Labor Discrimination - Equal Pay

Labor Discrimination - Equal Pay Act - Law and Reality

The objective of this work is to examine law and regulations relating to labor discrimination, the equal pay act and the reality of labor discrimination in today's workforce.

DEFINITION of LABOR MARKET DISCRIMINATION

The work of Becker (1957) defines 'Labor Market Discrimination' by stating that Labor Market Discrimination "...may be in the form of differences in wage rates for workers who are equally productive but who are different in terms of their personal characteristics including race, age, religion, nationality or education. Labor market discrimination also comes in the form of job exclusion upon the basis of social class, union membership or political beliefs. (Becker, 1957)

BACKGROUND to the STUDY

The Equal Pay Act (EPA) is a federal law that prohibits discrimination based on the individual's gender of the payment of wages. The EPA was enacted by Congress as an amendment to the Fair Labor Standards Act, to rectify the conditions created by the inequities in pay existing based on gender and specifically designed to rectify the disparity in the wages paid to women. The enactment of the Equal Pay Act resulted in Congress making the findings as followings in relation to gender-based wage differentials:

depresses wages and living standards for employees necessary for their health and efficiency;

prevents the maximum utilization of the available labor resources;

tends to cause labor disputes, thereby burdening, affecting, and obstructing commerce;

burdens commerce and the free flow of goods in commerce; and Construes an unfair method of competition. (AAUW, 2008)

The Equal Pay Act specifically states as follows:

No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee." (AAUW, 2008)

The difference between the Equal Pay Act and Title VII, is that Title VII of the Civil Rights Act was passed in 1964, which was one year after the passing of the Equal Pay Act. Title VII states:

It shall be unlawful employment practice for an employer to discriminate "against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." (42 U.S.C. 2000e; as cited by the AAUW, 2008)

Therefore, while the Equal Pay Act places a prohibition on discrimination of wages based on gender, Title VII prohibits all discrimination relating to employment which is inclusive of the hiring, termination and promotion as well as the wages of the individual upon the basis of race, religion, color or national origin and additionally prohibits it upon the basis of the gender of the individual. Individuals who have experiences gender-based pay inequity have the choice of filing under Title VII or the EPA however, it might be more advantageous to file under the EPA for the following reasons:

The individual can file a lawsuit under the EPA without first filing a complaint with the U.S. Equal Employment Opportunity Commission (EEOC). Under Title VII, the individual must file a complaint with the EEOC and the EEOC must issue you a "Right to Sue" letter before the individual can file a lawsuit in federal court.

The EPA has a longer statute of limitations than Title VII. EPA wage discrimination claims must be brought within two years of the first act of discrimination, however the statute of limitations is extended to three years if the employer's EPA violation is willful/intentional.

If the individual works for an employer with fewer than 15 employees, then that individual falls outside of Title VII's requirements but you can still file under the EPA.

Under the EPA, the individual can collect liquidated damages - double back pay can be awarded as liquidated damages unless the employer can show that wage discrimination was in good faith. (AAUW, 2008)

There are stated however, to be disadvantages to filing under the EPA including those as follows:

Under the EPA the individual cannot collect punitive damages including pain and suffering;

Unlike the EPA, Title VII does not require that the individual's job be substantially equal to that of a higher paid individual of the opposite sex and neither does it require that the individual work in the same establishment. (AAUW, 2008)

Generally, the individual will files claims under the Equal Protection Act and Title VII for the purpose of preserving their claim under both laws of sex discrimination. Under the Equal Pay Act the individual must show that a male and female working in the same place and performing equal jobs are in receipt of unequal pay. The burden is on the employee or the plaintiff to establish a prima facie case and this requires that the employee show:

same establishment; unequal pay; on the basis of sex; and equal work. (AAUW, 2008)

While the jobs do not have to be "identical, they must just be substantially equal." (AAUW, 2008) for the purpose of the Equal Pay Act two jobs are equal "when both require equal levels of skills, effort and responsibility and are performed under similar working conditions within the same establishment." (AAUW, 2008)

