Mind the Gap Practical Solutions to Minimize Pay Equity Claims, 0520 COBJ, Vol. 49, No. 5 Pg. 30
| Author | BY CHRISTINE LYMAN, LONNIE GIAMELA, AND LALONNIE GRAY |
| Position | Vol. 49, 5 [Page 30] |
LABOR AND EMPLOYMENT LAW
BY CHRISTINE LYMAN, LONNIE GIAMELA, AND LALONNIE GRAY
As the pay equity legal landscape evolves, Colorado employers should brace themselves for claims of gender-based discrimination, plummeting morale, and negative publicity. Employers can minimize the risk of claims by implementing the solutions discussed here.
When the U.S. women's soccer team won the World Cup last summer, crowds chanted "Equal pay!" in reference to pay disparities between the U.S. women's and the U.S. men's teams. Issues surrounding equal pay are becoming an increasing part of our cultural, social, and legal landscape as evidenced by the #MeToo movement, the gender pay gap discussions in the 2020 presidential campaign, and the increasing number of laws and lawsuits involving equal pay.
In response to these developing trends, Colorado employers continue to examine how to properly identify, audit, and address equal pay issues within their organizations. While understanding that federal law prohibits gender-based pay discrimination, Colorado employers frequently struggle with two basic questions:
1. How do I know if my organization has an equal pay issue?
2. If an issue exists, what do I do to fix it?
Indeed, to increase pay transparency and expand the limited "equal work" standard under federal law, Colorado has enacted a pay equity law that, among other things, will prohibit salary history inquiries and require equal pay for "substantially similar" work.
Colorado employers must navigate the evolving arena of pay equity laws to avoid gender-based discrimination claims based on pay, manage overall employee morale, and handle the heightened publicity surrounding pay equity issues. This article aims to ease the burden of Colorado employers confronted with pay equity issues in the workplace by providing an overview of the pay equity legal landscape and offering practical solutions. Because one strategy will not work for all employers, this article also discusses the advantages and challenges associated with three possible solutions: conducting proactive pay audits, revising compensation plans, and coordinating implicit-bias training.
The Equal Pay Act
On Tune 10, 1963, President John F. Kennedy signed the Equal Pay Act (EPA) into law.1 As an amendment to the Fair Labor Standards Act (FLSA), the EPA requires that men and women receive equal pay for equal work.2 Work is "equal" if it requires "equal skill, effort, and responsibility."3Skill includes considerations such as experience, training, education, and ability.[4] Effort refers to the physical or mental exertion necessary to perform the job.5And responsibility concerns the degree of accountability required to perform the job.[6] Courts generally construe the "equal work" requirement narrowly.7Therefore, jobs that are merely alike or comparable are not considered "equal" under the EPA.8
Even if a plaintiff is able to establish a prima facie case under the EPA, a defendant can still defeat the EPA claim by establishing that the wage differential is justified under one of the EPA's four affirmative defenses: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or (4) any factor other than sex.9 The most commonly invoked affirmative defense is "any factor other than sex."10 To establish this defense, an employer may use "any job-related or business reason other than sex to justify the difference in pay."11For example, "any factor other than sex" may include educational qualifications, work experience, training, or ability.12 To meet this burden, an employer must "submit evidence from which a reasonable factfinder could conclude not merely that the employer's proffered reasons could explain the wage disparity, but that the proffered reasons do in fact explain the wage disparity."[13]
Colorado's Equal Pay for Equal Work Act
With the purpose of expanding the limited equal work standard under the federal EPA, Colorado enacted its own pay equity law. Colorado's Equal Pay for Equal Work Act (Colorado's EPA), effective January 1, 2021, prohibits an employer from:
■ paying one employee a wage rate less than the rate paid to an employee of a different sex for substantially similar work,
■ asking about or relying on an applicant's salary history,
■ restricting employees from discussing their compensation with other employees, and
■ retaliating against an applicant who fails to disclose his or her wage history.14
"Substantially similar work" is to be determined without regard to job title and is based on a composite of skill, effort (which may include consideration of shift work), and responsibility.15 Colorado's EPA will require employers to apprise all employees of employment advancement opportunities, job openings, and the pay range for the job openings.16 Similarly, Colorado's EPA will require employers to maintain records of job descriptions and wage-rate history for current employees and—for two years after the employment ends—former employees.17An employer that violates Colorado's EPA may be liable for economic damages, equitable relief, and the employee's reasonable attorney employees.18
Similar to the federal EPA, a defendant can defeat a claim under Colorado's EPA by establishing that a wage differential is justified by one or more of the following factors: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; (4) the geographic location where the work is performed; (5) education, training, or experience to the extent they are reasonably related to the work in question; or (6) travel, if the travel is a regular and necessary condition of the work performed.19
Collective Actions
An employee's federal EPA claim and any pendent state law claims may result in a collective action, which will increase an employer's litigation costs and a company's exposure to the media. A collective action under the federal EPA is governed by the FLSA opt-in procedure, under which an aggrieved employee can bring a claim against an employer on behalf of herself and other similarly situated employees. Courts generally consider whether to certify FLSA collective actions under a two-step approach.
First, the court conditionally certifies the class, based on a modest factual showing that the putative class members are similarly situated. For example, in Smith v. Merck & Co., plaintiffs, who were female sales representatives, moved for the conditional certification of their EPA collective action.20 Plaintiffs alleged that defendant—"a global pharmaceutical powerhouse"—systemically paid female sales employees less than similarly situated male sales employees who performed the same job duties and worked under the same conditions.21 Plaintiffs argued that the female sales representatives were similarly situated because they all performed the same essential work and were subject to the same compensation policies and practices.[22] At the...
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