Business Law

Equal Pay

If you operate a small business, you will want to make sure that you aren't violating any of the equal pay laws that require you to give equal compensation to men and women when they have the same job duties and qualifications and prohibits compensation discrimination on the basis of race, color, religion, sex, national origin, age or disability. There are several federal laws that protect employees' rights to be free from discrimination in their compensation. These laws are:

All forms of compensation are covered by these laws, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses and benefits.

The Equal Pay Act

The EPA requires that men and women be given equal pay for equal work. The jobs need not be identical, but they must be substantially equal. It is job content, not job titles, that determines whether jobs are substantially equal. Specifically, the EPA provides that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment.

Differences in pay are allowed when they are based on a:

  • Seniority system
  • Merit system
  • System which measures earnings by the quantity or quality of production
  • Factor other than sex

The equal pay requirements do not apply to employees who fall into any of the following categories:

  • Employees of amusement or recreational establishments having seasonal peaks
  • Seamen on non-American vessels
  • Employees engaged in the fishing industry, including offshore seafood processing
  • Agricultural employees of an employer who didn't use more than 500 man-days of agricultural labor in any quarter of the preceding calendar year
  • Agricultural employees who are members of the employer's immediate family
  • Hand-harvest laborers who are paid on a piece rate basis, commute daily from their permanent residences, and whose agricultural employment, if any, during the preceding calendar year was for less than 13 weeks
  • Hand-harvest laborers under 17 years of age who are employed at a piece rate on the same farm as their parents
  • Workers principally engaged in the range production of livestock, such as cowboys and shepherds
  • Employees of weekly, semiweekly, or daily newspapers of less than 4,000 circulation, the major part of which is in the county of publication or contiguous counties
  • Switchboard operators employed by independently owned public telephone companies having not more than 750 stations
  • Employees who are casual babysitters or companions to ill or aged persons unable to care for themselves

Title VII, ADEA and ADA

Title VII, the ADEA and the ADA prohibit compensation discrimination on the basis of race, color, religion, sex, national origin, age or disability. These characteristics are considered "protected classes" under these laws, and employees can't be discriminated against by being paid less based on these characteristics. Unlike the EPA, there is no requirement that the employee's job be substantially equal to that of a higher paid person outside the employee's protected class, nor do these laws require that the employee work in the same establishment as a comparable employee.

A violation of the equal pay requirement under these three laws occurs when any of the following are true:

  • An employer pays an employee with a disability less than similarly situated employees without disabilities and the employer's explanation (if any) doesn't satisfactorily account for the differential
  • An employer sets the compensation for jobs predominately held by, for example, women or African-Americans below that suggested by the employer's job evaluation study, while the pay for jobs predominately held by men or whites is consistent with the level suggested by the job evaluation study
  • An employer maintains a neutral compensation policy or practice that has an adverse impact on employees in a protected class and can't be justified as job-related and consistent with business necessity. For example, if an employer provides extra compensation to employees who are the head of a household, because that practice may have an unlawful disparate impact on women


An employer can't retaliate against an employee for opposing employment practices that discriminate based on compensation or for filing a discrimination charge, testifying, or participating in any way in an investigation, proceeding, or litigation under any of the right to equal pay laws.

Employee's Proof

Under the EPA, an employee must prove that he or she was paid less than a comparable member of the opposite sex in order to win a lawsuit. Under the other equal pay laws, an employee must prove that he or she was paid less than he or she deserved to be paid because they are a member of one of the protected classes.

Complaint or Lawsuit

An employee who believes that he or she has a pay discrimination case against their employer may file a complaint with the EEOC or pursue a private lawsuit against their employer.


If compensation discrimination is found, the remedy will probably include a salary increase and back pay in the amount of the unlawful difference in pay. Compensation discrimination is always remedied by raising the pay of the lower-paid person to match the pay of the higher-paid person. The victims are also entitled to their attorneys' fees and costs, and to damages that may be available under the particular law. Injunctive relief, which is a court order to do or not to do a certain act, also is available under EPA.

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