This paper examines labor market discrimination with a focus on the Equal Pay Act of 1963, Title VII of the Civil Rights Act, and the ongoing gender wage gap. It traces the legislative history of equal pay protections, analyzes the landmark Ledbetter v. Goodyear Supreme Court decision and the subsequent Paycheck Fairness Act, and compares the legal frameworks in the United States, Japan, and internationally. The paper also evaluates competing theoretical perspectives — including free market theory, comparable worth theory, choice theory, and discrimination theory — to explain why a persistent pay disparity between men and women remains a workplace reality despite decades of legal protections.
The work of Becker (1957) defines "Labor Market Discrimination" by stating that it "may be in the form of differences in wage rates for workers who are equally productive but who are different in terms of their personal characteristics including race, age, religion, nationality, or education." Labor market discrimination also comes in the form of job exclusion on the basis of social class, union membership, or political beliefs (Becker, 1957).
The Equal Pay Act (EPA) is a federal law that prohibits discrimination based on an individual's gender in the payment of wages. The EPA was enacted by Congress as an amendment to the Fair Labor Standards Act to rectify the conditions created by pay inequities based on gender — specifically designed to address the disparity in wages paid to women. The enactment of the Equal Pay Act resulted in Congress making the following findings in relation to gender-based wage differentials. Such discrimination:
depresses wages and living standards for employees necessary for their health and efficiency; prevents the maximum utilization of available labor resources; tends to cause labor disputes, thereby burdening, affecting, and obstructing commerce; burdens commerce and the free flow of goods in commerce; and constitutes an unfair method of competition (AAUW, 2008).
The Equal Pay Act specifically states:
"No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex: Provided, That an employer who is paying a wage rate differential in violation of this subsection shall not, in order to comply with the provisions of this subsection, reduce the wage rate of any employee." (AAUW, 2008)
The difference between the Equal Pay Act and Title VII is that Title VII of the Civil Rights Act was passed in 1964, one year after the Equal Pay Act. Title VII states: "It shall be unlawful employment practice for an employer to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." (42 U.S.C. 2000e; as cited by AAUW, 2008)
While the Equal Pay Act places a prohibition on wage discrimination based on gender, Title VII prohibits all forms of employment discrimination — including hiring, termination, and promotion as well as wages — on the basis of race, religion, color, national origin, and gender. Individuals who have experienced gender-based pay inequity may choose to file under Title VII or the EPA; however, it may be more advantageous to file under the EPA for the following reasons:
An individual can file a lawsuit under the EPA without first filing a complaint with the U.S. Equal Employment Opportunity Commission (EEOC). Under Title VII, the individual must file a complaint with the EEOC, and the EEOC must issue a "Right to Sue" letter before a lawsuit can be filed in federal court.
The EPA has a longer statute of limitations than Title VII. EPA wage discrimination claims must be brought within two years of the first act of discrimination; however, the statute of limitations is extended to three years if the employer's violation is willful or intentional.
If an individual works for an employer with fewer than 15 employees, that individual falls outside of Title VII's requirements but can still file under the EPA.
Under the EPA, an individual can collect liquidated damages — double back pay can be awarded as liquidated damages unless the employer can show that the wage discrimination was made in good faith (AAUW, 2008).
There are also stated disadvantages to filing under the EPA, including the following: under the EPA the individual cannot collect punitive damages, including pain and suffering. Unlike the EPA, Title VII does not require that the individual's job be substantially equal to that of a higher-paid individual of the opposite sex, nor does it require that the individual work in the same establishment (AAUW, 2008).
Generally, an individual will file claims under both the Equal Pay Act and Title VII for the purpose of preserving claims under both laws regarding sex discrimination. Under the Equal Pay Act, the individual must show that a male and a female working in the same place and performing equal jobs are receiving unequal pay. The burden is on the employee — the plaintiff — to establish a prima facie case requiring that the employee show: same establishment; unequal pay; on the basis of sex; and equal work (AAUW, 2008).
While the jobs do not have to be "identical, they must be substantially equal" (AAUW, 2008). For the purpose of the Equal Pay Act, two jobs are equal "when both require equal levels of skill, effort, and responsibility and are performed under similar working conditions within the same establishment" (AAUW, 2008). The key components are defined as follows:
Skill — measured by factors such as the experience, ability, education, and training required to perform the job. The key issue is what skills are required for the job, not what skills the individual employees may have (AAUW, 2008).
