The Ultimate Guide to the Equal Pay Act

Equal Pay Act Featured Image

The Equal Pay Act was one of the first pieces of legislation in the US aimed at reducing gender-based wage discrimination at work. At the time and today, women are often paid less for doing the same work as men.

Payscale Statstics Equal Pay Act

Source: Payscale

These infographics by PayScale explain the problem better than we could ever articulate in words – this wage gap is what the Equal Pay Act sought to address all those years ago.

Unfortunately, the above infographics are from 2021. The wage gap is still just as prevalent. This is not to say that the wage gap does not exist in some industries in the opposite direction – i.e. where men earn less than women. Employers must consider both perspectives when enforcing equal pay.

This article aims to be your guide to understanding the Federal Equal Pay Act and the obligations it places on employers. 

What is the Equal Pay Act? 

The Equal Pay Act was signed by President Kennedy in 1963 as an amendment to the Fair Labor Standards Act. It is contained under Volume 29 of the United States Code, from section 206(d) onwards. The Equal Pay Act of 1963 mandates that employers cannot award unequal sums as wages to men and women who work jobs that require “substantially equal skill, effort, and responsibility under similar working conditions”. Essentially, the Act guarantees equal pay for equal work and ensures gender pay equity. 

Key Terms of the Equal Pay Act Act

Equal

Equal means substantially similar in overall job content, not exactly similar in all aspects. The job duties must be closely related and/or very similar. Minor divergence in skill, effort, responsibility or job duties does not render the work unequal. 

Skill

Skill is measured by factors such as experience, training, ability, and education. The key is to match the skills of the employee to what the job requires. 

Effort

Based on the physical and mental exertion put into the job. Can be more than just what the job requires and is dependent on how much the employee puts in. 

Responsibility

The accountability that the employee exerts within the job role. 

Working Conditions

This includes physical conditions such as pollution, temperature, and terrain and hazards typical to the job role. 

Exemptions 

Seniority System

Seniority can be based on position within the company or from years that the employee has been working for the company or within the relevant industry (their experience). 

Merit System

Merit can either be based on academic and prior achievements to starting the job or achievements that the employee has earned during their tenure at the company. Either may be a valid reason for a company to offer that employee more in pay. 

Measurement of Production

This is exactly as it sounds – simply offering an employee a higher wage depending on how much they produce. This takes into account both the quality and quantity of work product. Furthermore, this extends past mere production of tangible products, as work products can also be intangible or intellectual property. 

Different Differential

This provides that pay disparity based on any other factor than sex is not held to be in violation of the Act. However, there has been little illumination of what these factors may be. The Paycheck Fairness Act has since made some leeway into this by clarifying that this may include factors such as education, experience, or training. 

Equal Pay for Equal Work

Types of Payment Covered by the Equal Pay Act

The Equal Pay Act covers all forms of salary or payment, including: 

The Equal Pay Law is overseen and regulated by the Equal Employment Opportunity Commission (the EEOC). 

What is the Equal Employment Opportunity Commission?

The EEOC is based in Washington but has 53 field offices around the US. Its leadership is appointed directly by the President and is made up of five commissioners and a general counsel. It also co-operates with the Fair Employment Practices Agency (FEPA) which is the state-level equivalent of the EEOC.

This commission is in charge of enforcing the Equal Pay Act and similar federal laws that make it illegal for an employer to discriminate against a job applicant for several reasons – one of which is their sex. The EEOC regulates most employers who have at least 15 employees. 

US Equal Employment Opportunity Commission

What are the Powers of the EEOC? 

Alongside this, the EEOC works with several other agencies by offering them guidance and support on all matters related to employment discrimination and the Government’s equal employment opportunity program. The EEOC further acts as a hub for mediation and litigation on many things to do with employment discrimination. 

Where a charge is brought to the EEOC’s attention, they may choose to investigate it. Their role is to assess the allegations in the charge and make a finding. If they find that discrimination has occurred, then they will first attempt to settle the charge. Failing that, they will resort to lawsuits when necessary to protect the rights of the individual and the interests of the public. 

However, the number of cases that the EEOC litigates is small, therefore, there is little for businesses to worry about in that respect. When deciding to file a lawsuit, the EEOC will consider factors such as:

  • The strength of the evidence 
  • The issues in the case
  • Any wider impact that the lawsuit may have on battling workplace discrimination

Nevertheless, this doesn’t fully eliminate the possibility of a lawsuit against you as an employer. Employees have the ability to directly file a lawsuit against the employer on matters of equal pay discrimination. 

