บริหาร ค่าตอบแทน หุ้น ตัวเลือก เท็จ วัน

Employee Compensation Employee Compensation พนักงานได้รับเงินชดเชยจาก บริษัท เพื่อแลกกับงานที่ทำ ในขณะที่คนส่วนใหญ่คิดว่าการชดเชยและค่าตอบแทนเหมือนกันความเป็นจริงคือการชดเชยนั้นเป็นมากกว่าผลตอบแทนทางการเงินที่ได้รับจากนายจ้าง ตาม Milkovitch และ Newman ในหนังสือ 2005 ของพวกเขาชดเชย เป็น x201C ทุกรูปแบบของผลตอบแทนทางการเงินและการบริการที่เป็นรูปธรรมและผลประโยชน์พนักงานได้รับเป็นส่วนหนึ่งของความสัมพันธ์ในการจ้างงาน x201D วลี x201C x201D ผลตอบแทนทางการเงิน x201D หมายถึงเงินเดือนพื้นฐานของบุคคลรวมทั้งสิ่งจูงใจในระยะสั้นและระยะยาว x201C บริการและผลประโยชน์ที่เป็นรูปธรรม x201D คือสิ่งต่างๆเช่นการประกันวันหยุดที่จ่ายเงินค่าจ้างและวันป่วยแผนบำนาญและส่วนลดของพนักงาน การปฏิบัติในการชดเชยขององค์กรอาจมีผลกระทบอย่างมากต่อข้อได้เปรียบทางการแข่งขัน ผู้เชี่ยวชาญด้านการชดเชย Richard Henderson กล่าวว่า x201C เพื่อพัฒนาขีดความสามารถในการแข่งขันในระบบเศรษฐกิจโลกโครงการค่าตอบแทนขององค์กรต้องสนับสนุนแผนกลยุทธ์และการดำเนินการขององค์กรทั้งหมด x201D ต้นทุนแรงงานมีผลกระทบอย่างมากต่อความได้เปรียบในการแข่งขันเนื่องจากเป็นส่วนใหญ่ของงบประมาณการดำเนินงานของ บริษัท ด้วยการควบคุมค่าใช้จ่ายเหล่านี้ได้อย่างมีประสิทธิภาพ บริษัท สามารถบรรลุความเป็นผู้นำด้านค่าใช้จ่ายได้ ผลกระทบของต้นทุนแรงงานต่อความสามารถในการแข่งขันมีความแข็งแกร่งยิ่งขึ้นในด้านการให้บริการและองค์กรที่ใช้แรงงานจำนวนมากซึ่งนายจ้างใช้จ่ายรายได้ 40 ถึง 80 เซ็นต์ต่อดอลลาร์สำหรับค่าใช้จ่ายดังกล่าว ซึ่งหมายความว่าสำหรับแต่ละดอลล่าร์ของรายได้สร้างขึ้นเท่า 80 เซนต์อาจจะไปจ่ายเงินให้พนักงานและผลประโยชน์ ในแง่ของการชดเชยการจ่ายเงินของพนักงานจะแบ่งออกเป็นหมวดหมู่ย่อยต่างๆตามสิ่งที่เรียงลำดับของงานที่พนักงานมีและสิ่งที่แผนการชำระเงินขององค์กรดังต่อไปนี้สำหรับงานนั้น งานโดยทั่วไปมีสองจำแนกประเภทยกเว้นและไม่ได้รับการยกเว้นขึ้นอยู่กับคุณภาพและตำแหน่งของการจ้างงาน ตำแหน่งการบริหารงานวิชาชีพและตำแหน่งระดับสูงอื่น ๆ ภายในองค์กรจะได้รับการยกเว้นซึ่งหมายความว่าพวกเขาจะได้รับเงินเดือนโดยจ่ายแทนค่าจ้าง ตำแหน่งที่ได้รับการยกเว้นคือตำแหน่งเงินเดือนซึ่งพนักงานจะได้รับการชำระเงินไม่ได้ตามเวลา แต่เป็นช่วงเวลาหนึ่งตามที่พนักงานได้รับการชำระเงินที่กำหนดไว้ล่วงหน้า ตำแหน่งที่ได้รับการยกเว้นส่วนใหญ่จะได้รับผลตอบแทนและสวัสดิการสูงกว่างานที่ไม่ได้รับการยกเว้น แต่ไม่ได้รับการชำระเงินเพิ่มสำหรับการทำงานล่วงเวลาจริงๆคนที่ได้รับการยกเว้นจะคาดหวังว่าจะได้รับความคาดหวังที่ต้องการความพยายามมากขึ้นและใช้เวลานานกว่าตำแหน่งที่ไม่ได้รับการยกเว้น งานที่ไม่ได้รับการยกเว้นจะได้รับเงินค่าจ้างเป็นรายชั่วโมง เกือบทุกตำแหน่งระดับรายการและงาน x201D ที่ไม่ชำนาญ x201C ตกอยู่ในหมวดหมู่นี้โดยพนักงานจะได้รับการชำระเงินตามค่าจ้างรายชั่วโมงที่กำหนดไว้ล่วงหน้า ค่าจ้างเช่นเงินเดือนอาจมีการเปลี่ยนแปลงขึ้นอยู่กับผลการปฏิบัติงาน ค่าจ้างที่แตกต่างกันมักจะมีให้สำหรับพนักงานเมื่อทำงานล่วงเวลามากกว่า 40 ชั่วโมงต่อสัปดาห์หรือในวันหยุด ค่าจ้างนี้สูงกว่าอัตรารายชั่วโมงตามปกติ ระบบการชำระเงินแบ่งออกเป็นสองประเภทด้วยกัน ขั้นแรกการชำระเงินอาจรวมถึงการจ่ายเงินตามฐานหรือกำหนดจำนวนเงินที่พนักงานจะได้รับ นี่คือจำนวนเงินที่กำหนดเงินเดือนหรือค่าจ้างที่องค์กรกำหนดโดยการศึกษาหลายปัจจัยรวมถึงอัตราดอกเบี้ยในตลาดและประวัติการจ่ายเงินสำหรับตำแหน่งนั้น การจ่ายเงินพื้นฐานและความหมายของงานมีการเชื่อมต่ออย่างใกล้ชิด ค่าตอบแทนพนักงานประเภทอื่น ๆ คือค่าตอบแทนที่เปลี่ยนแปลงหรือการชำระเงินตามผลการปฏิบัติงานบางประเภทโดยพนักงาน การจ่ายค่าปรับอาจมีหลายรูปแบบรวมถึงสิ่งจูงใจและค่าคอมมิชชั่น งานอเมริกันส่วนใหญ่เป็นการรวมกันของฐานและตัวแปรค่าจ้างการเปลี่ยนแปลงอัตราส่วนสำหรับตำแหน่งที่แตกต่างกันแม้ว่างานอเมริกันมีแนวโน้มที่จะมีส่วนค่าตัวแปรสูงกว่าประเทศอื่น ๆ ก่อนหน้านี้การตัดสินใจขององค์กรที่ถูกนำมาใช้ทั่วโลก หลายรูปแบบที่สำคัญของกฎหมายแห่งชาติมีผลกระทบอย่างมีนัยสำคัญต่อค่าตอบแทนพนักงานในช่วงร้อยปีที่ผ่านมาของธุรกิจของสหรัฐฯ กฎหมายของรัฐได้เพิ่มเข้าไปในกฎหมายของประเทศมากขึ้นการเพิ่มค่าชดเชยค่าจ้างหรือการสร้างข้อกำหนดเพิ่มเติมสำหรับองค์กร แต่กฎหมายของรัฐบาลกลางได้นำวิธีการในการเปลี่ยนแนวทางการชดเชย พระราชบัญญัติมาตรฐานแรงงานที่เป็นธรรมของปีพ. ศ. 2481 (FLSA) ใช้บังคับกับงานเชิงพาณิชย์ทั้งหมดและเป็นรากฐานในการกำหนดค่าตอบแทนของพนักงาน เหนือสิ่งอื่นใดการกระทำที่กำหนดค่าจ้างขั้นต่ำแห่งชาติฉบับแรกตั้งข้อ จำกัด ในการจ้างงานของผู้เยาว์โดยการกำหนดแรงงานเด็กที่กดดันและบังคับใช้นโยบายด้านเวลาและครึ่งสำหรับการทำงานล่วงเวลา (กฎหมายระบุว่าสำหรับตำแหน่งบางอย่างพนักงาน ต้องจ่ายเพิ่มขึ้น 50 เปอร์เซ็นต์ต่อชั่วโมงสำหรับการทำงานล่วงเวลา) การกระทำอื่น ๆ อีกมากมายตลอดประวัติศาสตร์อเมริกาได้ส่งผลกระทบต่อ FLSA กฎหมาย Portal-to-Portal ซึ่งมีผลบังคับใช้ในทศวรรษที่ 1940 กำหนดระยะเวลาการทำงานและการทำงานประเภทใดที่ต้องจ่าย การแก้ไขอื่น ๆ ที่กำหนดโดยเฉพาะอย่างยิ่งสิ่งที่ธุรกิจถูกปกคลุมด้วย FLSA ทำให้ครอบคลุมความต้องการสำหรับสิ่งอำนวยความสะดวกการดูแลสถานประกอบการภาครัฐและทุกตำแหน่งของรัฐบาลและยกระดับค่าจ้างขั้นต่ำของรัฐบาลกลางหลายครั้ง ความสำคัญต่อประวัติการชดเชยพนักงานคือ Equal Pay Act ของปีพ. ศ. 2506 ซึ่งถูกสร้างขึ้นเพื่อป้องกันการเลือกปฏิบัติในการจ่ายเงินโดยเฉพาะอย่างยิ่งการเลือกปฏิบัติทางเพศ การกระทำนี้รวมถึงเหตุผลหลายประการที่รัฐสภามีไว้เพื่อบังคับให้มีการจ่ายเงินให้กับเพศเท่ากันโดยอ้างถึงผลประโยชน์ทางเศรษฐกิจและมาตรฐานการครองชีพ การกระทำนี้ยังมุ่งเน้นไปที่การกำหนดระบบการชำระเงินให้ใช้เฉพาะทักษะและประสบการณ์ไม่ใช่เรื่องเพศ พระราชบัญญัติการรักษาความปลอดภัยสำหรับรายได้ของพนักงานเกษียณอายุปีพ. ศ. 2517 กำหนดให้จำนวนเงินขั้นต่ำของแผนบำนาญสำหรับธุรกิจและได้กำหนดกฎหมายภาษีเพื่อควบคุมการใช้แผนการจ่ายเงินบำนาญ ในปีพ. ศ. 2547 รัฐบาลได้มีการเปลี่ยนแปลงการดำเนินงานของ FLSA หลายรูปแบบเรียกว่า FairPay FairPay ดำเนินการส่วนใหญ่กับการจัดตำแหน่งงานใหม่และคำจำกัดความของพวกเขา สิ่งนี้ทำให้งานจำนวนมากเปลี่ยนไประหว่างประเภทที่ได้รับการยกเว้นและไม่ได้รับการยกเว้น ผู้บังคับบัญชาบางคนที่เคยทำงานด้านค่าแรงมาก่อนต้องเปลี่ยนเงินเดือนโดยไม่คิดค่าล่วงเวลา พนักงานคนอื่น ๆ โดยเฉพาะอย่างยิ่งในบทบาทสนับสนุนในการบริหารธุรกิจได้ย้ายจากค่าจ้างไปเป็นสถานะที่ได้รับการยกเว้น การเปลี่ยนแปลงเหล่านี้ทำขึ้นเพื่อจัดหมวดหมู่งานให้มากขึ้นตามหน้าที่และความรับผิดชอบของตนมากกว่าชื่อของพวกเขา ล่าสุดพระราชบัญญัติการค่าจ้างขั้นต่ำที่ยุติธรรมของปี 2007 อีกครั้งยกระดับค่าจ้างของรัฐบาลกลางจาก 5.25 ถึง 7.25 ต่อชั่วโมงเพื่อให้เป็นตัวแทนที่ดีกว่าค่าจ้างของรัฐและเอกชนทั่วประเทศ การกระทำนี้จะเสร็จสิ้นในปีพ. ศ. 2552 เนื่องจากการปฏิบัติค่าชดเชยมีผลต่อการสรรหาบุคลากรการหมุนเวียนและการทำงานของพนักงานเป็นเรื่องสำคัญที่ผู้สมัครและพนักงานควรคำนึงถึงแนวทางปฏิบัติเหล่านี้ในมุมมองที่ดี ในส่วนต่อไปนี้เราจะหารือถึงวิธีที่ผู้คนสร้างความเข้าใจเกี่ยวกับระบบชดเชยของ บริษัท และความรู้สึกเหล่านี้ส่งผลต่อพฤติกรรมของพวกเขาอย่างไร ความเท่าเทียมกันเป็นเรื่องที่สำคัญมากดังนั้นบุคคลที่รับผิดชอบในการพัฒนาระบบชดเชยของ บริษัท จำเป็นต้องเข้าใจว่าความรู้สึกของผู้ถือหุ้นเกิดขึ้นได้อย่างไร ทฤษฎีทุนซึ่งจัดทำโดย J. Stacy Adams พยายามให้ความเข้าใจเช่นนี้ ทฤษฎีดังกล่าวระบุว่าผู้คนสร้างความเชื่อเกี่ยวกับส่วนได้เสียโดยอาศัยปัจจัยสองประการคือปัจจัยการผลิตและผลลัพธ์ ปัจจัยการผลิต (I) หมายถึงการรับรู้ว่าผู้คนมีส่วนเกี่ยวข้องกับสิ่งที่พวกเขามีส่วนร่วมในงาน (เช่นทักษะและความพยายาม) ผล (O) หมายถึงการรับรู้ที่ผู้คนมีเกี่ยวกับผลตอบแทนที่ได้รับ (เช่นจ่าย) สำหรับงานที่พวกเขาดำเนินการ คนตัดสินส่วนของค่าจ้างของพวกเขาโดยการเปรียบเทียบอัตราส่วนผลลัพธ์ต่อการเข้า (OI) กับอัตราส่วนของบุคคลอื่น บุคคลที่เปรียบเทียบนี้เรียกว่าบุคคลอ้างอิงอื่น ๆ x201C x201D คนรู้สึกยุติธรรมเมื่ออัตราส่วน OI ของแต่ละบุคคลและคนอื่น ๆ ของเขาอ้างอิงถูกมองว่าเท่าเทียมกัน ความไม่เท่าเทียมกันเกิดขึ้นเมื่ออัตราส่วนทั้งสองถูกมองว่าไม่เท่ากัน ยกตัวอย่างเช่นความไม่เท่าเทียมกันเกิดขึ้นถ้าคนรู้สึกว่าเขาหรือเธอมีส่วนร่วมเช่นเดียวกับคนอื่น แต่ได้รับเงินเดือนต่ำ บุคคลที่อ้างถึงคนอื่นอาจเป็นคนหนึ่งในหลาย ๆ คน คนสามารถเปรียบเทียบตัวเองกับคนอื่น ๆ : การทำงานเดียวกันภายในองค์กรเดียวกันการทำงานในองค์กรเดียวกัน แต่การทำงานที่ต่างกันการทำงานเดียวกันกับองค์กรอื่นตัวอย่างเช่นผู้ช่วยผู้จัดการที่ห้างสรรพสินค้า Wal - Mart อาจเปรียบเทียบค่าใช้จ่ายของเธอกับ ผู้ช่วยผู้จัดการคนอื่น ๆ ของ Wal-Mart ให้กับพนักงานของ Wal-Mart ในตำแหน่งอื่น ๆ (ทั้งด้านบนหรือด้านล่างของเธอในลำดับชั้นขององค์กร) หรือผู้ช่วยผู้จัดการที่ห้างสรรพสินค้าของ Kmart ในขณะที่กลไกในการเลือกอ้างอิงอื่น ๆ ส่วนใหญ่ไม่รู้จักผลการศึกษาหนึ่งพบว่าคนไม่ จำกัด การเปรียบเทียบของพวกเขาเพียงหนึ่งคนที่พวกเขามีคนอื่นอ้างอิงหลาย ดังนั้นคนทำการเปรียบเทียบหลายเมื่อประเมินความเป็นธรรมของการรับรู้ความเป็นธรรมของค่าจ้างจะทำได้เฉพาะเมื่อการเปรียบเทียบทั้งหมดถูกมองว่าเป็นธรรม เมื่อพนักงานอัตราส่วน OI น้อยกว่าที่คนอื่น ๆ อ้างอิงพวกเขารู้สึกว่าพวกเขากำลังได้รับค่าจ้างน้อยกว่าเมื่อมากขึ้นพวกเขารู้สึกว่าพวกเขากำลังถูก over-paid ตามทฤษฎีทุนทั้งสองเงื่อนไขทำให้เกิดความตึงเครียดที่พนักงานจะพยายามลดด้วยวิธีใดวิธีหนึ่งดังต่อไปนี้ลดปัจจัยการผลิตโดยการลดความพยายามหรือประสิทธิภาพ พยายามที่จะเพิ่มผลโดยการแสวงหาการเพิ่มเงินเดือน บิดเบือนการรับรู้ของปัจจัยการผลิตและผลลัพธ์โดยการโน้มน้าวตนเองว่าอัตราส่วน OI ของพวกเขาอยู่ที่เท่ากันกับค่าอ้างอิงอื่น ๆ พยายามเปลี่ยนปัจจัยการผลิตและผลของการอ้างอิงอื่น ๆ (s) ตัวอย่างเช่นพวกเขาอาจพยายามโน้มน้าวให้คนอื่น ๆ อ้างอิงเพื่อเพิ่มปัจจัยการผลิต (เช่นทำงานหนักขึ้นสำหรับการจ่ายเงิน) เลือก referent ใหม่อื่นที่มีอัตราส่วน OI อยู่แล้วเท่ากับตัวเอง หลบหนีสถานการณ์ การตอบสนองนี้อาจเกิดขึ้นได้จากพฤติกรรมที่หลากหลายเช่นการขาดงานความเกียจคร้านการหยุดพักทำงานที่มากเกินไปหรือการเลิกสูบบุหรี่ ในขณะที่ทฤษฎีความเป็นธรรมก่อให้เกิดการตอบสนองที่เป็นไปได้ 6 ประการต่อความไม่เท่าเทียมกันเพียงสองอย่างเท่านั้นที่เกิดขึ้น (คือตัวเลข 1 และ 6) ผลการวิจัยพบว่ามีการเชื่อมโยงการให้ค่าจ้างน้อยกว่าการเพิ่มขึ้นของการขาดงานและการหมุนเวียนและการลดลงของจำนวนความพยายามในการทำงาน ความเชื่อมโยงเหล่านี้มีความแข็งแกร่งเป็นพิเศษในหมู่คนที่มีเงินเดือนต่ำ ตรงกันข้ามกับการคาดคะเนทฤษฎีหุ้นคำตอบเหล่านี้เกิดขึ้นเฉพาะเมื่อพนักงานเชื่อว่าพวกเขามีรายได้น้อย บุคคลที่จ่ายเงินเกินจำนวนที่ไม่ตอบสนองเพราะรู้สึกไม่ค่อยมีความตึงเครียดและไม่มีความจำเป็นต้องลดจำนวนดังกล่าว (ผลการวิจัยเกี่ยวกับปัญหาการจ่ายเงินเกินกำหนดพบว่าการจ่ายเงินเกินกว่าจะเป็นเช่นเดียวกับความพอใจในฐานะส่วนของผู้ถือหุ้นหรือค่อนข้างไม่พอใจ แต่ก็ไม่ค่อยน่าพอใจเท่าที่ได้รับค่าจ้างน้อยกว่า) เมื่อรู้สึกว่ามีรายได้ต่ำกว่าเหตุผลที่คนบางคนเลือกที่จะลดปัจจัยการผลิตลง หลีกเลี่ยงสถานการณ์การศึกษาพบว่าการตอบสนองต่อความไม่เท่าเทียมกันขึ้นอยู่กับแหล่งที่มาของการเปรียบเทียบคนที่ตอบสนองต่อความแตกต่างกันขึ้นอยู่กับว่าพวกเขาตัดสินส่วนได้เสียบนพื้นฐานของภายนอก (อ้างอิงนอกองค์กร) หรือเปรียบเทียบภายใน (อ้างอิงโดยองค์กรของแต่ละบุคคล) . เมื่อการรับรู้ความไม่เท่าเทียมกันนั้นขึ้นอยู่กับการเปรียบเทียบภายนอกบุคคลมักจะเลิกทำงาน ยกตัวอย่างเช่นพยาบาลที่ทำงานให้กับโรงพยาบาล A อาจย้ายไปอยู่ที่โรงพยาบาลบีได้หากนายจ้างจ่ายเงินเดือนสูงกว่า เมื่อพิจารณาจากการเปรียบเทียบภายในผู้คนมักจะยังคงทำงานอยู่ แต่ลดปัจจัยการผลิตของตน (เช่นลดความตั้งใจที่จะช่วยเหลือผู้อื่นที่มีปัญหาตรงตามกำหนดเวลาและหรือริเริ่ม) จากการสนทนาก่อนหน้านี้เราอาจสรุปได้ว่าพนักงานจะเชื่อว่าการจ่ายเงินของพวกเขาเป็นธรรมเมื่อพวกเขารับรู้ว่า: เป็นธรรมเมื่อเทียบกับค่าตอบแทนที่ได้รับจากเพื่อนร่วมงานในองค์กรเดียวกัน (ความสอดคล้องภายใน) เป็นธรรมเมื่อเทียบกับค่าจ้างที่ได้รับจากคนงานในองค์กรอื่นที่มีตำแหน่งใกล้เคียงกัน (การแข่งขันภายนอก) ค่อนข้างสะท้อนให้เห็นถึงการป้อนข้อมูลของพวกเขาไปยังองค์กร (ผลงานของพนักงาน) เพื่อให้เกิดความมั่นคงภายในพนักงานของ บริษัท ต้องเชื่อว่างานทั้งหมดจะได้รับการจ่ายเงินตามมูลค่า x201C x201D กล่าวอีกนัยหนึ่งก็คือพวกเขาต้องมั่นใจว่าอัตราค่าจ้างของ บริษัท สะท้อนถึงความสำคัญโดยรวมของงานแต่ละงานต่อความสำเร็จขององค์กร เนื่องจากงานบางแห่งมีโอกาสมากกว่าที่คนอื่น ๆ จะมีส่วนร่วมทำให้ผู้ที่ถือครองงานดังกล่าวควรได้รับค่าแรงเพิ่มขึ้น ตัวอย่างเช่นส่วนใหญ่จะยอมรับว่าพยาบาลควรจะต้องจ่ายมากกว่า orderlies เพราะงานของพวกเขามีความสำคัญมากขึ้นซึ่งก็คือมันมากขึ้นในการดูแลผู้ป่วยซึ่งเป็นเป้าหมายหลักของโรงพยาบาล สำหรับอัตราค่าจ้างที่จะสอดคล้องภายในองค์กรแรกต้องกำหนดความสำคัญโดยรวมหรือมูลค่าของแต่ละงาน งานที่คุ้มค่ามักจะได้รับการประเมินผ่านกระบวนการที่เป็นระบบซึ่งเรียกว่าการประเมินผลงาน โดยทั่วไปการประเมินผลจะขึ้นอยู่กับ x201C ตัดสิน x201D ตัดสินเกี่ยวกับสิ่งต่างๆเช่นจำนวนของทักษะและความพยายามที่จำเป็นในการดำเนินงานความยากลำบากของงานและจำนวนความรับผิดชอบที่สันนิษฐานโดยผู้ทำงาน คำตัดสินในการประเมินผลงานต้องถูกต้องและเป็นธรรมเนื่องจากการจ่ายเงินให้พนักงานแต่ละคนได้รับอิทธิพลอย่างมากจากพวกเขา บริษัท ส่วนใหญ่สร้างคณะกรรมการของบุคคลที่เรียกว่าคณะกรรมการประเมินผลงานเพื่อวัตถุประสงค์ในการประเมินผล เนื่องจากผู้ที่ทำหน้าที่ในคณะกรรมการเป็นตัวแทนขององค์กรต่างๆพื้นที่ทำงานโดยรวมพวกเขาจะคุ้นเคยกับงานทั้งหมดที่มีการประเมิน บุคคลดังกล่าวมักประกอบด้วยผู้จัดการแผนกรองประธานผู้จัดการโรงงานและผู้เชี่ยวชาญด้าน HR (เช่นผู้เชี่ยวชาญด้านความสัมพันธ์กับพนักงานและผู้จัดการค่าตอบแทน) ประธานคณะกรรมการมักจะเป็นผู้เชี่ยวชาญด้าน HR หรือที่ปรึกษาภายนอก บางทีสองปัญหาที่ร้ายแรงที่สุดกับการให้คะแนนการประเมินผลงานคือความเป็นส่วนตัวและความรวดเร็วในการเปลี่ยนแปลงงานซึ่งทั้งสองอย่างนี้อาจทำให้การให้คะแนนที่ไม่ถูกต้องและไม่น่าเชื่อถือ เพื่อลดความเป็นส่วนตัวการจัดระดับการประเมินที่ใช้เพื่อประเมินงานจะต้องมีการกำหนดไว้อย่างชัดเจนและผู้ประเมินควรได้รับการฝึกอบรมอย่างละเอียดในการใช้งาน นอกจากนี้ผู้ประเมินควรได้รับรายละเอียดงานที่สมบูรณ์ถูกต้องและทันสมัย ปัญหาที่สองเป็นการยากที่จะแก้ไข ส่วนใหญ่เกิดจากการเปลี่ยนแปลงของเทคโนโลยีการจัดแสดง 1 ปัจจัยที่สามารถคำนวณได้ใช้ในวิธี Point-Factor ของงานประเมินผลงานตอนนี้มีการเปลี่ยนแปลงอย่างรวดเร็วและเป็นพื้นฐานเพื่อให้ผลการประเมินล้าสมัยออกไป กระบวนการประเมินผลงานมีความคล้ายคลึงกับการประเมินผลการปฏิบัติงานในผู้ประเมินว่าผู้ประเมินจะได้รับการจัดอันดับที่แน่นอนในแบบฟอร์ม อย่างไรก็ตามการให้คะแนนประเมินผลงานมุ่งเน้นไปที่ความต้องการของงานมากกว่าผลการปฏิบัติงานของผู้ทำงานแต่ละคน ถึงแม้ว่าหลายวิธีอาจถูกนำมาใช้เพื่อประเมินงานวิธีที่ใช้กันมากที่สุดคือวิธีการแบบจุดต่อจุด โดยใช้วิธีนี้งานจะได้รับการประเมินแยกตามเกณฑ์หลายอย่างเรียกว่าปัจจัยที่สามารถชดเชยได้ ปัจจัยเหล่านี้เป็นตัวกำหนดปัจจัยสำคัญที่สุดของงานที่มีค่า รายชื่อปัจจัยที่ใช้กันทั่วไปบางส่วนและเกณฑ์ที่พิจารณาจะปรากฏในส่วนที่ 1 การจัดทำมาตราส่วนการจัดอันดับปัจจัยขั้นตอนประกอบด้วยขั้นตอนต่อไปนี้: เลือกและกำหนดปัจจัยชดเชยที่กำหนดไว้เพื่อใช้ในการกำหนดมูลค่างานที่เหมาะสม . กำหนดจำนวนระดับหรือองศาสำหรับแต่ละปัจจัย กฎข้อเดียวสำหรับการกำหนดจำนวนองศาคืองานบางอย่างควรตกอยู่ในแต่ละระดับ ระบุแต่ละระดับอย่างละเอียด แต่ละระดับที่อยู่ติดกันต้องมีความแตกต่างกันอย่างชัดเจน น้ำหนักแต่ละปัจจัยที่สามารถชดเชยได้ในแง่ของความสำคัญในการกำหนดมูลค่างาน กำหนดค่าจุดให้เป็นองศาที่สัมพันธ์กับปัจจัยการชดเชยแต่ละตัว ปัจจัยที่ได้รับน้ำหนักมากขึ้นในขั้นตอนที่ 4 จะได้รับคะแนนมากขึ้นในแต่ละระดับ เมื่อประเมินผลการประเมินผลงานเสร็จแล้วผู้ประเมินจะใช้คำอธิบายงานเพื่อให้คะแนนแต่ละงานโดยพิจารณาจากปัจจัยหนึ่ง ๆ ในแต่ละครั้งจนกว่างานทั้งหมดจะได้รับการประเมินตามปัจจัยทั้งหมด จากนั้นพวกเขาคำนวณมูลค่าจุดรวมสำหรับงานโดยสรุปคะแนนที่ได้รับในแต่ละปัจจัยที่สามารถชดเชยได้ วิธีการประเมินผลงานนี้เป็นเรื่องยากและใช้เวลานาน อย่างไรก็ตามองค์กรส่วนใหญ่เชื่อว่ามันคุ้มค่ากับความพยายาม หากทำอย่างถูกต้องคะแนนโดยรวมสำหรับงานแต่ละงานควรสะท้อนถึงมูลค่าที่มีต่อองค์กรทำให้ บริษัท สามารถสร้างความสอดคล้องภายในได้ เมื่อการประเมินงานเสร็จสิ้นงานจะถูกจัดกลุ่มเป็นคะแนนตามจำนวนคะแนนที่ได้รับ งานที่มีค่าจุดเดียวกันหรือคล้ายกันจะอยู่ในเกรดเดียวกัน ตัวอย่างเช่นพิจารณางานที่ได้รับการจัดอันดับในระดับตั้งแต่ 1 ถึง 1,000 งานทั้งหมดที่มีรายได้ถึง 100 คะแนนอาจได้รับมอบหมายให้จ่ายค่าเล่าเรียนเกรด 1 งานที่มีรายได้ 101 ถึง 200 เพื่อจ่ายให้เกรด 2 และอื่น ๆ ผู้บริหารใช้คะแนนการจ่ายเงินเนื่องจากไม่มี บริษัท เหล่านั้นจะต้องกำหนดอัตราค่าจ้างแยกต่างหากสำหรับคะแนนจุดประเมินงานแต่ละรายการ เมื่องานจำแนกเป็นเกรดผลงานทั้งหมดที่อยู่ในเกรดเดียวกันจะได้รับการปฏิบัติเหมือนกันเพื่อวัตถุประสงค์ในการจ่ายเงินนั่นคือการจ่ายเงินเดียวกันกับแต่ละงานในเกรด ในฐานะที่เป็น บริษัท พัฒนาระบบการจ่ายเงินพวกเขาต้องตัดสินใจว่าจะให้คะแนนระดับใดในการสร้าง บริษัท ส่วนใหญ่ใช้คะแนนการจ่ายเงินสามสิบถึงห้าสิบ อย่างไรก็ตามบางคนใช้มากถึงหนึ่งร้อยหรือมากกว่าในขณะที่คนอื่นใช้เพียงไม่กี่ห้าหรือหก การปฏิบัติในการ จำกัด จำนวนการจ่ายเงินช่วยลดภาระการบริหารของ บริษัท อย่างไรก็ตามการใช้คะแนนในจำนวนที่ จำกัด จะก่อให้เกิดสถานการณ์ที่งานที่มีมูลค่าแตกต่างกันอย่างมีนัยสำคัญจะตกอยู่ในเกรดเดียวกันและได้รับเงินเดือนเท่ากัน ผลลัพธ์นี้อาจนำไปสู่ปัญหาความเสมอภาค ตัวอย่างเช่นพยาบาลที่ลงทะเบียนอาจรู้สึกไม่ได้รับค่าจ้างหากได้รับการจัดให้อยู่ในเกณฑ์การจ่ายเงินเช่นเดียวกับผู้ช่วยพยาบาล บริษัท ประสบความสำเร็จในการแข่งขันภายนอกเมื่อพนักงานรับรู้ว่าการจ่ายเงินของตนมีความเป็นธรรมในเรื่องที่คู่ค้าของพวกเขาในองค์กรอื่น ๆ ได้รับ องค์กรต้องเรียนรู้สิ่งที่นายจ้างรายอื่น ๆ จ่ายไปและจากนั้นจะตัดสินใจเกี่ยวกับความสามารถในการแข่งขันที่พวกเขาต้องการ จากนั้นพวกเขาสร้างอัตราค่าจ้างที่สอดคล้องกับการตัดสินใจครั้งนี้ ต่อไปนี้เป็นการตรวจสอบว่าขั้นตอนเหล่านี้ดำเนินการอย่างไร บริษัท เริ่มต้นด้วยการดำเนินการหรือได้รับการสำรวจเงินเดือน แบบสำรวจนี้ให้ข้อมูลเกี่ยวกับอัตราค่าจ้างที่เสนอโดยคู่แข่งของ บริษัท สำหรับงานทดสอบบางอย่าง (เช่นงานที่ทำในลักษณะเดียวกันในทุก บริษัท และสามารถใช้เป็นพื้นฐานในการทำเปรียบเทียบที่มีความหมายได้) บาง บริษัท รวบรวมข้อมูลนี้จากการสำรวจที่มีอยู่ซึ่งดำเนินการโดยผู้อื่นเช่นรายงานจาก Bureau of Labor Statistics สมาคมการค้ายังดำเนินการสำรวจเป็นประจำสำหรับสมาชิกของตนหรือ บริษัท อาจจ้าง บริษัท ที่ปรึกษาเพื่อรวบรวมข้อมูลดังกล่าว การสำรวจด้านค่าจ้างที่ดำเนินการโดยคนอื่น ๆ ควรใช้เมื่อพวกเขามีข้อมูลทั้งหมดที่ บริษัท ต้องการ เมื่อไม่มีการสำรวจเช่นนี้ บริษัท ต่างๆมักดำเนินการด้วยตนเอง หลังจากที่ได้มีการระบุแนวทางการจ่ายเงินของ บริษัท อื่นแล้วองค์กรต้องกำหนดวิธีการแข่งขันที่ต้องการ (หรืออาจจะเป็นได้) โดยเฉพาะอย่างยิ่งต้องกำหนดนโยบายการจ่ายเงินระบุว่าพนักงานจะจ่ายเงินให้กับพนักงานได้ดีเพียงใดเมื่อเทียบกับตลาด (นั่นคือคู่แข่งที่จ่ายสำหรับงานที่คล้ายคลึงกัน) การกำหนดนโยบายการจ่ายเงินเป็นขั้นตอนสำคัญในการออกแบบระบบจ่ายเงิน ถ้าอัตราค่าจ้างต่ำเกินไปองค์กรมีแนวโน้มที่จะประสบปัญหาการสรรหาบุคลากรและการหมุนเวียน อย่างไรก็ตามหากตั้งค่าสูงเกินไปองค์กรอาจประสบปัญหาด้านงบประมาณซึ่งอาจทำให้ราคาที่สูงขึ้นหยุดจ่ายและการปลดพนักงานได้ เมื่อมีการกำหนดอัตราการตลาดสำหรับงานและกำหนดนโยบายการจ่ายเงินไว้องค์กรจะต้องกำหนดราคาของแต่ละงาน เนื่องจากอัตราการตลาดที่ระบุโดยการสำรวจเงินเดือนมักจะถูก จำกัด ไว้ที่งานเปรียบเทียบ แต่องค์กรต่างๆจะกำหนดอัตราเหล่านี้สำหรับงานที่ไม่ใช่มาตรฐานโดยใช้ข้อมูลที่เก็บรวบรวมไว้ในงานมาตรฐานองค์กรจะกำหนดความสัมพันธ์ทางสถิติ (เช่นการถดถอยเชิงเส้นอย่างง่าย) ระหว่าง จุดประเมินงานและอัตราแลกเปลี่ยนในตลาดปัจจุบัน บรรทัดการถดถอยนี้เรียกว่าบรรทัดนโยบายการจ่ายเงิน อัตราค่าจ้างที่เหมาะสมสำหรับงานที่ไม่ได้ใช้เกณฑ์มาตรฐานจะกำหนดตามบรรทัดนี้ เมื่อเร็ว ๆ นี้แผนการชำระเงินและผลประโยชน์สำหรับผู้บริหารระดับสูงในธุรกิจอเมริกันได้รับการสอบสวนแล้ว ความสนใจของประเทศว่าเรื่องอื้อฉาวเกี่ยวกับภาษีและการฉ้อฉลในปี 2543 เมื่อปีพ. ศ. 2545 ได้นำมาสู่ บริษัท ต่างๆทำให้ผู้บริหารระดับสูงของกลุ่มผู้บริหารได้รับผลกำไรโดยเฉพาะอย่างยิ่งโบนัสและผลประโยชน์ของพวกเขาซึ่งหลายคนรู้สึกว่ามีการพองตัวขึ้นอย่างไม่เป็นธรรมจากผลตอบแทนของนักลงทุนที่ได้รับ ค่าตอบแทนของพนักงานคนอื่น ๆ ใน บริษัท การแก้ไขกฎหมาย Sarbanes-Oxley Act ดำเนินการในปี 2549 กำหนดให้ต้องเปิดเผยข้อมูลการจ่ายค่าตอบแทนผู้บริหารที่เกี่ยวข้องกับข้อมูลของผู้ลงทุนโดยตรงในส่วนของรายงานทางการเงินที่แยกต่างหาก ซึ่งนำไปสู่ความรู้ความเข้าใจเกี่ยวกับแนวทางการชำระเงินค่าตอบแทนของผู้บริหารในวงกว้างกว่าที่เคยเป็นมาก่อนและได้เริ่มการตรวจสอบที่สำคัญของ บริษัท และการปฏิบัติต่อผู้บริหารระดับสูง แผนการจ่ายค่าตอบแทนที่น่าสงสัยเหล่านี้นำไปใช้กับผู้บริหารระดับสูงรวมทั้งผู้บริหารระดับสูงผู้บริหารกิจการและควบรวมกิจการผู้บริหารด้านภาษีชั้นนำผู้บริหารยอดขายและผู้บริหารระดับสูง จากการวิเคราะห์ของ Watson Wyatt ผู้คนในตำแหน่งเหล่านี้ได้รับเงินเพิ่มขึ้นในปี 2550 เพิ่มขึ้น 11.4 เปอร์เซ็นต์หรือมากกว่าโดยเจ้าหน้าที่ควบรวมกิจการได้รับค่าตอบแทนเฉลี่ยสูงสุด กฎหมายล่าสุดเกี่ยวกับการจ่ายค่าตอบแทนผู้บริหารรวมถึง Office of Federal Procurement Policys 2008 ค่าชดเชยการสร้างเงินเดือนสูงสุดประจำปีสำหรับ บริษัท ที่ทำสัญญาและตำแหน่งการจัดการบางอย่างภายในองค์กร จำนวนเงินสูงสุดสำหรับตำแหน่งการจัดการสัญญาของรัฐบาล x2014 ซึ่งรวมเงินเดือนสวัสดิการและผลกำไรพิเศษอื่น ๆ ของผู้บริหาร x2014 คือ 612,196 เพื่อตอบสนองต่อการวิพากษ์วิจารณ์อย่างต่อเนื่อง บริษัท ต่างๆกำลังพิจารณาอย่างใกล้ชิดว่าผู้บริหารจ่ายเงินเท่าใดและการจ่ายเงินมีความรับผิดชอบทางการเงินมีสุขภาพดีสำหรับธุรกิจของพวกเขาและให้กำลังใจแก่ผู้ถือหุ้น ตามบทความ 2008 Wall Street Journal ของ Phred Dvorak ประมาณ 15 เปอร์เซ็นต์ของ บริษัท ที่ติดอันดับ Fortune 500 ได้เข้ามาดูระบบการชำระเงินของพวกเขาเมื่อจ่ายเงินเดือนให้กับผู้บริหารระดับสูงของปี 2550 โดยคำนึงถึงปัจจัยต่างๆเช่นความมั่งคั่งสะสม จำนวนนี้เป็นจำนวนเกือบสองเท่าของจำนวน บริษัท ที่คิดเป็นปัจจัยดังกล่าวในปี 2549 ตัวอย่างเช่นในปี พ. ศ. 2550 Waddell amp Reed Financial Inc. ตัดสินใจที่จะระงับเงินสมทบกองทุนเกษียณอายุของ CEO Henry Herrmann การทบทวนความมั่งคั่งที่สะสมของเขาแสดงให้เห็นว่าในช่วงอาชีพการทำงาน 36 ปีของเขาเขามีรายได้ประมาณ 70 ล้านหุ้นการชดเชยรอตัดบัญชีโบนัสและผลประโยชน์อื่น ๆ บริษัท ตัดสินใจว่าเขามีเงินเพียงพอที่จะเกษียณอายุและหยุดแผนเกษียณอายุ แม้ว่าปฏิกิริยาของ บริษัท จะแปรผันก็ตาม Waddell amp Reed อาจไม่ได้อยู่ตามลำพังในข้อหาชดเชยค่าชดเชย x2014 Equilar ได้พบว่าหุ้นเฉลี่ยของซีอีโอ บริษัท ใหญ่ในปี 2550 มีมูลค่าประมาณ 56.7 ล้านดอลลาร์ ในขณะที่บาง บริษัท ประกาศว่ากำไรจากหุ้นดังกล่าวเป็นสิ่งยับยั้งชั่งใจคนอื่น ๆ ให้เหตุผลว่าการลงทุนในหุ้นดังกล่าวทำให้ผู้บริหารมีแรงจูงใจในการทำงานได้ดี แผนการปฏิบัติงานสำหรับผู้บริหาร มีหลายรูปแบบของแผนการปฏิบัติงานสำหรับผู้บริหาร แต่ส่วนใหญ่เกี่ยวข้องกับ บริษัท บรรลุเป้าหมายบางอย่างภายใต้การกำกับดูแลของผู้บริหาร บ่อยครั้งที่คณะกรรมการพิจารณาค่าตอบแทนของบุคคลที่สามได้รับการจัดตั้งขึ้นเพื่อกำกับดูแลแผนการจ่ายค่าตอบแทนสำหรับผู้บริหารระดับสูงและหลีกเลี่ยงการวิจารณ์สาธารณะหรือการปฏิบัติในการจ่ายเงินที่ไม่เป็นธรรม แผนการปฏิบัติบางอย่างแบ่งความต้องการชดเชยออกเป็นสองส่วน ประการแรกคณะกรรมการพิจารณาค่าตอบแทนพิจารณาถึงความสำเร็จที่ บริษัท ตั้งใจจะทำในปีที่ผ่านมาภายใต้คำแนะนำของผู้บริหารและ บริษัท มีความก้าวหน้าไปไกลแค่ไหนในการบรรลุเป้าหมายดังกล่าว ประการที่สองคณะกรรมการคำนึงถึงคุณภาพความเป็นผู้นำและการตัดสินใจของผู้บริหารซึ่งเป็นปัจจัยที่ยืดหยุ่นมากขึ้นรวมทั้งทักษะส่วนบุคคลและความสามารถในการบริหารจัดการ อัตราส่วนสามารถเกิดขึ้นได้สำหรับทั้งสองด้านโดยกำหนดเปอร์เซ็นต์ที่มีความสำคัญโดยรวม แผนงานอื่น ๆ แบ่งความสำเร็จของผู้บริหารออกไปได้โดยคำนึงถึงวิสัยทัศน์การสร้างทีมและความรับผิดชอบ บ่อยครั้งที่แผนการดังกล่าวมีทั้งระยะยาวหรือระยะสั้น แผนระยะสั้นจะประเมินเป้าหมายล่าสุดและการตัดสินใจของผู้บริหารในขณะที่การวิเคราะห์ในระยะยาวจะขยายไปทั่วปีที่ผ่านมา ประโยชน์ที่ได้รับจะขึ้นอยู่กับแผนการที่คล้ายคลึงกันซึ่งอาจเป็นปัจจัยในการเติบโตของหุ้นของ บริษัท และการประเมินโดยคณะกรรมการอื่น ๆ ตามกฎหมายว่าด้วยรายได้ที่จัดตั้งขึ้นในปี 2536 เพื่อช่วยในการสร้างการปฏิบัติที่เป็นธรรมในการชดเชยผู้บริหารมีข้อ จำกัด ในการหักภาษีโดยรวมที่ บริษัท สามารถรับได้จากผลประโยชน์และการชำระเงินของผู้บริหารระดับสูงห้ารายเว้นแต่จะได้รับการชำระเงินตามผลการปฏิบัติงาน วงเงินการหักภาษีคือ 1 ล้านบาทซึ่งมีวัตถุประสงค์เพื่อเป็นขีด จำกัด ของเงินเดือนผู้บริหารของ บริษัท ในเชิงพาณิชย์และผลประโยชน์อื่น ๆ ทั้งหมดจะถูก จำกัด อยู่ในตัวเลือกหุ้น แผนการปฏิบัติงานมีวิวัฒนาการมาตั้งแต่รวมถึงรูปแบบผลประโยชน์อื่น ๆ แต่องค์ประกอบที่สำคัญยังคงเป็นตัวเลือกหุ้น ค่าชดเชยรอตัดบัญชี แผนการเกษียณอายุของผู้บริหารส่วนใหญ่ที่ได้รับในรูปของเปอร์เซ็นต์เงินเดือนหรือตัวเลือกหุ้นจะถือเป็นค่าชดเชยรอการตัดบัญชี ถูกเลื่อนออกไปเนื่องจากมีการตั้งเงินไว้ในบัญชีเงินฝากออมทรัพย์บางประเภทหรือการลงทุนสำหรับผู้บริหารจนกระทั่งถึงเวลาที่สามารถเข้าถึงได้ นี้แตกต่างจากแพคเกจการเกษียณอายุผู้บริหารมักจะได้รับเมื่อก้าวลง การชดเชยรอตัดบัญชีอาจมีได้สองประเภทคือมีคุณสมบัติและไม่ผ่านคุณสมบัติที่เกี่ยวข้องกับภาษี ค่าชดเชยที่รอการอนุมัติที่ผ่านการรับรองคือเงินที่ต้องเสียภาษีตามกฎหมายรวมทั้งวงเงินล้านดอลลาร์ที่สามารถหักออกได้สำหรับ บริษัท ที่ให้การชดเชย เหล่านี้เป็นแบบดั้งเดิมมากขึ้นการจัดเรียงสามัญของแผนการจ่ายผลตอบแทนรอการตัดบัญชี อย่างไรก็ตาม บริษัท บางแห่งเลือกที่จะให้ผู้บริหารของ บริษัท ไม่ต้องจ่ายค่าชดเชยที่ไม่เหมาะสมซึ่งไม่ได้อยู่ภายใต้กฎหมายภาษีเดียวกันและมักมีผลให้เกิดโครงการเกษียณอายุที่มีขนาดใหญ่สำหรับผู้บริหาร บริษัท สามารถชดเชยค่าใช้จ่ายได้โดยการตั้งค่าเงินภายในองค์กรโดยไม่ได้มอบสิทธิ์ให้กับผู้บริหาร แต่อย่างใดโดยการแยกบัญชีออกจากบัญชีแยกต่างหาก เงินที่ได้รับจากกองทุนจะได้รับการลงทุนใหม่จนกว่าผู้บริหารจะออกจากงาน การชดเชยรอการตัดบัญชีขึ้นอยู่กับความสำเร็จของ บริษัท และหาก บริษัท ล้มละลายกองทุน x2014 และโครงการเกษียณอายุ x2014 อาจมีความเสี่ยง กฎหมายกำลังถกเถียงกันอยู่ในสภาคองเกรสเกี่ยวกับการเพิ่มภาษีและข้อ จำกัด สำหรับการชดเชยค่าลาออกที่ไม่สมควรเนื่องจากเป็นข้อบกพร่องบางประการในกฎหมายปัจจุบัน การลงโทษขั้นกลาง การใช้มาตรการคว่ำบาตรขั้นกลางจะใช้โดย IRS เพื่อบริหารภาษีสรรพสามิตแก่บุคคลที่เชื่อว่าได้รับประโยชน์อย่างไม่ถูกต้องหรือผิดกฎหมายจากธุรกรรมของ บริษัท การค้า แม้ว่าจะเป็นคำจำกัดความกว้าง ๆ แต่ก็หมายถึงการนำไปใช้กับสมาชิกในครอบครัวองค์กรและผู้บริหารของ บริษัท ที่ได้รับผลประโยชน์จาก บริษัท ของตนมากกว่าที่ IRS เห็นสมควร การลงโทษสามารถนำไปใช้กับบุคคลที่ได้รับผลประโยชน์และทุกคนที่ได้รับอนุญาตให้ได้รับประโยชน์ดังกล่าวเช่นสมาชิกคนอื่น ๆ ในคณะกรรมการ บริษัท แม้ว่าการคว่ำบาตรเหล่านี้ จำกัด จำนวนการจ่ายเงินและผู้บริหารที่ได้รับประโยชน์พิเศษ แต่ก็สามารถทำงานได้ในระดับละเอียดมากขึ้น การลงโทษขั้นกลางมักใช้โดย IRS ในกรณีที่ผลกำไรของแต่ละบุคคลโดยอ้อมจากการดำเนินการของ บริษัท ตัวอย่างเช่นผู้บริหารอาจได้รับหุ้นเป็นจำนวนหนึ่งเป็นส่วนหนึ่งของแผนการจ่ายผลตอบแทนรอการตัดจำหน่าย แต่ยังได้รับสต็อคที่สองจากองค์กรแบบดัมมี่เป็นของขวัญ x201D x201D หรือ x201C x201C x201D โดยรวมแล้วผู้บริหารได้ประโยชน์จากการแลกเปลี่ยนมากกว่า บริษัท ที่มีและจะเปิดรับการคว่ำบาตรระดับกลาง การเตรียมการอื่น ๆ อาจนำไปสู่บทลงโทษที่กรมสรรพากรกำหนด โดยปกติแล้วเงินจากกิจกรรมดังกล่าวรวมทั้งดอกเบี้ยจะถูกส่งกลับมายัง บริษัท และบุคคลจะถูกลงโทษโดยปกติจะอยู่ที่ร้อยละ 25 ของผลประโยชน์ส่วนเกินตามที่ IRS ได้ตัดสิน ถ้าบุคคลไม่คืนผลกำไรให้กับองค์กรหรือจ่ายค่าปรับภายในระยะเวลาที่ต้องเสียภาษีต้องเสียภาษีสูงสุดไม่เกิน 200 เปอร์เซ็นต์ของผลประโยชน์ส่วนเกินที่ได้รับ อาจมีการเสียภาษี 10 เปอร์เซ็นต์สำหรับผู้จัดการหรือสมาชิกในคณะกรรมการที่มีส่วนร่วมในการตัดสินใจที่จะให้ผลประโยชน์ส่วนเกิน การออกเสียงลงคะแนนของผู้ถือหุ้น ปัจจุบันมีการผลักดันให้มีการออกกฎหมายที่กำหนดให้ผู้ถือหุ้นออกเสียงลงคะแนนให้กับผู้บริหารระดับสูงซึ่งเรียกว่า x201C Say on Pay x201D law ซึ่งจะต้องได้รับการอนุมัติจากผู้ถือหุ้นทุกรายใน บริษัท เกี่ยวกับวิธีการและจำนวนเงินค่าตอบแทน แม้ว่ากฎหมายฉบับนี้ยังไม่ได้รับการอนุมัติจากสภาคองเกรส แต่ก็มีการส่งมาหลายครั้งในปีพ. ศ. 2550 x2013 2008 หลายองค์กรต่อต้าน x201C Say on Pay x201D กฎหมายด้วยความกลัวว่าจะทำให้แผนการชดเชยในระบบการเจรจาต่อรองของข้าราชการที่ยาวนาน ตามที่ระบุไว้ก่อน บริษัท อเมริกันมักใช้ส่วนผสมของฐานและค่าตัวแปรเพื่อกำหนดค่าตอบแทนของพนักงาน จำนวนเงินที่จ่ายผันแปรมักจะมีขนาดใหญ่กว่าอเมริกันในระดับสากลซึ่งคำว่า x201C x201D ค่าตอบแทนส่วนใหญ่มักหมายถึงผลประโยชน์พิเศษและค่าตอบแทน x201C x201D หมายถึงค่าจ้างหรือเงินเดือนที่ได้รับ ทั่วโลกมีข้อควรพิจารณาหลายประการที่ต้องทำเมื่อสร้างแผนการชดเชยค่าตอบแทน (หรือค่าตอบแทน) สำหรับแรงงานต่างด้าวหรือโรงงานจากต่างประเทศ บริษัท ควรเข้าใจสิ่งที่ถือเป็นมาตรฐานด้านการครองชีพที่ดีต่อสุขภาพสำหรับประเทศที่พวกเขากำลังทำงานอยู่รวมทั้งทราบถึงรูปแบบของผลประโยชน์ที่ยอมรับได้ การเปลี่ยนแปลงบางอย่างอาจจำเป็นสำหรับแผนการจูงใจในวัฒนธรรมที่แตกต่างกันซึ่งให้ความสำคัญกับค่านิยมหรือคุณภาพของ บริษัท ที่แตกต่างไปจากประเทศสหรัฐอเมริกามากกว่าสิ่งจูงใจอื่น ๆ นอกจากนี้กฎหมายด้านภาษีและการรักษาความปลอดภัยข้อมูลอาจแตกต่างไปจากประเทศอื่นซึ่งจะนำไปสู่การเปลี่ยนแปลงแผนการจ่ายค่าชดเชยที่จำเป็น เมื่อสร้างรูปแบบของการชดเชยไม่ว่าจะที่บ้านหรือระหว่างประเทศมีหลายปัจจัยที่ บริษัท ควรคำนึงถึง ตัวอย่างเช่นการเปลี่ยนแปลงใด ๆ ในการชดเชยพนักงานจะส่งผลต่อข้อเสนอที่มีมูลค่าแก่พนักงานที่มีศักยภาพพนักงานที่มีทักษะจะเป็นที่ดึงดูดให้ บริษัท ที่เสนอราคาที่สูงกว่าตลาด ดูผลการประเมินพนักงานของพนักงานและการประเมินผลการปฏิบัติงานการจัดการทรัพยากรมนุษย์ Adams, J. S. x201C ความอยุติธรรมในการแลกเปลี่ยนทางสังคม x201D ในความก้าวหน้าทางจิตวิทยาสังคมเชิงทดลอง 2nd ed. เอ็ด Berkowitz New York: Academic Press, 1965 คัมมิงส์, จอห์น x201C การให้ความสำคัญกับสิทธิความเสี่ยงรอบ ๆ รางวัลของพนักงาน x201D ธุรกิจการเงิน 2008. มีจาก: businessfinancemag Dvorak, Phred บริษัท x201C ประเมินซีอีโอ (สุทธิ) มูลค่า x201D วารสารวอลล์สตรีท 2008 พร้อมใช้งานจาก: online. wsjarticleSB121418172473595653.html Henderson, Richard I. การจัดการค่าตอบแทนในโลกแห่งความรู้ 9th ed. Upper Saddle River, NJ: Prentice Hall, 2003. x201C การลงโทษขั้นกลาง แหล่งข้อมูลการชดเชย x201D, Inc ทรัพยากรค่าตอบแทน 2008 ปัญหา x201C x201D Center on Executive Compensation . 2008. Available from: execcomp. orgpositionsindex. aspx. Kleiman, Lawrence S. Human Resource Management: A Tool for Competitive Advantage . Cincinnati, OH: South-Western College Publishing, 2000. Mathis, Robert L. and John H. Jackson. Human Resource Management . 11th ed. Mason, OH: ThomsonSouth-Western, 2006. McNamara, Carter. x201C Employee Compensation in the U. S. x201D Field Guide to Leadership and Supervision . 2008. Available from: managementhelp. orgpaybencmpnstncmpnstn. htm . x201C Mergers and Acquisitions Executives Get Biggest Raises, Watson Wyatt Data Services Reports. x201D Watson Wyatt Data Services . 2007. Available from: wwdsSurveyPDFsPRMA0711.pdf. Milkovich, George T. and Jerry M. Newman. Compensation . edth ed. New York: McGraw-HillIrwin, 2005. x201C OFPP Issues 2008 Executive Compensation Cap. x201D Cherry, Bekaert . amp Holland . 2008. Available from: cbhngovcon-enews-0308-exec-comp. php. Parker, Gary L. x201C Adapting to Global and Local Compensation Trends. x201D Executive Resources Ltd . 2003. Available from: erlimited . x201C SEC Updates Executive Compensation Reporting Guidance. x201D Goodwin Procter LLP . Goodwin Procter, 2008. U. S. Department of Labor, Bureau of Labor Statistics. x201C Compensation and Working Conditions. x201D Available from: bls. govopubcwc. อ้างถึงบทความนี้เลือกรูปแบบด้านล่างและคัดลอกข้อความสำหรับบรรณานุกรมของคุณ Employee Compensation Encyclopedia of Small Business COPYRIGHT 2007 Thomson Gale Employee Compensation People work in order to earn money, but the structure of compensation is quite diversified. The two broadest categories are salaries and wages. Salaries tend to be paid every other week or monthly wages are typically calculated by the hour but paid by the week. As a consequence of legislative language, salary-earning employees are sometimes referred to as exempt employees and hourly workers as non-exempt in other words the first are exempt from the requirements of Fair Labor Standards Act (discussed below), the latter group are covered. Compensation may also take the form of commissions paid to sales people based entirely on some percent of the goods or services they sell this type of compensation is often combined with a minimal salary to even out the ups and downs of commission earnings x2014 but people on pure commission who fail to earn back their base salary rarely continue in the job long. Piece work, where pay is based on actual performance of some job measured by units produced, is a variant of this approach. People serving as wait-personnel in restaurants are typically compensated by a low wage inadequate to support them: they get the majority of their income from tips. In the so-called New Economy which began emerging in the 1990s, characterized by cutbacks and layoffs of salaried and professional employees, many individuals became self-employed of necessity but, often, continued working in actual jobs, much as before. The compensation of such people is based on contract revenues, but they receive no fringe benefits and are required to pay their own payroll taxes. Compensation has a legal status and, once engaged, people can use the courts to enforce the employment agreement. Employee benefits (fringe benefits) have another status: they are provided at the employers option and may be withdrawn at will. As such they are not strictly speaking compensation although, in practice, they are viewed as a part of the full compensation package. The employers payment of premiums for certain types of fringe benefits, such as health care coverage and insurance policies (disability, life insurance), are not viewed under tax law as part of the employees taxable income. Others, such as the provision of an automobile or housing, are taxable and therefore fall under the definition of compensation. COMPENSATION AND TIME For the non-exempt part of the workforce hours spent on the job are the measure of compensation to be paid. Time spent at work is regulated by the government, and laws govern pay scales over and above the specified work week, typically 40 hours. The vast majority of exempt workers are also required to work a fixed number of hours a week x2014 but the hours may be flexible under flextime rules set by the employer. For exempt employees, pay for overtime is not controlled by law in most cases. In other words, the typical administrativeprofessionalexecutive employee is expected to work 40 hours x2014 and as many more as the job may require, the extra hours compensated, if at all, by bonuses or time off. In the case of people working for commissions, time spent on the job is only incidentally related to compensation. Normally, of course, such people spend a lot of time working x2014 but one can imagine the highly charismatic (and lucky) sales person who, in a couple of hours a month, can move a million dollars worth of real estate x2026 . COMPENSATION LAWS The Fair Labor Standards Act of 1938 (FLSA) is in a sense the basic law controlling employment and compensation issues and, through amendments passed later, the management of benefits packages. FLSA sets minimum wage, overtime pay, equal pay for men and women, controls child labor, and establishes record keeping requirements. On the whole FLSA is aimed at protecting the non-exempt work force x2014 which was the overwhelming majority of all workers at the time of the laws passage. Since that time the profile of the workforce has greatly change amendments to FLSA have in part reflected these changes. As illustrated by state over-rides of FLSAs minimum wage requirements (see below), states also actively regulate compensation and other aspects of the workplace. The chief amendment of FLSA was passage of the Equal Pay Act of 1963 (EPA). EPA prohibits unequal compensation of men and women in the same workplace doing similar jobs. EPA makes exceptions for seniority, allows the use of merit systems, and recognizes compensation systems based on performance. EPA requirements do not differentiate between exempt and nonexempt employees. Other legislation related to employment compensation issues includes: 