Fra 214 Compliance Manual
Aron Eugine
The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.
PURPOSE: This transmittal covers the issuance of Section 10 of the new Compliance Manual on "Compensation Discrimination." The Manual Section provides guidance and instructions for investigating and analyzing claims of compensation discrimination under each of the statutes enforced by the EEOC.
Despite longstanding prohibitions against compensation discrimination under the federal EEO laws, pay disparities persist between workers in various demographic groups. For example, in 1999, women who worked full-time had median weekly earnings that were 75.7% of the median for men.(1) Median earnings for African Americans working at full-time jobs were 75.9% of the median for whites.(2) The median earnings of Hispanics were 65.9% of the median for whites and 86.8% of the median for African Americans.(3) There also is evidence that median earnings for individuals with disabilities are significantly lower than median earnings for individuals without disabilities.(4)
While some compensation disparities certainly are attributable to differences in occupations, skills, and experience, as well as differences in other legitimate factors, not all disparities can be explained by such factors. In 1998, the President's Council of Economic Advisers issued a report on the gender wage gap in which it stated that one rough but plausible measure of the extent of pay discrimination is the unexplained difference in pay. The Council determined that after accounting for measurable factors, there still is an unexplained 12% gap between the pay of men and women.(5) In a 2000 report, the Council also estimated an unexplained 12% pay gap between men and women in the field of information technology.(6) In terms of race, a private study has estimated that only about half of the wage gap between African-American and white women is explainable by differences in occupation, education, and other legitimate factors.(7)
Title VII, the ADEA, and the ADA prohibit compensation discrimination based on race, color, sex, religion, national origin, age, disability, or protected activity.(10) A claim of compensation discrimination can be brought under one of these statutes even if no person outside the protected class holds a "substantially equal," higher paying job. Furthermore, Title VII, the ADEA, and the ADA prohibit discriminatory practices that indirectly affect compensation -- such as limiting groups protected by these statutes to lower paying jobs. These practices are not covered by the EPA.
The EPA is more targeted. The EPA requires employers to pay male and female employees at the same establishment equal wages "for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions."(11) The jobs that are compared need be only substantially equal, not identical. Unequal compensation can be justified only if the employer shows that the pay differential is attributable to a bona fide seniority, merit, or incentive system, or any other factor other than sex.
A claim of unequal compensation based on sex can be brought under either the EPA or Title VII, as long as the jurisdictional prerequisites are met. To fully protect the charging party's rights and to maximize recovery, a charge alleging compensation discrimination based on sex should usually allege a violation of both Title VII and the EPA. While there is considerable overlap in the coverage of the two statutes, they are not identical. Title VII broadly prohibits discriminatory compensation practices, while the EPA only prohibits sex-based differentials in compensation for substantially equal jobs in the same establishment. Therefore, not all compensation practices that violate Title VII also violate the EPA. On the other hand, the Commission's EPA guidelines state that a practice that violates the EPA also will violate Title VII.(12)
All of the anti-discrimination statutes prohibit retaliation for opposing violations of the statutes or participating in the statutory complaint process. The anti-retaliation provisions protect persons who take steps to oppose compensation discrimination, or who participate in complaint proceedings addressing allegations of compensation discrimination.
Title VII, the ADEA, and the ADA prohibit discrimination in "compensation" based on race, color, religion, sex, national origin, age, disability, or protected activity. The term "compensation" includes any payments made to, or on behalf of, an employee as remuneration for employment.(13) Compensation discrimination in violation of Title VII, the ADEA, or the ADA can exist in a number of forms:
Subsections A through D, below, discuss the standards and suggested steps for investigating a charge of compensation discrimination under Title VII, the ADEA, or the ADA. Subsection A discusses disparate treatment; subsection B discusses disparate impact; subsection C discusses non-base elements of compensation (e.g., bonuses); and subsection D discusses discriminatory practices affecting compensation.
Because direct evidence of discrimination is rare,(16) investigators typically must evaluate whether comparative evidence supports a finding of compensation discrimination. Although not intended as an exclusive method, the method suggested in this subsection for conducting a comparative compensation analysis has three general components:
Investigators should identify similarly situated employees both inside and outside the charging party's protected class. Similarly situated employees are those who would be expected to receive the same compensation because of the similarity of their jobs and other objective factors.
When beginning an investigation for compensation discrimination, it is important to acquire information about the respondent's general system for compensating its employees. It will be useful to identify employees similarly situated to the charging party for purposes of comparing their compensation. If investigators have questions in any particular case about what the initial request for information should include, they should contact the Research and Technical Information division of the Office of Research, Information and Planning (ORIP), or the Office of General Counsel's Research and Analytical Services (RAS) division.(17)
As in other investigations, the initial request for information may, if necessary, be followed by requests for more specific compensation information. The investigator should design requests for information to facilitate an efficient and thorough investigation. Depending on the case, this request may include, by way of example, the following:
Sometimes much of the above information will have been provided by the charging party or other witnesses. After using the information to identify the jobs or positions whose occupants are potentially similarly situated to the charging party, the investigator should obtain relevant job descriptions for those positions, as well as other documents, such as work orders and sample work products, that would reveal the types of tasks performed by those employees and the complexity of the tasks.
As in any investigation, the investigator should consider supplementing the review of the respondent's written submission with respondent interviews and interviews of other witnesses. An on-site inspection also may be helpful.
The investigator should determine the similarity of jobs by ascertaining whether the jobs generally involve similar tasks, require similar skill, effort, and responsibility, working conditions, and are similarly complex or difficult.(18) The actual content of the jobs must be similar enough that one would expect those who hold the jobs to be paid at the same rate or level. Job titles and formal job descriptions are helpful in making this determination, but because jobs involving similar work may have different titles and descriptions, these things are not controlling.(19) Similarly, the fact that employees work in different departments or other organizational units may be relevant, but is not controlling.(20) The facts of Examples 1 and 2, below, illustrate these points.
Example 1: R is a large manufacturer of electronic equipment. R has four line departments: Development, Testing, Manufacturing, and Marketing. CP, an Asian American, is an electronics engineer in the Development department. He is on a team of engineers responsible for upgrades to the "OmniWidget," the company's flagship product. CP's charge alleges that he is paid less than other engineers on his team because he is Asian American. The investigation reveals that the OmniWidget design team has five team members and one supervisor. Teams responsible for the company's other products are similarly structured. The investigator analyzes the content of the electronics engineer jobs on the OmniWidget team and the other product teams and concludes that the jobs involve similar tasks, require similar skill, effort, and responsibility, and are similarly complex or difficult. Therefore, the investigator concludes that the engineers on all the teams in Development are similarly situated for purposes of comparing their treatment.
Factors other than job content also may be important in identifying similarly situated comparators. For example, minimum objective qualifications, such as a specialized license or certification should be taken into account.(21) Persons in jobs requiring certain minimum objective qualifications should not be grouped together with persons in jobs that do not require those qualifications, even though the jobs otherwise are similar. Although minimum objective qualifications should be taken into account in defining the pool of similarly situated employees,employees' relative qualifications should not be considered at this stage. While differences in qualifications, experience, and education ultimately may explain a pay differential, such factors require a pretext or disparate impact analysis to determine whether they are legitimate,(22) and thus should be considered only after the pool of comparators has been determined (see 10-III A.2 and B, infra). This approach allows for an orderly analysis that first identifies the relevant comparators, and then gives due consideration to factors that might explain compensation disparities.
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