Mad About Money:  Getting Out in Front of The Equal Pay Issue

Germaine Willett

The #MeToo movement took the nation by storm in 2017. Sexual harassment in the workplace has been illegal for over 50 years, and yet harassment keeps happening, fueled partially by lack of knowledge of the law’s protections and partially by fear on the part of victims. Then, all at once, women, and some men, stood together to say "enough." The result?  Titans across numerous industries fell. Perhaps more groundbreaking was the marked shift in public opinion from distrust and doubt to a new willingness to believe accusers’ stories. We likely have yet to see the full extent of the reverberations. Employers have wisely scurried to review their discrimination and harassment policies and procedures and double check training protocols. The forward-thinking among them will include equal pay in their assessment.

Like prohibitions of discrimination and harassment, the legal requirement to pay men and women equal pay for equal work has existed for decades, and yet, inequity persists. The Equal Pay Act prohibits gender discrimination resulting in unequal pay for equal work. Unlike other anti-discrimination statutes where the employee must prove that discriminatory bias motivated an adverse employment action, the employee suing under the Equal Pay Act need not prove that the employer intended to discriminate. The plaintiff need only show that an employee of the opposite sex who performs a job in similar working conditions involving substantially equal skill, effort, and responsibility receives more pay than the plaintiff. All it takes is one employee paid more; the fact that other similar employees of the opposite sex receive less pay than the complaining employee is irrelevant.

That is not to say these cases are defenseless. The law provides that employers who can prove they pay employees performing substantially similar work at different rates for reasons other than gender will avoid liability. Legitimate, non-gender-based reasons include the employer’s use of a bona fide system based on seniority, merit, or output or quality of work. In the absence of such systems, courts have accepted other evidence, including the fact the employee negotiated for higher pay or earned more pay in prior employment (although these reasons are being called into question and some states and localities have prohibited inquiring into prior compensation to avoid the potential perpetuation of prior discrimination). Other legitimate factors include education level (relevant to the position), the amount or type of similar past work experience, budget constraints, and market forces.  

Again, the law places the burden on the employer to prove that legitimate factors actually motivated the pay decision. Piecing together an explanation after suit is filed will not suffice.  Employers must present evidence not of possible motivations, but of the actual reason for the decision. Employers will be best served if they can point to documentation from the hiring process or from the process of deciding pay increases that plainly reflects legitimate reasons— supported by data—for deciding to pay one employee more than another even though they perform the same job duties. Keep in mind as well that claims need not arise from current employees. Many Equal Pay Act lawsuits are brought by former employees after they learn the company pays a higher wage to their replacements. Claims may also be brought by current employees who discover their predecessor received higher pay than they receive. 

You may be thinking, "we decide pay based on legitimate reasons, we maintain good documentation of our pay decisions … we’ve got this!" There is one more issue to keep in mind, however. Courts have held that legitimate reasons for initial pay differences can become less valid over time. For instance, when a male employee and a female employee perform similarly over a period of years, differing education and/or experience levels begin to matter less. Thus, employers should conduct an audit of staff performing substantially similar jobs to determine whether differences in pay exist between genders and whether legitimate reasons existed—and still exist—to support those differences. Legal counsel can provide invaluable assistance with assessing the legitimacy of reasons and planning a strategy for making any necessary corrections.   

Unequal pay has been simmering in the national consciousness for several years. In today’s climate, it may very well amount to a "ticking time bomb" in America’s workplaces. A simple audit, preferably directed by counsel to protect the results, and adjustments (if needed) can significantly reduce the risk of an explosion of litigation where the law places the burden on you to prove that the differences in pay between employees of different genders were made for non-gender-based reasons. Spending time now should help avoid costly litigation later.                  

Germaine Winnick Willett is a member of Ice Miller’s Labor, Employment and Immigration Group. She and Ice Miller’s other labor and employment attorneys assist employers faced with employment discrimination, retaliation, wage and hour, contract and other employment-related issues, provide advice and counsel regarding employer investigations, and conduct on-site training. For additional information, contact Germaine at (317) 236-5993 or any member of Ice Miller’s Labor, Employment, and Immigration Group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.