1) the Consumer Credit Protection Act of 1968 which deals with wage garnishments 2) the Employee Retirement Income Security Act of 1974 (ERISA), which regulates pension programs 3) the Old Age, Survivors, Disability and Health Insurance Program (OASDHI), which forms the basis for most benefits programs and 4) legislation implementing unemployment insurance, equal employment, workers compensation, Social Security, Medicare, and Medicaid programs and laws. MAJOR COMPENSATION ISSUES The two major issues related to compensation are the adequacy of the compensation, addressed by minimum wage laws, and pay equity x2014 between women and men and between racial and ethnic groups x2014 addressed by EPA and social anti-discrimination statutes. Minimum Wage Non-exempt employees, for whom the definition is intrinsically tied to time, are also guaranteed a minimum wage of 5.15 per hour under federal law. Six states (Alabama. Arizona. Louisiana. Mississippi. South Carolina. and Tennessee ) have no minimum wage. Fifteen states have higher minimum wage than the U. S. as a whole: Alaska. California. Connecticut, Delaware. Florida. Hawaii. Illinois. Maine. Massachusetts, Minnesota. New Jersey. New York Oregon, Washington, and Wisconsin. The highest wage is in Oregon, 7.63 an hour in 2006 Connecticut had a 7.40 per hour minimum wage to be raised to 7.65 in 2007. The rest of the states have the same minimum wage as the national rate. Under the federal rules, a non-exempt worker is entitled to receive the highest minimum wage available in the place where he or she works. Changes in state law are monitored by the U. S. Department of Labor and may be consulted at dol. govesaminw-ageamerica. htm. Equal Pay for Women and Men Detailed data comparing income of men and women in the same occupation are not routinely collected so that the pay-equity issues remains somewhat in the dark, but more general data series give an indication of overall patterns. Based on data published by the U. S. Census Bureau, the average income of a man in 1954, but measured in 2004 dollars, was 20,992 a year. The average income of a woman, using the same method of calculation, was 9,358. On average, in 1954 a woman earned 44.6 percent of what a man earned. Womens earnings were 41.1 percent of mens in 1964, thus showing a decline, 42.2 percent in 1974 (still down from 1954), were up to 49.3 percent in 1984 but dropped again to 43 percent in 1994. In 2004, average male income was 42,832, average female income was 24,998. A gap of 17,834 separated men from women, but women were earning an all time high of 58.4 percent of what men earned on average. In this 50-year period, womens income grew at a faster rate than mens (1.98 percent a year versus mens income at 1.44 percent). Womens participation rate in the work force grew in this period as well: female participation in the workforce increased from 34 percent to 59.2 percent, 1954 to 2004. At the same time, the difference in male-female income averaged around 17,000 a year in this period, strongly suggesting that women had a competitive advantage in the labor market. This is further substantiated by data, published in Social Trends and Indicators USA showing that more men than women (on a percentage basis) are laid off during periods recessions. In a 2002 survey conducted by the U. S. Bureau of the Census and published in Current Population Survey data showing income differentials between men and women of the same educational attainment are presented. This study showed that income differentials were substantial across the board: 2000 data showed women on average earning 57.5 percent of what men earned. The differentials were the following: for less than 9th grade education, 59.9 percent for high school graduates, 59.3 for bachelors degree, 56.0 for masters, 59.7 for professional degrees, 55.9 and for doctoral degrees, 60.3 percent of what men with the same education attainment level earned. Racial and Ethnic Differences The U. S. Bureau of the Census data cited above for all men and women also provide a look at racial and ethnic difference x2014 and difference between men and women in those groups. Data cited are for 2004 only because long-term data are not uniformly available. The highest average earnings are achieved by Asians. Asian women have the highest earnings among all women but earn only 61.1 percent of the income of Asian males. Lowest earnings were reported for Hispanics, again for both males and females. Hispanic females earned 66.5 percent of what Hispanic males earned. Whites had the second highest earnings, but white women lagged farthest behind. They had 56.9 percent of white males earnings. Black women earned 75.5 percent of black males earnings. For these four racial and ethnic group comparisons, black women were highest in relation to men. COMPENSATION IN THE SMALL BUSINESS SECTOR According to a Wells Fargo press release, announcing the latest Wells FargoGallup Small Business Index, Sixty percent of small business owners see the amount of compensation they can offer an employee as a critical disadvantage when compared to larger companies. Are small business owners simply grumbling No. Data for 2001 from the Census Bureau on firm size measured by employment and payroll show that the smaller the firm, the lower the average payroll per employee. Companies with 10,000 or more employees averaged 39,789 per employee, the smallest firms (1-4 employees) averaged 27,299. With the exception of companies with 5-9 employees, which were even lower than the smallest at 26,706, at each step up the size-scale payroll per employee went up. Small firms dominate the corporate population. Firms with less than 100 employees were 98 percent of all firms employing people, those with 100 or more employees were 2 percent of companies. But the small firms employed 36 percent of people working for companies in 2001 (41 million) and large firms employed 64 percent (74 million). In 2001 companies with fewer than 100 employees had payroll costs of 29,138 per employee, companies with 100 or more employees had costs of 37,265 per employee, for a differential of 8,127 a year. In the mid-2000s, indeed in earlier periods as well, small business had certain advantages: it was adding while the large companies were shedding jobs. The small business sector also offers a work environment that is attractive to many individuals and this fact can be turn to an advantage when recruiting x2014 even if with lower salaries. These include hands-on involvement in business activity, absence of bureaucracy, flexible and often more varied job assignments, more rapid and rational decision processes, and the ability of a small business to adapt to the special needs of an employee. Some employees also value closer contact with the customer yet others, especially those with entrepreneurial ambitions, feel that they can learn more about business in a small enterprise than embedded deep in the structure of a large one. A practical aid for the small business owner offered by the Bureau of Labor Statistics is an extensive and reasonably up-to-date tabulation of wages actually paid per occupation by area. This is the BLS Wages by Area and Occupation Program, accessible on the internet. Close study of what wages actually are paid often shows that prevailing rates are frequently much more modest than generally believed because of local or regional economic conditions. see also Employee Benefits Employee Motivation Employee Reward Systems BIBLIOGRAPHY ADP Small Business Services x2014 EasyPayNet The CPA Technology Advisor . August 2005. Brainfood: Workplace Rights x2014 Gender pay. Management Today . 7 February 2006. Magee, Monique D. ed. Are Women Better Able to Weather Economic Storms Social Trends and Indicators USA: Work amp Leisure . The Gale Group, 2003. Small Businesses Face Tough Competition Attracting Top Talent According to Wells FargoGallup Small Business Index. Press Release. Wells Fargo. 3 May 2005. Small Business Index. Business Record (Des Moines ) . 9 May 2005. U. S. Census Bureau. Current Population Survey . 21 March 2002. U. S. Census Bureau. Historical Income Tables x2014 People. Available from census. govhheswwwincomehistincp03.html. Retrieved on 5 March 2006. U. S. Department of Labor. Minimum Wage Laws in the States-January 1, 200 Available from dol. govesaminwageamerica. htm. Retrieved on 6 March 2006. U. S. Department of Labor. Bureau of Labor Statistics. Wages by Area and Occupation. Available from bls. govblsblswage. htm. Retrieved on 6 March 2006. xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 Hillstrom, Northern Lights xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 xA0 updated by Magee, ECDI Cite this article Pick a style below, and copy the text for your bibliography. Encyclopedia of Business and Finance, 2nd ed. COPYRIGHT 2007 Thomson Gale EMPLOYEE COMPENSATION In exchange for job performance and commitment, an employer offers rewards to employees. Adequate rewards and compensations potentially attract a quality work force, maintain the satisfaction of existing employees, keep quality employees from leaving, and motivate them in the workplace. A proper design of reward and compensation systems requires careful review of the labor market, thorough analysis of jobs, and a systematic study of pay structures. There are a number of ways of classifying rewards. A commonly discussed dichotomy is intrinsic versus extrinsic rewards. Intrinsic rewards are satisfactions one gets from the job itself, such as a feeling of achievement, responsibility, or autonomy. Extrinsic rewards include monetary compensation, promotion, and tangible benefits. Compensation frequently refers to extrinsic, monetary rewards that employees receive in exchange for their work. Usually, compensation is composed of the base wage or salary, any incentives or bonuses, and other benefits. Base wage or salary is the hourly, weekly, or monthly pay that employees receive. Incentives or bonuses are rewards offered in addition to the base wage when employees achieve a high level of performance. Benefits are rewards offered for being a member of the company and can include paid vacation, health and life insurance, and retirement pension. A companys compensation system must include policies, procedures, and rules that provide clear and unambiguous determination and administration of employee compensation. Otherwise, there can be confusion, diminished employee satisfaction, and potentially costly litigation. DETERMINANTS OF COMPENSATION Fair and adequate compensation is critical to motivating employees attracting high-potential employees, and retaining competent employees. Compensation has to be fair and equitable among all workers in the same company (internal equity). Internal equity can be achieved when pay is proportionate to the individual employees qualifications and contributions to a company. On the other hand, compensation also has to be fair and equitable in comparison to the external market (external equity). If a company pays its employees below the market rate, it may lose competent employees. In determining adequate pay for employees, a manager must consider the three major factors: the labor market, the nature and scope of the job, and characteristics of the individual employee. Potential employees are recruited from a certain geographic area x2014 the labor market. The actual boundary of a labor market varies depending on the type of job, company, and industry. For example, an opening for a systems analyst at IBM may attract candidates from across the country, whereas a secretarial position at an elementary school may attract candidates only from the immediate local area of the school. Pay for a job even within the same labor market may vary widely because of many factors, such as the industry, type of job, cost of living, and location of the job. Compensation managers must be aware of these differences. To help compensation managers understand the market rate of labor, a compensation survey is conducted. A compensation survey obtains data regarding what other firms pay for specific jobs or job classes in a given geographic market. Large companies periodically conduct compensation surveys and review their compensation system to assure external equity. There are professional organizations that conduct compensation surveys and provide their analysis to smaller companies for a fee. Several factors are generally considered in evaluating the market rate of a job. They include the cost of living of the area, union contracts, and broader economic conditions. Urban or metropolitan areas generally have a higher cost of living than rural areas. Usually, in calculating the real pay, a cost-of-living allowance (COLA) is added to the base wage or salary. Cost-of-living indexes are published periodically in major business journals. During an economically depressed period, the labor supply usually exceeds the demand in the labor market, resulting in lower labor rates. The characteristics of an individual employee are also important in determining compensation. An individuals job qualifications, abilities and skills, prior experiences, and even willingness to work in hardship conditions are determining factors. Within the reasonable range of a market rate, companies offer additional compensation to attract and retain competent employees. In principle, compensation must be designed around the job, not the person. Person-based pay frequently results in discriminatory practices, which violates Title VII of the Civil Rights Act, and job-based compensation is the employers most powerful defense in court. For job-based compensation, management must conduct a systematic job analysis, identifying and describing what is happening on the job. Each job must be carefully examined to list the necessary tasks and actions, identify skills and abilities required, and establish desirable behaviors for successful completion of the job. With complete and comprehensive data about all the jobs, job analysts must conduct systematic comparisons of them and determine their relative worth. Numerous techniques have been developed for the analysis of relative worth, including the simple point method, job classification method, job ranking method, and the factor comparison method. Information resulting from the comprehensive job analysis will be used for establishing pay or wage grades. Assume that twenty-five jobs range from 10 to 50 points in their job scores based on the job point method. All twenty-five of these jobs are reviewed carefully for their relative worth and plotted on Figure 1. The x-axis represents job points and the ordinate (y-axis) represents relative worth or wage rates. Once a manager can identify fair and realistic wages of two or more jobs, desirably top and bottom ones, then all the rest can be prorated along the wage curve in the diagram. In order to simplify the administration of a wage structure, similar jobs in the approximate cluster are grouped together into a class or grade for pay purpose. Figure 2 shows how twenty-five jobs are grouped into five pay grades. Employees move up in their pay within each grade, typically by seniority. Once a person hits the top pay in the grade, he or she can only increase the pay by moving to a higher grade. Under certain unusual circumstances, it is possible for an outstanding performer in a lower grade to be paid more than a person at the bottom of the next-highest level. INNOVATIONS IN COMPENSATION SYSTEMS As the market becomes more dynamic and competitive, companies are trying harder to improve performance. Since companies cannot afford to continually increase wages by a certain percentage, they are introducing many innovative compensation plans tied to performance. Several of these plans are discussed in this section. Incentive Compensation Plan Incentive compensation pays proportionately to employee performance. Incentives are typically given in addition to the base wage they can be paid on the basis of individual, group, or plant-wide performance. While individual incentive plans encourage competition among employees, group or plant-wide incentive plans encourage cooperation and direct the efforts of all employees toward achieving overall company performance. Skill-Based or Knowledge-Based Compensation Skill-based pay is a system that pays employees based on the skills they possess or master, not for the job they hold. Some managers believe that mastery of certain sets of skills leads to higher productivity