The Equal Pay Act and Pay Equity
The Equal Pay Act (EPA) of 1963 requires that men and women in the same establishment receive equal pay for equal work. As pay equity continues to be a prominent topic in the workplace, understanding the EPA is essential for HR professionals preparing for the SHRM exam. The EPA was the first federal anti-discrimination law and laid the groundwork for broader protections under Title VII.
Coverage and Application
The EPA applies to virtually all employers, regardless of the number of employees, because it is an amendment to the Fair Labor Standards Act. This is a broader scope than Title VII, which requires 15 or more employees. The EPA covers all forms of compensation, including salary, overtime pay, bonuses, stock options, profit sharing, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.
The "Equal Work" Standard
The EPA does not require that jobs be identical, but rather "substantially equal." Courts evaluate whether jobs require equal skill, effort, and responsibility, and are performed under similar working conditions. These four factors are defined as follows:
- Skill: Measured by factors such as experience, ability, education, and training required to perform the job. The focus is on what is required for the job, not what the individual employees may possess.
- Effort: The amount of physical or mental exertion needed to perform the job. Minor differences in effort do not make jobs unequal.
- Responsibility: The degree of accountability required in performing the job. Significant additional duties that make one job more complex than another may justify pay differences.
- Working conditions: Physical surroundings and hazards, including factors such as temperature, fumes, ventilation, and the risk of injury.
Affirmative Defenses
Even when a pay differential exists between men and women performing equal work, the EPA permits the differential if the employer can demonstrate that the pay difference is based on one of four affirmative defenses:
- Seniority system: A bona fide seniority system that rewards longer tenure with higher pay.
- Merit system: A system that measures earnings by quality or quantity of production.
- Quantity or quality of production: Pay differences based on a system measuring production output.
- A factor other than sex: Any other legitimate business factor, such as education, experience, shift differentials, or geographic location. Courts scrutinize this defense carefully to ensure it is not a pretext for discrimination.
EPA vs. Title VII Pay Claims
Employees can bring pay discrimination claims under both the EPA and Title VII, and the two statutes have important differences:
- The EPA does not require filing a charge with the EEOC before bringing a lawsuit; Title VII does.
- The EPA requires a showing of "equal work"; Title VII requires a showing of discriminatory intent but does not require the comparator to perform equal work.
- The EPA covers only sex-based pay discrimination; Title VII covers pay discrimination based on any protected class.
- Under the EPA, the burden shifts to the employer to prove an affirmative defense; under Title VII, the employee bears the ultimate burden of persuasion.
Conducting a Pay Equity Audit
Proactive HR professionals should conduct regular pay equity audits to identify and address potential disparities. A comprehensive audit typically involves identifying comparable positions and grouping employees performing substantially equal work, collecting compensation data for all employees in those groups, analyzing the data for statistically significant differences based on sex (or other protected characteristics), investigating legitimate explanations for any identified disparities, and developing a remediation plan to address unjustified pay gaps.
Many organizations engage outside counsel to oversee pay equity audits so that the analysis may be protected by attorney-client privilege.
SHRM Exam Tips
For the SHRM exam, remember that the EPA requires no minimum number of employees for coverage, that jobs must be "substantially equal" (not identical), that the employer bears the burden of proving an affirmative defense, and that employees can file EPA claims without first going to the EEOC. Also know the four affirmative defenses and the differences between EPA and Title VII claims.