An equal pay lawsuit brought by the U.S. women's soccer team against U.S. Soccer has once again brought the subject of equal pay to the forefront. If nothing else, the lawsuit is a reminder that pay equity is not just a social and ethical issue. It is also a legal one. With pay equity laws now the norm across the states, employers have an obligation to make sure all their employers are paid what they deserve.
Pay equity laws are here to stay. Employers should get used to them. They should also prepare for tougher laws in the future.
The Equal Pay Act 1963
Pay equity is nothing new as a social issue. In 1963, Congress passed the Equal Pay Act. In so doing, they amended the Fair Labor Standards Act in order to prevent sex discrimination in the payment of wages. The bill specifically stated that such discrimination:
- Artificially depresses wages and living standards
- Inhibits maximum utilization of labor resources
- Leads to labor disputes that ultimately disrupt commerce
- Inhibits the free flow of goods and services
- Amounts to an unfair method of competition.
It is fascinating to realize the 1963 law never directly addressed the idea of fairness. In recent years, several states have taken it upon themselves to tackle that subject. Thus, numerous pay equity laws enacted within the last five years have sought to make equal pay about simple fairness and nothing else.
State Pay Equity Laws
Despite implementation of the Equal Pay Act, there remains some disparity in wages. According to the National Conference of State Legislatures (NCSL), median pay for women still lags behind that of men by some 24%. The good news is that the disparity is down from 62% back in the late 70s. Pay equity laws seek to erase that remaining disparity if possible.
The NCSL says that 42 states now have pay equity laws in place. Eight of those states offer exemptions to small businesses. Exceptions also exist in most states to account for disparities not related to employee sex. These are things like merit pay and seniority.
The general consensus among labor and payroll experts is that America's employers should plan for additional pay equity legislation at the state level. Already a number of states have moved to strengthen outdated laws they believe are not really serving a purpose. California and New York are among them.
Expanding the Law in California
California addressed its pay equity laws a couple of years ago. New legislation more clearly defines requirements for fair pay based on substantially similar work performed equally by men and women. But California legislators didn't stop there. They also expanded the rules to cover ethnicity.
In order to determine whether or not pay is equitable, California employers now must compare what they pay with median wages for similar work across the state. Prior to the law's expansion, they needed only to compare pay within their own work forces.
It is clear that the states intend to strengthen existing pay equity laws in coming legislative sessions. It is no longer a question of 'if' they will do it. Again, pay equity laws are here to stay. They are only going to get stronger as time goes by. Stronger laws are likely to put a greater burden on employers who, at some point, may have to prove pay equity through documentation.
Rest assured we will stay abreast of pay equity laws throughout the states. We consider it part of our responsibility to help ensure our clients remain in compliance.