and therefore want their employees to master a series of skill sets. As employees gain one skill and then another, their wage rate goes up until they have mastered all the skills. Similar to skill-based pay is knowledge-based pay. While skill-based pay evolved in the manufacturing sector, pay-for-knowledge developed in the service sector (Henderson, 1997). For example, public school teachers with a bachelors degree receive the lowest rate of pay, those with a masters degree receive a higher rate, and those with a doctorate receive the highest. Team-Based Compensation As many companies introduce team-based management practices such as self-managed work teams, they begin to offer team-based pay. Recognizing the importance of close cooperation and mutual development in a work group, companies want to encourage employees to work as a team by offering pay based on the overall effectiveness of the team. Performance-Based Compensation In the traditional sense, pay is considered entitlement that employees deserve in exchange for showing up at work and doing well enough to avoid being fired. While base pay is given to employees regardless of performance, incentives and bonuses are extra rewards given in appreciation of their extra efforts. Pay-for-performance is a new movement away from this entitlement concept (Milkovich and Newman, 2005). A pay-for-performance plan increases even the base pay x2014 so-called merit increases x2014 to reflect how highly employees are rated on a performance evaluation. Other incentives and bonuses are calculated based on this new merit pay, resulting in substantially more total dollars for highly ranked employee performance. Frequently, employees also receive an end-of-year lump sum bonus that does not build into base pay. EXECUTIVE COMPENSATION Recently, people have been concerned with the excessively high level of executive compensation. According to Business Week s annual executive pay survey, in 1997 Sanford Weill, CEO of Travelers Group, collected 7.5 million in salary and bonuses plus 223.2 million for long-term compensation, totaling 230.7 million. In the same year, Roberto Goizueta, CEO of Coca-Cola, earned a total of 111.8 million, including annual salary, bonuses, and long-term compensation. Compensation for the twenty highest-paid executives ranged from 28.4 million to 230 million. Frequently, executive compensation becomes controversial. Are these compensations excessive What justifies such a large compensation for executives Justification of such a large sum of compensation is linked to the companys performance. In fact, a significant portion of executive compensation results from exercising stock options, which were quite valuable in the recent bull market. Yet ordinary working-class Americans are outraged by the shocking contrast in pay raises: annual executive pay at large companies rose 54 percent in 1996, whereas the pay raises of most working-class people were in the 3 percent to 5 percent range during the same period. An executive compensation package is typically composed of (1) base salary, (2) annual incentives or bonuses, (3) long-term incentives (e. g. stock options), (4) executive benefits (e. g. health insurance, life insurance, and pension plans), and (5) executive perquisites. Considering the high turnover rate of competent executives, offering a competitive salary is crucial in attracting the top candidates. Frequently, annual bonuses play a more important role than base salary in executive compensations. They are primarily designed to motivate better performance. In order to underscore the importance of financial performance, usually measured by the companys stock price, top executives are offered stock options. Sometimes, exercising stock options yields more cash benefits to executives than do annual salaries. In addition to monetary compensation, executives enjoy many different types of perquisites, commonly called perks. Such executive perks include the luxurious office with lush carpets, the executive dining room, special parking, use of a company airplane, company-paid membership in high-class country clubs and associations, and executive travel arrangements. Many companies even offer executives tax-free personal perks, including such things as free access to company property, free legal counseling, free home repairs and improvements, and expenses for vacation homes or boats. Another perk that became popular recently is the socalled golden parachute x2014 a protection plan for executives in the event that they are forced out of the organization. Such severance frequently results from a merger or hostile takeover of the company. The golden parachute provides either a significant one-time sum to the departing executive or a guaranteed executive position in the newly merged company. see also Employee Benefits bibliography Henderson, Richard I. (2006). Compensation Management in a Knowledge-Based World (7th ed.). Upper Saddle River, NJ: PearsonPrentice Hall. Henderson, Richard I. (1994). Compensation Management: Rewarding Performance (6th ed.). Englewood Cliffs, NJ: Prentice Hall. Klein, Andrew L. (1996). Validity and Reliability for Competency-Based Systems: Reducing Litigation Risks. Compensation and Benefits Review . 28(4): 31-37. Milkovich, George T. Newman, Jerry M. and Milkovich, Carolyn (1996). Compensation (8th ed.). New York McGraw - HillIrwin. Pauline, George B. (1997, MarchApril). Executive Compensation and Changes in Control: A Search for Fairness. Compensation and Benefits Review 29: 30-40. Reingold, Jennifer, and Borrus, Amy. (1997, May 12). Even Executives Are Wincing at Executive Pay. Business Week . 40 x2013 41. Reingold, Jennifer, and Melcher, Richard A. (1998, April 21). Executive Pay. Business Week . 58 x2013 66. Cite this article Pick a style below, and copy the text for your bibliography. How High CEO Pay Hurts the 99 Percent Photo Credit: AlterNet Corporations are not working for the 99 percent. But this wasnt always the case. In a special five-part series, William Lazonick, professor at UMass, president of the Academic-Industry Research Network, and a leading expert on the business corporation , along with journalist Ken Jacobson and AlterNets Lynn Parramore, will examine the foundations, history and purpose of the corporation to answer this vital question: How can the public take control of the business corporation and make it work for the real economy While most Americans struggle to make ends meet, the CEOs of major U. S. business corporations are pulling eight-figure, and sometimes even nine-figure, compensation packages. When they win, the 99 percent lose. We rely on these executives to allocate corporate resources to investments in new products and processes that, in a world of global competition, can provide us with good jobs. Yet the ways in which we permit top corporate executives to be paid actually gives them a strong disincentive to invest in innovation and training. The proper function of the executive is to figure out how to develop and use the corporations productive capabilities (business schools call it competitive strategy). But thats not happening. In effect, U. S. top executives rake in obscene sums by not doing their jobs. The Runaway Compensation Train When all the data from corporate proxy statements are in within the next month or so, they will show that 2011 was another banner year for top executive pay. Over the previous three years the average annual compensation of the top 500 executives named on corporate proxy statements was only 17.8 million. compared with an annual average of 27.3 million for 2005 through 2007. Yet even in these recent down years, the compensation of these named top executives was more than double in real terms their counterparts pay in the years 1992 through 1994. It might surprise you to learn that in the early 1990s, executive pay was already widely viewed as out of line with what average workers got paid. In 1991 Graef Crystal, a prominent executive pay consultant, published a best-selling book, In Search of Excess: The Overcompensation of American Executives . in which he calculated that over the course of the 1970s and 80s, the real after-tax earnings of the average manufacturing worker had declined by about 13 percent. During the same period, that of the average CEO of a major US corporation had quadrupled Bill Clinton took up the issue in his 1992 presidential campaign, and immediately upon taking office had Congress pass a law that forbade companies from recording as tax-deductible expenses executive salaries plus bonuses in excess of 1 million. Unfortunately Clinton chose the wrong pay target. In 1992 salaries and bonuses represented only 23 percent of the total compensation of the top 500 executives named on proxy statements. The largest single component of executive compensation was gains from exercising stock options, representing 59 percent of the total. The Clinton administration left this so-called performance pay unregulated. Perversely, one reaction of corporate boards to the Clinton legislation was to take 1 million in salary plus bonus as the government-approved minimum wage for top executives, and therefore to raise these components of executive pay if they fell short of that minimum. The number of named executives with salaries plus bonuses that totaled 1 million or more increased from 529 in 1992 to 703 in 1993 and 922 in 1994. The other reaction of corporate boards was to lavish more stock options on their top executives. When the stock market boomed in the late 1990s, these executives cashed in. The average annual compensation of the top 500 named executives reached 21 million in 1999 with gains from exercising stock options representing 71 percent of the total, and 32 million in 2000 with option gains now 80 percent of the total. From 1982 to 2000 the U. S. experienced the longest stock market boom in its history. Average annual stock-price yields of SampP 500 companies were 13 percent in the 1980s and 16 percent in the 1990s. So it didnt require any great genius to make money from stock options. In fact, it became a no-brainer. In 1991, the Securities and Exchange Commission waived the longstanding rule that, as corporate insiders, top executives had to hold stock acquired through exercising their options for six months to prevent short-swing profit-taking. As before, executives did not have to put any of their own money at risk in being granted stock options. But now they could also pick the opportune moment to exercise their options without any risk that the value of the companys stock would subsequently decline before they could sell the stock and lock in the gains. The New Normal of Corporate Greed The speculation-fueled irrational exuberance of the late 1990s brought unprecedented pay bonanzas to top executives, thus establishing a new normal for corporate greed. When boom turned to bust in the early 2000s, money-hungry executives had to look for another way to get stock prices up and make their millions. Their favorite weapon of value extraction over the past decade has been the stock buyback (aka stock repurchase). Top executives allocate massive sums of corporate cash to repurchasing their companys own stock with the purpose of boosting their companys stock price. Stock buybacks and stock options have become the yin and yang of executive compensation. Lets take a look at how it works: The board of directors of Acme Corporation authorizes the CEO to repurchase the companys own outstanding shares up to a specified value (say 5 billion) over a specified period of time (say three years). On any dates within this three-year period, the CEO then has the authority to instruct the companys broker to use the companys cash to buy back shares on the open market up to the 5 billion limit and subject to the SEC rule that the buybacks on any one day can be no more than 25 percent of the companys average daily trading volume over the previous four weeks. That might permit Acme to do buybacks worth, say, 100 million per day. It may be the end of the quarter, and the CEO and CFO want to meet Wall Streets expectations for earnings per share. Or they may want to offset a fall in the companys stock price because of bad news. Or they may want to ensure that the increase in the companys stock price keeps up with those of competitors, who may also be doing buybacks. Whatever the reason, by the laws of supply and demand, when the corporation spends cash on buybacks, it manufactures an increase in its stock price. Then, with the stock price up, the CEO, CFO and other insiders may choose to cash in their stock options. Presto They make tons of money for themselves. Meanwhile, these executives will tend to ignore investments in innovation and training. Some companies actually fund their buybacks by laying off workers, offshoring jobs to low-wage countries, and taking on debt. The top executives weapon of value extraction becomes a weapon of value destruction. They are rewarded handsomely by not doing their jobs. In 1981, 292 major corporations spent less than 3 percent of their combined net income on buybacks. In 1982, however, the SEC passed a rule (10b-18) that gave corporations that did very large-scale stock repurchases a safe harbor from charges of stock-price manipulation. Buyback activity then became larger and more widespread, increasing substantially over the course of the 1990s. From 2003 to 2007, buybacks really took off, and by 2007 the very same 292 corporations now spent over 82 percent of their net income repurchasing their own stock . The financial crisis and the Great Recession forced a slowdown in buybacks. SampP 500 companies repurchased a record 609 billion in 2007 but pared it down to 360 billion in 2008 and 146 billion in 2009. They stepped it back up to about 289 billion in 2010 and an estimated 440 billion in 2011. It is quite possible that buybacks in 2012 will be even higher than in the previous record year of 2007. And look for executive pay to increase as well. Concentration of Income at the Top Make no mistake about it. Executive pay is a prime reason why in 2005-2008 the top 0.1 percent captured a record 11.4 percent of all household income (including capital gains) in the U. S. compared with 2.6 percent three decades earlier. In 2010 (the latest Internal Revenue Service data available), this number was 9.5 percent. The income threshold among taxpayers for being included in the 0.1 percent in 2010 was 1,492,175. Of the executives named in proxy statements in 2010, 4,743 had total compensation greater than this threshold amount, with a mean income of 5,034,000 and gains from exercising stock options representing 26 percent of their combined compensation. Total corporate compensation of the named executives does not include other non-compensation income (from securities, property, fees for sitting on corporate boards, etc.) that would be included in their IRS tax returns. If we assume that named executives whose corporate compensation was below the 1.5 million threshold were able to augment that income by 25 percent from other sources, then the number of named executives in the top 0.1 percent in 2010 would have been 5,555. Included in the top 0.1 percent of the US income distribution were a large, but unknown, number of US corporate executives whose pay was above the 1.5 million threshold but who were not named in proxy statements because they were neither the CEO nor the four other highest paid in their particular companies. To take just one example, of the five named IBM executives in 2010, the lowest paid had total compensation of 6,637,910. There were presumably large numbers of other IBM executives whose total compensation was between this amount and the 1.5 million top 0.1 percent threshold. Lets Put CEOs to Work for Us Under the Obama administration, virtually nothing has been done to constrain top executive pay. President Obama signaled his unwillingness to take on the issue when, in an interview in February 2010, he was asked about the many millions paid in 2009 to Jamie Dimon, CEO of JPMorgan and Lloyd Blankfein, CEO of Goldman Sachs, in the wake of the financial meltdown and bank bailouts. I know both those guys they are very savvy businessmen, the president said. I, like most of the American people, dont begrudge people success or wealth. That is part of the free-market system. The Say-on-Pay provision in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act sounds good, but it just reinforces a system of incentives