There are many laws in the workplace that govern employers and employees. You need to be sure you are in compliance with federal and state laws at all times as a small business owner. One prominent issue today is equal pay between men and women. Federal law and equal pay laws by state aim to protect against discrimination in the workplace.
The median annual pay of full-time working women was only 80 cents for each dollar a man working full-time earned in 2016. Despite the Equal Pay Act of 1963, there are continuing reports of discrimination in the workplace. To combat this, many states have passed or are attempting to pass equal pay laws.
Equal Pay Act
So, what is the Equal Pay Act? The Equal Pay Act (EPA) of 1963 is federal legislation that aims to prevent pay discrimination based on sex. Employers are not allowed to pay men and women who perform the same job different wages.
Employers cannot pay unequal wages to women and men for jobs that require equal skill, effort, and responsibility and are performed under similar working conditions at the same establishment.
Differences between employee pay rates are only allowable due to something unrelated to an employee’s sex, like seniority, merit, and quantity or quality of production.
Under the Equal Pay Act, an employer paying employees unfair amounts must adjust the wages. Employers cannot decrease the wages of the employee with the higher pay. Instead, an employer must increase the wages of the employee with the lower pay.
The EPA is part of the Fair Labor Standards Act. The Fair Labor Standards Act (FLSA) also protects workers through minimum wage and overtime laws.
Other laws established to eliminate discrimination in the workplace include:
- Civil Rights Act of 1964 (race)
- Age Discrimination in Employment Act of 1967 (age)
- Title I of the Americans with Disabilities Act of 1990 (disabilities)
Equal pay laws by state
Some states have expanded the laws of the Equal Pay Act of 1963 through state legislation. The majority of states have their own equal pay laws that either emphasize or add to federal legislation.
California, New York, and Maryland have made recent amendments to their equal pay laws. Take a look at how these states expanded their equal pay legislation.
California
The California Fair Pay Act (SB 358) was signed into law in October 2015. This act expands and strengthens the already existing California Equal Pay Act.
The California Fair Pay Act states that employees do not need to work at the same location to have comparable jobs. For example, an employee working at John’s Office Bureau on 6th Street should receive the same wages as an employee working at John’s Office Bureau on Smith Road if they perform the same job.
And, the act makes it more difficult for employers to claim that their differential pay is not because of discrimination.
Another addition to the existing equal pay law is that employees can discuss their wages with other employees. This helps employees gauge internal equity and see if they are being paid fairly. Also, employees can take legal action against discrimination without fear of employer retaliation.
Under the act, employers need to maintain employee payroll records for three years.
New York
New York’s Achieve Pay Equity bill passed in October 2015, shortly after California’s act. The law allows employees to discuss their wages with other employees.
Employers are required to pay employees the same wages if they work similar jobs at different locations within the same county (e.g., if there is more than one business branch).
Employees being discriminated against will receive significant money in damages if the employer is found guilty.
Employers are required to prove how they set their wages if two employees receive different rates of pay. And, employers can only set different wages based on education, training, or experience.
Maryland
Maryland’s Equal Pay for Equal Work Act passed in May of 2016. The law expands protections as well as details exceptions to unequal pay. Under Maryland’s expanded law, employees can talk about their wages with fellow employees.
Maryland’s act also protects individuals who identify as a different gender. And, employers cannot assign an employee to a lower-status job based on sex. Employees at different business locations in the same county (not just the same building) must receive equal pay for comparable jobs.
The law also lets employers pay employees different wages by measuring performance. And, an employee can allege discrimination.
Employers in Maryland are required to keep the following records for all employees: wages, job classifications, and conditions of employment.
State equal pay laws
Most states have some form of equal pay laws. However, California, New York, and Maryland are the three states to expand their definitions, put a heavier burden on employers to follow the act, and allow employees to discuss their paychecks with other employees.
Here is a chart of the provisions states have regarding equal pay for equal work. In some states, the provisions only apply to employers with a certain amount of employees or types of employment. These states are marked with an asterisk. For more information, visit the National Conference of State Legislatures (NCSL).
