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Getting out in front of gender-based, wage disparity problems

| May 3, 2021 | Employer Defense

Nearly 60 years have gone by since Congress passed the Equal Pay Act of 1963. Though the law was intended to end gender pay disparity, a wage gap persists. The California Commission on the Status of Women and Girls says there’s a gender wage gap in 97 percent of occupations, though there is disagreement over the extent of the gap and how best to measure it.

Regardless of how experts and individuals calculate the value of the difference in pay for men and women, there are federal and state laws prohibiting wage differences based on gender. Employers who don’t comply run the risk of negative outcomes in legal actions taken by the California Labor Commissioner’s Office, the Equal Employment Opportunity Commission (EEOC) or lawsuits filed by current or former employees.

Toughened law

California’s Equal Pay Act of 1949 predated the federal measure by more than two decades, prohibiting unequal pay for employees of the opposite sex who perform “equal work.” A few years ago, the Fair Pay Act strengthened the law, prohibiting unequal pay for employees of the opposite sex who do “substantially similar work.”

Fair Pay also narrowed defenses available to employers to justify paying an employee of one sex less than an employee of the opposite sex for substantially similar work. Whatever factors an employer uses now to justify a pay difference (such as different levels of experience, training or education), they must all be job-related.

Compliance tips

The California Commission on the Status of Women and Girls offers tips for compliance with current gender wage equity law:

  • Review job descriptions: these don’t by themselves determine whether two employees perform substantially similar work, but they are evaluated.
  • Education: employers should make sure that managers and supervisors who make wage recommendations understand the law and which factors they can/cannot use in making their recommendations.
  • Document compensation decisions
  • Review employee wages: an audit or review can be performed to identify wage disparities and to make compensation adjustments
  • Retaliation: don’t retaliate or discriminate against employees who file wage disparity claims

Another step

The organization also advises employers who review compensation in order to identify a gender wage disparity to do the following:

  • Identify employees performing substantially similar work
  • Compare wage rates for workers of the opposite sex
  • If there are differences in pay, find the reason for the disparity
  • Fix disparities that can’t be explained by seniority or a merit system or a business-required factor such as training, education or experience

There is active enforcement of both California law and federal law regarding compensation and gender, as well as the ever-present possibility of litigation by current or former employees. You should discuss concerns with an experienced legal professional.