Excerpted from Iowa Employment Law Letter, written by attorneys at the law firm Whitfield & Eddy, P.L.C.

The Equal Pay Act (EPA) has been an important component of federal civil rights law for over 40 years, but it's often misunderstood and overlooked. Even sophisticated employers that vigilantly monitor their workplaces for potential sex discrimination or hostile work environments sometimes fail to appreciate their potential exposure under the EPA for using inequitable gender-based compensation structures.

History of the EPA

The EPA was passed by Congress and signed into law by President John F. Kennedy in 1963. At that time, women who worked full-time jobs were paid an average of 59 cents for every dollar earned by their male counterparts in similar positions. Although women have made great progress in closing the "gender gap" in compensation since the EPA was passed, it's surprising how often modern employers use compensation structures that make them vulnerable to claims under the law.

The EPA prohibits you from paying employees of one gender less than those of the opposite gender "for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions."

For claims asserted under the law, equal work needn't be literally identical. Instead, courts apply a "substantially equal" standard based on "a practical judgment on the basis of all of the facts and circumstances of a particular case, including factors such as level of experience, training, education, ability, effort, and responsibility."

Whether the work performed meets the "substantially equal" standard doesn't depend on artificial factors such as job titles or job descriptions but on the actual requirements and performance of the job.

EPA litigation claims

When a female employee asserts a claim under the EPA, she has the initial burden of demonstrating that her employer paid male workers more than she was paid for work that required equal levels of skill, effort, and responsibility under similar working conditions.

If she's successful in establishing that she was paid less than similarly situated male counterparts for "substantially equal" work, the burden shifts to the employer to prove that its compensation structure was gender-neutral based on one of the affirmative defenses set forth under the EPA.

The EPA includes four categories of affirmative defenses on which employers can rely: a seniority system, a merit system, a system that measures earnings by the quantity or quality of production, or differences that are based on any factor "other than sex."

The last category of affirmative defense is a "catchall provision" that has been interpreted fairly broadly by most courts but that must be based on a gender-neutral factor applied consistently by the employer that's actually related to job requirements or performance.

Interaction of Title VII and the EPA

Since a sex discrimination claim under Title VII of the Civil Rights Act of 1964 also can be based on disparities in compensation, disgruntled employees often assert claims for unequal pay under both Title VII and the EPA. There are some important distinctions between the EPA and Title VII, however.

Although the "burden shifting" that occurs in EPA cases is similar to that in Title VII cases, it should be noted that EPA cases don't follow the same analytical framework. An employer that has been sued under the EPA can't escape liability by articulating a legitimate, nondiscriminatory reason for its employment action. Instead, the EPA requires the employer to prove that the compensation differential was based on a factor other than the gender of the employees.

Further, claims under the EPA have limited damages compared to Title VII claims. Employees who successfully sue under the EPA are entitled to recover back pay for two years. If the violation of the EPA was intentional, the back-pay award can extend back three years. Employees can also recover liquidated damages in an amount equal to the back-pay award unless the employer can demonstrate that it acted in good faith and had reasonable grounds to believe that its actions didn't violate the EPA.

Defending EPA claims

When faced with an EPA claim, the first line of defense for an employer generally involves challenging the employee's claim that she received less compensation than male employees for equal work. That's generally done by showing that the male employees she uses for comparison purposes actually hold positions that require greater levels of skill, experience, or responsibility. If that isn't possible or if it proves to be unsuccessful, the employer must establish one of the affirmative defenses provided by the EPA.

If the employer contends that the compensation differential is based on a seniority, merit, or incentive system, it will be required to demonstrate that it has a bona fide system that wasn't adopted with discriminatory intent and that has been consistently applied to employees of both genders. The system must contain predetermined criteria for measuring factors such as seniority, merit, or productivity, and it must have been communicated to employees before the initiation of the EPA claim.

Conclusion

The fourth affirmative defense provided by the EPA permits an employer to show that the compensation differential was based on any factor other than sex. In practice, employers have successfully asserted the other-than-sex defense by demonstrating that the compensation differential was based on the education, experience, training, and ability of the employees involved.

The compensation differential also can be based on participation in a training program as long as it involved a specific course of activity and is open to similarly situated employees of both genders.

Additionally, employers have proven the other-than-sex defense by demonstrating that shift differentials or revenue production was the basis for the difference in compensation between female employees and the male employees they used for comparison purposes.

Avoiding EPA claims

Of course, the best way to successfully defend against an EPA claim is to avoid it in the first place. You should routinely review your compensation structure to determine if any inequalities exist between similarly situated employees that might appear to be based on gender.

If any discrepancies exist, you should be in a position to demonstrate, with reference to appropriate job descriptions and any gender-neutral factors such as seniority, merit, or the quantity and quality of production, exactly why certain employees are being paid at higher rates than others who hold identical or substantially similar positions.

While it's extremely common for employers to pay some employees more than others for jobs that might be considered "substantially equal," you can't afford to wait until an EPA claim is actually asserted to attempt to retroactively justify a compensation structure that doesn't appear to be gender-neutral.