Equal Pay Lawsuits by Employees

Employees wishing to bring equal pay lawsuits under the Equal Pay Act do not need to file a charge with the EEOC. They can instead go ahead with filing a lawsuit directly through the court system. However, it might be worth filing a charge with the EEOC as well prior to proceeding with a court claim as the EEOC may be able to arrive at a satisfactory result through its mediation and adjudication system. This may be a cheaper and quicker option when compared to a long drawn out court case.

For an employee to succeed in their claim, they have the burden to prove that: 

  • the employer offers the opposite sex a higher wage
  • employees perform equal jobs requiring substantially equal amounts of skill, effort, and responsibility 
  • the jobs are performed under substantially similar working conditions

There is no requirement that both employees must be performing identical tasks in identical working conditions. Lewis v City of Union City, Georgia, et al (2019) held that jobs which were ‘similarly situated in all material aspects’ were sufficient. 

Employees wishing to file a lawsuit need to be mindful of the statute of limitations. They must file a lawsuit within two years from the date of the pay discrimination. Employees have three years where the discrimination was willful. The full details of the statute of limitations are contained under section 255 (a) Equal Pay Act

Women Earn Less than Men

Penalties for Violation of the Equal Pay Act

Employers who breach the law of equal pay will be in violation of the Equal Pay Act and as such, they will open themselves up to legal vulnerability. This can come in a few forms: 

Penalty Description
Right of Action Employers that violate the Equal Pay Act accrue a right of action against them by the employee. The statute of limitation for this right of action is two years from the date of the alleged discrimination.

An employee’s right of action will be terminated where a complaint is filed by the Secretary of Labor under s217 Equal Pay Act.

Damages If the action is successful, the employer will be liable to the employee in the amount of their unpaid minimum or overtime wages. In addition, the employer must pay the employee another sum amounting to the same value as that of the unpaid wages. I.e. in total, the employer will have to pay the employee twice what they are owed originally. 

Where the employee’s unpaid wages are transferred to them prior to the completion of the lawsuit and where it is supervised by the Secretary of Labor, it shall constitute the employee waiving their right of action. 

The Secretary can bring an action at court to recover any unpaid wages and an equal amount as liquidated damages on behalf of the employees. Where this takes place, the employee loses any separate right of action.  

Costs  Where the employer loses an action at court, they will have to cover both the employee’s and their own legal fees. This should act as a further deterrent for employers and encourage out-of-court settlements. 
Civil Penalty If an employer repeatedly or willfully violates section 206 of the Equal Pay Act, then each time they do so, they are liable to a civil penalty of up to $1,100 per violation. 

Section 216(2) Equal Pay Act

Reputational Damage Another cost to consider is the damage to the company’s reputation and business. While this is not a direct penalty of a wage discrimination lawsuit, it is a lead on the effect that is best avoided – yet another thing to deter employers from the court. 

Further Regulations to Consider

The Equal Pay Act is 57 years old this year and considering its age, there are bound to be updated pieces of legislation. However, there haven’t been that many advances as the terms of the Equal Pay Act were clear (although, not often adhered to). Below, you will find several pieces of legislation (primary or secondary) which may be applicable to you. 

Name Description of Change
The Paycheck Fairness Act 2017 Updated the Equal Pay Act and brought the following (main) changes: 
  • Employers must demonstrate that wage differentials are based on factors other than sex
  • Strengthened penalties for equal pay violations by allowing for compensatory damages where the employer acted with malice
  • Prohibited retaliation from employers against employees who disclose their own wages
  • Inserted the words ‘bona fide’ meaning genuine/good-willed into the text of the Equal Pay Act, requiring any divergence in pay to be for a genuine reason such as experience or education

For further info, click here.  

Lily Ledbetter Equal Pay Act 2009 This legislation overturned the decision of the courts in Ledbetter v Goodyear. Under the Act, each gender-unequal pay-check is a new violation of the law. This can lead to employers accruing multiple penalties over the course of employment. 
Fair Pay Act 2013 Seeks to end wage discrimination against those who work in female or minority-dominated jobs by making sure that equal work receives equal pay. The act does not apply to small businesses and makes similar exceptions to the Equal Pay Act by allowing for wage disparity through seniority, merit, and quantity/quality of work. 
Overseas Legislation Following the implementation of the Equal Pay Act, other nations took notice and followed suit with similar legislation. One notable one is the Equal Pay Act of the UK which has since been replaced by the Equality Act 2010. As many companies operate multi-nationally, it is important to seek advice in each of the jurisdictions that the company operates in for any divergence in law or practice.