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  3. Discrimination
    4.  » Pay or Compensation Discrimination

Pay or Compensation Discrimination

Pay or compensation discrimination occurs when employees performing similar work do not receive similar remuneration. Pay discrimination also occurs when a pay differential has an illegitimate basis such as race or sex. Pay discrimination based on an employee’s membership in a protected category like race, disability, or sex, is prohibited by antidiscrimination laws. Relevant laws include Title VII, the ADA and ADEA, state antidiscrimination laws, and the Equal Pay Act which specifically addresses pay discrimination on the basis of sex. This page will explain pay or compensation discrimination in more detail.

  1. What is pay or compensation discrimination?
  2. What criteria is used to determine whether or not an employer has committed pay or compensation discrimination?
  3. What laws prohibit pay or compensation discrimination?
  4. Who is covered by the law?
  5. Can an employer pay me less because I’m a woman? Can I be paid less because I’m a man?
  6. Is it illegal to give different benefits to male and female employees?
  7. What are the remedies available to me?
  8. Am I protected against retaliation under the law?
  9. How can I file a complaint/how long do I have to file?

1. What is pay or compensation discrimination?

Pay discrimination (also known as compensation discrimination) occurs when employees performing otherwise substantially equal work do not receive the same pay, or remuneration, for their effort. It is job content and not job titles that determine whether or not jobs are substantially equal. Federal law looks to see that individuals performing jobs that require substantially equal skill, effort, responsibility, and under similar working conditions are compensated equally for their time. Discrimination can occur due to sex or race for example; federal law prohibits pay discrimination in both of these situations. All forms of pay are covered by law, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.

2. What criteria is used to determine whether or not an employer has committed pay or compensation discrimination?

The law looks to a number of factors when determining whether or not pay or compensation discrimination has occurred. Each of these factors is summarized below and each category of the analysis must be substantially similar in order for a plaintiff to successfully bring a claim based upon pay or compensation discrimination:

  • skill: measured by factors such as the experience, ability, education, and training required to perform the job. The key issue is what skills are required for the job, not what skills the individual employees may have.
  • effort: the amount of physical or mental exertion needed to perform the job.
  • responsibility: the degree of accountability required in performing the job.
  • working conditions: encompasses two factors: (1) physical surroundings like temperature, fumes, and ventilation, and (2) hazards.
  • Establishment: The prohibition against compensation discrimination under the EPA applies only to jobs within an establishment. An establishment is a distinct physical place of business rather than an entire business or enterprise consisting of several places of business. In some circumstances, physically separate places of business may be treated as one establishment. For example, if a central administrative unit hires employees, sets their compensation, and assigns them to separate work locations, the separate work sites can be considered part of one establishment

Pay differentials are permitted when they are based on seniority, merit, quantity or quality of production. These are known as affirmative defenses and it is the employer’s responsibility to prove that they apply.

3. What laws prohibit pay or compensation discrimination?

  • Equal Pay Act– requires that man and women be given equal pay for equal work in the same establishment. The jobs need not be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Specifically the EPA provides that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment. A more detailed explanation of these factors can be found in the answer to question 2.
  • Title VII – Part of the Civil Rights Act of 1964 which deals with discrimination.
  • ADEA – Age Discrimination in Employment Act of 1967.
  • ADA – Americans with Disabilities Act.

Title VII, ADEA, and ADA prohibit compensation discrimination on the basis of race, color, religion, sex, national origin, age, or disability. Unlike the EPA, there is no requirement that the claimants job be substantially equal to that of higher paid person outside the claimant’s protected class, nor do these statutes require the claimant to work in the same establishment as a comparator.

Compensation discrimination under Title VII, the ADEA, or the ADA can occur in a variety of ways. For example:

  • An employer pays an employee with a disability less than similarly situated employees without disabilities and the employer’s explanation (if any) does not satisfactorily account for the differential.
  • An employer sets the compensation for jobs predominately held by, for example, women or African-Americans below that suggested by the employer’s job evaluation study, while the pay for jobs predominately held by men or whites is consistent with the level suggested by the job evaluation study.
  • An employer maintains a neutral compensation policy or practice that has an adverse impact on employees in a protected class and cannot be justified as job-related and consistent with business necessity. For example, if an employer provides extra compensation to employees who are the head of household,i.e., married with dependents and the primary financial contributor to the household, the practice may have an unlawful disparate impact on women.

Note that there are separate laws protecting employees of federal contractors from pay discrimination:

  • Executive Order 11246 forbids federal contractors that do over $10,000 in government business per year from discriminating in employment decisions on the basis of race, color, religion, sex, sexual orientation, gender identity or national origin.
  • Executive Order 13665 protects employees of federal contractors from discrimination based on compensation inquiries, discussions, or disclosures.
  • Section 503 of the Rehabilitation Act prohibits federal contractors from discriminating in employment decisions based on disability.
  • The affirmative action provisions of the Vietnam Era Veterans’ Readjustment Assistance Act prohibit federal contractors from discrimination in employment decisions based on protected veteran status.

