Layoffs, job restructuring, and wage freezes no excuse for unequal pay

Contributed by Karen Davis

A furniture manufacturing company blamed tough economic conditions as the reason for paying three female managers less than their male counterparts, but a federal appeals court didn’t buy it. The female managers sued under the federal Equal Pay Act (EPA), which generally requires women and men to be paid the same if they perform work of equal skill, effort, and responsibility, under similar working conditions. The only exceptions are if the difference in pay is based on a seniority system, a merit system, a system that measures quantity or quality of production, or any other factor other than sex.

The company claimed that the recession that began in late 2008 was a “factor other than sex.” The company laid employees off and restructured jobs, but the court said those actions didn’t appear to affect the women’s pay.

In addition, the company’s decision to freeze merit-pay increases during the recession simply continued pre-existing wage differences; they didn’t cause them. The women were awarded a total of $204,000 in back pay and other damages, plus $269,877.67 to pay their attorneys, and an additional amount (yet to be calculated) to cover their court costs (Dindinger v. Allsteel, Inc., 8th Cir, April 2017).

Tips: Pay equity continues to be a hot topic, and state legislatures are looking for ways to expand equal pay laws. California’s pay equity law, California Labor Code 1197.5, allows wage comparisons for jobs that require “substantially similar work,” unlike the federal Equal Pay Act which looks at “equal work.” This law, which took effect on January 1, 2016, originally only applied to comparisons by sex, but was expanded to also include race or ethnicity effective January 1, 2017. Oregon’s legislature then jumped into the fray, with 2017 HB 2005, which will allow comparisons of employees who perform “work of comparable character” and establishes 10 protected classes: race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, and age. Meanwhile, enforcement agencies such as the Equal Employment Opportunity Commission (EEOC) and Office of Federal Contract Compliance Programs (OFCCP) continue to pursue initiatives to seek out and eliminate pay disparities. If you decide to conduct a pay equity review, do so under the direction of an attorney in order to preserve confidentiality to the extent possible.

Karen Davis
is a senior employment attorney at Vigilant


Posted in Compensation, HR BLOG and tagged , , , , , .

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