Skill - Skills is stated to be "measured by factors such as the experience, ability, education, and training required to perform the job. The key issue is what skills are required for the job, not what skills the individual employees may have." (AAUW, 2008)

Effort - Means the "...amount of physical or mental exertion needed to perform the job." (AAUW, 2008)

Responsibility - Relates to the "...degree of accountability required in performing the job." (AAUW, 2008)

Working Conditions - These are stated to encompass the factors of: (1) physical surroundings like temperature, fumes, and ventilation, and (2) hazards. (AAUW, 2008)

Establishment - This relates to the "...prohibition against compensation discrimination under the EPA applies only to jobs within any establishment. An establishment is a distinct physical place of business rather than an entire business or enterprise consisting of several places of business. However, in some circumstances, physically separate places of business should be treated as one establishment." (AAUW, 2008)

Upon having established the prima facie case the burden "shifts to the employer/defendant, who can justify the pay differential under one (or more) affirmative defenses" (AAUW, 2008) including those as follows:

seniority systems; merit systems; systems which measure earnings by quantity or quality of production; and differential based on any factor other than sex. (AAUW, 2008)

INTRODUCTION

On January 9, 2009 it was reported by Jim Abrams in the work entitled: "House Approves Bill to Fight Wage Discrimination" that the "House Democrats...energized by the prospects of a pro-labor president...marked the first week of the new Congress...by pushing through two bills to help workers, particularly women, who are victims of discrimination." Abrams relates that this act would effectively reverse the 2007 Supreme Court decision concerning the allotted time in which a worker is allowed to file a wage discrimination previously limited to 180 days of the "first decision to pay that worker less, even if the person was unaware of the pay disparity." (2009)

The previous decision arose from a case in which Lilly Ledbetter, a supervisor at a Goodyear Tire & Rubber Co. plant located in Gadsden Alabama sued the company over pay discrimination "when she learned, shortly before retiring after a 19-year career there, that she earned less than any male supervisor. A jury ruled in her favor, but the Supreme Court, in a 5-4 vote, threw out her complaint, saying she had failed to sue within the 180-day deadline after a discriminatory pay decision was made." (Abrams, 2009)

Ms. Ledbetter stated that this ruling "just doesn't make sense in the real world. In a lot of places you could get fired for asking your co-workers how much they are making." (Abrams, 2009) the 'Paycheck Fairness Act' passed on January 9, 2009 effectively "puts gender-based discrimination on an equal footing with other forms of discrimination in seeking compensatory and punitive damages. It also puts the burden on employers to prove that any disparities in wages are job-related and not sex-based, and bars employers from retaliating against workers who discuss or disclose salary information with their co-workers." (Abrams, 2009)

I. EXAMINATION of EQUAL PAY

In June 2007, Kay Steiger reported in the work entitled: "Equal Pay Reality Check" that the Supreme Court had, in June, 2007, "issued a majority opinion in Ledbetter v. Goodyear which effectively denied employees the right to sue for wage discrimination after the passing of 180 days that "Justice Ruth Bader Ginsberg was so incensed she read her scathing dissent aloud from the bench. She defended Lilly Ledbetter's right to sue her employer, Goodyear Tire & Rubber Co., Inc. For pay discrimination on the basis of sex, giving a not-so-gentle reminder of the realities of the American workplace." (Steiger, 2007) Specifically written by Justice Ginsburg is that as follows:

worker knows immediately if she is denied a promotion or transfer, if she is fired or refused employment. And promotions, transfers, hirings, and firings are generally public events, known to co-workers. When an employer makes a decision of such open and definitive character, an employee can immediately seek out an explanation and evaluate it for pretext. Compensation disparities, in contrast, are often hidden from sight." (Steiger, 2007)

