With the current surge of women’s rights issues in the news, equal pay laws have been receiving a lot of attention. As an employer, you should be aware of both state and federal laws governing this area.
For example, California Labor Code 1197.5 prohibits the payment of wages at rates less than the rates paid to employees of the opposite sex in the same establishment if the job requires equal skill, effort, responsibility, and similar working conditions. Different pay rates may be allowed where they arise under a merit or seniority system, a system which measures earnings by quantity or quality of production, or a differential based on any factor other than sex (or else be faced with a sex discrimination lawsuit). The Federal Equal Pay Act is nearly identical to the California Statute.
Due to these laws, lawsuits regarding an employer’s failure to enact equal pay laws have steadily been on the rise. Typically in these cases, the focus is on the work product and qualifications of the employee filing the lawsuit versus the employee/gender of employees who are receiving better pay. The greater the disparity in pay, the more justification the employer will have to prove for such a disparity.
Judgments for these cases typically include not only the recovery of any wages lost but also liquidated damages. A party bringing such a suit may also recover attorney’s fees in a private action to enforce this section.
As a result of these laws and the recent Lilly Ledbetter Fair Pay Act which essentially resets the statute of limitations to file a discrimination lawsuit with the receipt of each new paycheck, class actions lawsuits are steadily on the rise. These can be very painful suits to defend. They are long, time consuming, comprised of multiple former employees and a lot of work. The fallout of such a lawsuit can be both devastating to you personally and to you business.
At the risk of being redundant, employers should audit their workforce! I’m going to keep saying it until they start doing it. It’s the best way to protect and defend against these types of suits. Remember that these lawsuits start with the big companies and slowly work their way down to small companies, so you aren’t safe simply by virtue of the fact that you have 20 employees instead of 20,000. Many of my clients know this by personal experience.
If you want to know whether you are at risk for an equal pay lawsuit (or any other lawsuit), sign up today for a free Business and Employment Law Planning Session, or contact our employment law attorneys at (800) 889-8376 for a consultation.