EPA Compliance: Basic Guidance and Helpful Tips

Compliance is one task on a long list of tasks for managers. Even though it may not be the most interesting task, compliance is a constant battle that requires your attention. The pain in this ongoing battle absolutely offsets litigation and other penalties for non-compliance, but this doesn’t change the fact that compliance can be boring and confusing.

We’re here to help. Particularly, we’re here to discuss one of the most important federal laws that you and your organization must follow.

Starting in the 1960s, federal lawmakers passed a series of legislation intended to protect employees from discrimination in the workplace. One of those pieces of legislation is the Equal Pay Act. Passed in 1963, the Equal Pay Act (the “EPA”) requires that both men and women be given equal pay for equal work in the same establishment.

That said, the law is more nuanced than that. In order to effectively comply with the law, you and your team must be aware of these nuances and must take action as necessary.

Below are some important things to know about the EPA and how you can comply with the EPA. As always, this is not a comprehensive list. You will need to complete any supplemental research—depending on your company’s circumstances. It may also be useful to speak with someone in your company’s human resources or legal departments if you have any specific questions.

Equal Pay Act: The Basics

As stated above, the federal government passed the EPA to abolish wage disparity based on sex. When passing the bill, the U.S. Congress declared, among other things, that sex discrimination depresses employees’ wages and living standards, that it prevents the maximum utilization of available labor resources, and that it constitutes an unfair method of competition.

Specifically, the EPA requires employers to pay male and female employees the same for equal work in the same establishment. There are several important nuances within the statement. The jobs need not be identical, but they must be substantially equal in order for the EPA to apply. What determines if jobs are substantially equal is the content of the job itself, not job titles.

In other words, the EPA says that employers are in violation of the EPA who pay unequal wages to men and women who perform jobs requiring substantially equal (1) skill, (2) effort, (3) responsibility, and that (4) are performed under similar working conditions (5) within the same establishment. For more information about these factors—including some exceptions—please click here.

Ultimately, some types of pay differentials are allowed. You will not violate the EPA if the pay differentials are based on seniority, merit, quantity or quality of production, or a factor other than sex. It is the employer’s job to prove to the Equal Employment Opportunity Commission (“EEOC”)—the federal institution charged with enforcing the EPA—that these “affirmative defenses” apply to the situation at hand.

Compliance Tips

The EPA seems like a simple statute on the surface, yet it can be difficult to comply. This is because some employees—especially small business employees—perform more than one job or function in their day-to-day work.

One of the best ways to address this problem is to embrace documentation. Specifically, it helps to write down the reasons why employees are performing certain jobs and are being paid certain wages. Once you are finished with this task, keep this documentation in a safe place. It may potentially be used as evidence if the EEOC investigates whether you are complying with the EPA.

Along with this, it is wise to create a merit-based earnings and incentive system within your company. Within the system, use objective metrics that focus on quantity and quality of production. Of course, you must follow the system for each and every employee in order for it to work. But by providing no exceptions and following an objective earnings and incentive system, your organization is less likely to follow the EPA.

Finally, education is important. Ensure that your fellow managers understand the basics behind the EPA and how they can comply. Whether that is through formal classroom training or online training, training your employees now will save you from future headaches.

Prioritizing Equality

The EPA is an expansive statute that requires your attention. Whether you are encountering the EPA for the first time or have already needed to comply with the statute, we encourage you to get started today. If necessary, reach out to your company’s lawyers or human resources professionals for more information. By being proactive about EPA compliance, you can eliminate stress and be prepared for any contingencies.