Pay equity issues have attracted significant attention recently in political debates, state legislatures, and courtrooms. The latest venue for the conversation: the fields dominated by the U.S. women’s soccer team. In late March, five prominent members of the team filed a wage discrimination complaint against their employer, the U.S. Soccer Federation (USSF), with the Equal Employment Opportunity Commission (EEOC). The women are seeking to be paid the same wages as their male counterparts.
In the complaint, the women allege that the USSF pays male players nearly four times more despite the fact that the women’s team generated nearly $20 million more in revenue than the men’s team in 2015. The allegations can proceed under two separate laws: Title VII of the Civil Rights Act of 1964 and the Equal Pay Act (EPA). Both laws prohibit wage discrimination based on sex. Although the USSF will likely provide non-sex-based explanations for the wage differential (including the fact that players’ pay is collectively bargained), it is too early to make a reasonable projection about either side’s chances of success.
Importantly, the case gives employers an opportunity to refresh their knowledge of wage discrimination claims and examine whether they are vulnerable to challenge while watching a high-profile wage discrimination lawsuit comfortably from the sidelines. This article summarizes the legal standards for wage discrimination claims under Title VII and the EPA and provides recommended practices for employers seeking to prevent or successfully defend against such claims.
Title VII prohibits, among other things, wage discrimination on the basis of sex. To establish a wage discrimination claim under Title VII, an employee must show that she is paid less than a similarly situated male employee who is “directly comparable in all material respects.” In addition, an employee must show that her employer intended to discriminate against her. Title VII wage discrimination complaints must first be filed with the EEOC. Successful employees can recover back pay (and a raise), compensatory damages, and attorneys’ fees. If an employee can prove the employer acted with malice or reckless indifference, she can also recover punitive damages (subject to caps based on the employer’s size).
The EPA prohibits sex-based wage disparities between men and women who perform jobs that require substantially equal skill, effort, and responsibility under similar working conditions. Unlike in Title VII wage discrimination claims, an employee filing an EPA lawsuit is not required to demonstrate that the employer intended to discriminate. However, the employee must identify a male worker who was paid more for performing a “substantially equal” job. The following factors are relevant in determining whether jobs are “substantially equal” :
- The experience, ability, education, and training required to perform the jobs;
- The physical or mental exertion needed to do the jobs;
- The level of accountability required to do the jobs; and
- The physical surroundings and hazards.
Even if two jobs are substantially equal, pay differentials are permissible under the EPA if they are based on seniority, merit, the quantity or quality of work, or a legitimate nondiscriminatory business reason other than sex. Although the EEOC is charged with enforcing the EPA, an employee need not file an EEOC charge before filing suit in federal court. A successful employee can recover back pay (including a raise), attorneys’ fees, and liquidated damages in an amount equal to the back pay.
What should employers do?
Here are several recommendations to help prevent or, if necessary, defend against a claim of sex-based wage discrimination:
- Review job descriptions to ensure they accurately reflect each job’s responsibilities and the skill and effort required.
- Conduct audits on a regular basis to determine whether there are gender-based wage gaps (or gaps based on any other protected characteristic). If gaps exist, scrutinize the reasons for the differentials to determine whether they are based on legitimate nondiscriminatory reasons. If a gap was initially justified by a legitimate reason other than sex, consider whether the factor is still relevant.
- Keep records documenting the reasons for wage differentials.
- Remember that the prohibition on wage disparities applies to all forms of compensation, including bonuses, reimbursement for travel expenses, overtime, stock options, and benefits. Thus, wage audits should encompass all forms of compensation.
- If it is necessary to correct a differential, address it promptly. Remember that an employee’s wages may not be reduced to equalize pay. Rather, the wages of the lower-paid employee must be increased.
- Review your antidiscrimination policies to ensure they address wage discrimination issues, require reporting, and prohibit retaliation.
The attention given to wage discrimination issues by the U.S. women’s soccer team’s EEOC complaint is not likely to wane in the near future. The EEOC’s recently proposed revisions to the Employer Information Report (EEO-1 Survey), which require the collection of pay data from employers with 100 or more employees beginning in 2017, will make it easier for companies, workers, and the EEOC to identify potential pay disparities. The U.S. women’s soccer team’s claim and the proposed EEO-1 changes will likely result in increased EEOC activity in wage discrimination matters. Employers would be wise to take proactive steps to help prevent and prepare for wage discrimination claims.