Complying with Equal Pay Requirements

The idea behind the Equal Pay Act is to make sure that men and women doing substantially the same work do not get paid different wages for that work based on their gender.

If you only have a few employees. If no two people in your office do the same job, you probably won't need to address this issue at all, but if you have people of different genders who do the same or substantially the same job, you should look at the pay they receive. If you spot differences in pay between men and women for the same work, you should make sure that you can prove that those differences are based on something other than gender.

How do you analyze your pay structure? One simple way is to:

  1. Average the pay (on a weekly, biweekly, monthly, or hourly basis) for all men and women in particular job class).
  2. Compare the salaries of the men and women in that job class. Do all the women fall below the average while all the men fall above it? Unless you have another explanation for those kinds of differences (such as seniority, education, experience, etc.), you may need to consider taking some steps to rectify the situation.

In analyzing your pay structure and making sure that you're in compliance, you have to know:

  • what each job entails
  • what working conditions the jobs are performed under
  • what skill and effort is required to do the job

What kinds of things should you look for? In analyzing your pay structure, look for instances where a female employee and a male employee do the same work and one employee's pay is much higher. Figure out why that's the case. Some common and lawful explanations could be:

If you have job descriptions for your employees' positions, this is a perfect time to use them.

  • seniority
  • shift differentials
  • quantity or quality of work
  • experience
  • training
  • additional job duties
  • working conditions
  • additional skills required

Violations aren't always easy to spot. Sometimes a problem will be simple to spot, such as when you pay Jim $6.50 per hour and you pay Jane $6.00 an hour for the same work, and there are no other explanations for the disparity. There are other types of violations that aren't so easy to see.

For example, are there situations where males predominantly occupy a certain kind of job that pays more than other jobs? While this situation may say something about your recruiting and hiring practices, it may also lead to problems with Equal Pay Act claims.

 
Example

You employ three salespeople and five customer service representatives. Salespeople get paid an average of $25,000 annually, and customer service representatives get paid an average of $20,000 annually. All of your salespeople are males, while four out of five of your customer services representatives are female.

While this situation in and of itself does not put you in violation of the Equal Pay Act, it should raise a red flag. If men are in most or all of your highest paying jobs while women are in most or all of your lower paying positions, you'll want to look into this problem and make sure that the differences in pay and in gender/job distribution are motivated by factors other than gender.

If you are sued and found in violation of the Equal Pay Act, you may have to pay any wages owed to the suing parties plus other penalties.

How do you fix problems? If you see a situation where there is clearly a problem with females being paid less than males for the same work, or vice versa, you need to fix the problem by making the wages more equitable. It is illegal to reduce the pay of one gender to match the lower pay of the other. You have to raise the pay of the employee who is being paid less. Fix the problem as soon as possible. Don't wait until the employee's next raise to bridge the salary gap.

If the problems are more subtle, as in the example above, your hiring and promotion procedures may be the problem. Be sure to give females the same opportunities to get the higher paying jobs as males.