Effort — means the amount of physical or mental exertion needed to perform the job (AAUW, 2008).
Responsibility — relates to the degree of accountability required in performing the job (AAUW, 2008).
Working Conditions — encompass the factors of: (1) physical surroundings such as temperature, fumes, and ventilation, and (2) hazards (AAUW, 2008).
Establishment — the prohibition against compensation discrimination under the EPA applies only to jobs within any establishment. An establishment is a distinct physical place of business rather than an entire business or enterprise consisting of several places of business. However, in some circumstances, physically separate places of business may be treated as one establishment (AAUW, 2008).
Upon having established the prima facie case, the burden "shifts to the employer/defendant, who can justify the pay differential under one (or more) affirmative defenses" (AAUW, 2008), including: seniority systems; merit systems; systems which measure earnings by quantity or quality of production; and differentials based on any factor other than sex (AAUW, 2008).
On January 9, 2009, Jim Abrams reported in "House Approves Bill to Fight Wage Discrimination" that "House Democrats, energized by the prospects of a pro-labor president, marked the first week of the new Congress by pushing through two bills to help workers, particularly women, who are victims of discrimination." Abrams relates that this act would effectively reverse the 2007 Supreme Court decision that limited the time in which a worker could file a wage discrimination complaint to 180 days from the "first decision to pay that worker less, even if the person was unaware of the pay disparity" (Abrams, 2009).
The previous decision arose from the case of Lilly Ledbetter, a supervisor at a Goodyear Tire & Rubber Co. plant located in Gadsden, Alabama, who sued the company over pay discrimination "when she learned, shortly before retiring after a 19-year career there, that she earned less than any male supervisor. A jury ruled in her favor, but the Supreme Court, in a 5–4 vote, threw out her complaint, saying she had failed to sue within the 180-day deadline after a discriminatory pay decision was made" (Abrams, 2009).
Ms. Ledbetter stated that this ruling "just doesn't make sense in the real world. In a lot of places you could get fired for asking your co-workers how much they are making" (Abrams, 2009). The Paycheck Fairness Act passed on January 9, 2009, effectively "puts gender-based discrimination on an equal footing with other forms of discrimination in seeking compensatory and punitive damages. It also puts the burden on employers to prove that any disparities in wages are job-related and not sex-based, and bars employers from retaliating against workers who discuss or disclose salary information with their co-workers" (Abrams, 2009).
In June 2007, Kay Steiger reported in "Equal Pay Reality Check" that the Supreme Court had "issued a majority opinion in Ledbetter v. Goodyear which effectively denied employees the right to sue for wage discrimination after the passing of 180 days." Justice Ruth Bader Ginsburg "was so incensed she read her scathing dissent aloud from the bench. She defended Lilly Ledbetter's right to sue her employer, Goodyear Tire & Rubber Co., for pay discrimination on the basis of sex, giving a not-so-gentle reminder of the realities of the American workplace" (Steiger, 2007). Specifically, Justice Ginsburg argued:
"A worker knows immediately if she is denied a promotion or transfer, if she is fired or refused employment. And promotions, transfers, hirings, and firings are generally public events, known to co-workers. When an employer makes a decision of such open and definitive character, an employee can immediately seek out an explanation and evaluate it for pretext. Compensation disparities, in contrast, are often hidden from sight." (Steiger, 2007)
Steiger reports that the EEOC already had a significant backlog of cases, and with the ruling in Ledbetter the backlog was predicted to increase further. Steiger states: "The Ledbetter ruling places greater importance on the EEOC mediation, so an employee with a complaint must file with the EEOC within the given time period to give legitimacy to any lawsuit that may follow if the EEOC cannot resolve the complaint. The Ledbetter ruling has created a 'protection plan for employers,' Henderson said, because the burden of proof already lies with the employee filing the charge, and creating a limited time period gives employers an incentive to withhold the information until the filing period has expired." (Steiger, 2007)
"Reviews Sex Discrimination Act and Gallup Poll findings"
"Traces international and U.S. comparable worth debates"
"Contrasts free market, comparable worth, and choice theories"
"Summarizes findings and evaluates Paycheck Fairness Act impact"
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