The Challenges To Get Equal Pay For Equal Work

In the United States in 2019, although we have had many triumphs in insisting on eradicating gender discrimination in the workplace, there are still many feats to be made. Specifically an issue in the past and where legislation is still changing, is for equal pay among genders and other minority groups.

The right of employees to be free from gender discrimination in their pay is protected under several federal laws, including the following enforced by the U.S. Equal Employment Opportunity Commission: the Equal Pay Act (EPA) of 1963 and Title VII of the Civil Rights Act of 1964. An employee who brings their case forward to a federal judge and has an Equal Pay Act claim may also have a claim under Title VII (“Equal Pay/Compensation Discrimination,” 2019).

The Equal Pay Act of 1963 “requires that men and women be given equal pay for equal work in the same establishment” (“EQUAL PAY ACT OF 1963,” 2019). Within the act, it details out how jobs don’t need to be identical nor do titles; when jobs are equal in skill, effort, responsibility and working conditions, then they are considered ‘substantially equal’ under the EPA. For the consideration of skill, the focus is on what skills are mandatory for the job, not what skills the individual employees may have (i.e. a graduate or master’s degree that is not necessarily required for the role). With regards to responsibility, the type of responsibility has to be justified and substantial. Working conditions are divided into two factors: 1) physical surroundings (temperature, fumes, ventilation) and 2) hazards. The EPA justifies pay differentials when they are based on seniority, merit, and quantity/quality of production or a factor other than sex. In a case brought to a federal court, it is the organization’s burden to prove that these ‘affirmative defenses’ apply and that discrimination does not exist. If it is proven that an employer discriminated against an employee, to ameliorate the issue at hand, the EPA states that another employee’s pay cannot be reduced, but instead, the lower paid employee’s pay must be increased (“EQUAL PAY ACT OF 1963,” 2019). It would not be fair to just lower all higher employees’ salaries without proper warning or context; employees rely on their salary to live and certain changes in their pay (especially if there is a large differential) would require them to potentially change their housing, family/employment responsibilities, and way of life.

The Equal Employment Opportunity Commission (EEOC) was established to enforce Title VII of the 1964 Civil Rights Act. The federal group has the right to investigate charges of discrimination, attempt to reconcile the parties, or bring the suit to federal court on behalf of the employee (“Business Management / Leadership and Strategy,” 2019). Originally when it was created in 1964, the EEOC was just responsible for preventing illegal employment practices, but the responsibility greatly increased in 1972 when the Civil Rights Act was amended by the Equal Employment Opportunity Act. At that time, the government expanded the EEOC’s authority to bring lawsuits on behalf of those plaintiffs. This is extremely helpful for those plaintiff’s because legal fees and time spent reviewing/investigating an employee can be a large investment; to be able to have a government-funded organization helping employees through this process is a major achievement.

Within Title VII, it bans discrimination regarding any employment situation such as hiring, firing, promotion, transfer, compensation or admission to a training program. The law applies to employers with only 15 or more employees, but allows employers under the law to discriminate against employees if they can prove it’s a bona fide occupational qualification (BFOQ) (“Business Management / Leadership and Strategy,” 2019). A BFOQ is a genuine quality or attribute that employers feel is necessary to maintain in order to successfully run their business. In 1997 and 2009, the BFOQ defense was held up in court when Hooters was up against potential employees that applied for server jobs and were denied based on their gender. Hooters was able to prove that their choice to hire only attractive women servers was a bona fide occupational qualification (Shamsian, 2015). I don’t believe this is something that many businesses can prove in a court of law and it is something that requires serious data and information to demonstrate. Therefore, most businesses should be prepared before an allegation is made and they can do that in a variety of ways later explained.

Another piece of legislation that helps against employee discrimination is The Lilly Ledbetter Fair Pay Act; it was signed in 2009 during the Obama administration. The act amended the Civil Rights Act of 1964 so that unfair pay complaints can be filed within 180 days of a discriminatory paycheck (EEOC). Following this, Obama created The National Equal Pay Enforcement Task Force which combined the efforts of the Equal Employment Opportunity Commission, the Department of Justice, the Department of Labor, and the Office of Personnel Management. This group pursued employers who violated the EPA’s requirements and claimed substantial amounts of money for victims of sex-based pay discrimination (Landes, 2018).