Steiger reports that the EEOC has a backlog of cases and with the ruling in the Ledbetter case it was predicted that the backlog was likely to increase. Steiger states "The Ledbetter ruling places greater importance on the EEOC mediation, so an employee with a complaint must file with the EEOC within the given time period to give legitimacy to any lawsuit that may follow if the EEOC cannot resolve the compliant. The Ledbetter ruling has created a "protection plan for employers," Henderson said, because the burden of proof already lies with the employee filing the charge, and creating a limited time period gives employers an incentive to withhold the information until the filing period has expired." (2007)

II. SEX DISCRIMINATION ACT

The Sex Discrimination Act 1975 makes it illegal for an employer to discriminate against an individual in the workplace upon the basis of that individual's gender in regards to job selection, training, promotion, work practices, dismissal or any other effective disadvantage in the workplace such as sexual harassment. This Act additionally makes it illegal to discriminate against an individual upon the basis of their gender in the areas of education as well as the supply of goods and services.

This Act is applicable to men and women alike and also addresses discrimination upon the basis of marital status. There is no qualifying period of employment for the individual to be covered by law under this act and each employee is covered by this Act immediately upon being hired for a job. In fact this act covers the individual from the moment they are hired and throughout their employment and in some cases covers the references provided by a former employer following termination of employment and not only covers employees but workers, agency workers and in some instances covers those who are self-employed.

In the work entitled: "Incidence of Employment Discrimination: Is Perception Reality" the findings of a recent Gallup Poll are stated to include the findings as follows:

1) While the overall discrimination rate is 15%, it varies considerably by race and gender. Women are more than twice as likely to report that they have been discriminated against in the past year (22%) as are men (9%);

2) Asians and blacks are most likely to report experiences of discrimination (31% and 26%, respectively), while 18% of Hispanics and 12% of whites also report such incidents;

3) the difference in discrimination among men and women is primarily among whites, with only 3% of white men, compared with 22% of white women, reporting such experiences;

4) Black men and women report similar rates -- 26% and 27%, respectively. 20% of Hispanic men and 15% of Hispanic women report incidents of discrimination; and 5) the two types of discrimination most frequently cited are gender (26%) and race/ethnicity (23%). In addition, 17% mentioned age discrimination, 9% cited disability, 4% sexual orientation, and 4% religion. (Lenard, 2009)

III. GENDER EQUALITY and the ROLE of LAW

The work of Nakakubo (2003) entitled: "Gender Equality and the Role of Law" states that the "question of equality for men and women in the workplace is relatively new in the area of labor law. It was not until the 1970s that it became a topic of serious discussion. Even before World War II the International Labor Organization (ILO) Convention's consideration of women was mainly as a target of protective (rather than gender-based quality) measures such as maternity leave and prohibition of women's working in mines or at night." (2003)

Nakakubo states that following the war in 1951 that "Convention No. 100 concerning equal wages for men and women was adopted, but the ILO did not necessarily progress in its handling of the equality issue. On the contrary, apparently due to the ILO inclination toward the traditional labor law, pressure on the issue of equality came from other forums including Title VII of the Civil Rights Act of 1964 in the United States, the European Union 1976 Equal Treatment Directive, and the UN Convention on the Elimination of All Forms of Discrimination Against Women (1980)." (2003)

It is related by Nakakubo that the Labor Standards Law, as it relates to Japan, was effective in 1947, and Article 4 which prohibits wages discrimination based on gender however had little effect "partly because of difficulty in defining equal work." (Nakakubo, 2003) the regulations are stated to have not been extended to labor conditions other than those of wagers and the 'various forms of discrimination against women workers continued." (Nakakubo, 2003) However, in the 1960s, "court judges began invoking the principle of gender equality in Article 14 of the Constitution in handling cases of discrimination against women such as compulsory retirement upon marriage and retirement age set earlier for women than men, thereby forming a legal principle by which to nullify such practices on the ground that they are a violation of what Article 90 of the Civil Code calls 'public order and morals.' (Nakakubo, 2003)

In 2005, it was reported in the work entitled: "Equal Pay for Women Still a Long Way From Reality" that the widening pay gap "between men and women underscores the pressing need to enact two bills introduced in the U.S. Congress" specifically "Equal Pay Day." (Schmelzer and Robinson, 2005) Senator Hillary Rodham Clinton along with House of Representatives Rosa DeLauro introduced the Paycheck Fairness Act which focused on elimination of the disparities through placing enforcement power into the Equal Pay Act of 1963 which "bars wage discrimination on the basis of sex." (2005)

