Is pay inequality more affordable at the state level? It doesn’t matter – 7 steps for avoiding equal pay problems

Attorney Nilesh Patel is a member of Wisconsin SHRM, which is dedicated to being the state leader in HR management and premier source for HR expertise and resources. More information can be found at: Nilesh is the principal attorney of the Mahadev Law Group, LLC, which focuses on human resources and employment law issues for organizations. He can be reached at

April 17, 2012 was National Equal Pay Day, “a day to recognize the full value of women’s skills and their significant contributions to the labor force, acknowledge the injustice of wage discrimination, and join efforts to achieve equal pay.” In an ironic bit of bad timing, just three days later Wisconsin Senate Bill 202, sometimes referred to as a repeal of Wisconsin’s Equal Pay Enforcement Act, became law. With its passage, employees lost the ability to seek compensatory and punitive damages in state court for wage discrimination.

Senate Bill 202 (SB 202) essentially serves as a do-over for equal pay law in Wisconsin; the bill reverts the law to the way it was in 2009. Rather than get involved in the political controversy caused by the new law, this article will review the legal landscape for equal pay and what internal actions private sector employers can take to avoid equal pay problems.

Context for equal pay enforcement

If state law provided the only remedy for private sector employees who suffered wage discrimination, the law’s reversion would certainly lessen the financial consequences to employers. Removing compensatory damages means employers will not be liable for out-of-pocket expenses caused by the discrimination, such as job search costs or emotional harm. Removing punitive damages means employers who intentionally violate equal pay obligations will not face a financial penalty. Instead, the financial consequences will be limited to back pay for up to two years, possible reinstatement, and costs and attorney fees.

However, several federal laws still impose equal pay obligations. These are the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, and Title 1 of the Americans with Disabilities Act. Here, a broader range of remedies are provided in an effort to make the employee whole and to erase the harm caused by the discrimination. Those remedies include: back pay, lost benefits, job reinstatement or job promotion, an order to cease discriminatory practices, compensatory damages, punitive damages, and attorney fees, expert witness fees, and court costs.

Critics of SB 202 have charged that while federal claims remain an option, those are more expensive to litigate and therefore, possibly out of reach. However, the possibility of getting attorney fees and costs means federal cases are still accessible and blatant violations could be pursued on a contingency fee basis, with limited upfront costs for the employee.

There is one very important side note: public sector employers in Wisconsin may not be subject to the federal laws, in which case public sector employers will benefit from SB 202’s lowered damage awards.

Ensuring compliance

Employers need to be aware that equal pay is going to be a prevalent topic. The timing for SB 202’s passage made equal pay a hot political issue in Wisconsin. A federal Equal Pay Task Force was formed in 2010 to help federal agencies share information and collaborate toward equal pay enforcement. The task force also encouraged the development of applications to make it easier for the public to learn about equal pay rights and pay data.

Employers can take the following proactive steps to avoid gender-based wage disparities and the employee morale, public relations, or litigation problems they can cause. Many of these steps are developed based on federal law, since that provides the stronger basis for equal pay protections:

1) Review your equal pay obligations under local, state, and federal laws.

2) Determine which jobs are substantially similar, based on job content and duties. Make sure to place employees doing similar work in similar job classifications (i.e., in the same category and level, regardless of gender).

3) When establishing compensation rates for wages, bonuses, overtime, training, and separation pay, keep track of the wages of employees in substantially similar jobs and ensure that any differences can be legally justified.

4) Periodically, conduct an audit of all employees’ wages and look for any pay differentials for employees in substantially similar positions. Here again, if there are any differences, review whether they are legally justifiable. If the differences cannot be legally justified and are due to gender, wages for the affected employees must be increased.

5) Train managers about your organization’s equal pay obligations. Inform managers that salary negotiations cannot excuse gender-based pay discrimination. Nor should they entertain any notions that breadwinners deserve more pay. In addition, managers should be careful not to discipline employees for discussing their wages.

6) Evaluate the performance review process and ensure that biased performance reviews do not illegally impact compensation or promotions.

7) Create a checklist of what constitutes illegal retaliation against an employee who internally complains about unequal wages, files an equal pay complaint, or participates in an investigation or lawsuit. Generally, it is illegal for employers to fire, demote, harass, or otherwise retaliate against those employees. Prevent retaliation claims by training managers and employees on what conduct to avoid.

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