| State | Provisions |
|---|---|
| Alabama | None. |
| Alaska | Employers cannot pay females less than males for comparable work in the same operation, business, or type of work in the same locality. |
| Arizona | Employees doing the same quantity and quality of the same type of work in the same establishment must be paid equally regardless of sex. And, employers are liable for damages. |
| Arkansas | Females must receive the same pay as males for comparable work. And, employers are liable for damages. |
| California | Employers can’t pay any employees less than the rates paid to employees of the opposite sex for similar work. And, employees can sue for damages. |
| Colorado | Employers cannot pay employees less based on sex. And, employers are liable for damages. |
| Connecticut | Differences in pay based on sex is considered discrimination. Employers are liable for damages. |
| Delaware | Employees can’t be paid different rates of pay for doing a job that requires the same skill, effort, responsibility, and working conditions. And, employees can sue for damages. |
| D.C. | General law that prevents wage discrimination based on protected class status (race, sex, age, etc.). |
| Florida* | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, responsibility, and working conditions. And, employees can sue for damages. |
| Georgia* | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, responsibility, and working conditions. And, employees can sue for damages. |
| Hawaii | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, responsibility, and working conditions. And, employees can sue for damages. |
| Idaho | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, responsibility, and working conditions. And, employees can sue for damages. |
| Illinois* | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, responsibility, and working conditions. And, employees can sue for damages. Women and minors cannot be employed at an oppressive or unreasonable wage rate. |
| Indiana* | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, responsibility, and working conditions. And, employees can sue for damages. |
| Iowa | Employers cannot discriminate against employees due to age, race, creed, color, sex, sexual orientation, gender identity, national origin, religion, or disability by paying lower wages than someone doing the same job. And, employees can sue for damages. |
| Kansas | Employers with employees of both sexes can’t discriminate by paying a different pay rate for equal work in the same establishment. And, employers are liable for damages. |
| Kentucky* | Employers can’t discriminate based on sex by paying lower rates to an employee who does the same job (skill, effort, and responsibility) as another employee. And, employers are liable for damages. |
| Louisiana* | Employers cannot discriminate based on sex by paying less wages. And, employers are liable for damages. |
| Maine | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, and responsibility. |
| Maryland | Employers cannot discriminate based on sex by paying different wages for jobs that have comparable requirements relating to skill, effort, and responsibility at the same establishment. |
| Massachusetts | Employers cannot discriminate based on gender by paying different wages to people of comparable jobs. And, employers are liable for damages. |
| Michigan* | Employers with both male and female workers who discriminate based on wages will be guilty of a misdemeanor if the jobs have equal work. And, employees can sue for damages. |
| Minnesota* | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, responsibility, and working conditions. And, employees can sue for damages. |
| Mississippi | None. |
| Missouri | Employers cannot pay females less than males for the same quantity and quality of the same classification of work. And, employers are liable for damages. |
| Montana | The state, county, municipal entity, school district, public or private corporation, person, or firm cannot pay women workers less than men for the same service, amount, or class of work in the same industry, school, establishment, office, or place of employment of any kind. |
| Nebraska* | Employers can’t discriminate based on sex by paying different wages for equal work. And, employees can sue for damages. |
| Nevada | Employers cannot discriminate based on sex by paying lower wages to an employee of the opposite sex who performs equal work at the same establishment. |
| New Hampshire | Employers cannot discriminate by paying different wages based on sex. And, employers are liable for damages. |
| New Jersey | Employers can’t discriminate based on sex by paying different wages for similar jobs. And, employees can sue for damages. |
| New Mexico* | Employers can’t discriminate by paying employees less wages based on sex for equal work in the same establishment. And, employers are liable for damages. |
| New York* | Employees cannot receive a less wage rate than another employee for equal work that requires the same skill, effort, responsibility, and similar working conditions. Employers are liable for damages. |
| North Carolina | None. |
| North Dakota | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, and responsibility. And, employees can sue for damages. |
| Ohio | Employers, including state and political, cannot discriminate based on race, color, religion, sex, age, national origin, or ancestry by paying less wages for equal work. And, employers are liable for damages. |
| Oklahoma* | Employers cannot discriminate based on sex by paying different wages for jobs that require the same skill, effort, and responsibility. |
| Oregon | Employers cannot discriminate between sexes by paying less wages for work of comparable character that requires comparable skills. And, employees can sue for damages. |
| Pennsylvania | Employers cannot discriminate between employees based on sex by paying different wages at the same establishment. And, employees can sue for damages. |
| Rhode Island | Employers can’t discriminate between sexes by paying female employees less than male employees for equal work or work on the same operations. And, employees can sue for damages. |
| South Carolina | No equal pay law, but employers cannot discriminate by different wages based on protected class status. |
| South Dakota | Employers cannot discriminate based on sex by paying less wages to employees for comparable work on jobs with comparable skill, effort, and responsibility. And, employers are liable for damages. |
| Tennessee | Employers cannot discriminate based on sex by paying different wages for comparable work on jobs with comparable skill, effort, and responsibility. And, employers are liable for damages. |
| Texas* | In public employment, employers cannot discriminate based on sex by paying less wages. |
| Utah | No equal pay law, but employers can’t discriminate based on color, sex, race, retaliation, pregnancy, age, religion, national origin, disability, sexual orientation, or gender identity by paying different wages. |
| Vermont | Under the general employment discrimination laws, employers cannot discriminate based on sex by paying different wages. And, employees can sue for damages. |
| Virginia | Employers cannot discriminate based on sex by paying different wages in the same establishment for equal work. And, employees can sue for damages. |
| Washington | Employers with both male and female employees cannot pay a female less than a male with similar employment, or they will be guilty of a misdemeanor. And, employees can sue for damages. |
| West Virginia* | Private employers cannot discriminate by giving different wages for similar jobs. And, employees can sue for damages. |
| Wisconsin | No equal pay law, but the general employment discrimination law prohibits wage discrimination based on sex. |
| Wyoming | Employers cannot discriminate based on gender by paying different wages for equal work in the same establishment. And, employers are liable for damages. |
Why compliance is important
Complying with the Equal Pay Act and equal pay laws by state is very important. Violating equal pay laws can bring you into a lawsuit. If you pay your employees differently, you need to justify your reasoning for the difference in wages, like experience or education.
An employee who claims a violation of the Equal Pay Act does not need to file with the Equal Employment Opportunity Commission (EEOC) before going to court. If an employee sees a discrepancy in pay that violates the EPA, they have two years to go to court and file a charge.
How to comply with equal pay laws
To stay compliant with equal employment opportunity (EEO) laws, be sure you have justification for differential pay between employees. If you have two employees of different sexes doing the same job but receiving different pay, the wages must be because of experience, education, or seniority.
Keep records for at least three years that detail employee wages, job descriptions, and reasoning for compensation amounts. Remaining compliant with EEO responsibilities could save you a considerable headache.
Keeping employee records is part of the job when you’re a small business owner. Avoid losing important information like pay records with Patriot’s online payroll software. We offer free setup and support. Try it for free today!
This article has been updated from its original publication date of February 27, 2017.
This is not intended as legal advice; for more information, please click here.