Enforced by the Equal Employment Opportunity Commission (EEOC), the Equal Pay Act (EPA) requires employers to pay men and women equal pay for equal work. Yet the issue of equal pay remains a persistent issue for women, who make up nearly half of the U.S. labor force and hold more positions traditionally occupied by men than ever before.
It wasn’t until the passage of the EPA in 1963 that it was even illegal to pay women lower rates for the same job held by men. Until then, newspapers would frequently publish separate job listings for men and women, with separate pay scales.
The income inequality was obvious
In the early ‘60s, women with full-time jobs earned an average of 59 cents for every dollar their male colleagues pocketed for the same position.
Fast forward to the 21st century
It’s estimated that since the passage of the EPA, the closing of the wage gap between men and women has occurred at a rate of less than half a penny a year. Today, women earn an average of 77 cents for every dollar earned by men – a wage gap that widens for women of color and women with disabilities.
While this is a marked improvement over the past five decades, the fact remains that NO gender earnings gap should exist, since the federal Equal Pay Act expressly prohibits it. What does the law cover – and what is your responsibility as an employer to protect women from making less than men?
Basically, the law states that if a job requires substantially equal skill, effort and responsibility and is performed under similar working conditions within the same establishment, it should pay the same, regardless of the employee’s gender. It’s important to distinguish that job content -- not job title -- determines whether positions are considered substantially equal.
Here’s a closer look at each factor and how it comes into play:
Skill takes into account the experience, ability, education and training required to perform a job (as opposed to skills an employee may possess but that aren’t necessary for the position).
Practical example: Two bookkeeping jobs would be considered equal under the EPA even if the male employee has a master’s degree in physics, because that degree is not required for the job.
Effort refers to the physical or mental exertion needed to perform a job.
Practical example: The person at the end of an auto parts assembly line must place the finished product on a board as he or she completes the work – a job that that requires more effort than the other assembly line jobs. Since this added task is a substantial and regular part of the job, it would be OK to pay that person more, whether that job is held by a man or a woman.
Responsibility is the level of accountability required to perform a job.
Practical example: A salesperson who must determine whether to accept customers’ personal checks has more responsibility than other salespeople who do not verify checks. On the other hand, a minor difference in responsibility, such as turning off the lights at the end of the day, would not justify a variation in pay.
This encompasses two factors: 1) physical surroundings, such as temperature, fumes and ventilation, and 2) safety and/or health hazards, such as working in a confined space or with explosives.
Practical example: A male employee doing work in a confined space at a construction site may be paid more than a female coworker who isn’t required to enter that space.
An establishment is a distinct physical place of business rather than an entire business or enterprise that might consist of several places of business. In some circumstances, however, physically separate places of business may be treated as one establishment.
Practical example: A central administrative unit hires employees, sets their compensation and assigns them to work locations. As such, the separate work sites can be considered part of one establishment.
Although the law regarding equal pay is quite specific, employers have one very important right under the EPA. Pay differentials are allowed when they are based on seniority, merit, or quantity or quality of production. These are known as “affirmative defenses”, and it is your burden to prove they apply if you’re ever involved in a pay-related dispute.
Beyond this, here are some steps to take to stay in compliance with the EPA and ensure equal pay for equal work:
- Appoint an HR professional or other qualified individual to monitor your pay practices, including adherence to federal, state and local anti-discrimination laws
- Formally evaluate your compensation system each year to identify potential pay discrepancies based on gender and race/ethnicity
- Evaluate all forms of compensation, since the EPA covers more than just salary. This includes overtime pay, bonuses, stock options, profit-sharing and bonus plans, life insurance, vacation and holiday pay, gasoline allowances, reimbursement for travel expenses and benefits.
- In cases where starting salaries and bonuses are negotiated, be certain the agreement doesn’t adversely impact women
- Since performance evaluations also can affect pay, double check that your review process doesn’t unfairly disadvantage women
- Correct problems as soon as they are discovered, keeping in mind that you may not reduce an employee’s pay to fix a pay differential. Rather, the wages of the underpaid employee must be increased.