Employers Beware The Equal Pay Act Prohibits Rate Reductions

Issue: You have discovered that in one of your company’s departments, a supervisor has systematically been paying males less than females for the same work. Upon being confronted with this inequity, the supervisor, feeling the budget pinch, suggests that pay rates for females be reduced. How should you respond?

Achieving compliance with equal pay standard. In order to comply with the Equal Pay Act, lower rates paid to females performing the same work as males must be increased to the levels of higher rates paid to males. Similarly, lower rates paid to males who perform the same work as females would have to be raised to the higher rates paid to females. Rates can be equalized only by increases; reducing rates to equalize pay is prohibited by the statute. These rules apply as well to the elimination of unlawful differentials in the draw of employees who work on commission.

Remember, the equal pay directive applies only where both sexes perform equal work in the same establishment. Although the directive alone would appear to permit an employer to assign men and women to different operations within an establishment, or to restrict employees of particular establishments to one sex, such actions would violate the federal sex discrimination ban.

Even under the Equal Pay Act, if a job performed by a man becomes vacant and then is filled by a woman, the employer cannot pay the woman a lower wage rate than was paid for the same job when performed by the man. Similarly, an employer cannot remove all employees of one sex from a particular job and retain employees of only one sex in a job previously performed interchangeably or concurrently by both sexes.

Where wage rate differentials have been or are being paid on the basis of sex to employees performing equal work, rates of higher paid employees may not be “red circled” in order to comply with the statute. The Supreme Court has ruled that an employer does not cure an unlawful wage differential between an all-male and an all-female shift by opening up the men’s shift to women. The same is true with respect to separate job classifications.

Don’t wait for a court to equalize the rates.
In equalizing the rates of male and female employees doing equal work, a court may “incidentally” eliminate any legal differentials in the rates of the same sex when making upward adjustments to eliminate unlawful sex differentials. This will happen if there is no employer plan establishing lawful differentials based on seniority, merit, incentives or any other factor other than sex. Courts don’t have the discretion that employers have to establish these kinds of differentials.

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