Extent of Protection
Under the Equal Pay Act, an employer cannot discriminate between employees of the same establishment on the basis of sex, “paying wages to employees at a rate less than the rate at which the employer pays wages to employees of the opposite sex for equal work on jobs, the performance of which requires equal skill, effort and responsibility, and which are performed under similar working conditions”. Further, an employer cannot lower the wages of some employees to make wages equal.
Amending Title VII, the Lilly Ledbetter Fair Pay Act of 2009 overturned Supreme Court precedent severely restricting the time period for filing unfair pay complaints, establishing that such complaints can be filed within 180 days of a discriminatory paycheck, a period which resets each time a paycheck is issued. Employer practices subject to challenge include managerial decisions about base pay or wages, job classifications, career ladder or other noncompetitive promotion denials, tenure denials and failure to respond to requests for raises.
Nearly all states also have their own “equal pay acts”. Since 2016, many states have sought to broaden the pool of comparators to those performing “substantially similar work” or “comparable” work. Many of the state laws do not restrict comparison to the same establishment or geographic location. In addition, several states specifically prohibit sex-based wage discrimination, while other states prohibit wage discrimination based on protected class status. Many cities and states have passed laws restricting the collection of prior salary information during the hiring process based on concerns that setting the starting pay rate on the basis of prior salary, may have the effect of perpetuating pay discrimination. Nearly half of the states have also enacted pay transparency laws that prohibit employers from discharging, or taking any other retaliatory action against an employee, for discussing wages or compensation with another employee.
An employer who violates the Equal Pay Act is liable to the affected employee, for the amount of wages the employee was underpaid, for liquidated damages equal to 100% of the underpaid wages, as well as for reasonable attorneys’ fees and costs. Further, if the employer has retaliated against an employee for filing a complaint under the EPA, the employee is entitled to equitable relief which may include reinstatement, promotion and the payment of wages lost, as well as an additional equal amount as liquidated damages. The employer must also pay the reasonable attorneys’ fees and costs of the action; compensatory and punitive damages are not available. Under Title VII pay discrimination claims, in addition to the EPA remedies available, an employee can recover compensatory and punitive damages (the amount is limited by the size of the employer. Similar remedies exist under state law.
New state and local pay equity laws and the increased attention afforded to equal pay issues, pose significant challenges and unprecedented risks to employers. Recent litigation and settlements demonstrate the significant exposure in defending these claims.
All federal contractors who are covered under affirmative action regulations, must, annually, perform an evaluation of their compensation practices to ensure minorities and women are being fairly treated, locating any pay disparities and determining whether such disparities can be explained by a non-discriminatory reason. Employers with at least 100 employees are required to submit annual reports to the EEOC, which can be used to investigate the pay practices of those employers whose data suggests indefensible pay disparities. Some states stipulate that voluntary self-audits can be an affirmative defense to a pay discrimination claim. It is worth noting, that even if a state does not explicitly include a self-audit provision as a viable affirmative defense, such an audit can be helpful in defending a pay discrimination claim.