the does not work. This provision gives public shareholders the right to express their non-binding opinion to corporate management on issues related to executive compensation. If Congress had understood what drives executive pay in the U. S. however, it would have recognized that the granting of Say-on-Pay rights to public shareholders is part of the problem, not the solution. Through a combination of stock options and stock buybacks, Say-on-Pay provisions reinforce an alignment between the incentives of top executives and the interests of public shareholders that has been undermining investment in Americas future. It is about time that we took control of exploding executive pay. It is not just that the sums involved are unfair, and as history has shown, will only become more obscene. These executives control the allocation of resources that represent the well-being of the 99 percent, and the ways in which they bank their booty is doing severe damage to the U. S. economy. The investment strategies of business corporations are too important to be left under the control of those who gain when the 99 percent lose. SECTION 10: COMPENSATION DISCRIMINATION SECTION 10: COMPENSATION DISCRIMINATION 10-I BACKGROUND Despite longstanding prohibitions against compensation discrimination under the federal EEO laws, pay disparities persist between workers in various demographic groups. For example, in 1999, women who worked full-time had median weekly earnings that were 75.7 of the median for men. (1) Median earnings for African Americans working at full-time jobs were 75.9 of the median for whites. (2) The median earnings of Hispanics were 65.9 of the median for whites and 86.8 of the median for African Americans. (3) There also is evidence that median earnings for individuals with disabilities are significantly lower than median earnings for individuals without disabilities. (4) While some compensation disparities certainly are attributable to differences in occupations, skills, and experience, as well as differences in other legitimate factors, not all disparities can be explained by such factors. In 1998, the Presidents Council of Economic Advisers issued a report on the gender wage gap in which it stated that one rough but plausible measure of the extent of pay discrimination is the unexplained difference in pay. The Council determined that after accounting for measurable factors, there still is an unexplained 12 gap between the pay of men and women. (5) In a 2000 report, the Council also estimated an unexplained 12 pay gap between men and women in the field of information technology. (6) In terms of race, a private study has estimated that only about half of the wage gap between African-American and white women is explainable by differences in occupation, education, and other legitimate factors. (7) 10-II OVERVIEW OF THIS SECTION This Manual Section sets forth the standards under which compensation discrimination is established in violation of Title VII of the Civil Rights Act (Title VII), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), or the Equal Pay Act (EPA). (8) It replaces Sections 633, 701, 704, and 708 of Volume II of the Compliance Manual. (9) Title VII, the ADEA, and the ADA prohibit compensation discrimination based on race, color, sex, religion, national origin, age, disability, or protected activity. (10) A claim of compensation discrimination can be brought under one of these statutes even if no person outside the protected class holds a substantially equal, higher paying job. Furthermore, Title VII, the ADEA, and the ADA prohibit discriminatory practices that indirectly affect compensation -- such as limiting groups protected by these statutes to lower paying jobs. These practices are not covered by the EPA. The EPA is more targeted. The EPA requires employers to pay male and female employees at the same establishment equal wages for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions. (11) The jobs that are compared need be only substantially equal, not identical. Unequal compensation can be justified only if the employer shows that the pay differential is attributable to a bona fide seniority, merit, or incentive system, or any other factor other than sex. A claim of unequal compensation based on sex can be brought under either the EPA or Title VII, as long as the jurisdictional prerequisites are met. To fully protect the charging partys rights and to maximize recovery, a charge alleging compensation discrimination based on sex should usually allege a violation of both Title VII and the EPA. While there is considerable overlap in the coverage of the two statutes, they are not identical. Title VII broadly prohibits discriminatory compensation practices, while the EPA only prohibits sex-based differentials in compensation for substantially equal jobs in the same establishment. Therefore, not all compensation practices that violate Title VII also violate the EPA. On the other hand, the Commissions EPA guidelines state that a practice that violates the EPA also will violate Title VII. (12) All of the anti-discrimination statutes prohibit retaliation for opposing violations of the statutes or participating in the statutory complaint process. The anti-retaliation provisions protect persons who take steps to oppose compensation discrimination, or who participate in complaint proceedings addressing allegations of compensation discrimination. 10-III COMPENSATION DISCRIMINATION IN VIOLATION OF TITLE VII, ADEA, OR ADA Title VII, the ADEA, and the ADA prohibit discrimination in compensation based on race, color, religion, sex, national origin, age, disability, or protected activity. The term compensation includes any payments made to, or on behalf of, an employee as remuneration for employment. (13) Compensation discrimination in violation of Title VII, the ADEA, or the ADA can exist in a number of forms: An employer pays employees inside a protected class less than similarly situated employees outside the protected class, and the employers explanation (if any) does not satisfactorily account for the differential An employer maintains a neutral compensation policy or practice that has an adverse impact on employees in a protected class and cannot be justified as job-related and consistent with business necessity An employer sets the pay for jobs predominantly held by protected class members below that suggested by the employers job evaluation study, while the pay for jobs predominantly held by employees outside the protected class is consistent with the level suggested by the job evaluation study (14) A discriminatory compensation system has been discontinued, but salary disparities caused by the system have not been eradicated (15) or The compensation of one or more employee s in a protected class is artificially depressed because of a discriminatory employer practice that affects compensation, such as steering employees in a protected class to lower paid jobs than persons outside the class, or discriminating in promotions, performance appraisals, procedures for assigning work, or training opportunities. Subsections A through D, below, discuss the standards and suggested steps for investigating a charge of compensation discrimination under Title VII, the ADEA, or the ADA. Subsection A discusses disparate treatment subsection B discusses disparate impact subsection C discusses non-base elements of compensation (e. g. bonuses) and subsection D discusses discriminatory practices affecting compensation. A. Disparate Treatment Because direct evidence of discrimination is rare, (16) investigators typically must evaluate whether comparative evidence supports a finding of compensation discrimination. Although not intended as an exclusive method, the method suggested in this subsection for conducting a comparative compensation analysis has three general components: Identify employees similarly situated to the charging party, based on job similarity and other objective factors, and compare their compensation. If the charging partys compensation is lower than the compensation of his or her comparator(s), ask the employer to offer a nondiscriminatory explanation for the differential, and evaluate the employers explanation. Consider a systemic investigation using statistics. Each component of the analysis is discussed below. 1. Identifying Employees Similarly Situated to the Charging Party Investigators should identify similarly situated employees both inside and outside the charging partys protected class. Similarly situated employees are those who would be expected to receive the same compensation because of the similarity of their jobs and other objective factors. Initial Requests for Information When beginning an investigation for compensation discrimination, it is important to acquire information about the respondents general system for compensating its employees. It will be useful to identify employees similarly situated to the charging party for purposes of comparing their compensation. If investigators have questions in any particular case about what the initial request for information should include, they should contact the Research and Technical Information division of the Office of Research, Information and Planning (ORIP), or the Office of General Counsels Research and Analytical Services (RAS) division. (17) As in other investigations, the initial request for information may, if necessary, be followed by requests for more specific compensation information. The investigator should design requests for information to facilitate an efficient and thorough investigation. Depending on the case, this request may include, by way of example, the following: Organization charts and other documents which reflect the relative position of the charging party in comparison to other employees, including written detailed job descriptions Written descriptions of the respondents system for compensating employees -- including collective bargaining agreements entry level wage rates or salaries any policies or practices with regard to periodic increases, merit and other bonus compensation plans and the respondents reasons for its pay practices and Job evaluation studies, reports, or other analyses made by or for the employer with respect to its method of compensation and pay rates. Sometimes much of the above information will have been provided by the charging party or other witnesses. After using the information to identify the jobs or positions whose occupants are potentially similarly situated to the charging party, the investigator should obtain relevant job descriptions for those positions, as well as other documents, such as work orders and sample work products, that would reveal the types of tasks performed by those employees and the complexity of the tasks. As in any investigation, the investigator should consider supplementing the review of the respondents written submission with respondent interviews and interviews of other witnesses. An on-site inspection also may be helpful. ข Job Similarity The investigator should determine the similarity of jobs by ascertaining whether the jobs generally involve similar tasks, require similar skill, effort, and responsibility, working conditions, and are similarly complex or difficult. (18) The actual content of the jobs must be similar enough that one would expect those who hold the jobs to be paid at the same rate or level. Job titles and formal job descriptions are helpful in making this determination, but because jobs involving similar work may have different titles and descriptions, these things are not controlling. (19) Similarly, the fact that employees work in different departments or other organizational units may be relevant, but is not controlling. (20) The facts of Examples 1 and 2, below, illustrate these points. Example 1: R is a large manufacturer of electronic equipment. R has four line departments: Development, Testing, Manufacturing, and Marketing. CP, an Asian American, is an electronics engineer in the Development department. He is on a team of engineers responsible for upgrades to the OmniWidget, the companys flagship product. CPs charge alleges that he is paid less than other engineers on his team because he is Asian American. The investigation reveals that the OmniWidget design team has five team members and one supervisor. Teams responsible for the companys other products are similarly structured. The investigator analyzes the content of the electronics engineer jobs on the OmniWidget team and the other product teams and concludes that the jobs involve similar tasks, require similar skill, effort, and responsibility, and are similarly complex or difficult. Therefore, the investigator concludes that the engineers on all the teams in Development are similarly situated for purposes of comparing their treatment. ค Other Objective Factors Factors other than job content also may be important in identifying similarly situated comparators. For example, minimum objective qualifications, such as a specialized license or certification should be taken into account. (21) Persons in jobs requiring certain minimum objective qualifications should not be grouped together with persons in jobs that do not require those qualifications, even though the jobs otherwise are similar. Although minimum objective qualifications should be taken into account in defining the pool of similarly situated employees, employees relative qualifications should not be considered at this stage. While differences in qualifications, experience, and education ultimately may explain a pay differential, such factors require a pretext or disparate impact analysis to determine whether they are legitimate, (22) and thus should be considered only after the pool of comparators has been determined ( see 10-III A.2 and B, infra ). This approach allows for an orderly analysis that first identifies the relevant comparators, and then gives due consideration to factors that might explain compensation disparities. Example 2: Same as Example 1, above. The investigator also analyzes the jobs in the Testing, Manufacturing, and Marketing departments. The investigator quickly concludes that the jobs in Manufacturing and Marketing are not similar to CPs job in Development. But the investigator discovers that the engineers in Development work closely with the engineers in Testing, and that engineers in both departments often perform tasks generally associated with the other. The investigator concludes that the jobs in Testing are sufficiently similar to the jobs in Development, in terms of content, that one would expect engineers in the two departments to be paid at the same rate or level. In the respondents position statement that accompanied its initial submission of information, the respondent has identified a number of individuals who it asserts are not similarly situated to the charging party for various reasons such as performance, experience, and other relative qualifications. The factors the respondent proffered to explain the compensation differential are best included in the analysis after the pool of comparators has been established so that they can be properly evaluated. Absent an explanation that does not require such an analysis, the investigator should conclude that engineers in Testing and Development are similarly situated for purposes of comparing their treatment. Notwithstanding the facts of Examples 1 and 2, differences in job titles, departments, or other organizational units may reflect meaningful differences in job content or other factors that preclude direct pay comparisons between employees. As always, however, enforcement staff should determine whether evidence uncovered in those other job categories, departments, etc. warrants expanding the investigations scope, up to and including a systemic investigation. (23) ORIP and RAS are available to help enforcement staff with the technical issues involved in a systemic investigation. (24) In any event, after employees similarly situated to the charging party have been identified, the next step is to determine whether the charging party receives less compensation than similarly situated employees outside his or her protected class. (25) The investigator should request relevant payroll data from the respondent if that information has not already been provided. 