Equal Pay for Equal Work — Regardless of Gender
“National Equal Pay Day” was held earlier this month. President Obama marked the day by issuing an executive order intended to accomplish, on a smaller scale, the goals of the proposed legislation discussed by Congress. With this action, the spotlight is cast on women’s pay and the objective of rooting out gender-based pay discrimination. Is this an area where your company might be vulnerable to future litigation? It has been nearly 51 years since President Kennedy signed the Equal Pay Act of 1963. Its aim was straightforward enough — ensuring that women are paid the same as men for “substantially equal” work. In the intervening years, the Equal Employment Opportunity Commission (EEOC) has been exploring the boundaries of its mandate. Often, illegal gender discrimination isn’t as clear-cut as a man and a woman being paid differently for the same precise job. The EEOC has successfully litigated against companies with broader employment policies, including career advancement opportunities, that were deemed discriminatory. A recent major milestone in EEOC pay equity enforcement occurred nine days after President Obama was elected — the enactment of the Lilly Ledbetter Fair Pay Act of 2009. This law overturned a U.S. Supreme Court ruling stating that the 180-day statute of limitations for filing an equal-pay lawsuit begins with the employer’s first discriminatory act. In this case, plaintiff Lilly Ledbetter didn’t know she was paid less than male colleagues performing the same work until several years after the practice had begun. The 2009 law made it clear the statute of limitations begins anew with each issuance of a paycheck ultimately deemed to be discriminatory. Congressional Actions Lilly Ledbetter’s initial problem arose because of a policy of secrecy concerning pay. While the earlier law bearing her name changed the statute of limitations for filing a pay equality lawsuit, it did not resolve the issue of keeping pay levels private. Employees have a hard time proving the existence of pay inequality when they are unable to find out what their counterparts are paid. The burden of proof in such lawsuits falls on the employee. Ledbetter’s employer at the time, Goodyear, had a policy preventing employees from discussing their pay among themselves. An anonymous tip left on her desk containing pay data revealed to Ledbetter her pay was lower than the pay of her male counterparts. A law that has been proposed in Congress, the Paycheck Fairness Act, seeks to address the issue of pay secrecy. However, on April 9, the law failed to receive the votes necessary to pass in the U.S. Senate. Note: Under current law, even if a plaintiff shows she is being paid less than men for a job that requires equal skill, effort and responsibility, and performed under similar working conditions, employers can generally win the case by showing the pay policy is based on:
- A seniority system,
- A merit system,
- Incorporates production metrics, or
- Is based on any factor other than gender.
Wide Loophole? The fourth exception has been interpreted broadly and is considered a significant “loophole” by pay equity advocates. Had it passed, the Paycheck Fairness Act would have narrowed the scope of the exception by, among other things, requiring the “other factor” to be based on the employee’s education, training or experience, or a business necessity, and to pertain specifically to the job at issue. President Obama’s recent executive order, which applies to companies doing business with the federal government, forbids retaliation against employees who discuss their compensation. The order “does not compel workers to discuss pay, nor does it require employers to publish or otherwise disseminate pay data,” according to a White House summary. However, the order encourages pay transparency “so workers have a potential way of discovering violations” of equal pay laws. In addition, the president instructed the Secretary of Labor to write regulations requiring federal contractors to furnish “summary data on compensation paid to their employees, including data by sex and race.” That data, depending on what it reveals, could arm the EEOC to “target enforcement more effectively.”
What to Do Now Here are some implications of the President’s actions, even if you are not a federal contractor:
First, it’s never safe to assume you are impervious to pay discrimination claims. As described above, discrimination can be found even where limited apples-to-apples testing reveal no discrimination.
Second, consider the extent to which your pay practices need to be confidential. While being completely transparent about individual employees’ compensation could be a disaster from an employee relations standpoint, providing general information about pay policies, including some salary or wage ranges can be beneficial. It is critical, however, to ensure the wording of your policies cannot be construed as promises. Telling employees they cannot discuss their pay, as Goodyear did in the Ledbetter case, can fuel suspicion and cynicism. In contrast, making public your compensation guidelines for different categories of jobs helps to combat cynicism. Doing so can also be motivational, by giving lower paid employees an indication of the rewards which could come from working their way into a job with greater responsibility.
Third, at this time, although the Paycheck Fairness Act did not pass Congress, legislation embodying its general principles could someday do just that. Rather than wait to be coerced to adopt a gender-neutral compensation policy, it might be wise to consider adopting these principles voluntarily. Source: BizActions / Thompson Reuters 
