Chapter 17: Government and Legal Issues in Compensation

Pay equity (gender pay equity)

"Equal pay for work of comparable worth" See comparable worth

Minimum-wage legistlation

Intended to provide an income floor for workers in society's least productive jobs A minimum-wage level for most Americans established by Congress as part of the FSLA of 1938

Age Discrimination in Employment Act (ADEA)

Created in 1967 and enforced by the EEOC, this law prohibits discrimination based on age and covers people who are age forty or older. Amended in 1978, 1986, and 1990 (known as OWBPA)

Access discrimination

Discrimination that focuses on the staffing and allocation decisions made by employers. It denies particular jobs, promotions, or training opportunities to qualified women or minorities. This type of discrimination is illegal under Title VII of the Civil Rights Act of 1964

Disparate (unequal) treatment

Discrimination theory that outlaws the application of different standards to different classes of employees unless the standards can be shown to be business-related

Job group

Group of jobs having similar content, wage rates and opportunities. A group of positions with similar duties and responsibilities that require similar qualifications, are filled by similar recruiting procedures, and are paid under the same pay schedule

Executive Order 11246

Prohibits discrimination on the basis of race, color, national (country of) origin, religion and gender in all federal agencies and organization doing business with the government Enforced by the Office of Federal Contracts Compliance Programs (OFCCP), Department of Labor

Living wage

Provides a minimum wage tailored to living costs in an area Have a narrower coverage than minimum wage laws, as they cover only city (or state) employees and/or employees that do business with the city (i.e., contractors and subcontractors)

Prevailing wage laws

Set pay for work done to produce goods and services contracted by the federal government Legislation that provides for a government-defined prevailing wage as the minimum wage that must be paid for work done on covered government projects or purchases. In practice, these prevailing rates have been union rates paid in various geographic areas.

Older Workers Benefit Protection Act (OWBPA)

The amendment in 1990 to ADEA, which has detailed rules regarding how separation agreements (e.g., an early retirement incentive) involving older workers are used). Ex. At least 21 days must be given to consider the agreement

Valuation discrimination

looks at the pay women and minorities receive for the jobs they perform Discrimination occurs when members of these groups are paid less than white males for performing substantially equal work. Based on "equal pay for equal work"

Comparable worth

A policy that women performing jobs judged to be equal on some measure of inherent worth should be paid the same as men, excepting allowable differences, such as seniority, merit, production-based pay plans, and other non-sex-related factors. Objective is to eliminate use of the market in setting wages for jobs held by women.

4 steps for establishing a comparable-worth plan

1) Adopt a single "gender neutral" point job evaluation plan for all jobs within a unit 2) All jobs with equal job evaluation results should be paid the same 3) Identify the percentages of male and female employees in each job group 4) The wage-to-job evaluation point ratio should be based on the wages paid for male-dominated jobs

In the context of unequal pay for equal work, the following are included in factors other than sex

1) Shift differentials 2) Temporary assignments 3) Bona fide training programs 4) Differences based on ability, training, or experience 5) Other reasons of "business necessity"

Definitions of the 4 factors of work

1) Skill - Experience, training, education, and ability as measured by the performance requirements of a particular job 2) Effort - Mental or physical - the degree of effort (not type of effort) actually expended in the performance of a job 3) Responsibility - The degree of accountability required in the performance of a job 4) Working conditions - The physical surroundings and hazards of a job, including dimensions such as inside versus outside work, heat, cold, and poor ventilation

Guidelines (conditions) to support a claim of unequal work

1) The effort/skill/responsibility must be substantially greater in one of the jobs compared 2) The tasks involving the extra effort/skill responsibility must consume a significant amount of time for all employees whose additional wages are in question 3) The extra effort/skill/responsibility must have a value commensurate with the questioned pay differential (as determined by the employer's own evaluation).

Fair Labor Standards Act of 1938 (FLSA)

A federal law governing minimum wage, overtime pay, equal pay for men and women in the same types of jobs, child labor, and record-keeping requirements Covers all employees (with some exceptions) of companies engaged in interstate commerce or in the production of goods for interstate commerce Major provisions: 1) Minimum wage 2) Hours of work (including overtime) 3) Child labor

Job classifications

A group of jobs that are considered substantially similar for pay purposes

Job hierarchy

A grouping of jobs based on their job-related similarities and differences and on their value to organization's objectives

Title VII (of the Civil Rights Act of 1964)

A major piece of legislation prohibiting pay discrimination. It is much broader in intent than the Equal Pay Act, forbidding discrimination on the basis of race, color, religion, sex, pregnancy, or national origin in any employment condition, including hiring, firing, promotion, transfer, compensation, and admission to training programs EEOC is responsible for Title VII enforcement

Class action lawsuit

Any civil case in which parties indicated their intent to sue on behalf of themselves as well as others not specifically named in the suit at some point prior to the final resolution of the matter.

Disparate impact

Discrimination theory that outlaws the application of pay practices that may appear to be neutral but have a negative effect on females or minorities unless those practices can be shown to be business-related

Americans with Disabilities Act (ADA)

Legislation passed in 1990 that requires that reasonable accommodations be provided to permit employees with disabilities to perform the essential elements of a job

Equal Pay Act (EPA) of 1963

Part of the FSLA Forbids wage discrimination on the basis of gender if employees perform equal work in the same establishment. Jobs are considered equal if they require equal skill, effort, and responsibility and are performed under similar working conditions. Differences in pay are legal based on affirmative defense criteria: 1) Seniority 2) Merit or quality of performance 3) Quality or quantity of production 4) Some factor other than sex