Equal Pay and Compensation Discrimination
The right of employees to be free from discrimination in their compensation
is protected under several federal laws, including the following enforced by
the U.S. Equal Employment Opportunity Commission (EEOC): the
Equal Pay Act of 1963,
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of
1967, and Title I of the Americans with Disabilities Act
of 1990.
The Equal Pay Act requires that men and women be given equal pay for equal work in the same establishment. The jobs need not be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Specifically, the EPA provides:
Employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment. Each of these factors is summarized below:
- Skill - Measured by factors such as the experience, ability, education, and training required
to perform the job. The key issue is what skills are required for the job, not what skills the
individual employees may have. For example, two bookkeeping jobs could be considered
equal under the EPA even if one of the job holders has a master's degree in physics, since
that degree would not be required for the job.
- Effort - The amount of physical or mental exertion needed to perform the job. For example,
suppose that men and women work side by side on a line assembling machine parts. The
person at the end of the line must also lift the assembled product as he or she completes the
work and place it on a board. That job requires more effort than the other assembly line jobs
if the extra effort of lifting the assembled product off the line is substantial and is a regular
part of the job. As a result, it would not be a violation to pay that person more, regardless of
whether the job is held by a man or a woman.
- Responsibility - The degree of accountability required in performing the job. For example, a
salesperson who is delegated the duty of determining whether to accept customers' personal
checks has more responsibility than other salespeople. On the other hand,
a minor difference in responsibility, such as turning out the lights at the
end of the day, would not justify a pay differential.
- Working Conditions - This encompasses two factors: (1) physical surroundings like
temperature, fumes, and ventilation; and (2) hazards.
- Establishment - The prohibition against compensation discrimination under the EPA applies
only to jobs within an establishment. An establishment is a distinct physical place of
business rather than an entire business or enterprise consisting of several places of business.
However, in some circumstances, physically separate places of business should be treated as
one establishment. For example, if a central administrative unit hires employees, sets their
compensation, and assigns them to work locations, the separate work sites can be considered
part of one establishment.
Pay differentials are permitted when they are based on seniority, merit, quantity or quality of
production, or a factor other than sex. These are known as "affirmative defenses" and it is
the employer's burden to prove that they apply.
In correcting a pay differential, no employee's pay may be reduced. Instead, the pay of the
lower paid employee(s) must be increased.
Title VII, ADEA, and ADA
Title VII, the ADEA, and the ADA prohibit compensation discrimination on the basis of race,
color, religion, sex, national origin, age, or disability. Unlike the EPA, there is no requirement
under Title VII, the ADEA, or the ADA that the claimant's job be substantially equal to that
of a higher paid person outside the claimant's protected class, nor do these statutes require the
claimant to work in the same establishment as a comparator.
Compensation discrimination under Title VII, the ADEA, or the ADA can occur in a variety
of forms. For example:
- An employer pays an employee with a disability less than similarly situated employees
without disabilities and the employer's explanation (if any) does not satisfactorily
account for the differential.
- A discriminatory compensation system has been discontinued but still has lingering
discriminatory effects on present salaries. For example, if an employer has a
compensation policy or practice that pays Hispanics lower salaries than other
employees, the employer must not only adopt a new non-discriminatory compensation
policy, it also must affirmatively eradicate salary disparities that began prior to the
adoption of the new policy and make the victims whole.
- An employer sets the compensation for jobs predominately held by, for example,
women or African-Americans below that suggested by the employer's job evaluation
study, while the pay for jobs predominately held by men or whites is consistent with
the level suggested by the job evaluation study.
- An employer maintains a neutral compensation policy or practice that has an adverse
impact on employees in a protected class and cannot be justified as job-related and
consistent with business necessity. For example, if an employer provides extra
compensation to employees who are the "head of household," i.e., married with
dependents and the primary financial contributor to the household, the practice may
have an unlawful disparate impact on women.
It is also unlawful to retaliate against an individual for
opposing employment practices that discriminate based on compensation or for
filing a discrimination charge, testifying, or participating
in any way in an investigation, proceeding, or litigation under Title VII, ADEA, ADA
or the Equal Pay Act.
Statistics
In Fiscal Year 2008, EEOC received 954 charges of compensation discrimination discrimination.
EEOC resolved 828 compensation discrimination charges in FY 2008 and recovered $9.6 million
in monetary benefits for charging parties and other aggrieved individuals
(not including monetary benefits obtained through litigation).
Other Resources
Here are some links to other sources of information about compensation discrimination.
Please be aware that, consistent with the EEOC's general
disclaimer statement, the EEOC does not control or
guarantee the accuracy or completeness of this outside information, and references
to the sites below are not intended to reflect their importance or an
endorsement of any views expressed or products or services offered.
