Last week one of C2’s small government contracting clients was awarded additional work from its government client. To help support the new contract, our client hired an additional recruiter, a female, to assist their current male recruiter. Despite both recruiters having similar qualifications and backgrounds, the incoming female recruiter received a lower compensation package, as compared to the incumbent male recruiter. Our client’s CEO noticed the discrepancy and called C2 because she was concerned about violating the federal Equal Pay Act (“EPA”).
A. A Little History About the Equal Pay Act
The origin of the Equal Pay Act of 1963 goes all the way back to a letter sent to the editor of the New York Times in February 1869. This letter questioned why female government employees were not paid the same as their male counterparts. The author of the letter wrote, “Very few persons deny the justice of the principle that equal work should command equal pay without regard to the sex of the laborer.” Later that same year, a resolution to ensure equal pay for government employees passed the U.S. House of Representatives, even though it was ultimately watered down to pass the Senate in 1870.
During the first World War, in 1918, the United States Employment Service published jobs “suitable for women,” to encourage the men to sign up for the military and support the war effort. With the men away fighting, women were doing work that men would have ordinarily be doing. As a result, the National War Labor Board decided that women should be paid the same for these traditional male jobs.
The second World War followed suit, many women worked in the aircraft industry, and the unions championed equal pay. But as World War II came to an end and the troops were coming home from Europe and Asia, the outcry for equal pay started to lose steam. To turn the tide, then Secretary of Labor Lewis Schwellenbach attempted to get an equal pay amendment passed that would apply to the private sector. He argued, “there is no sex difference in the food she buys of the rent she pays, there should be none in her paycheck”. But with the return of the servicemen, more and more women were staying home, causing Schwellenbach’s push to be ultimately unsuccessful.
In 1963, it was President Kennedy who finally signed the EPA into effect. Calling it a “significant step forward” and noted that, “it affirms our determination that when women enter the labor force, they will find equality in their pay.”
B. Pay Equity and the Equal Pay Act
Advocates of civil rights frequently cite the gender wage gap as compelling proof of pay discrimination against female employees. In this context, “pay equity” refers to the payment of equal pay for equal work as between men and women.
The EPA was the first piece of modern civil rights legislation to address discriminatory pay discrepancies, but it has a very narrow focus. The EPA only prohibits pay discrimination on the basis of gender, not on the basis of race, color, religion, national origin, age or disability.
Despite its narrow focus, the EPA allows claimants to prevail on a pay discrimination claim if they can demonstrate that their employer paid male employees more than similarly situated female employees – without the need to prove the employer acted with discriminatory intent. In response, companies can justify the pay difference by showing they are based on one of the following:
a) a seniority system;
b) a merit system;
c) a pay system based on quantity or quality of output; or
d) a disparity based on any other factor other than sex.
Claims under the Equal Pay Act are relatively rare. This is likely due, at least in part, to the fact that Title VII of the Civil Rights Act, which was passed a year after the EPA was enacted, allows for prevailing plaintiffs to collect both compensatory and punitive damages – something the EPA does not provide (allowing only lost wages and up to three times lost wages as liquidated damages).
C. What About the Lilly Ledbetter Fair Pay Act?
More recent legislative attempts have also been made to remedy pay disparity between the sexes. In 2009, then President Obama signed into law the Lilly Ledbetter Fair Pay Act (“Ledbetter Act”). This new law significantly eased a plaintiff’s ability to allege and prove historic pay discrimination by declaring that each paycheck that delivers discriminatory compensation is a wrong actionable under the federal EEO statutes, regardless of when the discrimination began. Under this so-called “paycheck rule,” the statute of limitations for filing a wage claim resets each time the employee receives a paycheck, benefits or other compensation. An employee can recover back pay and other relief for up to two years preceding the filing of a charge where the unlawful employment practices that occurred during the charge filing period are similar or related to practices that occurred previously.
D. The EEOC’s Take on the Equal Pay Act
The Equal Employment Opportunity Commission (“EEOC”) is the federal agency charged with enforcing the EPA, and has created a set of common questions and answers about the EPA to assist both employers and employees in understanding the law, some of which include the following:
1. Do women and men have to perform identical jobs for the EPA to apply?
No. The EPA does not require that the jobs be identical. The following requirements apply:
- a significant portion of the job tasks are the same for the positions being compared;
- the two jobs involve similar levels of skill, which means similar levels of experience, ability, education, and training;
- the two jobs involve similar levels of mental and physical exertion;
- the two jobs involve similar levels of responsibility or accountability; and
- the two jobs are performed under similar working conditions.
2. Do the two individuals have to be working in the same place?
Generally, yes. However, workers at different worksites sometimes may be compared if the same managers oversee the operations of both locations and workers frequently transfer between the two locations.
3. If I’m being paid less than someone of the opposite sex who is doing the same job as me at the same location, does that mean that my employer is violating the EPA?
Not necessarily. Under limited circumstances, an employer is permitted to pay someone of the opposite sex more, even though he or she is performing the same job. To justify the higher pay, the employer would have to show that the higher pay is based on a reasonable factor other than sex.
4. Do other laws also prohibit pay discrimination?
Yes, all of the laws enforced by the EEOC prohibit pay discrimination. Pay discrimination based on sex is also prohibited by Title VII of the Civil Rights Act of 1964. Title VII prohibits discrimination in compensation and other terms and conditions of employment, so it is broader than the EPA. Title VII also prohibits discrimination in compensation or other aspects of employment based on race, color, religion, or national origin. The Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Genetic Information Nondiscrimination Act prohibit discrimination in compensation or other aspects of employment based on age (40 or over), disability, or genetic information.
5. Where can I find more information about pay discrimination?
Several documents on EEOC’s website provide background information on the EPA and other EEO laws prohibiting pay discrimination:
- EEOC Compliance Manual Section on Compensation Discrimination: http://www.eeoc.gov/policy/docs/compensation.html
- Questions and Answers: Compliance Manual Section on Compensation Discrimination: http://www.eeoc.gov/policy/docs/qanda-compensation.html
With respect to C2’s client, the male recruiter had been with the company longer and had a few more years of high-level recruiting experience than the newly hired female. The client had a long-standing practice of using seniority as one factor in determining compensation levels. So, the relatively modest pay disparity was, in that case, justifiable.
However, do not be fooled. Pay disparity continues to be a focus of the EEOC and federal courts around the country. In addition, many states have enacted their own laws designed to eradicate pay discrimination between men and women. Companies would be well served by periodically evaluating their wages across gender lines to make sure that wage differences are legitimate and not the inadvertent product of gender-based wage bias.
C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.