The Equal Pay Act (EPA) of 1963 prohibits pay discrimination based on gender. The EPA was drafted as an amendment to the Fair Labor Standards Act with the goal of rectifying the pay inequity which exists between men and women who perform the same job functions.
The following seven (7) tips will help you reduce the risk that your company will face of the most commonly filed employment discrimination claims.
- Create a Policy Prohibiting Wage Discrimination. Your employee handbook should include a policy prohibiting wage discrimination based on gender, race, national origin and several other protected classes. Also a multi-channel internal complaint procedure should be implemented allowing employees to bring issues or complaints to management. The policy should be clear that an employee will not face retaliation for making a compliant.
- Allow Employees to Freely Discuss Their Wages. The Illinois Equal Pay Act of 2003 and the National Labor Relations Act (NLRA) expressly disallows employers from attempting to prevent employees from freely discussing their wages, benefits and compensation. Look closely at your confidentiality and social media policies as the National Labor Relations Board (NLRB) has found that many of these polices violate the NLRA and discourage employees from discussing various protected topics, including pay. Review these policies closely to ensure they comply with NLRB guidelines.
- Review and Audit Pay Practices. Review your job descriptions, pay practices and compensation policies on a regularly base to make sure that pay discrimination is not happening. Be careful to take all forms of compensation into consideration including bonuses, equity opportunities, perks and benefits. Employee’s pay, salary, and bonuses should be set out in writing and employers should take time to explain to each employee how their compensation is tied to merit, performance, productivity or some combination of other factors (if any). Criteria should be objective, measureable and predictable. Additionally, it should be made explicitly clear to each employee what the employers’ expectations are and how compensation decisions will be made. Any wage differences that exist which are based on gender or some other protected class must be based on legitimate, nondiscriminatory factors and be supported by written documentation. Any issues which are spotted should be immediately corrected unless a seniority system, merit system or bona fide reason can support the disparity.
- Maintain Accurate and Comprehensive Documentation About Employment Decisions. Clear and complete records relating to each employment decision made, documenting how such decisions were made and the factors taken into account by the employer when making such decision, can support the employers position in the event an administrative hearing or lawsuit is ever filed.
- Retain Wage Records. Regularly review your recordkeeping policies and procedures to make sure that all wage records are properly maintained. The Illinois Prevailing Wage Act requires wage records and any records related to job classification or other terms of and conditions of employment (such as employment agreements), among other records, should be kept for minimum of three (3) years.
- Conduct Timely And Effective Performance Evaluations. Employer should establish a policy of annual or bi-annual performance evaluations. During the evaluation the employer should communicate to the employee its’ expectations and whether the employee is meeting those expectations or not. Such evaluations may offer some protection to the company in the event that an employee files a complaint alleging discrimination based on a protected class as they can provide documented evidence of legitimate business purposes for taking an adverse employment action (unrelated to the individual’s protected class).
- Provide Training to Supervisors and Managers. Employers should provide comprehensive training to supervisors and managers on avoiding wage discrimination and making employment decisions based on legitimate non-discriminatory criteria. Failure to properly educate employees can make the company vulnerable to discrimination claims. By making all company decisions makers familiar with underlying factors that can be grounds for discrimination, the risk of a manager or supervisor suggesting wage or bonus disparities on discriminatory grounds can be reduced.
While the above is not a complete list, and certainly unique situations can arise where following some of the above recommendations is not advised, generally following these steps can help you reduce the risk associated with employees claiming pay discrimination.
Should you have any questions about pay discrimination or employee handbooks or any other law that may affect your business, please contact Waltz, Palmer & Dawson, LLC at (847) 253-8800.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.
This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.
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