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Be ready to explain male/female pay disparity—dating back to the time salaries began to diverge

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in Compensation and Benefits,Human Resources

Since Congress passed the Lilly Ledbetter Fair Pay Act to overturn the Supreme Court’s Ledbetter decision, employers have again been in the position of having to defend paying men and women differently—and sometimes that means going back many years, to the time when pay scales began to diverge.

That’s because courts are ruling that employers have to defend why they decided to pay differently at the time, not by today’s standards.

In other words, if you can’t show a court that the decision you made years ago was legal under the Equal Pay Act (EPA), the employee may win.

Here’s why: The EPA outlaws the payment of unequal wages on the basis of gender. To win an EPA case, employees have to show that: (1) their employer pays different wages to employees of the opposite sex; (2) the employees performed equal work in positions requiring equal skill, effort and responsibility; and (3) the jobs are performed under similar working conditions.

Once the employee has done so, the employer has to provide a reason for the disparity unrelated to gender at the time the original disparity occurred.

Recent case:
Barbara Jamilik sued Yale University, claiming that in 1989, she and a male colleague whose jobs shared the same grade, rank and title began to receive different pay. The man was promoted into her classification at that time, and from that moment, the two were always paid differently.

The disparity continued to grow, and eventually Jamilik sued, alleging EPA violations based on her most recent paycheck.

The 2nd Circuit Court of Appeals said that, under the EPA, sharing the same grade, rank and title is a good starting point for assuming the positions should be paid the same. It is then up to the employer to show that the higher-paid employee earned more because of some reason other than sex, such as education, experience or training.

Yale argued that, today, the man received higher pay than Jamilik because he was a better employee.

But the court said his performance at the time Jamilik sued was not relevant. It wanted Yale to show why it paid him more back in 1989, when the pay disparity began. Yale couldn’t do that because it didn’t have documentation going back that far. The court ruled in Jamilik’s favor. (Jamilik v. Yale University, et al., No. 08-5818, 2nd Cir., 2009)

Advice: Make it a routine habit to carefully document why employees holding the same grade, rank or title are receiving different rates of pay. Update your records every time compensation changes are made to anyone in the same category, and keep that documentation indefinitely.

Remember, under the Lilly Ledbetter Fair Pay Act, employees can sue going back two years from the date of their last paycheck that reflects the impact of the discriminatory act. But employers have to be prepared to justify the original pay decision even if it was made decades ago.

Final note: You may also want to make your salary decisions more transparent. Employees are obligated to file their EPA claims soon after they discover the disparity. If salaries are strictly secret, that discovery can come years later.

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