Equal Pay Act: Overview, Benefits, and FAQs Explained

You’ve likely heard the gender pay gap referenced in conversations about workplace equality. Numerous labor studies and statistical reviews have proven that women are often paid 83.7 percent of what their male counterparts are paid for performing substantially similar work under similar working conditions. This pay equity gap was even more significant in decades past.

Shifting perspectives, a greater call for civil rights, and legislation impacting the workplace have made significant strides in rectifying the gender pay gap. The Equal Pay Act is designed to address and enforce wage equality. Here’s how the act’s requirements may impact you as an employer.

What Is the Equal Pay Act?

The Equal Pay Act of 1963 (EPA) is an amendment to the Fair Labor Standards Act (FLSA) regarding salary equality between comparable employees of different sexes. The short version is that a man shouldn’t be paid more for fulfilling job duties equal to a woman’s job duties, although the inverse may also occur. The EPA is one of many labor laws for salaried employees, designed to prevent sex discrimination.

The Equal Pay Act encompasses all forms of compensation an employee may receive. Overtime, reimbursement, paid time off, and insurance are all parts of the equality standard and payroll compliance. Employees must receive equal compensation packages if they’re performing fundamentally equal work.

If a discrepancy exists between equal employees of different sexes, employers must offer the difference to the person receiving less. They may not reduce compensation or eliminate benefits from the employee who receives more.

How Are Workers Protected?

Employment laws exist to protect job applicants and employees from discrimination or unfair labor practices. American employees are prohibited from discriminating against someone on the basis of sex, sexual orientation, gender identity, race or national origin, age, religious or spiritual beliefs, and disability.

These rules apply to both hiring discrimination and pay discrimination. Refusal to hire someone or offer them less pay based on their status as a protected class is prohibited. The Equal Opportunity Employment Commission (EEOC) oversees hiring and compensation discrimination where protected classes are impacted.

How Is Equal Pay Determined?

Equal pay is only relevant when two positions within a company are extremely comparable or essentially identical. Comparability doesn’t necessarily relate to job titles but to duties fulfilled by the person who assumes a role. The standard doesn’t compare across different companies, so you aren’t legally required to match your competitor’s pay for an equivalent position.

The Equal Pay Act utilizes a high standard to determine that positions are demonstrably equal when considering pay rates. Similar does not mean the same under the definition of equal pay.

Single Establishment

Both positions must be offered within a single establishment, which refers to one workplace or multiple workplaces that utilize the same administration team. Equal pay doesn’t refer to separate businesses owned by the same company if they’re managed independently.

Employees who were hired by the same hiring manager or team are considered to work for the same establishment, even if they do so in separate physical locations.

Skill, Ability, and Education Requirements

Skill, ability, and education requirements refer directly to the position in question rather than the individual’s skills, abilities, or education. If two jobs require the same skill set, training, education, or abilities, they’re considered similar positions for the purposes of the Equal Pay Act.

If one employee has an associate’s degree and the other employee has a doctorate degree, the differences in their level of education won’t matter if they’re both sufficiently educated to meet the requirements of the position.

Effort and Responsibility

Equal positions must require the same amount of effort, responsibility, and accountability. Effort refers to both physical and mental effort. A scientist’s job is likely to require a substantial amount of mental effort, and a factory worker’s job would require a wealth of physical effort. Both types of effort are viewed equally.

Responsibility refers to how much an employee is required to keep track of, complete, or oversee. A managerial role would entail more responsibility than a secretarial role. Empowered employees who are allowed a certain degree of self-management also possess high levels of workplace responsibility.

Workplace Conditions

Workplace conditions refer to the circumstances under which a job is performed. A job performed in a hot warehouse where chemicals or fumes may be present is considered a high-risk job, whereas a job in an air-conditioned office is usually considered low-risk.

Exposure to hazards can command higher pay for a position. If two employees work the same job under completely different positions, their jobs may not be comparable enough to warrant equal pay because of the premium associated with hazards.

What Is the Lilly Ledbetter Fair Pay Act of 2009?

The previous reporting requirement for the Equal Pay Act only gave the wronged party 45 days to report a violation after receiving a paycheck they felt was subject to review under the EPA. The Lilly Ledbetter Fair Pay Act recognizes each offending paycheck as a separate event, increasing the statute of limitations across time and giving employees ample time to report violations of the EPA.

How Are EPA Violations Handled?

If an employee believes they have a valid Equal Pay Act violation complaint, they have 45 days upon receipt of a paycheck to contact a representative of the Equal Employment Opportunity (EEO) office and file an equal pay claim. EPA complaints are handled by the EEO’s Civil Rights Center (CRC).

As a result of the Lilly Ledbetter Act, the time period of 45 days restarts after every paycheck an employee receives. This leaves most employees within a perpetually open window for as long as they work with a company without pay disparity issues sufficiently addressed.

Employees who raise claims for EPA violations are protected from retaliation. Employers cannot unlawfully terminate or discipline employees for exercising their legal rights or utilizing their access to employer protections. Terminating an employee without valid cause (i.e. a clear violation of written company policy) will not nullify an EPA complaint.

The Civil Rights Center will investigate the complaint, and the affected employee can seek legal representation. If an employer is found to have violated the Equal Pay Act, the employee is immediately entitled to the wage differential and any other compensation they are owed due to the EPA. Employees may also be awarded additional liquidated damages and compensation for their attorney’s fees.

Employers will face a fine of up to $10,000 upon their first violation. Additional violations can be punishable by up to six months in jail.

Do States Have Wage Discrimination Laws?

State compliance is a separate issue from compliance with federal law. Most states have laws on the books to prevent discriminatory wage rates based on someone’s status as a protected class. State laws may factor in more than sex, with some states writing laws specifically to protect people with illnesses like sickle cell anemia.

It’s important to check laws and compliance issues at a local level. Laws can vary from town to town, so it’s best not to assume that broader state requirements are the only compliance issues that apply to your business. The more specificity you have with compliance issues that impact your business, the better your compliance strategy will be.

You may face state and federal penalties if you’re found noncompliant with equal pay law. Employers must be aware of all pay and labor laws that impact their ability to operate and evaluate their practices for employment discrimination.

Mosey Helps Employers Stay Compliant

Your business has a lot of laws, rules, and regulations to monitor and abide by closely. State compliance adds another level of complexity to the process. Some compliance requirements are designed to impact businesses at a local level, only applying to businesses registered in specific cities or counties. Monitoring and maintaining specific business compliance requirements may feel like a juggling act. Mosey takes all the guesswork out of staying on track.

Mosey’s automated business compliance platform helps business owners keep track of state and local compliance requirements that impact their ability to grow and thrive. Schedule a demo with Mosey to learn how we can help your small business stay on track.