The work of Elaine Hobbs Fry and Allayne Barrileaux Pizzolatto (2001) entitled: "Managing Pay Equity in the Small Business" states that current trends "suggest that interest in the pay equity issue will not diminish in the 21st Century. If anything, as more women and minorities enter and gain experience in the workforce, the interest in pay equity will increase." This work relates that the small business owner must necessarily "recognize the significance of pay equity issues from a legal and competitive advantage perspective. Small business owners can elect to be proactive and guide their company to pay parity or wait, react, and suffer the consequences. This paper discusses the history and current trends of pay equity and offers proactive management measures to the small business owner." (Fry and Pizzolatto, 2001)

Fry and Pizzolatto state that since the Equal Pay Act (EPA) became law many years have passed. This law makes it a requirement that companies "pay covered employees of both sexes the same wages for substantially equal work in jobs that are performed under similar working conditions, and that demand equal skill, effort and responsibility." (Fry and Pizzolatto, 2001) According to this report the Equal Employment Opportunity Commission (EEOC) "...reported that women filed 3800 wage-related charges with them in 1999, and since 1992, the commissions' total recovery in wage bias cases has reached nearly 100 million." (Fry and Pizzolatto, 2001)

The report of Fry and Pizzolatto (2001) relates that the Bureau of Labor Statistics (BLS) states that the "...gap between men and women's pay still exists. In fact, the BLS reports that in nine instances since passage of the act, the pay gap actually widened from one year to the next." (Fry and Pizzolatto, 2001) Fry and Pizzolatto state that many and various reasons have been "offered for this gap" and that "one prevailing explanation is 'discrimination against women's occupations.' The American Prospect reports that as the percentage of women in an occupation rises, wages tend to fall." (Fry and Pizzolatto, 2001) Fry and Pizzolatto state that while the "...final jury is still out as to why this inequity exists, the fact remains that today women earn approximately 75% of men's median income. Hence, the issue continues to draw much attention in the political and work arena." (Fry and Pizzolatto, 2001)

Laws in regards to worker pay "date back to 1938 with the passage of the Fair Labor Standards Act. This act sets standards for minimum wage, hours of work, and determining the exempt or nonexempt status of employees. The Equal Pay Act was included as an amendment to the FLSA in 1963. The "Comparable Worth" issue emerged in the 1970's in connection with Title VII of the Civil Rights Act." (Fry and Pizzolatto, 2001) the Equal Pay Act was passed in 1964 which served to amend the Fair Labor Standards Act of 1938 and which "focuses on the elimination of sex-based pay discrimination where men and women are performing work requiring equal skill, effort, responsibility, under similar working conditions -- equal pay for equal work. Skill includes factors such as education, experience, and training. Effort includes both physical and mental effort. Responsibility includes factors such as accountability for results and authority held. Similar working conditions refer to the physical environment and the hazards." (Fry and Pizzolatto, 2001)

The law holds that men and women who perform equal work and who are employed by the same employer "must be given equal pay." (Fry and Pizzolatto, 2001) the concept of comparable worth means that both women and men would "receive equal pay for performing dissimilar jobs that are of equal worth or value." (Fry and Pizzolatto, 2001) Fry and Pizzolatto state that this concept of "comparable worth" has been in existence for quite a long time. Legislation was introduced during the 1960s which required equal pay for comparable work. This legislation was rejected by Congress and has been since that time according to Fry and Pizzolatto. Fry and Pizzolatto state that one reason that law has not been enacted in regards to comparable worth "is that the concept is contrary to the free-market system. An accepted basis for paying people different wages for different jobs is that "the market demands it." In the free market some jobs are paid lower wages because there are people willing to do the job for the lower wage. Market forces have been an employer defense even when those lower-paid jobs were female dominated." (Fry and Pizzolatto, 2001)

