Do you know what constitutes pay discrimination in the eyes of the courts and regulators?

As equal pay for men and women has become a hot-button issue in the business world due to the #MeToo movement and recent surveys documenting widespread pay disparity, you need to know the basics. There have been laws and regulations governing gender-based pay equality for decades, but recent Equal Employment Opportunity Commission (EEOC) gender-based discrimination allegations suggest that many remain unclear about what pay discrimination constitutes.

While it can be a grey area, knowing the essential concepts will help you assess your risk of an EEOC equal pay claim and take preventive measures to protect your company and employees.

Which Laws Apply?

The primary laws governing pay discrimination are:

·   The Equal Pay Act of 1963 (EPA), and

·   The Civil Rights Act of 1964.

The Age Discrimination in Employment Act of 1967 (ADEA) and the Americans with Disabilities Act (ADA) are also involved in indirect pay discrimination cases with a gender element.

As an example, an employer might set compensation for jobs mostly held by women (or other “protected class” employees under the Civil Rights Act of 1964) below that suggested in an industry job evaluation study. Or they might maintain a neutral compensation policy that has an adverse impact on women that “cannot be justified as job-related and consistent with business necessity.”

What Types of Pay Are Covered?

Under the EPA, “pay” refers to all forms of compensation, not just wages or salaries. Other categories can include:

·   Bonuses,

·   Employee benefits,

·   Vacation and paid holiday allowances, and

·   Reimbursement rates for work-related travel.

Potential discrimination in pay practices is reviewed on a location-by-location basis. So if you have an office in California and one in Kansas, the same compensation scales are not expected for both. Relative pay by location is the question. That said, workers at different sites “sometimes may be compared if the same managers oversee the operations of both locations and workers frequently transfer between the two locations,” according to the EEOC.

What Qualifies as “Substantially” Equal?

The basic equal pay for equal work standard does not define “equal work” as a man and a woman doing exactly the same job or having the same title. Instead, the jobs must be “substantially” equal.

Beyond being at the same location or establishment, the following four elements are considered:

1. Skill. This is assessed by factors required for the job including experience, education and training. It doesn’t necessarily cover all the individual’s skills. For example, if there is a basic accounting position at your company, it might be discriminatory to pay a man with a Ph.D. in economics more than a woman with an undergraduate degree in accounting. Why? The higher level of education he has isn’t required to perform the responsibilities of a basic accounting position.

2. Effort. This applies to both mental and physical exertion. The EEOC illustrates this by contrasting two workers on an assembly line. Worker A simply attaches one part of a product to another. Worker B attaches the parts, but also lifts the heavy finished product and places it somewhere else. The additional physical exertion could justify paying B more than A.

3. Working conditions. Two factors are at play here: physical conditions and degree of hazard. Physical conditions would include temperature, fumes, and ventilation. Presumably, this criterion would justify paying a man who works in a hot, smelly and dangerous environment more than a woman in a “substantially similar” job in a safe, clean environment. It’s hard to imagine how similar jobs could exist with such divergent working conditions though.

4. Responsibility. Higher base pay could be more justified for, say, a sales rep who has authority to negotiate deals and payment terms versus another rep who must operate with fixed constraints. Minor differences in responsibility — like being in charge of turning off the office lights at the end of the day — would not be a factor in this job analysis, according to the EEOC.

What Constitutes Retaliation?

Another way that an employer can get into trouble is by taking any action that could be viewed as retaliatory against an employee making a discrimination allegation.

For example, last year, a janitorial services company settled a suit brought by the EEOC for $36,000. After a female employee complained about being paid less than a male counterpart for similar work and asked for a raise, she was assigned more work. She was also verbally harassed and eventually terminated. The original discrimination charge might have been dismissed, if not for the retaliatory treatment she received after she alleged pay discrimination.

Making Amends

Some employers are aware of pay disparities along gender lines. But if they fail to take remedial action, the EEOC will weigh in. That was a point that the EEOC’s acting chair stressed in a recent case involving a major university.

Female professors at the university’s law school were paid, on average, nearly $20,000 less than male professors performing “substantially equal work under similar working conditions,” according to the EEOC.

“Despite recognizing the significant pay disparity … the university failed to take corrective action by adjusting salaries of female professors,” the EEOC stated in a summary of the case. “I hope cases like these get the attention of all employers and lead them to not only review their pay practices, but take action to address discrimination when they find it,” said Acting Chair Victoria Lipnic.

For More Information

An ounce of prevention is worth a pound of cure when it comes to gender pay discrimination. If you have doubts about whether your pay practices are up to snuff, consult with a qualified attorney or HR advisor.