographical variations in expenses, which can affect overall compensation but does not directly relate to the principle of equal pay for similar work.