Be prepared to offer rock-solid reasons for pay levels — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Be prepared to offer rock-solid reasons for pay levels

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in Compensation and Benefits,Human Resources

Simply said, federal law requires you to provide men and women equal pay for equal work. While some situations dictate that you set pay differentials, say, for seniority, merit or quantity or quality of work, you must prove your reasons, based on a sound business explanation that doesn't hint of gender bias.

As the following case shows, poorly documenting your reasons for pay levels can easily invite an equal-pay lawsuit. Always look at the ability, education and experience required to perform a job, not what skills individual employees possess, when setting wages. And focus on the content of a job, not the person's title, when setting pay grades.

With equal-pay complaints on the rise, now's a good time to evaluate your pay levels and see if your organization is complying.

Recent case: Robin Lawrence worked full time as a trade show specialist earning $756 a week when she left the company. Nick Bonacorso, the male employee who replaced her, was paid $900 a week and given a company car.

Lawrence sued, alleging Equal Pay Act violations. The company argued that the pay disparity reflected Bonacorso's prior work experience and his record as a top revenue producer. But a jury didn't buy it, ruling in Lawrence's favor and awarding her $10,000 in lost wages, $125,000 for emotional distress and $1 million in punitive damages.

A federal appeals court agreed, saying both jobs required the same work, skill and responsibility. The company couldn't produce any detailed revenue comparisons between the two trade-show specialists. Also, the court pointed to several damning statements Lawrence's supervisor made including, "Well, she makes damn good money for a woman."

The appeals court killed the $1 million punitive damage award because it believed the company didn't act with "malice and reckless indifference." (Lawrence v. CNF Transportation Inc., No. 02-1520, 8th Cir., 2003)

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