The number of complaints
alleging federal Equal Pay Act allegations fell from 970 in 2005 to 663 in 2006,
according to new U.S. Equal Employment Opportunity Commission (EEOC) figures.
This continues a five-year downward trend in these complaints, which have
declined almost 50 percent from 1,256 in 2002. The Equal Pay Act requires that
employers pay equal wages to men and women for performing substantially equal
jobs.
law also forbids pay discrimination.
Although the drop in
EEOC complaints is welcome news for employers, another development illustrates why
you shouldn’t let your guard down when it comes to ensuring your pay policies
and practices are legal. The Ninth Circuit Court of Appeals recently approved class
certification in a sex discrimination class action— the largest in the nation’s
history, involving more than 1.5 million women—against Wal-Mart. The lawsuit accuses
Wal-Mart of discriminating against women at its 3,400 stores throughout the
with respect to pay, among other things. The suit alleges that women in many
job categories at the retailer are paid less than men with the same seniority
in these jobs.
To help make sure you’re
not the next target of an equal pay suit, here’s a look at the equal pay laws, along
with a checklist you can use to review your pay practices.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
Equal Pay Basics
Under state and federal
equal pay laws, you must provide equal wages to men and women whose jobs require
substantially equal skill, effort, and responsibility and are performed in the
same workplace under similar working conditions. Other laws prohibit
compensation bias based on age, race, national origin, religion, disability,
sexual orientation, and other protected characteristics.
Note that you can
compensate men and women differently if you do so based on seniority, a merit system,
or a policy that measures earnings by quantity or quality of production. Also,
a pay differential is legal if it’s tied to legitimate factors other than sex,
such as education, experience, work shifts, or prior salary.
Audit Checklist
Here’s an eight-step
checklist to help evaluate your compensation practices for possible equal pay
issues. Use this checklist for a quick mental review rather than as a form to
fill out and keep in a file. In this way, you’ll avoid having to disclose your
responses if you are sued. Alternatively, you can conduct this review under an
attorney’s guidance to help ensure your review is privileged.
Evaluate your
compensation system for internal equity.
Do you ensure consistent
pay for workers with similar levels of experience and education in positions
involving comparable degrees of skill, effort, responsibility, and working
conditions, even though the job titles may be different?
Do you have defined
procedures for determining salaries and benefits?
Do you use job
descriptions?
Do you solicit
employee/union input and develop a consensus for job descriptions?
Do you have a consistent
system to evaluate jobs to determine their worth (such as scoring jobs or assigning
grade levels)?
Do you use the same
standards to evaluate positions in which women and minorities tend to work as
you use for jobs men or nonminorities tend to hold?
Examine your
compensation system for industry competitiveness.
Do you have a method for
determining the market rate for a particular job, such as the use of salary
surveys?
Do you pay the market
rate consistently to men, women, and minorities?
Compare job grades.
Is pay comparable for
positions with similar grades/job descriptions?
On average, do women and
minorities receive similar compensation as men and nonminorities within the same
job grade? If disparities exist, are there legitimate reasons?
Do women and minorities
stay within job grades longer than men or nonminority workers do before moving
up? Do they have the same opportunities to advance?
Review recruiting
practices.
Do you take identifiable
actions to increase diversity in applicants for available positions?
Review new-employee
data.
Are men, women, and
minorities paid similarly for typical entry-level work?
If entry-level salaries
are commonly negotiated, do men, women, and minorities negotiate similar starting
salaries?
Are there differences by
gender or race as to whether new hires are paid more or less than those already
working at the company in the same job grades or positions?
Assess bonus and
commission practices.
Are the same standards
consistently used for assigning men, women, and minorities to projects or
customers with high commission potential?
Are men, women, and
minorities with similar performance levels awarded bonuses on a consistent basis,
and do they receive bonuses of similar value?
Assess how raises are
awarded.
Are the same criteria
used to evaluate the performance of men, women, and minorities?
Do members of each group
receive raises based on similar performance standards? If the bonus amounts
differ, are there objective reasons?
Evaluate employee
training, development, and promotion opportunities.
Are women and minorities
selected for training opportunities or special projects that lead to advancement
on the same basis as men and nonminorities?
Special Rules for
Government Contractors
If you’re a federal
contractor, note that you’re subject to some special rules and guidelines pertaining
to equal pay from the Office of Federal Contract Compliance (OFCCP).