Compensation, FLSA/Wages, Strategic HR

Pay Equity Laws 101

Providing equal pay for equal work to employees has been an ongoing concern for decades. Employers need to be particularly wary on this point because not only is pay discrimination illegal but also, it’s something that is subject to increased scrutiny right now, both in the media and by regulatory enforcement bodies like the Equal Employment Opportunity Commission (EEOC).

Let’s take a look at some of the federal regulations that are related to equal pay.

Pay Equity Laws at the Federal Level

There are two primary laws that directly relate to equal pay at the federal level and several others that have antidiscrimination provisions—which, by extension, will prohibit pay discrimination. The primary two laws that directly relate to equal pay are the Equal Pay Act and the Lily Ledbetter Fair Pay Act.

The Equal Pay Act (1963) requires employers to pay men and women equally when they’re performing equal work. Per the EEOC webpage about it:

“The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work. The jobs need not be identical, but they must be substantially equal. Job content (not job titles) determines whether jobs are substantially equal. All forms of pay are covered by this law, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits. If there is an inequality in wages between men and women, employers may not reduce the wages of either sex to equalize their pay.”[i]

The Lily Ledbetter Fair Pay Act was passed in 2009. The need for this law stemmed from the case Ledbetter v. Goodyear Tire & Rubber Co., in which the Supreme Court denied a claim of unequal pay—despite clear evidence of discriminatory pay practices—based on the fact that the original pay decision was made long ago and the statute of limitations had run out (if you count the original pay decision as the basis for starting the clock). The Lily Ledbetter Fair Pay Act remedies that issue. It does so by explicitly making each new paycheck a new instance of pay discrimination, not just the original pay decision. Bearing in mind that many instances of discriminatory pay practices may not be discovered for years after the original decision—but may still be ongoing—this law closed that loophole.

Separate from the laws above that specifically address equal pay, there are several laws that prohibit discrimination and, therefore, prohibit pay discrimination as a result. For example:

  • Title VII of the Civil Rights Act prohibits discrimination based on gender, race, color, national origin, and religion. While this isn’t specifically an “equal pay” law, if it can be shown that pay differed in a discriminatory way, it would apply. Many times, if someone has a pay complaint, he or she may also have a discrimination claim.
  • The Age Discrimination in Employment Act (ADEA) prohibits age-based discrimination—as such, paying someone in a substantially similar role a different amount solely based on age could qualify as discriminatory.
  • The Americans with Disabilities Act (ADA) prohibits discrimination for qualified individuals with a disability. Pay discrimination in these cases would also be illegal.

Separate from the federal laws, it’s important to note that most states and some local jurisdictions have some form of equal pay or wage discrimination law or, at minimum, standard antidiscrimination provisions that would apply. Some states have gone even further by banning salary history questions during the hiring process as an attempt to stop perpetuating previous salary discrimination.

[i] https://www.eeoc.gov/laws/types/equalcompensation.cfm