Last Wednesday, business representatives met with the Equal Employment Opportunity Commission (EEOC) to discuss the gender pay gap between male and female employees. According to the Obama Administration, women make $0.79 to every $1 earned by a man, which is something that the President has repeatedly said that he would like to change.
The representatives discussed rules proposed by the EEOC that would require employers to report to the EEOC how much they pay their male and female employees. The EEOC would use this data to get a better picture of the gender pay gap and devise strategies to address it. The rules are set to take place in September 2017, although if a Republican is elected in November, it seems unlikely that they would go into effect.
Regardless of who is elected in November, employers would be wise to take steps to prevent lawsuits alleging that they pay their female employees less than their male employees. Title VII of the Civil Rights Act of 1964 makes it illegal for an employer to discriminate against an employee based on gender. While this means that it is illegal to pay an employee less only because she is a woman, it is not illegal to pay a woman less if there are other factors behind the salary disparity, like her level of education, work experience, and even appearance.
While most employers probably do not purposefully pay women less because of their gender, that might not save them from a lawsuit. If an employer pays its employees based on seemingly arbitrary factors, this could create the impression of discrimination. For example, if an employer pays an employee more because the employer happens to like that employee more, this could create the appearance of discrimination.
Instead, employers should have a set of compensation criteria that they use to evaluate how much to pay an employee. These criteria should take into account factors such as education, experience, job performance, how much business they bring in, and other objective factors. These factors should be applied the same to each employee. Moreover, an employer should maintain records showing that it considered these factors when determining an employee’s pay.
Employers may also want to conduct an audit of their workforce to determine whether women, or any other protected group, are paid less than men. Such an audit should be performed by an employer’s attorney so that it will remain confidential in the event of a lawsuit. Also, as we have discussed before, if an employer believes that all of its female employees are underpaid, it may not want to give all of them a raise at once.
Contact an experienced attorney to make sure that you are taking steps to protect your business from a pay discrimination claim. Spending a little bit of money up front on an attorney can save a lot of money in the long run by avoiding a lawsuit.