Federal Employment Laws That Impact Compensation and Benefits

Pay Equity

There have been groundbreaking changes to equal pay laws as states and other localities aggressively take action to improve pay equity through enforcement of state and city equal pay laws. One common theme is that the new laws typically focus on pay inequality between the sexes and/or gender identity.

Although each law is different and should be reviewed for compliance separately, pay equity is normally measured via:

• Assessment of employee pay in the same geographic region, country, locality, and/or organization
• Equal or substantially similar work typically measured based on:
	Skill
	Effort
	Responsibility
	Working Conditions
• Pay differences derived from a:
	Seniority System
	Merit System
	Quantity or quality of production measurement system
	Bona fide factor other than sex such as:
		Education
		Training
		Experience

Some pay equity laws also include a salary history ban during the recruiting process.

An attorney should be consulted prior to conducting a pay equity audit. Some of the large law firms are also maintaining an up-to-date guide to Pay Equity Laws across the United States for reference.

Comparable Worth

Based on the Civil Rights Act, comparable worth extends the concept of “equal pay for equal work” to “equal pay for jobs of equal value.” Comparable worth flows from an observation that women are paid less than men and the idea that when jobs filled mostly by women are judged "comparable" to jobs filled mostly by men, wages for both should be the same. Proponents of comparable worth argue that there are female-dominated occupations, so the labor market discriminates against them. To overcome this kind of discrimination they call for equal pay for jobs of comparable value within an organization. This differs from EPA. The EPA dictates that the jobs being compared must be substantially equal in terms of duties, responsibilities, skill, and working conditions.

There are three major court cases that serve to illustrate the issue.

Comparable Worth Cases

Case 1

The first case involved nurses employed by the city of Denver. The nurses charged that they were being discriminated against in pay because of their gender. They showed that they were paid a lower wage than parking-meter repairers, tree trimmers, and sign painters.

The nurses argued that these pay differentials didn’t reflect any differences in type or value of work but were due to society's tendency to compensate women less for their work than men. The nurses based their case on the Equal Pay Act and the Civil Rights Act. The nurses’ challenge based on the Equal Pay Act was overruled because the jobs compared were different. However, based on the prima facie facts, the court decided that the Civil Rights Act could apply because jobs dominated by women were paid less than jobs dominated by men, even though the jobs were of equal or comparable worth. It also agreed that such discrimination could in fact lead to a violation of a comparable-worth criterion of fairness. Ultimately, the court ruled against the nurses by citing the market (rather than comparable worth) as the proper standard.

Case 2

In the second case, a union charged that Westinghouse Corporation had historically established classes of jobs for wage-setting purposes that discriminated against women. They demonstrated that Westinghouse had segregated "women's" jobs from "men's" jobs and set lower rates for the former. The federal district court decided that such a practice discriminated against women and ordered it stopped. The court upheld plaintiff’s claims based on the equal-work standard.

Case 3

In case three, jail matrons doing work similar to (but not equal to) that of prison guards charged that they were being discriminated against because the difference in pay between the two jobs was much greater than the difference between the jobs themselves. In this case, the Supreme Court ruled that women who file lawsuits charging gender discrimination in pay matters may have valid claims under civil rights law.

Comparable Worth Not Completely Defined

These three cases questioned the adequacy of the market as a criterion of job worth. Job evaluation as a formal method of comparing jobs is a logical potential solution as long as:

• When job evaluation plans use market salary rates as a basis for key jobs, the job evaluation and market rates are not separate criteria.
• The same job evaluation plans are used for traditional "men" versus "women" jobs.
• Neutral / objective job evaluation plans are used.

For instance, in the example shown, the employer will need to explain the pay differential likely tied to use of legitimate salary survey data:

Job	Internal Job	Company Pay	Representation	Outcome
Van Driver	117 points	$1,900.00	90% men	Possible case: should review market rates and see how this compares to internal pay rates
Clerk Typist	117 points	$1,500.00	75% women

At present, it seems best to label comparable worth a complicated legal concept that may crystallize with further court cases or through legislation. The issue is whether jobs or people in the organization are being paid on a nondiscriminatory basis.

While not in the law, it should be noted that inspections by the Department of Labor clearly examine issues that would fall into the area of comparable worth.

Congress is currently reviewing a bill that is intended to strengthen the EPA called the, Paycheck Fairness Act. This new proposed bill is the outgrowth of women still being paid only $0.84 for each $1.00 a male counterpart is paid. The bill would:

• allow employees to disclose salary information with co-workers despite workplace rules prohibiting disclosure
• require employers to show that any wage discrepancies are based on genuine business requirements

The more internal and external factors you include in the job evaluation process, the more objective, holistic, and defensible the results.

For more information on how job evaluation can be used to prevent unequal pay, see our Course 34: Installing Job Evaluation in Your Organization.