2. Determining Whether Compensation Differences Are Due to Discrimination If a compensation differential(s) exists, the respondent should be asked to produce a non-discriminatory reason for the differential. If a respondent leaves the pay disparity unexplained, or provides an explanation that is too vague, is internally inconsistent, or is facially not credible, (26) the investigator should find cause. If the respondent does provide a nondiscriminatory reason, an inquiry should be made into whether it satisfactorily explains the pay differential. (27) Example 3: CP (African American named A. Jones) is a salaried waiter in an upscale restaurant. A. Jones alleges that he is being discriminatorily paid. The investigation shows that A. Jones is paid less than his comparators, who are white. The respondent alleges that the compensation differential is due to the other employees superior job performance and their experience as waiters in the restaurant. The investigator then creates the following chart regarding A. Jones and similarly situated employees: Employees in Protected Class Alleged Factors Affecting Salary As noted in the middle column above, the investigator concludes that the respondents explanation does not account for the pay disparity because A. Jones has the same experience and average performance rating as A. Smith but receives a lower salary. Therefore cause is found. The employers explanation should account for the entire compensation disparity. Thus, even if the employers explanation appears to justify some of a compensation disparity, if the disparity is much greater than accounted for by the explanation, the investigator should find cause. Example 4: Same as Example 3, except A. Smith has more years of experience and a higher average performance rating than A. Jones. Employees in Protected Class Alleged Factors Affecting Salary Do Proffered Reasons Explain Disparity Employees Not in Protected Class Alleged Factors Affecting Salary - avg. 2 perf. rating No - A. Jones pay differential is out of proportion to the difference in explanatory factors. - avg. 3 perf. rating - avg. 4 perf. rating - avg. 5 perf. rating - avg. 5 perf. rating In this variation of the example, despite the fact that A. Smith has more years of experience and a higher average performance rating than A. Jones, the investigator concludes that the respondents explanation for A. Jones salary is not credible because the explanation accounts for much smaller differences in pay between the white waiters than for A. Jones. For example, the same experience and performance differences that account for an 8000 pay gap between A. Smith and A. Jones (one year of experience one point average performance) account for only a 3000 difference between B. Thomas and A. Smith. Therefore cause is found. The investigator should be sure to include in the analysis all employees similarly situated to the charging party. The mere fact that one or more employees in the protected class are paid the same as, or more than, the employees outside the class does not necessarily mean that there is no discrimination. (28) It could be that other factors, such as red circling (29) or seniority, account for the higher pay those particular protected-class-members receive, and that the data with respect to the other members of the protected class still suggests discrimination. Nevertheless, the investigator should analyze the compensation of all similarly situated employees because even if a comparison of only one or two similarly situated individuals might raise an inference of compensation discrimination, a comparison of all similarly situated individuals might dispel this inference. The next example is designed to demonstrate this. Example 5: Same as Example 4, except there are additional comparators inside CPs protected class. Employees in Protected Class Alleged Factors Affecting Salary Do Proffered Reasons Explain Disparity In this variation of the example, the salary of B. West, an African American, is in line with his white counterparts salaries, given his experience and average performance rating. In addition, C. Barnes, the other African American comparator, receives a higher salary than his white counterpart with the same years of experience and the same average performance rating. These facts suggest that discrimination probably is not the reason for A. Jones low salary. The charge should be dismissed without a cause finding. 3. Using Statistics Statistics can have various uses in a compensation case. Statistical evidence can help determine if there is a broad pattern of intentional discrimination, i. e. whether intentional discrimination is the respondents standard operating procedure. (30) If the scope of the investigation is narrower, statistics still can help determine whether an individual has suffered from intentional discrimination in compensation. (31) Statistics also are useful for determining whether a neutral compensation policy or practice has an adverse impact on members of a protected group. This subsection explains one approach to investigating compensation practices using an analytical tool known as statistical inference. It allows one to determine whether differences between a protected class target group and a comparison group are statistically significant, i. e. whether the difference could not be expected to have occurred by chance. (32) This differs from the basic comparison of raw numbers or percentages, which is known as descriptive statistics. Statistical inference helps ensure consistent decisionmaking, whereas the meaning of descriptive statistics may be interpreted differently by different individuals. The decision about whether and how to use statistics to aid in an investigation should be made on a case by case basis. Statistical analyses are less reliable when they encompass a small number of people, so investigators should contact ORIP or RAS (see footnote 17) with questions about whether the number of comparators is large enough to perform a statistical analysis in any particular case. Necessary Information In preparation for performing a statistical analysis, the investigator will have to request from the respondent payroll data for employees in the group of similarly situated employees if that information has not already been provided. Before issuing the request for information, the investigator should consult with ORIP or RAS concerning: (a) what information to request (b) what format to request the information in and (c) how to document that format (e. g. how to document what hardware and software produced the data, how the data was organized, etc.). It is almost always preferable to request that the employer provide this information in computerized format if possible. This especially is true if: (a) the number of similarly situated individuals exceeds 25 or (b) it is anticipated that the respondent will raise a number of explanations andor defenses or (c) it appears that the investigation is likely to raise issues other than pay equity -- especially related ones such as discriminatory promotions or assignments. Once the respondent has submitted the appropriate data for all the similarly situated employees, the investigator can begin to determine the effect of the respondents pay practices on persons inside and outside the charging partys protected class. ข Threshold Statistical Test There are alternative statistical tests for analyzing compensation data for patterns of potential discrimination. ORIP or RAS are available to help enforcement staff with statistical procedures and the identification of possible alternatives. Below is a description of one statistical method that takes advantage of the EEOSTAT statistical software already being used by enforcement staff. This threshold statistical test will tell the investigator whether there is a statistically significant difference (i. e. a difference unlikely to have occurred by chance) between the expected and actual number of employees in the protected class who earn less than or equal to the median pay of all comparators. However, this test cannot tell an investigator what actually has caused an observed pattern. Investigators therefore are advised to use it only as an initial tool for determining whether a statistically significant pattern exists that warrants the use of more sophisticated and resource-intensive statistical techniques ( see infra 10-III A.3.c.) to test the respondents explanation for the pattern, if any. i) Determining Median Compensation The threshold statistical test first requires the investigator to calculate the median wage or salary of the employees in the comparator pool. The median is the mid-point of the wages or salaries when they are arranged from lowest to highest, or vice versa. Spreadsheet software that will calculate the median is available. Example 6: Using spreadsheet software, the investigator creates the following table for the pool of similarly situated employees: RESPONDENT: EMPLOYEES SORTED BY SALARY Because there is an odd number of comparators, the median salary is 23,600 -- the midpoint of the salaries when arranged from lowest to highest. Had there been an even number of comparators, the median would have been the average of the two salaries closest to the midpoint. Even though this example only considered the comparators races, the spreadsheet also can be set up to analyze multiple bases together (such as race and sex). ii) Determining Whether a Statistically Significant Pattern Exists Once the median wage or salary has been determined, a comparison should be made between the expected and actual number of employees in the protected class whose wages or salaries are at or below the median wage or salary of all comparators. The purpose of the comparison is to determine whether there is a statistically significant difference. The Commissions EEOSTAT computer software includes a program called SQUARE, which may be used to make this calculation. Example 7: Same as Example 6. The investigator obtains the help of ORIP to run the data through the EEOSTATSQUARE computer program. The following result indicates that the actual number of blacks with salaries below the median was thirteen (13), but the expected number was slightly less than nine (9). The difference between the expected number and the actual number is statistically significant because the Fishers Exact probability value is less than 0.05. If no statistically significant group-wide pattern is present, the investigator should determine whether reasonable cause exists based only on non-statistical evidence ( seesupra 10-III A.2). If the statistical analysis above does produce a statistically significant compensation pattern, the investigator should ask the employer to provide an explanation for the pattern so that a more sophisticated statistical analysis can be performed that takes account of the respondents explanation. ค Using More Sophisticated Statistical Techniques to Evaluate Respondents Explanation A respondents failure to provide an explanation for a statistically significant pay pattern should result in a cause finding. More typically, a respondent will have asserted that pay disparities are caused by nondiscriminatory factors. Such factors could include the employees education, work experience with previous employers, seniority in the job, time in a particular salary grade, performance ratings, and others. The Commission will need accurate information about all the variables on which the employer relies, for each employee similarly situated to the charging party. The employer should be asked to provide and explain all of its reasons for a compensation differential to reduce the need for burdensome repetitive requests. Once a respondent provides one or more legitimate nondiscriminatory reasons for a statistically significant compensation pattern, the reasons must be analyzed to determine whether they explain the compensation disparity. The investigator should contact ORIP or RAS to consider more sophisticated statistical tests for this purpose, including multivariate analyses. A multivariate analysis shows the extent of the relationship between one or more independent factors (e. g. race, length of service, performance rating) and one dependent factor (e. g. compensation). The ultimate question is whether employees protected status has a statistically significant relationship to their compensation even after taking into account other factors that, according to the respondent, affect compensation. If a respondent prepares and submits a statistical analysis of its own purporting to explain pay disparities in nondiscriminatory terms, the investigator should call ORIP or RAS to evaluate the respondents analysis. Example 8: CP, an African-American financial assistant in an investment firm, alleges that she receives lower pay than similarly situated employees who are not African American. The investigator obtains detailed information about the jobs that CP identifies as similar, determines which ones can be compared for Title VII purposes, and then requests the salary and race of all employees in those jobs. The investigator performs the threshold statistical test to determine whether a statistically significant difference in compensation patterns exists. The investigator first calculates the median salary, which is 42,000. Fifty-five (55) out of seventy-five (75) African American employees, and thirty - six (36) out of one hundred twenty (120) employees not African American earn less than the median. The investigator then uses the EEOSTATSQUARE program to discover that the difference between the expected and actual number of African Americans whose salaries are at or below the median salary of all comparators is statistically significant. The investigator asks the employer to explain the pay disparity. The respondent alleges that the pay differential is attributable to differences in length of service, education, and performance. After consulting with RAS, the investigator asks the respondent to provide data on each of these factors for all the comparators. RAS performs additional statistical tests and concludes that the compensation factors proffered by the respondent do not satisfactorily account for the pay differential. The investigator therefore relies on RASs statistical analysis in making the cause determination. B. Disparate Impact Disparate impact analysis is aimed at practices that are fair in form, but discriminatory in operation. (33) It is another analytical tool for determining whether compensation discrimination has occurred. (34) The focus in a disparate impact analysis is whether a neutral compensation practice or policy disadvantages employees in a protected class. In the area of compensation, practices that may fall within disparate impact analysis include: educational requirements, performance appraisals, examinations, qualification standards, and other practices or policies. A disparate impact analysis can rely on the same statistical methods described above with respect to disparate treatment. Under the disparate impact method, the investigator must attempt to determine what particular practice or policy caused the impact. For example, if an employer provides extra compensation to employees who are the head of household -- i. e. married with dependents and the primary financial contributor to the household -- that policy may have a disparate impact on women. Where the elements of the respondents decisionmaking process cannot be separated for analysis, the investigator may analyze the decisionmaking process as one unified employment practice. (35) For example, it may be impossible to identify the particular cause of the disparate impact where the employer destroyed or otherwise failed to keep required records related to its compensation decisions. Once a disparate impact has been established, the investigator should determine whether the challenged compensation practice or policy is job related for the position in question and consistent with business necessity. (36) If it is not, then the investigator should find cause. Even if the compensation practice or policy is job-related and consistent with business necessity, the investigator should determine whether there are one or more alternative practices that serve the employers business need without a disparate impact on the protected class. Example 9: CP, a janitor, files a charge alleging discriminatory pay because he is Hispanic. The investigation reveals that Rs policy is to pay janitorial employees with a high school diploma a higher salary than those without a high school diploma. The investigator determines through statistical data that the high school degree requirement has a disparate impact on Hispanics. The investigator also determines that the higher salary does not correlate with any difference in duties or responsibilities, and therefore is not job related and consistent with business necessity. Therefore cause is found. C. Non-base Compensation Base salaries or wages often make up only part of the compensation package for employees. Employee compensation also can consist of stock options, bonuses, perquisites, and other payments made as remuneration for employment. Non-base compensation can be discriminatory even if base compensation is not. Non-base compensation items -- such as bonuses, commissions, and perquisites -- usually are a function of an employer policy defining who is eligible to receive them, and in what amount. As a result, the job content of particular jobs likely will be irrelevant in defining the pool of employees who are similarly situated to the charging party. Instead, investigators should examine the employers policy to identify those to whom the employer makes the benefit available. The investigation should focus on whether the employers policy is non-discriminatory in design and application. There are two issues the investigator should explore: (1) how the respondent applies the eligibility criteria for non-base compensation to persons inside and outside the protected class and (2) whether, among those eligible for the non-base compensation, persons inside and outside the protected class receive non-base compensation in nondiscriminatory amounts. 