Introduced within the last few days was the newest version of the Paycheck Fairness Act on 1/30/19 and it was unveiled by Democratic leaders at a press conference. In previous years, with a Republican-dominated Congress, this bill had failed to pass. “The bill would allow workers to compare salaries, bar employers from basing current pay on salary histories, require bosses to prove pay disparities are job-related, and provide technical training so employers can live up to the standards” (Mcauliff, 2019). While equal pay legislation has been a part of the law for many years, these democratic leaders advised that it has been extremely hard to prove in court, and this new bill will help women meet the standards of proof.

U.S. Bureau of Labor Statistics developed a survey in 2016 comparing men’s and women’s earnings reported for the age 55-64; the results revealed that men earned, on average, around 25.01% higher than women (median usual weekly earnings of men: $1075 and women: $836) (“Bureau of Labor Statistics,” 2016). So although the some of the legislations described above have been in place for 40-50 years, the gap is still present.

Why women in the workplace are not earning the same amount as men for equal work is known as the ‘glass-ceiling’ condition. The glass-ceiling is “an intangible barrier within a hierarchy that prevents women or minorities from obtaining upper-level positions” (“Glass Ceiling,” 2019). When considering why the gap still exists, Terina Allen and Vicky Valet in their Forbes articles insist that a strong corporate culture could be one of the major reasons. Valet explains that leadership needs to create an environment “where it’s clear that people will be treated equally” (Valet, 2018). According to the HRCP textbook, other reasons as to why the glass ceiling exists could be selection bias and work-life balance issues/expectations (“Business Management / Leadership and Strategy,” 2019). When the applicants or employees are similar to the leadership/board members/HR representatives that make the decisions (i.e. male) they tend to select the applicants/employees that are similar (male).

The challenges with equal pay in the workplace have occurred well before 1963 and many years after the legislation was created. In 2017, a few events that were widely publicized and brought to light by Hollywood, sparked the discussion again. A big campaign that was developed during this time that is well known is called ‘TIME’S UP.’ TIME’S UP is “is an organization that insists on safe, fair and dignified work for women of all kinds…[it] addresses the systemic inequality and injustice in the workplace that have kept underrepresented groups from reaching their full potential” (“TIME'S UP Now,” 2019). As the cases of inequality began to sprout up following these types of movements, employers started taking a more aggressive look at their practices and policies and individual states reviewed their legislation.

Recently in July 2018, New Jersey was one of the latest states to pass legislation around a more all-encompassing equal pay law. The bill was named the Diane B. Allen Equal Pay Act. New Jersey is now able to extend legal protection beyond gender and provide relief to all classes of employees protected under the anti-discrimination law (Wieselthier, 2018). Different than the federal laws previously enacted, the NJ legislation places the burden of proof on the employer to prove that discrimination in pay does not exist (Becica, 2018). Furthermore, the NJ act is unique in that it allows a six-year statute of limitations, which is three times longer than the two-year period under the federal EPA. This means that in the case of the employee winning and proving their case, the employer could be responsible for up to six years of back pay (Rizvi, 2018). In order for the employer to shift the burden of proof to the employee, they must prove that the pay was based on seniority, merit, or a BFOQ and how exactly these factors were applied. Another portion of the law that makes this NJ EPA act so distinctive and aggressive is that “state contractors will be mandated to report to the Commissioner of Labor and Workforce Development information regarding gender, race, ethnicity, and job category and total compensation” (Rizvi, 2018).

Based on some of the above examples, NJ has taken a rather rapacious stance on equal pay across different groups within a workplace, as compared to other states’ legislations. It is to be noted that it was recently upheld in federal court that the new act cannot be applied retroactively. In the case of Perrotto v. Morgan Advanced Materials, PLC, a federal court judge ruled that New Jersey’s Diane B. Allen Equal Pay Act may not be applied in favor of Perrotto. Perrotto was terminated April 5, 2018 by Morgan Advanced Materials, PLC before the NJ EPA was enacted; however, her claim included parts of the new legislation such as gender-based pay inequity and retaliation. The court judge proved that the law was meant to be applied prospectively and therefore, this case could not be upheld against the new law (Greenbaum, 2019).

