Pay Equity United States (Federal)

Basic Summary

Federal pay equity protections in the United States are established by the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, and the Lilly Ledbetter Fair Pay Act of 2009. While there is no federal pay transparency or reporting mandate (unlike many states), these laws prohibit pay discrimination and provide remedies for violations.

Key Legislation

Equal Pay Act of 1963 (EPA)

Part of: Fair Labor Standards Act (FLSA)

Requires employers to pay men and women equal pay for equal work in the same establishment.

"Equal work" = jobs requiring:

• Equal skill
• Equal effort
• Equal responsibility
• Performed under similar working conditions

Covered employers: All employers subject to FLSA (most private employers and federal/state/local government)

Title VII of the Civil Rights Act of 1964

Prohibits employment discrimination based on race, color, religion, sex, or national origin, including in compensation.

Broader than EPA:

• Covers all forms of pay discrimination (not just "equal work")
• Applies to discriminatory pay practices based on sex and other protected characteristics

Lilly Ledbetter Fair Pay Act of 2009

Statute of limitations reform: Each discriminatory paycheck restarts the 180/300-day clock for filing an EEOC charge.

Prior to this Act, the clock started when the discriminatory pay decision was made, often barring claims by long-term employees.

Equal Pay Act Requirements

Equal Pay for Equal Work

Employers must pay men and women equally for jobs that are substantially equal in:

1. Skill: Experience, training, education, and ability required
2. Effort: Physical or mental exertion needed
3. Responsibility: Degree of accountability and decision-making
4. Working conditions: Physical surroundings and hazards

"Establishment": Physical place of business (not company-wide).

Permissible Pay Differentials (Affirmative Defenses)

Pay differences are lawful if based on:

1. Seniority system: Objective, consistently applied time-based progression
2. Merit system: Performance-based pay tied to objective criteria
3. Quantity or quality of production: Piece-rate, commission, or measurable output
4. Any factor other than sex: E.g., shift differentials, education (if genuinely job-related and not a pretext for discrimination)

Burden: Employer must prove the differential is based entirely on one of these factors.

Remedies Under EPA

• Back pay: Up to 2 years (3 years if willful violation)
• Liquidated damages: Equal to back pay (unless employer proves good faith)
• Attorney's fees and costs

No compensatory or punitive damages under EPA (but available under Title VII).

Title VII Pay Discrimination

Broader Protections

Title VII prohibits pay discrimination based on:

• Sex (including pregnancy, gender identity, sexual orientation per recent case law)
• Race
• Color
• Religion
• National origin

Standard: Does not require "equal work"; applies to any discriminatory pay practice.

Covered Employers

• Private employers with 15+ employees
• Federal, state, and local governments
• Employment agencies and labor unions

Theories of Discrimination

Disparate Treatment

Intentional discrimination (e.g., paying a woman less than a man for the same job because of her sex).

Disparate Impact

Facially neutral policy that disproportionately affects a protected group and is not job-related or justified by business necessity (e.g., relying on prior salary history in states without bans).

Remedies Under Title VII

• Back pay: Up to 2 years
• Compensatory damages: Emotional distress, etc. (capped based on employer size)
• Punitive damages: For malicious or reckless discrimination (capped)
• Injunctive relief: Court orders to change policies
• Attorney's fees and costs

Damage caps (compensatory + punitive combined):

• 15-100 employees: $50,000
• 101-200 employees: $100,000
• 201-500 employees: $200,000
• 500+ employees: $300,000

EEOC Enforcement

Filing a Charge

Employees must file a charge with the Equal Employment Opportunity Commission (EEOC) before suing under Title VII.

Deadlines:

• 180 days from discriminatory act (federal)
• 300 days in states with a state/local anti-discrimination agency (most states)

Lilly Ledbetter Act: Each paycheck that reflects discriminatory pay is a new violation, restarting the clock.

EEOC Process

1. Employee files charge

2. EEOC investigates (requests information from employer)

3. EEOC may:

   • Find reasonable cause and attempt conciliation
   • Find no reasonable cause and dismiss
   • Issue "right to sue" letter

4. Employee may file lawsuit in federal court (within 90 days of receiving right-to-sue letter)

National Labor Relations Act (NLRA)

Right to Discuss Pay

Section 7 of the NLRA protects employees' right to engage in "concerted activity," including:

• Discussing wages with co-workers
• Asking about pay
• Sharing salary information

Covered: Most private-sector employees (union and non-union).

Employer prohibition: Cannot enforce "pay secrecy" policies that forbid wage discussions.

Enforcement: National Labor Relations Board (NLRB).

Federal Contractor Obligations (Executive Order 11246)

Office of Federal Contract Compliance Programs (OFCCP)

Federal contractors and subcontractors with contracts of $50,000+ and 50+ employees must:

• Develop written Affirmative Action Plans (AAPs) including compensation analysis
• Conduct annual compensation self-analysis to identify pay disparities
• Take corrective action if disparities found

Compensation Analysis

Contractors must:

• Analyze pay by gender and race/ethnicity within job groups
• Investigate disparities
• Remediate unjustified gaps

Method: Regression analysis or other statistically valid approach.

State and Local Laws

Many states and cities have stronger laws than federal, including:

• Pay transparency: CA, CO, NY, WA, etc.
• Salary history bans: 20+ states and cities
• Pay data reporting: CA, IL
• Expanded equal pay: Broader definitions of "equal work"

Multi-state employers: Must comply with strictest applicable law.

Best Practices for Employers

Conducting Pay Equity Audits

1. Privileged analysis: Conduct under attorney-client privilege to protect from discovery
2. Use regression analysis: Control for legitimate factors (job level, experience, performance, location)
3. Identify disparities: Flag unjustified gaps by gender, race, etc.
4. Remediate proactively: Adjust pay before claims arise
5. Document justifications: Maintain contemporaneous records of pay decisions

Pay Setting and Transparency

1. Objective criteria: Use documented, gender-neutral factors (market data, job evaluation, performance)
2. Starting pay: Set offers based on role, budget, and market—not prior salary
3. Pay bands: Establish ranges for each position/level
4. Regular reviews: Monitor pay equity annually or biannually

Compliance with NLRA

• Eliminate pay secrecy policies: Allow employees to discuss wages
• Train managers: Do not discourage wage discussions

Record-Keeping

Under FLSA and EPA, maintain records of:

• Job descriptions
• Wage rates
• Pay policies
• Evaluations and performance data
• Retention: 3 years for payroll records; 2 years for other records

Resources

• Equal Employment Opportunity Commission (EEOC): https://www.eeoc.gov
• U.S. Department of Labor - Equal Pay: https://www.dol.gov/agencies/wb/equal-pay
• OFCCP (Federal Contractors): https://www.dol.gov/agencies/ofccp
• National Labor Relations Board (NLRB): https://www.nlrb.gov
• Equal Pay Act (29 USC § 206(d)): https://www.law.cornell.edu/uscode/text/29/206
• Title VII (42 USC § 2000e et seq.): https://www.law.cornell.edu/uscode/text/42/chapter-21

Compliance Calendar

Date	Action
Ongoing	Pay employees equally for equal work under EPA
Ongoing	Avoid pay discrimination based on sex, race, etc. under Title VII
Within 180/300 days	File EEOC charge if discrimination suspected
Annual (federal contractors)	Conduct compensation analysis and update AAP
Annual (recommended)	Internal pay equity audit for all employers

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Disclaimer: This guide is for informational purposes only and does not constitute legal advice.