Pay Equity Trends and Best Practices
April 2 of each year is known as “Equal Pay Day”. The purpose of Equal Pay Day is to shed light on the fact that the average woman must work all of the previous year and through April 2 of the next year in order to earn the same amount as the average man earned the previous year.
Equal Pay Day can serve as the annual event in your organization to trigger you to review your pay practices and to help you to ensure that your organization is compliant with the state and federal laws at issue related to equal pay.
In Iowa, it is an unfair or discriminatory practice for an employer to discriminate against any employee by paying wages to such employee at a rate less than the rate paid to other employees who are employed within the same establishment for equal work on jobs, the performance of which requires equal skill, effort and responsibility and which are performed under similar working conditions. Iowa Code §216.6A(2)(a).
The federal Equal Pay Act is a strict liability statute that does not require an employee to prove that the employer acted with discriminatory intent, only that the employer pays males more than females. In order to avoid liability under the EPA, an employer must show that any pay disparity is justified by (1) a seniority system; (2) a merit system; (3) a pay system based on quantity or quality of output; or (4) a disparity based on any other factor other than sex. 29 U.S.C. § 206(d)(1). The employer under the EPA carries the burden of persuasion and must prove an affirmative defense.
The United States Equal Employment Opportunity Commission (EEOC) and many federal courts have taken the position that the “factor other than sex” is limited to job-related factors.
One of the explanations commonly used by employers in unequal pay claims is the explanation that the applicant negotiated a higher salary and the employer was willing to pay the higher salary in order to recruit the best talent for the role. Employers have sought to use salary negotiations as the “factor other than sex” in their affirmative defense. However, for this affirmative defense to withstand scrutiny, the employer must be able to prove (with documentary evidence) that the negotiation was the actual reason for the pay difference. Frequently, the employer is unable to produce the documents necessary to establish the history of the negotiations or the history of pay increases attributable to salary negotiations.
Another explanation commonly used by employers is that the company chose to issue a salary increase based on employee job performance. Should this be the case, then the performance documents must prove this. Too often, we see equal scoring metrics in the performance documents, but different salary adjustments without any written or substantiated reason for making that decision. Should you choose to reward employees with salary increases based on performance, you must ensure that the comparator list of employees and corresponding salary adjustments will withstand the scrutiny of the EEOC, the judge, and the jury.
Finally, employers tend to use job experience as a “factor other than sex” to explain pay disparity. In the event the employer chooses to use this method, the employer must be able to demonstrate experience is valued equally across gender (and race/ethnicity). One way to prove this is to input data into the company’s human resources information system database (HRIS) from the applicant’s resume and job application materials in order to most accurately describe the employee’s experience in all roles, current and former. The best practice would be to identify how experience relates to the job duties and identify how the company is going to measure experience (i.e. through number of years or quality of the experience) and how the company is going to quantify this in their system. The employer would be well served by developing a policy and then training all human resources staff on the policy to ensure consistency across the organization, remembering, too, to revisit this policy on an annual basis – perhaps around April of each year.
The Equal Pay movement continues to capture the attention of executives, human resources personnel and employees. Being proactive and identifying potential liabilities before a complaint or suit is filed is worth your time and effort today – not tomorrow. Put this on your list of to-dos for this quarter and, as always – please feel free to reach out to MWH Law Group, LLP with any questions or assistance you may need on this important issue.
This article is a publication of MWH Law Group LLP and is intended to provide general information regarding legal issues and developments to our clients and other friends. It should not be construed as legal advice or a legal opinion on any specific facts or situations. For further information on your own situation, we encourage you to contact the author of the article or any other member of the firm.
© MWH Law Group LLP 2019. All rights reserved.
CONTACT ATTORNEY JULIE T. BITTNER
Julie T. Bittner
Partner – West Des Moines
1501 42nd St., Suite 465, West Des Moines, IA 50266
P: (515) 453-8509 / F: (515) 267-1408
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