Question

The Equal Pay Act of 1963 prohibited employers from paying different wages to workers who performed the same work but differed by gender. There were for exceptions to this standard. List the four exceptions and provide a contemporary example of each.

Answer 1

Under the Equal Pay Act, employers usually must pay men and women equally for doing the same work. But the law has several exceptions, meaning certain differences in pay don’t amount to wage discrimination.

The EPA says that men and women working in the same establishment and performing jobs that require equal levels of skill, effort, and responsibility should be paid equally. Working in the same “establishment” generally means being employed in the same store, office, or worksite not merely working for the same company.

Employers who are accused of wage discrimination can defend themselves by producing evidence that the wage difference was caused by one or more of these exceptions.

1. Seniority System

One of the EPA exceptions allows employers to use a seniority system that compensates employees based on years of service. An employer may use a seniority system to pay longer-tenured employees more than newer hires, even if this approach results in a wage disparity between the sexes. For example, exempt employees who are sole breadwinners from the seniority system.

2. Merit System

Another exception is for merit systems that pay employees based on job performance. In a merit system, supervisors evaluate employees on a regular basis according to predetermined objective measures, with exceptional performers receiving raises or bonuses. For example, a supervisor might be asked to rate his employee’s ability to interact with customers on a scale of one to ten. If no or little objective data is available, the supervisor might have to give an evaluation based largely on impressions and anecdotes.

3. Productivity System

The next EPA exception relates to productivity systems, also called “incentive systems.” These systems reward employees based on the quality or quantity of work produced. Employers often use this kind of approach in manufacturing and other production jobs where output can be measured easily. For example, an employee in a fulfillment warehouse might receive a bonus for every 100 packages prepared for shipping.

4. Other Factors

Factors other than sex can also be responsible for legal wage disparities between the sexes. But such factors must be related to the job, beneficial to the employer’s business, and applied equally to male and female employees. For example, a school could pay its teachers with master’s degrees in education more than those without, or a hospital could choose to pay more to nurses who work night shifts.