If we pay a female less than a male who is doing the same job at the same location, how can we justify the basis of the salary and prove it does not violate the Equal Pay Act?
Quick Answer
Pay differentials between men and women who perform the same job at the same location are permissible under the Equal Pay Act if they are based on a factor other than sex, such as a seniority system, merit system or incentive system.
Legal Perspective
Shawe Rosenthal
Baltimore, Maryland
The EPA prohibits pay disparities if a male and a female perform “equal work on jobs the performance of which requires equal skill, effort, and responsibility and which are performed under similar working conditions,” says employment law attorney Fiona Ong of the firm Shawe Rosenthal LLP. If there is a difference in pay, the EPA sets forth certain factors that an employer may rely upon to explain a legitimate wage disparity:
- A seniority system;
- A merit system;
- A system based on quantity or quality of production; and
- A differential based on any other factor than sex. Common legitimate rationales under this catchall factor include the type of or years of experience, education, and certifications. Pay history is controversial – some courts have accepted it as a legitimate factor, but others as well as the Equal Employment Opportunity Commission have rejected it.
The employer must prove that the cited factor is actually the basis for the disparity, and not that it merely might be the basis.
Relevant Case Law
Lawrence v. CNF Transportation, Inc.
Drum v. Leeson Electric Corp.
King v. Acosta Sales and Marketing, Inc.
HR Insight
The HR Solution
Weatherford, Texas
Determine the reason the woman is being paid less, and make sure that the reason is job-related and reasonable, advises Ruth Bassham, HR Consultant at The HR Solution. For example, consider the following questions:
- Does the woman have less experience or knowledge than her male co-worker? Is she still in the learning curve?
- Are her specific job requirements less demanding, such as output volume, specific customer particulars, etc.?
- Has she been with the company for a shorter period of time? Is her performance not on par with the male employee’s work?
L&R Human Resource Consulting LLC
Bossier City, Louisiana
Justifying salary when comparing males and females can be a bit tricky, HR Consultant Mary Webber at L&R Human Resource Consulting LLC acknowledges. When reviewing all qualifying factors, be sure gender is not the only factor considered. Other factors to consider would be:
- The date of hire
- The specifications of the job
- Considerations of an advanced degree or technical skill, and
- Any possible promotions or increases.
The EEOC states the jobs do not have to be identical, but substantially equal. Job content (not job titles) determines whether jobs are substantially equal. Remember, if there is an inequality in wages between men and women, employers may not reduce the wages of either sex to equalize their pay.
Supportive HR
Passaic, New Jersey
If the female has less seniority, or in fact has fewer responsibilities, than her male counterpart, the company may have a valid rationale for the pay discrepancy, says Barry Ackerman of Supportive HR. Differing levels of seniority and/or responsibility may justify a pay disparity. And an honest assessment is crucial. Areas to look at include skill and responsibility.
For example, if the male employee has a particular skill set that is important for the role, and the female does not have that skill set, that may be a valid explanation of the pay disparity. Similarly, if the male has increased responsibility that the female does not have, that also may be a valid explanation. And note that when correcting the pay differential, the lower wage is to be increased to meet the higher wage, not vice versa.
The Cost of Noncompliance
DOL unequal pay case: Tech company shells out $2.3M to female engineers
Who was involved: Esri, a digital mapping and analytics company, and 176 female employees who worked as software development engineers and quality assurance engineers at the company’s headquarters in Redlands, California.
What happened: As part of a federal compliance evaluation, the DOL’s Office of Federal Contract Compliance Programs alleged the company paid the women less than their male counterparts in 2017.
The preliminary findings determined the company “systemically discriminated” against the women. As an FYI, Executive Order 11246 prohibits pay discrimination by federal contractors. The company accepted an Early Resolution Agreement, which allows contractors to willingly enter directly into a “conciliation agreement” to expedite the settlement process.
Result: The company agreed to pay $2.3 million in back wages and interest to the affected employees. In addition to the financial payout, Esri also agreed to:
- Review and revise its overall compensation system.
- Provide additional training to its managers to ensure future compliance.
- Conduct annual reviews of its compensation policies.
Info: DOL, Esri agree to resolve alleged pay discrimination at California headquarters; Company to pay $2.3 million to 176 female workers, 8/3/22.
University pays $450K to settle pay discrimination claims
Who was involved: The University of Oregon and a now-retired female psychology professor.
What happened: The professor filed a federal lawsuit alleging pay discrimination based on her gender. She alleged that she was paid between $14,000 and $42,000 less than similarly situated male colleagues.
Result: The university agreed to pay $450,000 to settle the lawsuit, with the payout broken down as follows:
- $15,000 for lost wages.
- $335,000 for attorneys’ fees.
- $100,000 for a donation to a nonprofit founded by the professor.
Info: University reaches settlement with psychology professor, 7/16/21.
DOL: Google will shell out $3.8M to 5K workers for pay disparity
Who was involved: Google LLC and more than 5,500 employees and job applicants across the U.S.
What happened: The DOL’s Office of Federal Contract Compliance Programs found pay disparities during a routine compliance evaluation. The disparities were with female employees in software engineering positions at Google’s facilities in Mountain View, CA, Seattle and Kirkland, WA. In addition, hiring rate differences were identified that disadvantaged female and Asian applicants for software engineering positions at its San Francisco, Sunnyvale, CA, and Kirkland, WA locations.
Result: Google agreed to pay $1,353,052 in back pay and interest to 2,565 female employees in engineering positions subject to pay discrimination, and $1,232,000 in back pay and interest to 1,757 female and 1,219 Asian applicants for software engineering positions not hired. The Internet giant also allocated a cash reserve of at least $1,250,000 in pay-equity adjustments for the next five years for U.S. employees in engineering positions. The company also agreed to:
- Review its policies, procedures and practices related to hiring and compensation.
- Conduct regular reviews of those procedures.
- Take corrective action to “ensure non-discrimination.”
Info: Google LLC, DOL settlement resolves alleged pay, hiring discrimination, 2/1/21.
Key Takeaways
- Workers of different sexes performing the same job may be paid differently without violating the Equal Pay Act if the pay difference is based on a factor other than sex, such as seniority, merit or an incentive system.
- The Equal Pay Act applies when jobs involve similar tasks, levels of skill, levels of exertion, working conditions and levels of responsibility.
- For the Equal Pay Act to apply, the jobs do not need to be identical to one another.
- Although the jobs generally must be performed in the same physical place, workers at different sites may be compared if the same managers oversee both sites and workers move between both locations.
- To correct an improperly sex-based pay differential, the pay of the lower-paid employee must be raised; the pay of the higher-paid employee may not be reduced.
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