Understanding pay discrepancies is crucial for ensuring fair compensation practices within organizations. A key term in this context is "pay disparity," but how does it differ from pay gaps? In the following sections, we will explore these concepts and their significance, along with the legal protections available to address pay discrepancies.
What is a Pay Discrepancy?
Pay discrepancies happen when workers performing equivalent jobs do not receive the same compensation for their work. Job content, not job descriptions, decides whether or not workers are significantly equal. A pay discrepancy is also referred to as a pay disparity or pay inequity.
Why Do Pay Discrepancies Happen?
Pay discrepancies occur for reasons that are not justified by neutral, job-related components such as tenure, skill, working conditions, or qualifications. For instance, if a team of construction workers performs comparable duties under similar working conditions, but women and men in this group are paid differently despite having similar tenure and experience, this constitutes a gender-based pay discrepancy.
Pay discrepancies can reflect patterns of inequity within a business’s compensation practices or organizational culture. Pay discrepancies that are based on race, gender, or other protected characteristics are illegal under federal employment discrimination laws, exposing organizations to significant legal liabilities if left unaddressed. Beyond legal implications, perceptions of unfairness in pay can have detrimental effects on employee trust and retention.
Pay Discrepancies vs. Pay Gaps
Pay discrepancies are different from pay gaps. A pay gap measures the overall differences in earnings between two populations (such as men and women) without adjusting for factors like experience, tenure, or education. Pay discrepancies contribute to pay gaps but are focused specifically on unjustified differences in pay for similar roles. Addressing pay discrepancies involves ensuring that employees performing equivalent work are compensated fairly based on legitimate job-related factors.
Legal Protections Against Pay Discrepancies
Federal legislation looks to ensure that people performing work that demands relatively comparable abilities, skill(s), and obligation(s) under identical working conditions are equally compensated for their time. If you believe you have experienced a pay discrepancy at your prior job, you may be entitled to compensation.
Pay discrepancy discrimination can occur on the basis of sex or race, both of which are illegal under federal law. All types of pay fall under the scope of the law in the United States, including wages, overtime pay, bonuses, equity options, profit share and incentive plans, life insurance, leave and holiday pay, and benefits.
On top of local laws, there are federal rulings enacted to ensure that you will not incur a pay discrepancy. Title VII refers to all private employers, state and local governments, and educational institutions that employ 15 or more individuals. These regulations also apply to private and public job agencies.
Furthermore, the Equal Pay Act requires equal pay for equal jobs for men and women in the same establishment. Jobs do not need to be identical, but they need to be significantly equal. It is the quality of the work, not the title of the job, that determines whether the positions are significantly equal. If you have a pay discrepancy compared to a coworker that you believe is due to race, gender, religion, or another protected class, you may be entitled to a workers' compensation claim.
Victims of pay discrepancy discrimination can recover remedies to include back pay, hiring, promotion and more.
How Do You Handle Pay Discrepancy at Work?
The wage and hour division of the Department of Labor (DOL) will investigate any potential case of wage discrepancy if a complaint is filed. Examples of pay discrepancy include any of the following:
- Wage is less than the minimum wage
- Overtime rates are not correctly paid
- Wages are not paid on a regular basis
- Pay stubs are not issued when wages are paid
- Wages not paid on termination of employment
- Wages withheld in retaliation for whistleblowing, or after filing for workers’ compensation following a workplace injury or illness
- Wages paid under what was included in an employment contract or agreement
If you believe you have experienced pay discrepancy at work, you do need to have evidence of it and have made an attempt to resolve it with your HR (human resources) department or your employer directly. Examples of evidence include pay stubs showing inconsistent pay rates or insufficient wages, your signed employment agreement showing what your wage was supposed to be, and correspondence with your employer, such as letters, emails, text messages, etc.
It is better to file your complaint with an office of the DOL as soon as possible when evidence is fresh. You can visit the hours and wage division office in person or phone them to discuss your complaint. If the DOL thinks that your experience indicates that employment legislation has been breached, then they will initiate an investigation. This involves assessing evidence, contacting the employer, holding conferences, and enforcing the legislation.
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