Most federal gender pay discrimination cases are brought under Title VII of the Civil Rights Act of 1964. The other applicable law that was intended to address pay discrimination, the federal Equal Pay Act (EPA), was enacted before Title VII and was more narrow-focused.
The EPA prohibits pay discrimination based upon gender, but that is all. It does not address other forms of workplace discrimination. From the plaintiff’s side of the alleged discrimination, this earlier pay discrimination law had a flaw. This flaw allowed employers (the defendant) to prevail in gender-based pay discrimination lawsuits if the difference in pay between a woman and an appropriate male comparator is shown to have resulted from “factors other than gender.” This is a lower standard than the employer has to meet than the Title VII standard. The Title VII standard, which is more difficult to defend against, has more restrictions against workplace gender discrimination including terms and benefits of employment.
Because the Title VII law had more avenues to demonstrate discrimination in terms and conditions of employment, just showing that the pay difference was due to “factors other than sex” alone would not suffice as an effective defense under Title VII. With Title VII’s higher standard requiring employer-defendant to show discrimination (including pay) was not based upon gender, use of the EPA statute fell off dramatically in favor of Title VII complaints.
In a recent Fourth Circuit Court of Appeals decision, the Court potentially broadened the use of the EPA by overturning a lower court’s summary disposition decision in favor of the employer. It adopted a new standard which held that an employer’s defensive evidence has to be “strong enough to establish that this was in fact the justifiable reason for the pay disparity,” rather than just presenting it as a “factor other than sex.” This distinction, if upheld as a new test under the EPA, would broaden the law so it “aligns the EPA more closely with the use of Title VII to enforce pay equality complaints.”
Whether the Fourth Circuits broader standard is adopted more broadly and in turn the EPA becomes more effective anti-pay discrimination tool in the future remains to be seen.
What employers have to get their collective heads around is that pay disparity based upon gender, race, or another protected class will be scrutinized. If there is a legal reason for the pay disparity, the employer must be ready to “make its case” not just to the regulatory agency or the Courts but to the court of public opinion. This new reality is evidenced by the outcry that ensued when it became known that male actor, Mark Wahlberg, was paid $1.5 million to reshoot movie scenes that his female co-actor made less than $1,000 to do. Despite being in the highly subjective compensation realm of “talent,” this pay disparity issue was “litigated” in the court of public opinion to the point Mr. Wahlberg “forfeited” his fee to charity rather than become one of the faces of gender pay discrimination.
What can employers do to check and identify potential pay discrimination in their organizations?
Start with evaluating how pay is managed in your organization. Does your company have a compensation program that allows it to monitor internal job value and corresponding pay? If not, how are jobs valued and in turn are employees in those jobs paid equitably? A well developed and administered compensation program allows an employer to manage pay not only for internal equity purposes (discrimination and employee relations issues), but for external competitive reasons. It allows for managing the cost of personnel to the organization and to reinforcing corporate business objectives.
Further an effectively managed pay system can help avoid the perils of subjectivity that managers fall prey to using non-standardized or subjective personal judgement to set pay while hiring and later in performance-based merit pay decisions.
ASE Resources
ASE provides several services and resources to help employers pay competitively, prudently, and fairly.
Benchmarked Data
ASE’s annual compensation surveys provide annual market data to benchmark your positions’ pay to the market. Members who participate in this survey receive complimentary results.
Compensation Consulting
ASE’s compensation services can implement a customized pay system that not only sets pay competitively, but prudently within an organization’s means. Did you know that a point factor job evaluation system is the least subjective form of job evaluation? It’s effective against systemic pay discrimination claims.
HR Courses
ASE offers several HR courses that address pay and discrimination.
Online Libraries
Lastly, ASE members can find an abundance of compensation and legal pay practices information in its online libraries, McLean & Company and CCH HRAnswersNow.
For more information on any of the above ASE services and resources contact Mike Burns at (248) 223-8039.
Source: Encouraging Broader Use of Equal Pay Act at 4th Circuit. Michael Abcarian, 2/7/2018.