Silicon Valley, where many tech and computer-centric jobs are located, recently had a string of various pay discrimination suits throughout 2017 and 2018. Back in March of 2017, the Department of Labor (DoL) requested salary records from Google since it is a federal contractor subject to equal opportunity laws. Google fought back and refused to hand over certain records to the DoL because they alleged the project would be “very time-consuming and burdensome” (Levin, 2018). A judge ultimately ordered Google to disclose certain documents proving that almost nothing could be monetarily burdensome to Google based on its size and financial capabilities as a multi-national company. Following this inquiry, in October 2018, a class-action lawsuit with over 8,300 plaintiffs in California was introduced. The plaintiffs are current and former Google employees in California who sued for pay discrimination. The judge dismissed this first version of the case for being ‘overly broad’ but the amended complaint moved forward with a narrower group of plaintiffs. The US will continue to watch to see how this is handled in court. This type of case could set precedent for future class-action suits for pay discrimination. Other cases have spanned across Silicon Valley and throughout the United States, and they do not seem to be losing any traction moving forward.

Because the new NJ act is far more aggressive than previous legislation, employers should prepare by reviewing their current practices to proactively avoid any accusations. According to Benjamin Widener in his National Law Review article, “Equal Pay for Equal Work – New Jersey's New Equal Pay Act,” employers need to “review, update or create equal opportunity, anti-discrimination, and standardized compensation policies and procedures” (Widener, 2018). Federal civil rights laws do not require discrimination training, but in order to properly prepare for the new NJ act, it would be in the best interest of NJ employers to have all leadership and individual contributors educated on the rights of the employees per the law and policies of the organization. When a court is considering a case and whether the employer is at fault, they examine to see if the employer used training and education to prevent discrimination “as an indication of it’s good faith efforts” (“Business Management / Leadership and Strategy,” 2019). So under the new legislation, the more the employer preemptively works to eradicate discriminatory practices, the better chance the court will rule in their favor or at least consider lesser damages due. In addition to reviewing current pay practices, it will be important for NJ employers to consider reviewing current job descriptions, titles and pay scales and adjust as needed.

Performance evaluations and related standard practices would also be helpful for employers to make sure they have either implemented or reviewed (if they already exist). This type of data is important because if an employer does receive an allegation of pay inequity, they can use the data to prove the disparity is because of merit and likely avoid any charges.

At my organization, we have certain levels that are associated with job type, leadership level, seniority, and payment ranges/scales. For example, when you enter the organization at an entry-level role, you will be given the highest grade level, a 24. As you continue to get promoted, benefit from merit and cost of living increases, your level will go down in numerical value, but increase in amount of pay (i.e. our president is at a level 1). Each level has a salary bracket, and Human Resources along with leadership categorize each job at a certain level based on job description, responsibility, requirements, and so forth. This practice would most likely fall under the definition of a classification or predetermined-grading method (“Business Management / Leadership and Strategy,” 2019). With this practice in place, all jobs in the organization are standardized to stay within a pay bracket based on their level; this is one way to help avoid any pay disparity in the organization for ‘substantially similar work’ – which is what NJ requires for equal pay under the new act.

Another way employers can prepare and preemptively take action is to consider conducting a pay equity audit, whether internal or through a third-party. A pay audit consists of numerous steps including: 1) identify the audit scope, 2) conduct the audit, 3) present findings to the employers, 4) take remedial actions, and 5) consider future best practices. Factors such as performance evaluations, compensation systems, job descriptions, training programs, length of service, years’ of experience in the industry, education, and geography should all be considered in the audit (Landes, 2018).

If employers do not consider taking actions such as the ones listed above and they are found guilty in a court of law for discrimination, they could be responsible to recover compensatory damages (3x the amount), punitive damages, and attorneys’ fees/costs (Widener, 2018).

When employers are preparing for these new types of legislations and how it will impact their business, it is important to make sure that they close the gap effectively. In his Harvard Business Review article, “Why Companies’ Attempts to Close the Gender Pay Gap Often Fail,” David Anderson and other contributors stated that it can be an arduous task. They argue that employers have to identify the gap swiftly, fix it without inflating their wage bill, maintain a solid incentive program and mitigate legal risk (Anderson, 2019). To close the gap, it’s important to not just raise every woman’s pay by the same percentage. Anderson shares that in addition to targeting raises to those specified women, you must consider your budget, managerial goals, and equality.

Federal leaders are continuing to fight to close the gap and it will be important for employers to understand the new bills, potential legislation changes and how it will affect their employees’ compensation. As stated above, Human Resources departments along with leadership, should look to take a proactive approach to reviewing and standardizing performance evaluations, data management and upkeep, and compensation practices/systems to avoid any future allegations.