For more information on pay discrimination as applicable to federal contractors and their employees see our federal contractor’s page.

4. Who is covered by the law?

Title VII covers all private employers, state and local governments, and educational institutions that employ 15 or more individuals. These laws also cover private and public employment agencies, labor organizations, and joint labor management committees controlling apprenticeship and training.

Many state laws also make it illegal to discriminate on the basis of sex. For more information, please see our page on the minimum number of employees needed to file a claim under your state law.

The law’s protections apply to both current workers and job applicants. If you are a current employee and are fired, not promoted, or not accommodated due to your sex or gender, you are protected. If you are not hired due to your sex or gender, you are also protected.

5. Can an employer pay me less because I’m a woman? Can I be paid less because I’m a man?

The Equal Pay Act (EPA) makes it illegal to discriminate on the basis of sex in the payment of wages or benefits. The laws against discrimination in compensation cover all forms of compensation, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.

The EPA requires that men and women be given equal pay for equal work in the same establishment. The jobs need not be identical, but they must be substantially equal. It is the content of the job, not job titles, that determines whether jobs are substantially equal. Unlike the EPA, Title VII does not require that the job of the person claiming discrimination be substantially equal to that of a higher paid person of the other sex, nor does Title VII require the person claiming discrimination to work in the same establishment as the higher paid person. However, Title VII, unlike the EPA, requires proof of intent to discriminate on the basis of sex, while the EPA does not require proof of discriminatory intent.

Under the EPA, employers are prohibited from paying unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment. The law defines these terms as follows:

  • skill: measured by factors such as the experience, ability, education, and training required to perform the job. The key issue is what skills are required for the job, not what skills the individual employees may have.
  • effort: the amount of physical or mental exertion needed to perform the job.
  • responsibility: the degree of accountability required in performing the job.
  • working conditions: encompasses two factors: (1) physical surroundings like temperature, fumes, and ventilation, and (2) hazards.

Note that:

  • Employers may not reduce wages of either sex to equalize pay between men and women.
  • A violation of the EPA may occur where a different wage is or was paid to a person who worked in the same job before or after an employee of the opposite sex.

While there are some differences between Title VII and the Equal Pay Act, these federal laws are enforced by the same administrative agency, the Equal Employment Opportunity Commission (EEOC).

6. Is it illegal to give different benefits to male and female employees?

Employers are not allowed to condition benefits available to employees and their spouses and families on whether the employee is the “head of the household” or “principal wage earner” in the family unit, since that status bears no relationship to job performance and discriminatorily affects the rights of female employees.

An employer cannot make benefits available:

  • for the wives and families of male employees where the same benefits are not made available for the husbands and families of female employees;
  • for the wives of male employees which are not made available for female employees; or
  • for the husbands of female employees which are not made available for male employees.

It is also against the law for an employer to have a pension or retirement plan which establishes different optional or compulsory retirement ages based on sex, or which differentiates in benefits on the basis of sex.

7. What are the remedies available to me?

Victims of pay discrimination can recover remedies to include:

  • back pay
  • hiring
  • promotion
  • reinstatement
  • front pay
  • compensatory damages (emotional pain and suffering)
  • punitive damages (damages to punish the employer)
  • other actions that will make an individual “whole” (in the condition he or she would have been but for the discrimination)

Remedies also may include payment of:

  • attorneys’ fees
  • expert witness fees
  • court costs.

An employer may be required to post notices to all employees addressing the violations of a specific charge and advising them of their right to be free of discrimination, harassment, and retaliation. If necessary, such notices must be accessible to persons with visual or other disabilities that affect reading.

The employer also may be required to take corrective or preventive actions with regard to the source of the discrimination and minimize the chance it will happen again, as well as discontinue the specific discriminatory practices involved in the case.

Your state law may allow for greater or different remedies than federal law.

8. Am I protected against retaliation under the law?

Yes, It is unlawful to retaliate against an individual for opposing employment practices that discriminate based on compensation or for filing a discrimination charge, testifying, or participating in any way in an investigation, proceeding, or litigation under Title VII, ADEA, ADA or the Equal Pay Act. See our page on Discrimination Retaliation for more information about anti-retaliation laws.

9. How can I file a complaint / How long do I have to file?

Select your state from the map below or from this list.

Washington Oregon Idaho Montana North Dakota Nevada Utah Arizona California New Mexico Colorado Wyoming South Dakota Nebraska Kansas Texas Oklahoma Louisiana Mississippi Arkansas Alabama Tennessee Missouri Iowa Minnesota Wisconsin Michigan Illinois Indiana Florida Georgia South Carolina North Carolina Virginia Kentucky Ohio West Virginia Pennsylvania New York Vermont Massachusetts Rhode Island Connecticut New Jersey Delaware Maryland Maine New Hampshire District of Columbia Alaska Hawaii

 

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