Federal law prohibits covered employers from basing pay differences solely on gender.
Under federal wage and hour law, employers subject to the Fair Labor Standards Act must comply with the Equal Pay Act. In order to be in compliance an employer cannot pay a person of one gender, who is doing the same or substantially the same work as another employee of the opposite gender, less money.
Therefore, in order to comply with equal pay requirements, you need to first determine if you're covered by equal pay laws.
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The Equal Pay Act applies only to pay differences between men and women. It does not address pay inequities motivated by race, color, religion, or national origin. Pay inequities related to protected groups other than gender groups are covered by federal anti-discrimination law.
Are you subject to equal pay laws?
If you are subject to the Fair Labor Standards Act (FLSA), you are also subject to Equal Pay Act requirements (i.e., you must pay men and women the same where they have the same job duties and qualifications). Employees who are exempt from the FLSA are not subject to equal pay requirements, except in the case of executive, administrative, and professional employees and outside salespersons.
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Be aware that state anti-discrimination laws also address equal pay inequities.
Employees not covered by equal pay laws. Employees who fall into one of the following categories are also exempt from equal pay requirements:
- employees of amusement or recreational establishments having seasonal peaks
- seamen on non-American vessels
- employees engaged in the fishing industry, including offshore seafood processing
- agricultural employees of an employer who did not use more than 500 man-days of agricultural labor in any quarter of the preceding calendar year
- agricultural employees who are members of the employer's immediate family
- hand-harvest laborers who are paid on a piece rate basis, commute daily from their permanent residences, and whose agricultural employment, if any, during the preceding calendar year was for less than 13 weeks
- hand-harvest laborers under 17 years of age who are employed at a piece rate on the same farm as their parents
- workers principally engaged in the range production of livestock, such as cowboys and shepherds
- employees of weekly, semiweekly, or daily newspapers of less than 4,000 circulation, the major part of which is in the county of publication or contiguous counties.
- switchboard operators employed by independently owned public telephone companies having not more than 750 stations.
- employees who are casual babysitters or companions to ill or aged persons unable to care for themselves
If you determine that you as an employer and/or your employees are covered under the Equal Pay Act, your next move should be to examine your current pay structure, and make sure that there are no potential violations.
Analyze your wages to ensure compliance with equal pay requirements
If you're covered by the Equal Pay Act, analyzing your pay structure can help ensure you're in compliance with equal pay requirements.
If you only have a few employees and if no two people in your office do the same job, you probably won't need to address this issue at all. However, if you have people of different genders who do the same or substantially the same job, you should look at the pay they receive. If you spot differences in pay between men and women for the same work, you should make sure that you can prove that those differences are based on something other than gender.
If you have more than a couple of employees, how do you analyze your pay structure? One simple way is to:
- Average the pay (on a weekly, biweekly, monthly, or hourly basis) for all men and women in particular job class).
- Compare the salaries of the men and women in that job class. Do all the women fall below the average while all the men fall above it? Unless you have another explanation for those kinds of differences (such as seniority, education, experience, etc.), you may need to consider taking some steps to rectify the situation.
In analyzing your pay structure and making sure that you're in compliance, you have to know:
- what each job entails
- what working conditions the jobs are performed under
- what skill and effort is required to do the job
If you have job descriptions for your employees' positions, this is a perfect time to use them.
What kinds of things should you look for in your analysis? In analyzing your pay structure, look for instances where a female employee and a male employee do the same work and one employee's pay is much higher. Figure out why that's the case. Some common — and lawful — explanations could be:
- seniority
- shift differentials
- quantity or quality of work
- experience
- training
- additional job duties
- working conditions
- additional skills required
Example
If you employ Jack and Jill as receptionists and if Jack doesn't have seniority over Jill because they were hired at the same time, you cannot pay Jack more because he is a male.
However, if Jack is paid more because he has extra job duties, such as ordering office supplies, or better qualifications, such as experience than Jill, you may have valid reasons for paying Jack more than Jill.
In your analysis, sometimes a problem will be simple to spot, such as when you pay Bob $14.25 per hour and you pay Brooke $11.25 per hour for the same work, and there are no other explanations for the disparity. However, there are other types of violations that aren't so easy to see.
For example, are there situations where males predominantly occupy a certain kind of job that pays more than other jobs? While this situation may say something about your recruiting and hiring practices, it may also lead to problems with Equal Pay Act claims.
Example
You employ four sales managers and nine sales representatives. The managers get paid an average of $70,000 annually, and the sales reps get paid an average of $30,000 annually. All of your managers are males, while seven out of nine of your sales representatives are female.
While this situation in and of itself does not necessarily put you in violation of the Equal Pay Act, it should raise a red flag. If men are in most or all of your highest paying jobs while women are in most or all of your lower paying positions, you'll want to look into this problem and make sure that the differences in pay and in gender/job distribution are motivated by factors other than gender.
Correcting pay inequities
If you see a situation where there is clearly a problem with females being paid less than males for the same work, or vice versa, you need to fix the problem by making the wages more equitable.
It is illegal to reduce the pay of one gender to match the lower pay of the other. You have to raise the pay of the employee who is being paid less.
Fix the problem as soon as possible. Don't wait until the employee's next raise to bridge the salary gap.
If the problems are more subtle, your hiring and promotion procedures may be the problem. Be sure to give females the same opportunities to get the higher paying jobs as males.