Equal Pay Act

Equal Pay Act

Equal Pay Act is a federal piece of legislation signed into law in 1963 (Cho & Kramer, 2016). The legislation outlaws pay discrimination based on an individual’s sex or state of being either man or woman. This paper explores the importance of companies understanding the Equal Pay Act when they are designing their compensation program.

The Equal Pay Act does not outlaw pay differentials. As such, it is legal for workers to earn different salaries. However, the salary people earn must be as a result of the evaluation process based on the employees’ seniority, merit, and administration (Cho & Kramer, 2016). This means that organizations must have a written down evaluation criterion to mitigate against any possible litigation stemming from the Equal Pay Act.

Despite the passage of the Equal Pay Act several decades ago, gender inequalities in workers’ compensations are still very pervasive, especially when it comes to high-paying occupations. Organizations should be conscious of the fact that gender pay gap are prevalent in different departments and may be caused by a variety of factors. For example, a study conducted in Philadelphia revealed that high-end restaurants are more likely to offer wait-staff positions to female candidates compared to their male counterparts (Cho & Kramer, 2016). The knowledge gained from the organization’s data analysis process regarding the risk and protective factors as far as pay inequality is concerned should shape its internal compensation program.

Sections 211 of the Equal Pay Act provides for the collection of data in place of works selected under this piece of legislation (U.S Equal Employment Opportunity Commission, n. d.).  This section covers areas such as inspections and investigations, records, homework regulations, and state and local agencies. For example, section 211 requires employers to preserve employment and pay-related data and avail this information to relevant government officials (U.S Equal Employment Opportunity Commission, n. d.). This means that data collection and preservation must be an integral part of the internal alignment policy of a company’s compensation program.

At the same time, the Equal Pay Act has several exemptions, which should be reflected in a company’s compensation policy. One of these exemptions pertains to individuals employed in bona fide professional, executive and administrative capacity as well as those working in small-scale agricultural operations (U.S Equal Employment Opportunity Commission, n. d.).  To be on the safe side, a company must ensure that it factors in the exemptions to the Equal Pay Act when drafting the workers’ employment agreements to avoid the possibility of being charged under this law.

In conclusion, the Equal Pay Act should be at the heart of every company’s compensation policy. Each company should not only understand this piece of legislation but should also seek to identify the risk and protective factors as far as pay inequality is concerned. At the same time, companies must ensure that the habit of collecting and preserving pay-related data is part of the organizational culture.

References

Cho, R., & Kramer, A. (2016). Everything you need to know about the Equal Pay Act. Retrieved from https://www.icrw.org/wp-content/uploads/2016/11/Everything-You-Need-to-Know-about-the-Equal-Pay-Act.pdf

U.S Equal Employment Opportunity Commission.  (n. d.). The Equal Pay Act of 1963. Retrieved from https://www.eeoc.gov/laws/statutes/epa.cfm