money.bmpBy Reema Kapur

On the opening day of the 2013 National Conference on Equal Employment Opportunity Law, which continues through April 6, 2013, panelists representing the judiciary, labor unions, employees, and management debated, among other issues, the root causes of pay differentials in a panel titled “Pay Equity and Job Segregation.” 

Although the government was not represented on the panel, the discussion about pay equity provides an interesting and informative analysis of a hot issue at the forefront of the EEOC’s strategic enforcement plan. 

Pay Differentials

Panelists debated whether employment laws such as the Equal Pay Act, the Lilly Ledbetter Act, and the (twice) proposed (and twice rejected) Paycheck Fairness Act, can effectively address pay differentials that are driven by a variety of experiential and sociological factors.

Given this complexity, even defining the problem can be challenging. For example, the panel explained that since the passage of the Lilly Ledbetter Act, the OFCCP has conducted 10,000 audits of employer’s wage practices and found noncompliance with existing equal pay laws in only 50 instances (an incidence of 0.005 or in 0.5% of all audits). The EEOC has done no better. The panel reported that in FY 2011 and 2012, the EEOC filed three lawsuits alleging violations of the EPA. At the same time, panelists listed many statistics that appear to document wide disparities in pay. The panelists argued that these statistics are proof that various protected classes are at a disadvantage in the workplace. 

Why the discrepancy?

Different speakers offered different explanations for the discrepancy. 

Attorneys representing labor and employee interests defend the OFCCP and EEOC scorecard. They argue that, far from being cause for celebration, the fact that pay audits show a low incidence of noncompliance with equal pay laws is misleading. In their view, pay disparities are very real but existing employment laws – such as the Lilly Ledbetter Act – have not armed the EEOC, OFCCP and similar agencies with effective tools to root out and quantify gaps. According to the plaintiff’s bar, government agencies should be accorded broad authority in their efforts in this regard. 

Management-side attorneys countered that pay inequity is a complex issue. Although it may be tempting to label all pay differences as evidence of discriminatory employment practices, peeling back the onion reveals that differences in pay are a function of numerous factors, including education level and career choice, among others. Given this complexity, a single-minded focus on eliminating pay differentials through employment laws may stretch civil rights laws beyond their intended purpose of prohibiting discrimination based on protected characteristics and into the realm of combating larger social problems.

Key Takeaway

So, are pay differentials an employment issue or do they reflect a larger social problem? The answer to this question is critical for employers. If pay differentials are an “employment” issue, then a case can be made that they should be addressed through tighter employment laws and more oversight over employers. However, if pay differentials are a societal issue, then equal pay laws place disproportionate focus on employers by holding them solely accountable for complex social problems.

Implications for Employers

The lively panel discussion illustrates the complex and multi-faceted nature of pay differentials and divergent proposals for addressing them. We expect that the debate will continue as the EEOC intensifies its scrutiny of compensation systems.