By Consuela A. Pinto

The Equal Pay Act of 1963 (EPA) is the oldest federal law prohibiting pay discrimination based on sex. The EPA is narrow in scope, applying only to employees working in the same workplace and preforming jobs that are the same or substantially similar. The law is highly prescriptive on the defenses an employer can use to defeat an EPA claim. Employers will avoid liability only if they prove the pay difference at issue is justified by a seniority system, merit system, incentive system, or any other factor other than sex.

EPA claims typically turn on whether the employee and her comparator are performing substantially similar jobs. Two recent federal court decisions, however, address novel issues arising under this 59-year-old law.

‘Wages’ Refers to Individual Components of Pay

In Sempowich v. Tactile Systems Technology, Inc., an employee filed an EPA claim alleging her base pay was less than that of her male colleague performing the same job in the same establishment. The district court dismissed her claim on the basis that her total wages exceeded that of her male comparator.

The U.S. 4th Circuit Court of Appeals reversed the district court’s decision, holding the term “wages” in the EPA refers to each individual component of pay. In doing so, the court relied on the Act’s text, which “unambiguously states” an employer may not discriminate between employees on the basis of sex by paying wages to employees at a rate less than the rate it pays employees of the other sex.

The court further noted that regulations at 29 C.F.R. 1620.19 define “wages” as including “all forms of compensation . . . whether called wages, salary, profit sharing, expense account, monthly minimum, bonus . . . or some other name.” Although the regulations define “wages” to include various forms of compensation, there is no indication that only a difference in total compensation is actionable. If that were the case, “an employer who pays a woman $10 per hour and a man $20 per hour would not violate the [Equal Pay Act] . . . as long as the woman negated the obvious disparity by working twice as many hours.” Sempowich, 2021 WL 5750450, citing Ebbert v. Nassau County, 2009 WL 935812, at 3 (E.D.N.Y., Mar. 31, 2009).

Salary Negotiations Legitimate Basis for Pay Differential

The Equal Employment Opportunity Commission (EEOC) filed a claim on behalf of the superintendent of the Hunter-Tannersville School District in the U.S. District Court for the Northern District of New York alleging she was paid less than her male predecessor in violation of the EPA. The school district argued that both the superintendent and her comparator negotiated their starting pay and she could have negotiated a higher pay.

The EEOC took the position that an applicant’s ability to negotiate a higher salary is not a legitimate job-related justification to pay a woman less. To support its position, it relied on prior court decisions in which the employer was held to have violated the EPA by paying a male more than a female for equal work simply because the male was able to negotiate a higher salary. The school district countered, arguing its defense is legally sufficient because neither the U.S. Supreme Court nor the 2nd Circuit, where this case is pending, has held that negotiation is not a “factor other than sex” and that an employer cannot rely on it to defend against an EPA claim. Moreover, multiple federal district and circuit courts have held that negotiation is a valid defense to an EPA claim.

The court did not agree with the EEOC’s argument that only job-related factors could constitute a “factor other than sex.” The court did note, however, that at some point it may have to resolve whether negotiations could constitute a “factor other than sex” under the EPA. U.S. Equal Employment Opportunity Commission v. Hunter-Tannersville Central School District, 2021 US Dist Lexis 230595 (N.D.N.Y., Dec. 02, 2021).

Conclusion

President John F. Kennedy signed the EPA in June 1963. Several decades later, fundamental questions remain unanswered. There is no clear definition of “wages,” and the scope of the critical catch-all defense—any factor other than sex—remains an open question. The pay equity landscape is constantly changing, and claims are on the rise. Employers must remain vigilant in tracking legal developments in the jurisdictions in which they operate and continue to conduct annual pay equity analyses.

Consuela A. Pinto is a shareholder with FortneyScott in Washington, D.C. She advises clients on the full range of equal employment opportunity laws with a particular focus on compliance with workplace laws and regulations, federal government investigations, pattern and practice systemic claims, and compliance with federal contractors’ affirmative action and non-discrimination obligations.  You can reach her at cpinto@fortneyscott.com.