Stated as another reason that comparable worth has not been successful is the fact that there has not been an agreement among experts regarding a system that would:

1) determine which dissimilar jobs have comparable worth and 2) artificially set pay levels without under-pricing scarce jobs." (Fry and Pizzolatto, 2001)

In spite of these drawbacks this issue has remained in focus. The Office of Federal Contract Compliance Programs (OFCCP) has been promoting comparable worth in the "way it contracts salary grade analyses. In addition to analyzing male/female pay for jobs in the same salary grade level." (Fry and Pizzolatto, 2001) the Department of Labor announced in 1999 that the EPA would be aggressively enforced. In 1999, the Department of Labor performed a glass-ceiling audit and found that Texaco, Xerox, CoreStates Financial, U.S. Airways and Blue Cross/Blue Shield of Maryland were in violation of the EPA.

Fry and Pizzolotto state that the DOL and the EEOC "have expressed their intent to better enforce pay discrimination laws through the cross-training of staff on the equal pay laws, the sharing of information on cases, and a better understanding of the processing of complaints where the agencies have joint jurisdiction to avoid duplication of effort." (Fry and Pizzolatto, 2001) the work of Fry and Pizzolatto (2001) states that there are actions that an employer can take to ensure that they are not in violation of laws and regulations of the Department of Labor and the Equal Protection Act which are inclusive of those as follows:

Conduct self-audits;

Understand the laws;

Update job titles and job descriptions.

THEORETICAL PERSPECTIVES EXAMINED

The work of Robert L. Nelson and William P. Bridges entitled: "Legalizing Gender Inequality" states that the "pay equity movement won its largest legal victory in 1983 when Judge Jack Tanner of the federal District Court of Western Washington found that the State of Washington had discriminated against workers in predominantly female jobs and awarded the plaintiffs a $400 million judgment." (1999) the ASFCME decision was revered in 1985 by the Ninth Circuit Court of Appeals and the law was pronounced by justice Anthony Kennedy as "Neither law nor logic deems the free market a suspect enterprise...Title VII does not obligate the State of Washington to eliminate an economic inequality it did not create." (Nelson and Bridges, 1999) the reversal of this decision is stated to have "had a devastating effect on the pay equity movement." (Nelson and Bridges, 1999)

Following the reversal of the AFSCME decision "other courts followed...precedent in rejecting similar claims. Reform activity in states and municipalities slowed to a trickle. Media coverage of pay equity matters fell by more than one-half. Some wage reforms were won through state legislation and collective bargaining, but even these guaranteed only mixed results." (Nelson and Bridges, 1999) the opinion among press and policymakers alike and even among academics was "that comparable worth was essentially dead on arrival, an unrealistic reform program that lacked broad-based political support and now had lost its tenuous foothold within federal antidiscrimination law." (Nelson and Bridges, 1999)

Nelson and Bridges write that "one of the central tensions within the American legal system in the modern era has been the question of what role the law should play in redressing patterns of social inequality. In the area of sex-based pay discrimination in how they pay men and women who hold different jobs in the same organization." (Nelson and Bridges, 1999)

The Equal Pay Act of 1963 is stated by Nelson and Bridges to have "established the principle that employers could not pay men and women different wages for the same job." (Nelson and Bridges, 1999) There was a "broader antidiscrimination rule" put in place by prohibiting employers "from discriminating against women and minorities in any aspect of employment, including pay." (Nelson and Bridges, 1999) the ban that Title VII placed on wage discrimination was not inclusive of the equal work requirement however, in 1981 when the Gunther case was decided by the Supreme Court it remained un clear as to whether "an amendment to Title VII sought to reconcile it with the Equal Pay Act imported the equal work requirement into Title VII as well." (Nelson and Bridges, 1999)

