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'Equal' is the key word in Equal Pay Act claims
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This week we examine the Equal Pay Act of 1963 (EPA), which requires that men and women in the same establishment be paid equal wages for equal work. "Wages" encompass all forms of compensation, including salaries, overtime pay, bonuses, vacation pay, insurance benefits, retirement benefits, stock options, and reimbursement for expenses.
To determine whether two jobs involve substantially equal work, employers must consider whether they require substantially equal skill, effort, and responsibility and expose the employees to similar working conditions. Employers can defeat an Equal Pay Act claim by showing that employees' compensation differences were based on: (1) a seniority system, (2) a merit system, (3) an incentive system, or (4) any factor other than sex. The following questions and answers examine the affirmative defenses available to employers under the Equal Pay Act.
Q: Michael and Amy work as salespeople in the shoe department at a local department store and have roughly the same schedule. Michael earns approximately $1,000 more per month than Amy, however. The store pays its salespeople based on commission, and Michael earns more money because of his higher sales figures. Does Amy have a claim under the Equal Pay Act?
A: Paying employees a commission based on sales volume is a valid form of incentive system. Generally, an employer must demonstrate that its incentive, seniority, or merit system meets five criteria: (1) It wasn't adopted with discriminatory intent, (2) it's a formalized system that contains predetermined sex-neutral criteria for measuring seniority, merit, or productivity, (3) it has been distributed to all affected employees, (4) it's applied consistently to both male and female employees, and (5) it's the reason for the pay disparity between the male and female employee.
Q: Jack and Sue were hired on the same day to work in the maintenance department of the local hospital and perform essentially the same functions. However, Jack works the night shift, and Sue works the day shift. Because he works the night shift, Jack earns approximately $2,500 more per year than Sue. Does their pay disparity violate the Equal Pay Act?
A: At first glance, you might argue that Jack and Sue face different working conditions because they work at different times of the day. The difference between day and night work generally doesn't constitute a difference in working conditions, however. Rather, the hospital will likely be able to avoid liability under the Equal Pay Act's "factor other than sex" catchall. According to that affirmative defense, the employer has to show that employees of both sexes had an equal opportunity to work either shift, the disparity in shift pay serves a business purpose, and gender wasn't the reason it created the pay disparity. The hospital can easily show that its difference in pay meets a valid business purpose because working the night shift is less desirable, which makes it harder to recruit employees for that shift.
Q: John, a data processor at a local hospital, has asked for a leave of absence because of an illness. The hospital has granted his request and has asked one of its female receptionists, Janet, to fill in for him. As a receptionist, Janet earns approximately $5,000 less than John and the other data processors, who are also men. Does the hospital violate the Equal Pay Act if it temporarily reassigns Janet to fill John's position but keeps her at the lower rate of pay?
A: Under the regulations implementing the Equal Pay Act, the hospital's reassignment doesn't violate the statute if two conditions are satisfied: (1) The pay rate isn't based on quality or quantity of production and (2) the reassignment is temporary. But failing to pay the higher rate to an employee who's transferred for longer than one month will raise questions about whether the reassignment is actually temporary. Although there's no definite cutoff point for determining when a reassignment is no longer temporary, courts have upheld reassignments that lasted longer than one month. Nevertheless, employers that temporarily reassign a worker and keep her at a lower pay rate than other employees performing similar tasks should expect more scrutiny from government agencies and the courts. If an employer determines that an assignment won't be temporary, it should immediately begin to pay the reassigned employee equivalent wages to avoid any liability.
Joseph Leonoro is an associate with Steptoe & Johnson PLLC in Charleston. He can be reached at (304) 353-8162 or joseph.leonoro@steptoe-johnson.com.
Copyright 2009 M. Lee Smith Publishers LLC. WEST VRIGINIA EMPLOYMENT LAW LETTER . WEST VIRGINIA EMPLOYMENT LAW LETTER should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only. Anyone needing specific legal advice should consult an attorney. The State Bar of West Virginia does not certify specialists in the law, and we do not claim certification in any listed area. For further information about the content of any article in this newsletter, please contact any of the editors.
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