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Despite EPA’s gender-equity requirements, you do have discretion to set wide salary

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in Centerpiece,Compensation and Benefits,Discrimination and Harassment,Human Resources

The Equal Pay Act (EPA) requires employers to pay women and men equally for substantially equal work. Gender can’t be a salary factor.

That doesn’t mean that employers don’t have considerable flexibility when setting salaries. The fact is that dozens of reasons that have nothing to do with the applicant’s sex may jus­tify different pay scales. That includes education and experience, the appli­cant’s ability to negotiate a higher salary and even the employer’s decision—based on research—that the job should pay more than it does.

Recent case: Beatrice Rhoades worked for the YWCA as an accountant. When she applied for the job, she stated that she was looking for a salary between $28,000 and $31,000. The YWCA offered her $33,000, which was the midrange for the position based on a brief survey of salaries for area nonprofit accountants. Rhoades accepted the offer.

Soon after, she learned that her male predecessor had earned $34,000. She complained, claiming this violated the EPA.

Meanwhile, Rhoades’ boss complained she focused too much on routine matters while ignoring more important audit functions. A few months later, when things didn’t improve, she was fired. Rhoades sued.

Before hiring a replacement, the YWCA contacted a compensation specialist, who informed the nonprofit that the market rate for the position was up to $40,000. A man interviewed for the job, seeking a salary between $35,000 and $40,000. The Y offered him $38,000 and he accepted.

Rhoades then added an EPA claim to her lawsuit.

The court dismissed her case, buying the YWCA’s argument that Rhoades’ predecessor made $1,000 more because he had negotiated up from an initial offer of $33,000. He also had more responsibilities.

The court also agreed with the YWCA’s argument that Rhoades’ male replacement earned more because the market and the applicant demanded more. In addition, it pointed out that if the YWCA had wanted to pay Rhoades less because of her sex, it wouldn’t have offered her higher pay than she herself requested. (Rhoades v. YWCA of Greater Pittsburgh, et al., No. 10-3533, 3rd Cir., 2011)

Final note: Make sure you can always justify every salary offer based on factors other than sex. The HR professional in charge of compensation and hiring should establish set salary ranges for each position and make it a point to regularly review them. A compensation study should reveal whether the position’s pay is at market rates, should be increased or (rarely) should be reduced.

In addition, the salary range should include wiggle room for experience and education, so candidates with exceptional credentials or experience can be offered a starting salary at the higher end of the position range.

In addition, if an applicant you want to hire negotiates with you to increase your initial offer, be sure to create a record of that request, the justification and the company’s response.

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