Equal Pay and Compensation Discrimination in the Workplace

Introduction: Compensation Discrimination and Labor Legislation

The 2001 state labor legislation included several significant developments in employment standards (Nelson 2002). These included increases in minimum wage rates, child labor measures, employment regulations for the entertainment industry, limits on child labor, and prohibitions on employment discrimination based on genetic information or other grounds. Areas such as occupational safety and health, employment and training, labor relations, employee background clearance, economic development, and local living wage ordinances were not addressed. A ban on female workers being paid less than male employees by the same employer for the same work was also excluded.

Instead, the legislation provided that employers may not discriminate in the payment of wages on the basis of gender for equal work on jobs requiring equal skill, effort, and responsibility performed under the same working conditions (Nelson 2002). Beyond gender, numerous other forms of pay discrimination persist in U.S. workplaces, each with its own legal framework, enforcement history, and pattern of case law.

Gender Pay Discrimination and the Equal Pay Act of 1963

Morgan Stanley, an investment firm, paid $54 million in settlement to Allison Schieffelin as lead plaintiff in a gender discrimination case (Stites 2005). The suit was filed by the Equal Employment Opportunity Commission (EEOC). Schieffelin alleged that the company withheld opportunities for promotions and higher pay. The firm set aside $40 million for other female employees who filed similar claims and $12 million for a new diversity program to enhance compensation and promotional opportunities for its female workforce. The firm, however, denied the discrimination charges.

The settlement came after a class-action suit was permitted against Wal-Mart Stores, Inc. Wal-Mart was accused of sex discrimination, including gender pay inequity. The suit potentially covered approximately 1.6 million former and current female employees across the store chain, making it the largest workplace discrimination lawsuit in American history (Stites 2005).

The EEOC listed at least 24,000 sex discrimination complaints in its files since 1988 (Stites 2005). In 2004 alone, it resolved more than 10,000 sex discrimination complaints and recovered $100.8 million in benefits for aggrieved parties. The Equal Pay Act of 1963 obliges employers to provide male and female employees equal pay for equal work within the same organization or establishment. Human resource professionals must ensure pay equity within the organization for employees with the same work experience and education. Should a discrepancy exist, they must identify the reason and determine whether it is legitimate. Under the Act, it is unlawful to retaliate against those who oppose discriminatory practices based on sex, file discrimination charges, testify, or participate in any investigation in any capacity (Stites 2005).

Twenty-eight female employees at an airline manufacturing company filed action against the company for systemic gender discrimination (Law Reporter 2004). They claimed it violated Title VII of the Civil Rights Act of 1964, federal and state equal pay statutes, and state anti-discrimination laws. They charged that the company denied them job assignments, promotions, and overtime pay solely on the basis of gender. The company also knowingly allowed significant pay disparities between male and female employees and did not correct them. The complaining employees also sued for breach of contract, negligent supervision, and violation of state wage law. The company denied that any of its operating divisions or subsidiaries practiced gender discrimination or disparate treatment of employee salaries. The parties ultimately settled before trial for compensation ranging between $40.6 million and $72.5 million. The company also agreed to revise its policies on compensation, promotion selection, and overtime pay (Law Reporter 2004).