The Equal Pay Act (EPA) prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort, and responsibility under similar working conditions. 29 U.S.C. § 206(d). Enacted in 1963, the EPA was an amendment to the Fair Labor Standards Act of 1938 (FLSA) and (under certain circumstances) is enforced by the Equal Employment Opportunity Commission (EEOC). Here’s a link to the EEOC Compliance Manual on compensation discrimination. The forms of compensation in which the EPA requires equality include all payments made to or on behalf of employees as remuneration for employment. This ultimately covers all forms of compensation including:
- Salary
- Overtime pay
- Stock options
- Profit sharing and bonus plans
- Bonuses
- Vacation and holiday pay
- Life insurance
- Hotel accommodations
- Cleaning or gasoline allowances
- Reimbursement for travel expenses
- Benefits
Substantially Equal Work
In short, the EPA 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. Determination of job equality is based on the content and requirements of the job itself, not the job title. Under the EPA, job factors and requirements are measured by looking to whether the job roles being compared entail substantially equal amounts of skill, effort, responsibility, and working conditions within the same establishment. The comparative skills of job roles are measured by looking to the experience, ability, education and training required to perform their respective daily job requirements. This means the skills required to complete the job, not what skills an individual employee has prior to taking the job. Therefore, two jobs could be considered equal under the EPA even if one of the employees holds a higher degree in another field. If the degree is not specific to the job requirements, it does not need to be considered under the EPA.
Under the the EPA, a comparison of job effort looks to the amount of physical or mental exertion it takes to perform the necessary job requirements. If there is are two jobs within the same department, and one requires more effort (physically or mentally) than another, then lower payment for the job requiring less exertion may not violate the EPA or its regulations, regardless of whether that job is held by a female or male employee.
Similarly, under the EPA, a comparison of job responsibility turns on the degree of accountability required to perform the respective positions. If a corporate representative holds a position that requires more accountability and responsibility than another position, this may justify difference in pay between the two positions. Additionally, a comparison of jobs under the EPA may entail an evaluation of working conditions, such as physical surroundings or hazards.
Pursuing Claims for Pay Discrimination Under the EPA
If an employee believes her or his employer has run afoul of the EPA by failing to provide equal compensation for equal work, the employee can either file a charge with the EEOC or a lawsuit in court. Importantly, however, under the EPA, an employee is generally required to file a lawsuit within two years of when she received the discriminatory pay. It is important to understand that, unlike some other laws, the filing of a charge with the EEOC does not toll or extend the two-year limitations period for filing an EPA lawsuit.
Compliance Entails Increasing Pay
If an employer needs to correct a pay differential to comply with the EPA, the law requires the employer to increase the pay of the lower paid employee. The EPA specifically prohibits employers from creating pay “equality” by reducing the pay of the higher paid employee. 29 U.S.C. § 206(d)(1).
Exceptions to the EPA
The are four main exceptions to the EPA — situations in which a difference in pay between men and women who perform substantially equal work does necessarily not violate the law. These exceptions arise when the difference in pay results from (i) a seniority system; (ii) a merit system; (iii) an incentive system, i.e. a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex. 29 U.S.C. § 206(d)(1).
These exceptions are affirmative defenses, meaning the employer has the burden of proving them. To use one or more of these exceptions in defending against a claim of unequal pay between men and women, the employer must establish that the difference in pay was the result of a real (“bona fide”) merit, seniority, or incentive system. The employer must therefore prove that the systems were bona fide, meaning they were not put in place for discriminatory purposes. To determine whether a merit, seniority, or incentive system is “bona fide”, courts may look to a variety of factors, including whether the employer used predetermined criteria to measure merit, seniority, or productivity; whether the criteria were communicated to all employees; whether the criteria were consistently applied to all employees; and whether those criteria truly were the basis for any disparity in the compensation received by male and female employees.
The Lilly Ledbetter Act
The Lilly Ledbetter Fair Pay Act of 2009 made it easier for many employees to bring claims to recover for violations of the EPA. The Ledbetter Act was the first bill that Obama signed into law as president. The Ledbetter Act responded to a 2007 Supreme Court decision (Ledbetter v. Goodyear, 550 U.S. 618 (2007), link to decision here), which made it harder for certain workers to pursue pay discrimination claims because it interpreted the statute of limitations of pay disparity claims to run from the date the employer decided on a pay rate (often the date of hire).
In the Ledbetter case, a former longtime Goodyear employee alleged that she received poor evaluations based on her sex. Consequently, Ledbetter claimed, her pay did not increase as it should have if she had been evaluated fairly, and that by the end of her employment she was earning a significantly lower wage than her male colleagues. The jury found for Ledbetter, and awarded her back pay and damages; however, the Supreme Court ultimately threw out that verdict, on the grounds that Ledbetter’s pay discrimination claim was time-barred as to any pay decisions made more than 180 days before Ledbetter filed her charge of discrimination with the EEOC. In short, the Court held that a pay discrimination claim under Title VII could not be based on alleged events, such as the issuance of paychecks that paid women less than men for substantially equal work, that took place after the last pay decision. As a practical matter, this holding made it more difficult for workers to pursue claims of pay discrimination — particularly when the wage at issue was decided upon several years in the past — outside the applicable limitations period.
The Ledbetter Act changed that by clarifying that in pay discrimination cases, the relevant statute of limitations restarts each time the employer issues a discriminatory paycheck. The intended result of the Ledbetter Act was to make it easier for the victims of pay discrimination to recover lost wages.
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