How to Make Pay Equity Reviews Count

Author: Zev J. Eigen, Littler

An employer's compensation practices are subject to significant scrutiny, as concerns about lingering wage gaps have intensified. The federal Equal Pay Act has long prohibited paying employees lower wages as compared to employees of the opposite sex for performing equal (or substantially equal) work that requires equal (or substantially equal) skill, effort and responsibility. All but two states (Mississippi and Alabama) have passed or are planning to enact similar or more sweeping laws.

Some states' equal pay laws, like California and Oregon, include protections for categories other than gender, such as race. Other states' antidiscrimination laws, such as New York, explicitly prohibit compensation discrimination based on a broad range of protected characteristics. In addition, states and localities (including Delaware and New York City) have implemented salary history laws that are intended to close gender wage gaps. Such laws make it illegal for employers to ask applicants about their current or prior wage rates.

As this trend continues, an employer may want to review how it pays its employees. Evaluating pay structures can help an employer to recognize, correct and prevent compensation disparities. It is critical that employers consider certain issues when determining whether and how to review their employees' compensation under applicable equal pay and salary history laws.