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EEOC launches compensation lawsuit based on gender

August 27, 2013

Article courtesy of SBAM Approved Partner AdvanceHR

During the last century, the United States has made strides in equality between the sexes in the workplace — particularly over the last few decades. But the playing field is generally still tilted in favor of men. The Equal Pay Act protects employees against discrimination and the EEOC investigates matters when qualified women:

  • Fail to get promoted as quickly as men;
  • Are under-compensated relative to men performing the same or similar duties; and
  • Are otherwise discriminated against by employers.

In one recent example, the EEOC filed a lawsuit against Extended Stay Hotels, a hotel chain with almost 700 locations, for illegally paying female employees less than the amount it paid their male counterparts who were doing “equal work” (EEOC v. HVM LLC., DBA Extended Stay Hotels, Civil Action No. 8:13-cv-01980, 7/11/13).

Background Information

The EEOC is responsible for enforcing, among other federal employment-related laws (see box), the Equal Pay Act. Under the law, payment based on gender is treated as being discriminatory, but it is generally limited to pay discrimination among employees who are performing the same job at the same location.

In order for the Equal Pay Act to apply, the following requirements must be met:

  • A significant portion of the job tasks are the same for the positions being compared.
  • The two jobs involve similar levels of skill, which means similar levels of experience, ability, education, and training.
  • The two jobs involve similar levels of mental and physical exertion.
  • The two jobs involve similar levels of responsibility or accountability.
  • The two jobs are performed under similar working conditions.

Although the workers must be performing their job-related duties at the same business location, workers at different worksites may sometimes be compared if the same managers oversee the operations of both locations and the workers frequently transfer between the two locations.

Job content determines whether positions are substantially equal, rather than job titles.

Note: An unequal pay arrangement is not automatically discriminatory under the Equal Pay Act. In certain cases, an employer is permitted to pay someone of one gender more than the other, even though he or she is performing the same job. To justify the higher pay in those situations, the employer must show that the higher pay is based on:

  • A seniority system rewarding employees due to length of employment;
  • A merit system rewarding employees for exceptional job performance; 
  • An incentive system that pays employees based on the quality of their work or the amount of work they perform; or 
  • Some other factor related to job performance or business operations, such as paying a shift differential to workers on less popular shifts.

Facts of the Recent Case

According to the lawsuit filed in U.S. District Court in Maryland, Latoya Weaver was hired as a guest services representative at the Extended Stay America hotel in St. Mary’s County, MD. Initially, she was paid $8 an hour. When Weaver resigned nearly five years later, she was earning $8.88 an hour.

Weaver’s primary responsibilities included answering the telephone, making reservations and checking guests in and out of the hotel. Despite her years of similar experience at another hotel before she started work at Extended Stay Hotels, and her five years of good job performance at the same location, the EEOC is charging that the hotel paid newly-hired male employees a higher rate than the one paid to Weaver — even though they performed substantially equal work.

When Weaver subsequently offered to rescind her resignation if she were to receive a raise, the EEOC says the general manager told her it wasn’t possible because the hotel was being renovated. Around the same time, the EEOC alleges that two men were hired as guest services representatives and paid a rate of $10 an hour. During its investigation, the EEOC found that other female guest services workers at the hotel were discriminated against.

The EEOC claims that such alleged conduct violates the Equal Pay Act and Title VII of the Civil Rights Act of 1964 (see right-hand box). After first attempting to reach a voluntary pre-litigation settlement, the EEOC is now seeking injunctive relief prohibiting Extended Stay Hotels from paying female employees less compensation than male workers performing equal work, equitable relief providing equal employment opportunities or women, lost wages, compensatory and punitive damages and other affirmative relief for Weaver and other similarly situated female employees who were harmed by the discriminatory conduct.

“Although we have made great strides in narrowing the wage gap between men and women, this case demonstrates that pay discrimination remains a serious problem in the workplace,” District Director Spencer H. Lewis, Jr. of the EEOC’s Philadelphia District Office stated in an EEOC press release.

EEOC Regional Attorney Debra M. Lawrence added: “It is disturbing that even as we commemorate the 50th anniversary of the Equal Pay Act, some employers persist in paying women less than men for equal work simply because of their gender. The EEOC will take vigorous action to remedy sex-based wage discrimination.”

Extended Stay Hotels owns and operates approximately 685 hotels in the U.S. and in Canada. As of this writing, the company, which is headquartered in Charlotte, NC, has not issued a formal statement on the EEOC lawsuit.

Should Employers Just Reduce Pay for Some Workers?

According to the EEOC, all forms of pay are covered by the Equal Pay Act, including salary, overtime pay, bonuses, stock options, profit sharing and bonus plans, life insurance, vacation and holiday pay, cleaning or gasoline allowances, hotel accommodations, reimbursement for travel expenses, and benefits.

“If there is an inequality in wages between men and women, employers may not reduce the wages of either sex to equalize their pay,” the EEOC states.
Federal Laws Prohibit Unequal Pay

The Equal Pay Act is the linchpin of the recent lawsuit, but the EEOC also enforces other federal laws in this area, including Title VII of the Civil Rights Act of 1964.

Under Title VII, discrimination involving compensation or discrimination based on other terms and conditions of employment is prohibited, so it takes a broader view than the Equal Pay Act. In addition, Title VII prohibits discrimination in compensation or other employment issues based on race, color, religion, or national origin.

Furthermore, the Age Discrimination in Employment Act, the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act prohibit discrimination in compensation or other aspects of employment based on age, disability, or genetic information.

In 2009, President Obama signed the Lilly Ledbetter Fair Pay Act, which supersedes a U.S. Supreme Court decision that required a compensation discrimination charge to be filed within 180 days of a discriminatory pay-setting decision (or 300 days in jurisdictions that have a local or state law prohibiting the same form of compensation discrimination).

The Lilly Ledbetter Fair Pay Act restores the earlier position of the EEOC that each paycheck that delivers discriminatory compensation is actionable under the federal statutes, regardless of when the discrimination began.

It is important for employers to have a fundamental understanding of all applicable federal and state laws involving discrimination.

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