IV. COMPARABLE WORTH

The ruling in the Gunther case indicated that Title VII was applicable to "between-job pay differences" thereby opening the door "for comparable worth lawsuits in which plaintiffs used job evaluation results as a means of attempting to demonstrate sex-based pay discrimination." (Nelson and Bridges, 1999) Nelson and Bridges relate of the comparable worth lawsuit that "in its pure form..." this case states the argument "that employers are required to pay equal wages for jobs of the same evaluated worth (typically as measured in terms of skill, effort, responsibility and working conditions)." (Nelson and Bridges, 1999)

The AFSCME is stated by Bridges and Nelson to have "sounded the deathknell for 'pure' comparable worth theories." (Nelson and Bridges, 1999) Following this case there was a move on the part of Plaintiff's in similar cases away from "sole reliance on job evaluation results in cases alleging between-job discrimination" and instead Plaintiff's sought to bring in other evidence of disparate treatment and intentional discrimination." (Nelson and Bridges, 1999) Each time, these efforts are stated to have failed.

Nelson and Bridges examine how "policy debates about antidiscrimination policy" and how society effectively addresses "between-job gender inequality" and how that is dependent upon understanding the theory in place that describes the relationship that exists between "law, labor markets and employing organizations." (Nelson and Bridges, 1999) Bridges and Nelson state that the debates surrounding existing laws against discrimination due to gender of the individuals pay is "a subset of a broader issue in social policy" and specifically as to how "this society" should regulate the "pay practices of employers for predominantly male and predominantly female jobs?" (Nelson and Bridges, 1999)

V. EXAMINATION of the THEORISTS

The free market theorists hold that practices relating to pay should be the domain solely of the employer. According to Nelson and Bridges "the market will cure itself by driving less efficient, discriminating employers from the market" thereby making it "irrational for employers to discriminate on the basis of sex..." (Nelson and Bridges, 1999) Furthermore, attempts at some type of regulation would results in costs far outweighing any possible benefits and even for worker who originally are the intended beneficiaries of the same regulation. Those who uphold the theory of comparable worth state the argument that "market prices and employer practices are so thoroughly infused with sexism that the only cure for gender inequality is to abandon market systems in favor of job evaluation." (Nelson and Bridges, 1999)

Nelson and Bridges state that they "enter this broad debate with what we take to be a set of relevant empirical findings. First, the free market theorists exaggerate the degree to which market forces determine wage levels within large organizations." (Nelson and Bridges, 1999) Secondly stated is that the politics within the organization "significantly shape the outcomes of pay systems, whether based on market principles of comparable worth." (Nelson and Bridges, 1999)

Nelson and Bridges state that the gender hierarchies in organizations "have functioned to distort and deflect the progressive effects of market change on male-female wage differences." (1999) However, should organizations "most consistently and fairly" incorporate the market principles in the systemic determination of wages then it would appear that progressive gender consequences would result. Additionally stated is that it is "useful for policy to encourage the sometimes powerful tendencies within organizations to develop pay practices that are more rational and just." (Nelson and Bridges, 1999) Antidiscrimination law is sated to be not the solely or even best "instrument for change" it still can however, play a central role in the stimulation of organizational change of a significant nature.

The work of Ruben Bolivar Pagan entitled: "Defending the "Acceptable Business Reason" Requirement of the Equal Pay Act: A Response to the Challenges of Wernsing V. Department of Human Services" relates the fact that female employees "historically...have earned less than male employees for substantially similar work. This trend, known as the gender wage gap, continues today and is demonstrable in almost every sector. Modern scientists posit competing theories about why it exists." (Pagan, 2008) it is related that those belonging to the group of 'modern social scientist' state theories that are in competition with one another that explains why this gender wage gap exists.

For example, choice theory holds that the reason that women earn less on a consistent basis is because "they make different choices in their careers." (Pagan, 2008) Therefore, this theory "makes the normative claim that male employees earn more on average than female employees because males more frequently make choices that are more conducive to career advancements." (Pagan, 2008) the discrimination theory, holds that the reason that less is earned among female employees on the average is due to the payment systems used by employers which are discriminatory in nature and to support this belief it is suggested by research that less is earned by women even in "positions of power, such as corporate executives." (Pagan, 2008)