Pay equity issues can arise in multiple ways for employers

Business man and woman standing at work desk looking at touchscreen computer

Pay equity for women remains an issue for many employers. Among those championing gender pay equity is Megan Rapinoe, the American soccer star who is set to retire from professional play at the end of National Women’s Soccer League final this Saturday, November 11, 2023. Rapinoe has been at the forefront of gender pay equity for years in her role with the United States Women’s National Soccer Team and recently authored a “playbook” for employers on the subject.

For employers, gender pay equity issues can arise as a legal issue in multiple ways. One way is through the Equal Pay Act of 1963. Another way is in a claim for gender discrimination under Title VII of the Civil Right Act of 1964. Given that both of these laws have been on the books for 60 years, the principles of equal pay should be well-known to employers.

Equal Pay Act claims

The EPA prohibits pay discrimination on the basis of sex. Specifically, it prohibits employers from discriminating “between employees on the basis of sex by paying wages to employees … at a rate less than the rate at which (the employer) pays wages to employees of the opposite sex … for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions….” 29 U.S.C. § 206(d)(1). In lay person’s terms, the EPA requires equal pay for equal work as between men and women.

This does not mean identical work is required. Rather, an employee must show that the skill, effort, and responsibility required in the performance of the jobs compared are substantially equal. But the EPA does recognize four exceptions to the law where pay disparities may result: a seniority system, a merit pay system, a system that measures earnings by quantity or quality of production, or any factor other than sex. In Eisenhauer v. Culinary Institute of America, 84 F.4th 507 (2nd Cir. 2023), the court found that a gender-neutral compensation plan in a collective bargaining agreement is a factor other than sex and comes within the exception.

Where there is not equal pay for equal jobs under the terms of Section 206(d)(1), an employee has a claim for damages. The EPA is part of the Fair Labor Standards Act so the monetary damages consist of back pay for the pay differential (and any differences in bonuses or incentive pays) and liquidated damages up to an equal amount of back pay awarded. An employee may also recover attorney’s fees on a successful EPA claim.

Title VII claims

Title VII prohibits discrimination based on sex in the workplace. Discrimination claims are most often made after an employee experiences an adverse job action, such a discharge or other form of discipline. But Title VII also expressly covers discrimination “with respect to … compensation.” 42 U.S.C. § 2000e-2. Thus, a woman can bring a claim for pay disparity under Title VII also.

A Title VII discrimination claim requires proof of an unlawful discriminatory motive, or intent to discriminate. Courts have held that intent to discriminate can be inferred “if there’s a male comparator who performs a similar to the plaintiff (female employee) yet is paid more” or from other evidence that shows an intent based on sex to discriminate in pay. Noonan v. Consolidated Shoe Co., Inc., 84 F.4th 566 (4th Cir. 2023).

The analysis of whether two job positions are similar under Title VII is stated differently than for purposes of the EPA. In a Title VII claim of discrimination, whether two positions are similar requires consideration of whether the employees have the same job description, were subject to the same standards, were subordinate to the same supervisor, and had comparable experience, education, and other qualifications. The damages an employee can recover in Title VII claims are also broader and include the difference in pay, compensatory damages, and potentially punitive damages. Attorney’s fees also are available to a successful Title VII claimant.

Next steps for employers

An employer can take steps to prevent or justify pay disparities. An employer can audit its jobs to compare duties, qualifications (such as experience, training or degrees, skills needed), and working conditions to determine whether two jobs are, in fact, substantially similar in duties, skill, effort, responsibilities and working conditions. The employer can also determine whether, under the specific circumstances, one of the exceptions in the EPA apply. An employer can then review whether its pay for similar jobs is equal, or if improvements in pay are needed to provide equal pay for equal work.

Given the topicality of equal pay, positions and pay audits are worth an employer’s attention.