The federal Equal Pay Act (EPA) has been on the books for half a century. President Kennedy signed the legislation in 1963, but it has not wiped out unequal pay.

In recent years, the Equal Employment Opportunity Commission (EEOC) has made a priority of rooting out pay discrimination and has been receptive to investigating claims. It’s important to identify and deal with accusations of pay discrimination quickly and efficiently.

Under the EPA

Pay discrimination cases under the EPA go through the EEOC. (Plaintiffs can easily file with their local EEOC office without an attorney.) If the EEOC office decides an employee has a case, it will notify your company.

Attorneys generally (and rightfully) advise against waiting until a plaintiff takes your company to court – it’s better for both sides to address the issue on your own (i.e., it’s good will, and it saves both sides attorney fees and court costs).

Legal Pay Discrepancies

Under the EPA, employers can pay different wages only if discrepancies are based on seniority, merit, quantity or quality of work produced, says attorney Regina Dinkes. Moreover, wages cover “the entirety of what an employee is paid, including bonuses, benefits and any other form of compensation” beyond basic cash compensation.

Typical employment scenarios that give rise to pay discrimination complaints, according to attorney Andria Ryan, include “a junior employee who works under a male employee asks herself, ‘Why am I doing all the work and he is paid more’?”

Or when a newly recruited male employee is brought in at a higher salary, triggering resentment among female employees.

When specific complaints are voiced in such situations, take them seriously – regardless of whether they appear to have merit – to fix any problems that exist and nip a potential legal action in the bud, Ryan said. “If there is a problem, fix it.”

Best Practices

Don’t wait for a complaint or a notice from the EEOC to address the prospect of pay discrimination issues. Make sure you put formal anti-discrimination policies and procedures in place, educate managers and other employees about them, and conduct regular wage audits to ensure that you are acting consistently with those policies.

Also, “it is a best practice to implement policies and procedures which require employees to report violations of the law to specified individuals, departments and/or an anonymous hotline,” Dinkes said. State that there will be no retaliation against anyone who reports a violation, and have employees acknowledge in writing that they understand all of the above.

Periodically reviewing your payroll and patterns of raises (and written documentation of the rationale for pay change decisions) to look for any potentially discriminatory practices should be more than a casual eyeballing exercise.

You will also need to review promotion decisions in addition to simple changes in compensation. Note: Comparisons cannot be limited to workers with the same job title. “Equal work is determined by taking five factors into account,” said Dinkes: skill, effort, responsibility, working conditions and the establishment.

If a periodic audit uncovers a potential case of discrimination, be sure to address the problem promptly. Doing so is not only the right thing on the merits, but it’s critical from a legal liability perspective.

If the problem winds up in litigation, pay audits are “discoverable” in the legal process. If it is revealed that you spotted a problem and failed to remedy it, you could face punitive damages on top of compensating the employee for being underpaid, warned Ryan.

Steps To Take If the Worst Happens

Dinkes offered the following steps to take if you think you might be about to be sued for pay discrimination:

  • Review all pay documentation and related records and determine which employees may have a legitimate complaint.
  • Review all pay documentation and related records and determine which employees may have a legitimate complaint.
  • Make a good faith effort to address any issues and mitigate damages.
  • Maintain open and good lines of communication with the complaining employee.
  • Do not become angry with the employee, as this might expose you to the charge of retaliation.
  • Do not take any concrete action, such as terminating, disciplining, demoting, reducing the pay or hours of a complaining employee, as these also may be considered retaliatory acts.

Again, dealing promptly and completely with the issue is key. A complaint may seem like a molehill, but take it seriously, investigate it thoroughly and, if there is discrimination, apply the right solution. Failing to follow through could turn that molehill into a mountain of legal trouble.