Overview: Under the Equal Pay Act (EPA) as well as state and local fair pay acts, men and women are required to receive equal pay for equal work. Generally, the jobs do not have to be identical, but need to be substantially equal in terms of skill, effort and job responsibility, and performed under similar working conditions. The term pay pertains to not just salary, but also overtime, bonuses, vacation and holiday pay, stock options, life insurance and all other benefits and compensation of any kind paid to employees. Employers can defend a claim of wage discrimination under a seniority system, merit system, a system measuring earnings by quality or quantity of production or if wages were set based on a factor other than sex. Employers also should know that Title VII further prohibits wage discrimination.
Trends: In 2009, the Lilly Ledbetter Fair Pay Act was signed into law. It provides that the time an individual has to file a wage discrimination lawsuit begins each time the individual receives a paycheck, therefore allowing aggrieved individuals more time in which to file a lawsuit. This law was passed was in response to the US Supreme Court ruling in Lilly Ledbetter v. Goodyear Tire, 550 U.S. 618 (2007) which held that the time an individual has to file an equal pay lawsuit begins on the date the employer made the initial discriminatory compensation decision, not the date of the most recent paycheck. Employers also need to understand that the Lilly Ledbetter Fair Pay Act does not just apply to wage discrimination cases based on sex, but also wage discrimination based on race, age, color, national origin, and religion under Title VII as well as age under the Age Discrimination in Employment Act and disability under the Americans with Disabilities Act.
Employers also should be aware that the Paycheck Fairness Act has been introduced in the US Congress, but has failed to advance. The proposed law would provide individuals with increased damages under the EPA and include potentially unlimited back pay and punitive damage awards. It would put the burden on the employer to prove that a disparity in wages was based on a bona fide factor other than sex such as education, training, or experience, and that the other factor is job-related and consistent with business necessity. It would also make it easier to bring a class action lawsuit under the EPA and prohibit retaliation against employees for filing a claim of wage discrimination.
In 2014, President Obama signed two executive measures enforcing equal pay laws and combating wage discrimination for federal contractors. Specifically, an Executive Order prohibits federal contractors from firing or discriminating against employees or job applicants who have inquired about, discussed or disclosed their own or a coworker's compensation information. In a Presidential Memorandum - Advancing Pay Equality Through Compensation Data Collection - the Department of Labor (DOL) is directed to issue regulations by August 6, 2014 requiring federal contractors to submit information about the compensation paid to employees, including data by race and sex which will be used to encourage federal contractors to comply with equal pay laws and identify and analyze industry trends while focusing on federal contractors with pay discrepancies.
Additionally, the EEOC has identified enforcing equal pay laws as a priority in its Strategic Enforcement Plan. In 2016, the EEOC announced that it is in the process of revising the EEO-1 Form to collect pay data from employers with more than 100 employees and government contractors, making it easier for the government to identify and remedy wage discrimination.
The states have also made efforts to address wage discrimination, California and New York dramatically expanded the reach of their equal pay law and other states may pass similar laws.
Author: Beth P. Zoller, JD, Legal Editor
The 9th Circuit Court of Appeals has ruled that an employer may use an individual's salary history to determine the individual's pay in certain circumstances, even if it results in a female employee earning less than male employees for doing the same work.
The New York City Council has approved a bill that would prohibit employers from inquiring about a prospective employee's salary history during all stages of the employment process. Mayor Bill DeBlasio is expected to sign the legislation.
The workplace is evolving at a rapid-fire pace amidst technological, societal and cultural changes and employers need to be ready to meet these changes. So what are the top compliance issues to watch out for in 2017?
Updated to reflect amendments to state's Fair Pay Act, effective January 1, 2017.
A new Philadelphia law would ban employers from asking job applicants about their salary history. Massachusetts and California have passed similar laws, but Philadelphia will become the first city in the nation with a so-called wage history law if Mayor Jim Kenney signs the measure as expected.
XpertHR offers many tools and resources to help an employer minimize the risk of an equal pay claim.
HR Guidance on developing policies and practices to eliminate pay discrimination.