South-Western - Management  
Pay Difference Based on Experience Pass EPA Muster
Topic Human Resources Management
Key Words Equal Pay Act (EPA), gender discrimination, pay differential
News Story 

The 6th U.S. Circuit Court of Appeals has ruled that a difference between a male and a female's pay that is based on education or experience is acceptable under the Equal Pay Act (EPA), even if both employees hold similar jobs.

In 1999, Shannon Balmer accepted a position as a claims supervisor for Health Care Indemnity (HCI). At the time, she had two and a half years experience with another insurance company. HCI hired her at a starting rate of $39,500, an increase from her salary in her previous position. Another claims supervisor, Frank Halliburton, was hired on the same day. Halliburton had 11 years of extensive experience and he negotiated a starting salary of $50,800, which was a decrease from his previous salary.

After Balmer started work at HCI, she often complained about her salary. At her annual review, she received a salary increase higher than those given to other supervisors. She also received a performance award and gift certificates worth over $2,000.

Balmer ultimately resigned her position and filed a gender discrimination suit under the EPA. The Court found that Balmer had established a case, but eventually it ruled in favor of HCI. The Court advised that four affirmative defenses can be used to justify a difference in pay for two people in the same position. These include: a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a factor other than sex. HCI argued the last measure and successfully demonstrated that the pay differential for the two employees was based on experience and prior salary history.


Under employment law, what types of objective criteria can be used to determine a pay deferential for any position?


Research job-based, skill-based, and competency-based pay systems in your textbook and define them here. What type of pay system was HCI using to make its compensation decisions?


Research compensation equity in your textbook. What methods can an employer use to ensure that their pay system is fair and equitable for all employees?

Source "Pay Difference Based on Experience Pass EPA Muster," Society for Human Resource Management HR News, September 30, 2005.
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