1. Eligibility If all employees are eligible for the same non-base compensation, then no potential exists for discriminatory application of eligibility standards. However, if some employees are not eligible for the same non-base compensation, then the investigator should determine whether, for each type of non-base compensation at issue, the eligibility standards are applied consistently and without regard to the protected characteristic involved (e. g. sex). The statistical methods discussed earlier in this Manual Section can be used to analyze eligibility criteria under the disparate treatment or disparate impact methods of proof, as appropriate. Example 10: CP, an economist at a management consulting firm, files a charge alleging that she has been denied participation in Rs bonus program because of her sex. The investigation reveals that R limits participation in its bonus program to management consultants, and that no economists at the firm, including males, participate in Rs bonus program. The charge should be dismissed without a cause finding because nondiscriminatory eligibility standards explain why CP does not participate in Rs bonus program. Example 11: Another charge is filed against R, the management consulting firm in Example 10, this time by a female management consultant who alleges that her bonuses over the last two years have been less than those of her male counterparts. R has one hundred fifty (150) consultants on staff. R operates a two-part cash bonus system for consultants. Half of each consultants bonus is based on the firms profitability. This portion of each consultants bonus is always the same as that of the other consultants. The other half of each consultants bonus is based on his or her personal performance as measured against predetermined criteria. The investigator concludes that every consultant is eligible to participate in Rs bonus system and theoretically is eligible for the same bonuses. The investigator next must determine whether the amount of each persons bonus is nondiscriminatory (see Example 12). Even if the respondents eligibility standards for non-base compensation are nondiscriminatory in design and application, the amount of non-base compensation paid to the charging party and other members of the protected class still could be discriminatory. Therefore, the investigator should determine whether, among the eligible employees, those in the protected class receive the non-base compensation at issue in the same amount as those outside the protected class -- and, if not, whether the disparity is attributable to discrimination. Again, the statistical methods discussed earlier in this Manual Section can be used here. Example 12: Same as Example 11. The investigator obtains the help of ORIP to analyze Rs bonus system using statistics. That analysis shows a statistically significant difference between the expected and actual number of female consultants whose bonuses are less than the median. R asserts that the difference is attributable to performance. The investigator obtains performance records for the comparator group and ORIP performs additional statistical tests comparing bonus amounts by sex, controlling for performance. The analysis reveals that the sex of employees has a statistically significant relationship to their bonus amounts even when taking performance appraisals into account. Non-statistical evidence does not dispel the inference of discrimination and the investigator finds cause. Example 13: R, a thriving computer software company, has an incentive program by which employees receive bonuses in the form of stock options. The stock options give employees the right, after a three-year vesting period, to buy company stock at the market price at the time the bonuses were awarded. All programmers are eligible for the program. CP, a Hispanic programmer, files a charge against R alleging that he received fewer stock options in year 20XX than employees who are not Hispanic. R provides evidence that the number of stock options granted to each programmer is tied to the sales of the software packages for which the programmer is responsible. R also demonstrates that other Hispanics working on projects different than CPs received more stock options than CP and non-Hispanic programmers working on CPs project. The investigator finds no evidence that Rs explanation is not credible. Therefore, the charge should be dismissed without a cause finding. D. Discriminatory Practices Affecting Compensation Compensation disparities also can arise because of discriminatory practices that affect compensation indirectly. For example, the so-called glass ceiling phenomenon -- i. e. artificial barriers to the advancement of individuals within protected classes -- can depress the compensation of members of protected classes. These types of unlawful practices can include, for example, discriminatory promotion decisions, performance appraisals, procedures for assigning work, or training opportunities, or a company practice of steering protected class members into low paying jobs or limiting their opportunity to transfer to better jobs. (37) These practices violate Title VII, the ADEA, and the ADA in their own right, in addition to affecting employee compensation. Thus, when investigating a charge of compensation discrimination, the investigator also should be alert to evidence that the respondent has violated Title VII, the ADEA, or the ADA by engaging in glass-ceiling type practices. (38) Example 14: CP, a Hispanic administrative assistant, filed a charge alleging that she receives less pay than the office manager even though in her opinion they perform similar work. The investigator concludes that CP is not similarly situated to the office manager due to the difference in responsibility associated with the jobs. Nevertheless, the investigation reveals that all but one of Rs Hispanic employees hold lower paying clerical, secretarial, and low-level administrative positions. Many of these employees testified to the lack of promotional opportunities into higher paying jobs. R asserted that it does not employ Hispanics in higher paying jobs because of a lack of qualified applicants. The investigator determines that qualified Hispanic employees have applied for these jobs but nearly all, like CP, have not been promoted. Cause is therefore found with respect to steering Hispanics into the lower-paying positions and denying them promotions. Example 15: CP (female) has worked six months in Rs human resources department as a recruiter when she files a charge alleging that she receives a lower salary than a male counterpart. The investigator analyzes the two jobs and concludes that they are not similar because CP recruits for low level positions whereas the male recruits for upper level positions and thus has more responsibility. However, the investigation also reveals that at the same time CP applied for a job in Rs human resources department, she also applied for an opening in Rs marketing department. CP was qualified for both jobs, but the marketing job was her first choice. The investigator obtains an e-mail authored by the person who rejected CP for the marketing job that states that CP is a better fit for human resources because women tend not to be assertive enough for the marketing department. The investigator also uncovers, through further investigation, evidence that other women were unlawfully steered away from jobs in line departments to less lucrative jobs in support departments such as human resources. Based on this evidence, the investigator finds cause to believe that R had a practice of unlawfully steering women into lower-paying jobs. 10-IV COMPENSATION DISCRIMINATION IN VIOLATION OF THE EQUAL PAY ACT In addition to Title VII, the ADEA, and the ADA, the Equal Pay Act (EPA) also prohibits discrimination in compensation. Because of this overlap, enforcement staff may refer to the applicable analysis in 10-III, including the discussion on statistical analysis, when analyzing EPA complaints. The EPA, however, is a different statute with its own scheme. Moreover, it is targeted only at pay discrimination between men and women performing substantially equal work in the same establishment. A. Expeditious Investigation Required An individual alleging a violation of the EPA may go directly to court and is not required to file an EEOC charge beforehand. The time limit for filing an EPA charge with the EEOC and the time limit for going to court are the same: within two years of the alleged unlawful compensation practice (39) or, in the case of a willful violation, within three years. The filing of an EPA charge does not toll the time frame for going to court. Investigations thus should be completed well before the time limit expires, so that the charging party andor the Commission will be able to bring a timely lawsuit with the benefit of a completed investigation. In addition, the EPA limits the recovery of back pay to two years (or three years if the violation was willful) before the filing of suit or the end of successful conciliation. The back pay period will be a rolling two - or three-year window, with each added day of investigation moving the back pay period forward one day, resulting in lower relief for a charging party. Therefore, each added day of investigation will directly impact the bottom-line relief for the charging party. B. Elements of Claim The elements of an EPA claim are as follows: Prima Facie Case: (1) the complainant receives a lower wage than paid to an employee of the opposite sex in the same establishment and (2) the employees perform substantially equal work (in terms of skill, effort, and responsibility) under similar working conditions. Affirmative Defense: If the respondent cannot defeat the showing of unequal pay for substantially equal work, it must prove that the compensation difference is based on a seniority, merit, or incentive system, or on any other factor other than sex. The models of proof under Title VII, the ADEA, and the ADA do not apply to the EPA. The complainant need only demonstrate a sex-based wage disparity in substantially equal jobs in the same establishment. If the employer cannot rebut that showing, it must prove that the wage disparity is based on one of the four affirmative defenses. C. Definition of Wages and Wage Rate The term wages encompasses all forms of compensation, including fringe benefits. Wage rate is the measure by which an employees wage is determined. Wages include all payments made to or on behalf of an employee as remuneration for employment. (40) The term encompasses all forms of compensation, including fringe benefits. Wages include payments whether paid periodically or at a later date, and include (but are not limited to) wages, salary, overtime pay bonuses vacation or holiday pay cleaning or gasoline allowances hotel accommodations use of company car medical, hospital, accident, life insurance retirement benefits stock options, profit sharing, or bonus plans reimbursement for travel expenses, expense account, and benefits. Thus, for example, if male and female employees performing substantially equal work receive equal salaries but unequal fringe benefits, an EPA violation can be established. Wage rate is the measure by which an employees compensation is determined. It encompasses rates of pay calculated on a time, commission, piece, job incentive, profit sharing, bonus, or other basis. An employer that pays different wages to a male than to a female performing substantially equal work does not violate the EPA if the wage rate is the same. For example, if a male and a female employee performing substantially equal sales jobs are paid on the basis of the same commission rate, then a difference in the total commissions earned by the two workers would not violate the Act. Conversely, if the commission rates are different, then a prima facie violation could be established even if the total compensation earned by both workers is the same. (41) Equal wages must be paid in the same form. For example, a male and female who are paid on an hourly basis for substantially equal work must receive the same hourly wage. The employer cannot pay a higher hourly wage to one of those employees and then attempt to equalize the difference by periodically paying a bonus to the employee of the opposite sex. Example 16: A male tennis instructor and a female tennis instructor at a particular health club provide tennis lessons that are substantially equal. The male instructor is paid a weekly salary, but the female instructor is paid by the lesson. Even if the two instructors receive essentially the same pay per week, there is a violation because the male and female are not paid in the same form for substantially equal work. D. Definition of Establishment Establishment ordinarily means a physically separate place of business. Two or more physically separate portions of a business should be considered one establishment if personnel and pay decisions are determined centrally and the operations of the separate units are interconnected. The prohibition against compensation discrimination under the EPA applies to jobs within any establishment. An establishment is a distinct physical place of business rather than. an entire business or enterprise which may include several separate places of business. (42) For example, separate facilities of a chain store generally cannot be compared to each other. (43) In certain circumstances, however, physically separate places of business should be treated as one establishment. This would be the case if a central administrative unit hires the employees, sets the compensation, and assigns work locations. (44) Example 17 . CP, a school teacher, alleges that she is paid less than a male teacher who performs equal work in the same school district. The school district asserts that their compensation cannot be compared under the EPA because they work in different schools. The investigation determines that the school district is a single establishment because hiring, assignments of teachers, and compensation rates are determined centrally, and personnel are sometimes reassigned to different schools. Therefore, the compensation rates of the two teachers can be compared. Example 18: CP, a female, works for a computer services firm that has offices in numerous cities. She alleges that she is paid less than a male who performs the same job in a different branch office. The employer claims that the separate offices are separate establishments and that, therefore, the compensation rates in each office cannot be compared. The evidence shows that while the headquarters of the company exercises some control over the branches, the specific salaries offered to job applicants are determined by supervisors in each local office. The local offices therefore constitute separate establishments, and CPs salary cannot be compared to the salary of an employee in a different office. In narrow circumstances