HR Solutions: Audit policies to ensure Equal Pay Act compliance

Lynne Haggerman is president/owner of Haggerman & Associates, a firm providing outplacement, retained search and management consulting/training on human resource issues.

Nationwide statistics reflect that, on average, females receive less pay than males for jobs primarily alike. The Equal Pay Act of 1963 forbids paying one sex less than the other for positions substantially similar. Sex discrimination also is not allowed in benefits and other payments.

The EPA prohibits paying one gender less than the other based solely on the person's pay at his/her previous employer. One sex may not be paid less, even if the average cost of employing that gender is greater. In addition, paying differently solely on the grounds of working different shifts is forbidden.

Private businesses and the federal, state and local governments are required to comply if employing more than two staff. Schools, hospitals, police, public health, fire prevention, and parks and recreation enterprises remain exempt.

The law is enforced by the Equal Employment Opportunity Commission. Violations consist of personal liability for the individual supervisor.

The act includes six exceptions that enable companies to pay unequal wages.

The first exclusion is if pay is based upon different locations.

The second is if the job at issue does not require equal skill. Skill is defined in terms of ability, training, education and experience. Skill is measured in terms of job requirements, not the skills and qualifications of the associate in the position.

The third is if the jobs require unequal amounts of mental or physical exertion.

The fourth is if the positions have unequal responsibility. Responsibility is defined as the amount of authority, the degree of accountability and the consequences of poor performance. In addition, dissimilar physical environments and hazardous working conditions may be taken into account.

The fifth is if pay is determined by a bona-fide incentive system, such as quantity or quality of production.

The sixth is if pay differences are based on any factor other than sex. The factors might include performance, a seniority system, longevity of service, a merit system based upon performance, disciplinary actions resulting in demotion, and/or the completion of job-related training programs.

Implement two processes to ensure compliance. First, document the nondiscriminatory reasons for the starting salary of each new hire, and maintain the record in the personnel file. Second, conduct regular audits of pay policies and incentive systems. Confirm that a job description is available for each position that clearly states all duties, the working conditions, and the level of skill and effort required to perform the areas of accountability. If utilizing merit systems based upon performance, apply objective, written standards and conduct systematic evaluations on a regular basis.

Use the results of the audits to determine the positions entitled to equal pay. If differences are discovered between men and women performing the same or substantially the same job, ensure the business is able to prove the differences are based on some factor other than gender. If this is not possible, raise the pay of the underpaid worker. The safest course is to make the pay increase retroactive three years due to the three-year statute of limitations.