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Be prepared to explain why you pay some employees more

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in Compensation and Benefits,Human Resources,Leaders & Managers,Performance Reviews

Chances are, you don’t pay everyone who performs the same job exactly the same amount of money. You may, for example, have negotiated a higher rate of pay for a new employee to fill a critical shortage. Or you may pay less to recently hired employees than those loyal workers who have been with you for several years. Those are all valid and defensible reasons.

That doesn’t mean, however, that you won’t be sued under the Equal Pay Act (EPA) if it turns out that men are being paid on average more than women who hold the same job.

Advice: That’s why it’s a good idea to regularly review your payroll, looking for any lurking problems. If you find a disparity, come up with an explanation based on seniority, merit, production quantity or quality, or any other factor than sex. If there is no explanation that fits in those categories, consider revamping your compensation plan to equalize wages.

Recent case: Her employer discharged Loretta Rosa during a work slowdown because she was the production worker with the worst performance reviews. For more than a decade, she had been a problem employee, unable to get along with others.

When she lost her job, she looked around for a reason to sue. One claim she hit on was equal pay for equal work. She claimed that the company violated the EPA by paying male warehouse workers more than female warehouse workers like herself.

Her case fell apart as soon as the company reviewed its records and discovered that at least one male warehouse worker (who had been hired later than a female counterpart) earned less. It raised seniority as the explanation for the disparity and reasoned that anyone hired later was paid less, regardless of their sex. The court tossed out the case. (Rosa v. Seiko, No. 05-4406, DC NJ, 2008)

Final note: There recently has been renewed interest in federal legislation to improve on the EPA. One proposal would allow employees to sue for salary disparities decades after an alleged discriminatory pay decision. Another would require employers to make sure that comparable jobs, not just equal jobs, provide the same pay. 

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