Understanding Employment Law Equal Pay Act

UnderstandingEmployment Law: Equal Pay Act

UnderstandingEmployment Law: Equal Pay Act

TheEqual Pay Act was formulated in the year 1963 with the main objectiveof bridging the gender gap that existed in terms of paydiscrimination. During its time of formulation, women earned about 59cents for each dollar earned by their male counterpart (Siniscalco,Damrell &amp Nabity, 2014). Legislators blamed organizations oremployers for gender-based discrimination in compensation. Thisimplies that the key objective was to control the organizations’compensation practices. This paper will summarize the impacts of theEqual Pay Act as presented in the article “The pay gap, the glassceiling, and pay bias: Moving forward fifty years after the Equal PayAct”. The article was written by Siniscalco Gary, Nabity Clara, andDamrel Lauri and published in the American Association Labor andEmployment Law Journal in the year 2014. The authors discuss theimplications of the Equal Pay Act for more than fifty years since itsformulation.

TheEqual Pay Act has had both the positive and the negative impacts onthe organization. The first negative impact of the act is theimposition of the financial burden of raising the compensation forwomen in order to reduce the gap between the amount that is earned bymen and women (Siniscalco, Damrell &amp Nabity, 2014). It would bepractically impossible to bridge the gap by reducing the pay for menwhile maintaining the pay for female employees. The only alternativeis to raise the compensation for the group that has beendiscriminated against, which means that the employer has to expandthe salary expenditure. In essence, the Equal Pay Act increased thecost of using labor on the part of the employer (Brenton, 2012). Inthe long-run, the high cost of utilizing labor made organizationsreluctant to hire, which in turn tightened the labor market and adecline in the organizations’ productivity as well as efficiency.

Theenactment of the Equal Pay Act increased the risk of litigations thataffected many organizations. The Equal Employment OpportunityCommission was given the responsibility of enforcing the Equal PayAct. This commission was authorized to investigate and sue employerseven in cases where employees are unwilling to pursue their rights asprovided by the Equal Pay Act (Siniscalco, Damrell &amp Nabity,2014). The simple criteria for rising litigation against theorganization requires the commission to be convinced that the paydisparity exists in a case where employees have a job that needsequal skills, equal responsibility, equal effort, and similarconditions. The commission has been receiving complaints in hundredsof thousands each year where some of these cases are settled with thecommission while others are sent to litigation. For example, the EEOCreceived about 1,124 cases in 2010, 972 cases in 2011, and 1,250 in2012 (Siniscalco, Damrell &amp Nabity, 2014). These litigationsoften damage the image of the organization since they depict the firmas law breaking enterprise. The litigation also has financialimplications on the organizations since the settlement is, in mostcases done in the form of cash that is paid as fines.

Althoughthe Equal Pay Act is often perceived by the organization as a form ofpunishment given the high cost of implementing its provisions, propercompliance enhances the image of the organization. Organizations havethe moral as well as ethical obligations to abide by the laws set theauthorities in the jurisdictions in which they operate in. Complyingwith these laws sends a message to the society that the firm is a lawabiding origination that care for its stakeholders (Bagley, Clarkson&amp Power, 2006). This gives a positive image of the organization,which is associated with other benefits, such as customer loyalty,increased market share, enhanced profitability, and a safer goingconcern. Similarly, organizations that comply with the Equal Pay Actmay have may benefit through an improvement in the corporate image.Although the concept of equity (including equal pay) is expected tobe a part of the corporate social responsibility policy, itsintegration in the national laws creates a mandatory responsibility,which is an opportunity that organizations can exploit throughcompliance to enhance their image.

TheEqual Pay Act prevents organizations from utilizing efficientgender-based practices that are perceived to be value adding. Thisleads to an additional burden on top of the cost of implementing theact’s provisions and taking care of litigations. For example, it isperceived to be economically rational to make decisions that echomisogynistic tastes of clients, but such a practice is prohibited bythe act (Brenton, 2012). In additional, it is economically feasiblefor the organization to discriminate against a female staff if it hascertain beliefs regarding that employee’s average characteristicsinstead of bearing the added cost of information of distinguishing agiven prospective female staff from an average female staff.Organizations are prohibited from such efficient practices.

Inconclusion, employment laws are mainly formulated to protectemployees from being exploited or mistreated by employers. However,some employment laws have more negative impacts on employers than thepositive effects. For example, organizations have to bear theadministrative cost of implementing the provisions of the EqualEmployment Act, face the risk of litigations, and avoid usingsex-based employment practices that are otherwise considered to beeconomically efficient. However, proper compliance can help theorganization enhance its image.


Bagley,E., Clarkson, G. &amp Power, R. (2006). Deeplinks: Business school students’ perceptions of the role of law andethics in business.Boston, MA: Harvard Business School.

Brenton,A. (2012). Overcoming the Equality Pay Act and Title VII: Why federalsex-based employment discrimination laws should be replaced with asystem for accreditation employers for their anti-discriminatoryemployment practices. WisconsinJournal of Law, Gender, and Society,26 (2), 350-385.

Siniscalco,G., Damrell, L, &amp Nabity, C. (2014). The pay gap, the glassceiling, and pay bias: Moving forward fifty years the equal pay act.AmericanBar Association and Employment Law Journal,29 (3), 1-28.