April 22, 2020
The Equal Pay Act: Separating Sex From Salary History
If you employ one or more employees, you are likely a covered employer under the federal Equal Pay Act (EPA). The EPA prohibits discrimination between employees on the basis of sex. A covered employer may not pay wages to employees working in the same establishment at a rate less than the rate at which it pays wages to employees of the opposite sex for equal work on jobs that require equal skill, effort, and responsibility, and which are performed under similar working conditions. There are a few exceptions, including using, “a differential based on any other factor other than sex.” The question has been asked and answered by U.S. Circuit Courts of Appeals across the county as to whether use of a candidate’s salary history is a factor other than sex. That answer has varied across the courts. As a result, the U.S. Supreme Court (SCOTUS) has been petitioned and asked to answer whether the Equal Pay Act ever permits employers to use prior salary as a “factor other than sex” to help explain a pay difference.
What is the issue or concern? If women have historically been paid less than men performing the same work, making an offer to a female candidate based on her salary history may perpetuate sex discrimination.
Why would employers care about a candidate’s salary history? On April 22nd, the Society for Human Resource Management (SHRM) submitted an amicus brief (friend of the court) asking SCOUTS to consider this issue. SHRM cites some business-related reasons why employers ask for this information.
- Many employers ask about prior salary because they don’t want to waste the time of a candidate who’s seeking a higher salary than the employer would pay.
- Many employers ask only about a candidate’s current salary, not the person’s entire salary history.
- Employers may need to meet offers or raises an applicant has received from competing employers.
- Results of a survey recently conducted by SHRM revealed how or why some employers use salary history. 65.3% of respondents report screening out candidates whose salary demands are too high. 64.6% of respondents report framing an offer that would be attractive to the applicant. 58.4% of respondents report gathering market data to compare against employer’s own pay structure.
SCOTUS has the authority to grant or deny a request to hear or consider a particular issue. Stay tuned to learn if the high court agrees to hear this issue and, if so, what the final determination will be. In the meantime, consider some of the tips below.
- Watch your state and local laws. At least 18 states and 21 local jurisdictions have already enacted laws that prohibit or restrict when you may ask a candidate about salary history.
- If you ask for salary history, know what your business-related reason is for doing so. For example, you might meet the same objective by simply telling a candidate the pay range of your job and asking them if that would be acceptable should the candidate be offered the job.
- If you talk to colleagues in the same industry or publish your pay range in job ads, ensure you are not at risk for violating anti-trust laws. You may want to read the FTC’s publication “Antitrust Guidance for Human Resource Professionals.”