4 Exceptions to Equal Pay

The basic purpose of the Equal Pay Act is ensuring that male and female employees receive equal pay for equal work. And yet, there are still some differences in pay between male and female employees that is justified. There are 4 exceptions to the general premise of the Equal Pay Act, which are the use of a bona fide seniority system, merit system or incentive system or any factor other than gender.

Seniority, Merit and Incentive Systems

As a defense to an equal pay claim, an employer always has the opportunity to show that the difference in pay was actually justified. One way to establish a defense is to establish that a bona fide seniority, merit or incentive system was in place, which explains the difference in pay. However, in order for these defenses to work, it must also be shown that the system was not put in place as a way to discriminate. Here are some factors that courts look at to determine whether such a system is bona fide:

  • Must be based on predetermined criteria that measures seniority, merit or productivity
  • Must be communicated to all employees
  • Must be consistently and even-handedly applied to all employees
  • Must be the basis for any differences in compensation received by male and female employees

The key is that, even with the system in place, it cannot allow a supervisor to arbitrarily authorize exceptions at their discretion.

What makes a merit system bona fide?

A merit system is basically an established system that rewards employees for exceptional performance through pay increases or bonuses. To be valid, it must be shown that employees are regularly evaluated at intervals according to predetermined objective criteria. Although most employee evaluations are based on the subjective ratings of supervisors, the rating system should be closely monitored.

How a bona fide incentive program works

An incentive or productivity system is similar to a merit system, in that it rewards employees based on the quality or quantity of their work. However, it is typically used more in production or sales type jobs. For example, a word processing employee might be paid a certain rate for every document produced, or a sales person might be paid a commission rate based on the total monthly sales. In those cases, the differences in pay would be a direct reflection of the employee's work performance. Again, the system must be applied across the board in order to be valid.

Factors Other Than Gender

When there are no bona fide systems in place upon which an employer can base the difference in pay, there may still be a way to show the inequality was justified. If there are any other legitimate factors, other than gender, that justify the difference in pay, there may still be a defense against liability for discrimination. In order for one of these factors to be sufficient to rebut a claim of discrimination, the employer must show that:

  • The factor is related to job requirements or is beneficial to the employer's business
  • The factor is reasonable to further the employer's business or to some other employment practice
  • The factor is applied to both male and female employees
  • The employer and the employee were aware that the factor was or was not be applied in setting the employee's pay
  • The factor's application is the reason for the difference in pay

Some examples of valid factors include education, experience, training, training programs, evening or night shifts and job classification.

If you feel you have been the victim of discrimination or retaliation, or if you have any questions regarding your employment rights, please contact Wrady & Michel, LLC, either online or by calling us at (205) 265-1880.

Categories: Equal Pay Act, Equal Pay
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