By 1938, the Great Depression had wrecked a lengthy and widespread economic havoc on the country. Pressured to give the working populace some relief, President Franklin Roosevelt enacted the Fair Labor Standards Act (FLSA). No longer could businesses financially exploit their workers to make a profit. No longer did workers have few to no rights regarding their workplace conditions. And for the first time, a minimum wage, overtime pay, and child labor standards were law, applicable to any employee (low-level, management, and executives). Businesses who violated these laws could now be penalized and sued.
Almost a century later the FLSA still stands, but while most are familiar with its basic rules, many are unaware of the nuances within the FLSA. One nuance applies to gender equality.
Regardless of whether a job is done by a man or woman the amount of pay for a job is determined by its job requirements. Under the Equal Pay Act (29 U.S.C. § 206.), a 1963 amendment to the FLSA, men and women are to receive equal pay for equal work. However, businesses can compensate men and women workers differently if the pay differences are not based on gender, but on a "bona fide seniority system, merit system or incentive "system.
A system is bona fide if the following criteria are met:
• The system is not implemented with a purpose to discriminate for gender reasons, and
• Specific criteria that are used to assess the worker's productivity, merit, or seniority are ... determined prior to the pay disparity, the reason(s) for the pay differences, properly communicated to the entire work force, and applied equitably to all workers.
Any seniority pay increases that do not meet these criteria must be justified. If it is determined the pay increase was arbitrarily applied, it can be a violation of the FLSA.
Additionally, if the business implements a merit pay system, workers should receive periodic performance evaluations that objectively asses the worker's accuracy, efficiency, and ability of preset criteria. Performance evaluations cannot be solely based on management's subjectivity.
But if a business does not have a bona fide system, it is not automatic that a worker has a punishable FLSA violation. Businesses are given the opportunity to prove that though there is no bona fide system, any difference in pay is still not based on gender, but other factors which are germane to the requirements of the job, providing specific benefits to or further the business, or enhancing an employment practice within the business. Additionally, the business is still required to show these factors are applicable to all their workers regardless of gender and that workers have knowledge these factors are used in determining pay.
Factors not based on gender that have been used to validate pay differences for men and women are:
• The workers' have different experience, education, training, and skills.
• The worker generates more revenue for the company.
• The job is performed on the 2nd or 3rd shift, is part-time, seasonal, or temporary.