All Things Being Equal - Navigating the Pay Equity Landscape

Although the federal Equal Pay Act (EPA) has been in place since 1963, we can expect potential updates to pay equity legislation that expand workers’ rights under the Biden administration. The EPA prohibits employers from discrimination among employees on the basis of gender by paying wages to employees of the opposite sex at a lesser rate for equal work requiring the same skill, effort, and responsibility and under the same working conditions.

Proposed Changes to the Equal Pay Act

The Paycheck Fairness Act has been reintroduced as H.R. 7 and would amend the Fair Labor Standards Act (FLSA). This new version of proposed legislation addresses the gender wage gap by restricting the justifiable reasons for pay differences and excluding the popular “any factor other than sex” defense in addition to other stipulations such as increased penalties for violations.

Collection of Compensation Data

This proposed version of the Act would require OFCCP to survey employers who are federal contractors to collect compensation and other employment-related data on an annual basis. The EEOC continues to research and consider the collection of pay data from all employers through the EEO-1 survey. 

State-specific Equitable Pay Laws

Several states have already passed equal pay laws that are more amenable to employees and often apply to additional protected classes beyond gender (such as age, race, and many other characteristics). Some state laws allow employees to compare wages to employees within the company across the same county, while others allow wage comparisons across a company’s entire business regardless of location. Employers in these states are required to document a detailed pay structure system to justify pay differences based on bona fide factors. Examples of these factors may include seniority, a merit system, and measurable earnings by production quantity or quality.

How Employers Can Protect Themselves

Relying on previous salary to set pay for any employee could be subject to a challenge of pay disparity under the Equal Pay Act. Many states prohibit inquiries about previous pay history in the application or screening process, which is why Cadient Talent does not include questions of this nature in its baseline Candidate Experience. Employers should carefully consider whether they include any pay-related questions in their job applications, particularly if they operate in jurisdictions that restrict these questions.

Next Steps

For more information about preventing litigation based on compensation discrimination, refer to the EEOC’s facts on this topic and consult with your attorney. In addition to information from the EEOC about the Equal Pay Act, this article also relied on resources from The National Law Review, Seyfarth Shaw LLP, and Littler Mendelson P.C.