HR FOCUS NEWSLETTER: Why Courts, States, and Employers Are Focusing on Pay Equity

The federal Equal Pay Act went into effect in 1963, but it hasn’t brought an end to pay disparities between men and women. Neither have state laws with the same objective. Long story short: the laws weren’t strong enough, and they didn’t account for all the causes of unequal pay. In many cases, it has been possible for an employer to comply with these laws while still giving unequal pay for equal work.

Often, it’s not that employers have deliberately chosen to pay women less than men for the same jobs. In many cases, the basis for pay differentials has seemed sensible, such as salary history. But it turns out that basing pay on salary history perpetuates discrimination over an employee’s career. Mindful of these facts, some states across the country have instituted salary history bans and implemented other legal measures to strengthen pay equality. And the 9th Circuit Court of Appeals issued an opinion recently that significantly strengthened the federal Equal Pay Act.

The Equal Pay Act makes it illegal for employers to 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. Job duties, not job titles, will determine whether jobs are substantially equal.

Here are action items to consider:

Audit Your Pay Scales
Between the spread of equal pay legislation at the state level, the narrowing of the catch-all in the EPA, and the increased visibility of the women’s equality movement, there is no better time to take a long hard look at how your employees are paid.

If you are in the 9th Circuit and among the many employers who have based employee wages to some extent on salary history, that practice should be stopped immediately, and different wages adjusted or accounted for. Also look for factors that contributed to pay differentials that were business-related rather than job-related. Remember that you cannot reduce someone’s pay as a remedy under the EPA.

Stop Asking About Salary History
We have advised against asking candidates about their salary history for some time, but the advice becomes more urgent now. Although it is still legal to ask this question in most states, having this information is very likely to impact the offer made to a new employee. Even if the answer has no impact on the offer, the mere asking of the question implies that the employer intended to do something with the information, thereby opening the door for a discrimination claim.