two or more portions of a business enterprise that are located in a single place of business may constitute separate establishments. This would be the case if, for example, portions of the enterprise are physically segregated, engage in functionally separate operations, and have separate administrative structures, employees, and record keeping. E. Prima facie Case: Appropriate Comparison 1. Opposite-Sex Comparators A prima facie EPA violation is established by showing that a male and a female receive unequal compensation for substantially equal jobs within the same establishment. A complainant cannot compare herself or himself to a hypothetical male or female rather, the complainant must show that a specific employee of the opposite sex earned higher compensation for a substantially equal job. There is no requirement that the complainant show a pattern of sex-based compensation disparities in a job category. (45) In other words, if a woman is paid less than male employees performing the same work, the lack of other women with low salaries in the job category does not preclude finding an EPA violation as to the complainant. However, the employers treatment of other women is relevant to the complainants case -- if other women are paid the same as or more than males, this may indicate that a factor other than sex explains the complainants compensation. (46) The comparators need not have held their jobs at the same time. For example, a prima facie violation of the EPA can be established if a male employee is replaced with a lower paid female, or a female employee is replaced with a higher paid male. On the other hand, if there have never been any men performing substantially the same work as women in a work establishment, or vice versa, it is not possible to establish an EPA violation. (47) 2. Comparison of Work The important comparison in determining whether the equal work requirement is met is the comparison of the jobs, not the people performing the jobs. Thus, a difference between the comparators has no bearing on whether the jobs are equal. The critical question at this point in the analysis is whether the jobs involve equal work. However, a difference between the comparators could qualify as a defense to a compensation disparity. Such defenses are explained later in this Manual Section. (48) The EPA speaks in terms of equal work, but the word equal in the EPA does not require that the jobs that are compared be identical, only that they be substantially equal. Thus, minor differences in the job duties, or the skill, effort, or responsibility required for the jobs will not render the work unequal. In comparing two jobs for purposes of the EPA, consideration should be given to the actual duties that the employees are required to perform. Job content . not job titles or classifications, determines the equality of jobs. (49) The fact that jobs are in different departments is not determinative, although in some cases it may be indicative of a difference in job content. (50) In evaluating whether two jobs are substantially equal, an inquiry should first be made as to whether the jobs have the same common core of tasks, i. e. whether a significant portion of the tasks performed is the same. (51) If the common core of tasks is not substantially the same, no further examination is needed and no causecan be found on the EPA violation. (52) If a significant portion of the tasks performed in the two jobs is the same, an inquiry should be made as to whether the comparators perform extra duties which make the work substantially different. Jobs with the same common core of tasks are equal, even though the comparators perform extra duties, if the extra duties are insubstantial. (53) Example 19: CP, a college teacher, alleges that she is paid less than a male teacher in the same school, in violation of the EPA. The school alleges that their jobs are not equal because the male teacher has a heavier load of courses. The evidence shows, however, that the only difference in workload is that the male teacher gives an occasional additional lecture. This difference is not significant enough to defeat a finding that the jobs are substantially equal. Example 20: CP manages insurance claims for an insurance brokerage firm. She investigates claims, submits claims to insurance companies, and advises clients with respect to their claims. CP alleges that she is paid less than male account executives in violation of the EPA. The male comparators do brokerage work, negotiating appropriate insurance coverage between insurance carriers and the firms clients. CP does not do brokerage work and the male comparators do not manage claims. The differences in job tasks render the two jobs unequal. If the jobs to be compared share the same common core of tasks, consideration should be given to whether, in terms of overall job content, the jobs require substantially equal skill, effort, and responsibility and whether the working conditions are similar. Skill is measured by factors such as the experience, ability, education, and training required to perform a job. Two jobs require equal skill for purposes of the EPA if the experience, ability, education, and training required are substantially the same for each job. (54) In comparing the skill required to perform two jobs, the characteristics of the jobs should be compared. Possession of a skill not needed to meet the requirements of the job should not be considered. (55) If two jobs generally share a common core of tasks, the fact that one of the jobs includes certain duties that entail a lower level of skill would not defeat a finding that the jobs are equal. For example, if two people work as bookkeepers, and one of the individuals performs clerical duties in addition to bookkeeping tasks, the skill required to perform the two jobs would be substantially equal. On the other hand, if the jobs require different experience, ability, education, or training, then the jobs are not equal. For example, a vice president of a trade association could not show that her work was equal to the work performed by other vice presidents, where they performed key policymaking for the association, a skill that her position did not require. (56) The proper analysis is the functional one -- the analysis of the skills the jobs actually require. Example 21: CP, a hotel clerk, alleges that she is paid less than a male who performs substantially equal work. CP only has a high school degree, while the male comparator has a college degree. However, performance of the two jobs requires the same education, ability, experience, and training. A college degree is not needed to perform either job. Therefore, the skill required to perform the two jobs is substantially equal. Example 22: CP, a male, works for a telephone company diagnosing problems with customer lines. He alleges that he is paid less than hisfemale predecessor in violation of the EPA. The evidence shows that the job of CPs predecessor required expert training in diagnostic techniques and a high degree of specialized computer skill. The respondent switched to a newer, more advanced computer testing system after CPs predecessor resigned. The job now requires much less overall skill, including computer skill, than was required when CPs predecessor held it. Therefore, the skill is not equal, and no violation is found. Example 23: CP, a sales person in the womens clothing department of the respondents store, alleges that she is paid less than a male sales person in the mens clothing department. The respondent asserts that differences in skills required for the two jobs make them unequal. The investigation reveals, however, that the sale of clothing in the two departments requires the same skills: customer contact, fitting, knowledge of products, and inventory control. Therefore, the skill required for the two jobs is substantially equal. Effort is the amount of physical or mental exertion needed to perform a job. Job factors that cause physical or mental fatigue or stress are to be considered in determining the effort required for a job. Differences in the kind of effort exerted do not justify a compensation differential if the amount of effort is substantially the same. Example 24: CP alleges that she and other female grocery store workers are paid less than males who perform substantially equal work. Most of the tasks performed by the males and females are the same. In addition to those same tasks, the male employees place heavy items on the store shelves, while the female employees arrange displays of small items. The extra task performed by the men requires greater physical effort, but the extra task performed by the women is more repetitive, making the amount of effort required to perform the jobs substantially the same. Example 25: Same as Example 24, except two of the male grocery store workers also regularly haul heavy crates from trucks into the store. In this case, the employer can lawfully pay a higher rate to the persons who perform the extra task. On the other hand, a violation would be found if all males receive higher compensation based on the extra effort required for only some of the males jobs. ค Responsibility Responsibility is the degree of accountability required in performing a job. Factors to be considered in determining the level of responsibility in a job include: the extent to which the employee works without supervision the extent to which the employee exercises supervisory functions and the impact of the employees exercise of his or her job functions on the employers business. Differences in job responsibilities do not depend on job titles. Thus, designation of an employee as a supervisor will not, by itself, defeat a comparison under the EPA with an employee who is not designated as such. Moreover, the mere fact that an employee has assistants does not necessarily demonstrate that he or she has a more responsible position than one who does not have assistants. In addition, investigators should consider whether employees of the lower paid sex are being discriminatorily denied the opportunity to assume the additional responsibilities borne by the employees of the higher paid sex. (57)If one employee in a group performing otherwise equal jobs is given a different task that requires a significant degree of responsibility, then the level of responsibility in that persons job is not equal to the others. (58) Example 26: CP, a female sales clerk, claims that a male sales clerk performs substantially equal work for higher compensation. The evidence shows that the male comparator, in addition to performing the tasks that CP performs, is solely responsible for determining whether to accept personal checks from customers. That extra duty is significant because of potential losses if bad checks are accepted. The two jobs are not substantially equal due to the difference in responsibility. Example 27: Same as Example 26, except that CP, her male comparator, and the other sales clerks rotate handling the additional responsibility of determining whether to accept personal checks. In this case, the jobs are substantially equal. Example 28: Same as Example 26, except the only difference in responsibility between the jobs of CP and her comparator is that the comparator occasionally is given the responsibility for performing a walk around inside the building at the end of the day to make sure nothing is out of the ordinary. In this case, the jobs are substantially equal because the difference in responsibility is minor. d Working Conditions Working conditions consist of two factors: Surroundings take into account the intensity and frequency of environmental elements encountered in the job, such as heat, cold, wetness, noise, fumes, odors, dust, and ventilation. Hazards take into account the number and frequency of physical hazards and the severity of injury they can cause. The time of day or night in which each of the jobs is performed is not a working condition for purposes of determining whether the jobs are substantially equal within the meaning of the EPA. (59) The fact that jobs are performed in different physical surroundings does not necessarily defeat a finding that the working conditions are similar. (60) Comparability of working conditions is measured by a more flexible standard than skill, effort, or responsibility, because the statute only requires that the working conditions be similar, not equal. Similarity of working conditions is seldom in dispute because employees who perform jobs requiring substantially equal skill, effort, and responsibility are likely to be performing them under similar working conditions. Example 29: R is a company that occupies a large office park. CP, a female, delivers intra-office mail for R. CP files a charge alleging she is being paid less than a male who also delivers mail. The investigator discovers, however, that the males job involves extended periods of time outside, carrying mail between buildings in the office park, often under extreme weather conditions (heat in the summer cold and snow in the winter). CP, on the other hand, delivers mail only within one building. There is no evidence that the company bars women, including CP, from obtaining the more lucrative position when there is an opening. The investigator determines that the jobs are not equal because of different working conditions (there may also be a difference in the effort required in the two jobs). F. Defenses If the evidence establishes a prima facie violation of the EPA, then the employer must prove that the compensation disparity is based on one of the four affirmative defenses in the statute. The burden is a heavy one, because the employer must show that sex played no part in the compensation differential. EPA Defenses A sex-based compensation difference in substantially equal jobs is justified if it is based on: 1. Seniority, Merit, or Incentive System Must Be Bona Fide An employer may lawfully compensate employees differently on the basis of a bona fide seniority, merit, or incentive system. A seniority system rewards employees according to the length of their employment. A merit system rewards employees for exceptional job performance. An incentive system provides compensation on the basis of the quality or quantity of production. To be a bona fide system, it must not have been adopted with discriminatory intent it must be based on predetermined criteria it must have been communicated to employees and it must have been applied consistently and even-handedly to employees of both sexes. Seniority, Merit, or Incentive System Defense A seniority, merit, or incentive system must be bona fide to operate as an EPA defense. This means it: was not adopted with discriminatory intent is an established system containing predetermined criteria for measuring seniority, merit, or productivity has been communicated to employees has been consistently and even-handedly applied to employees of both sexes and is in fact the basis for the compensation differential. A seniority system allocates rights, benefits, and compensation according to length of employment. It should be consistently applied to all employees unless there are defined exceptions which are known and understood by the employees. A merit system, to operate as a defense, must be a structured procedure in which employees are evaluated at regular intervals according to predetermined criteria, such as efficiency, accuracy, and ability. (61) The merit system can be based on an objective measurement such as a test, or a subjective rating. However, a merit system that is subjective should be strictly scrutinized to assure that it is consistently applied. (62) Example 30: CP, a bank teller, alleges that she is paid less than a male bank teller who performs the same job. The respondent claims that the compensation disparity is justified because wages are paid under a merit system. That alleged merit system is unstructured, based on a managers gut feeling. Furthermore, the respondent offers no objective evidence to support CPs lower compensation under its merit system. In this case, the merit system is not bona fide and does not justify the compensation disparity. Example 31: Same as Example 30, except that the respondent proves that its merit system is a systematic and formal process that was communicated to employees and is guided by sex-neutral, objective standards. The respondent also proves that under its merit system, the comparators work performance merited higher compensation than CPs. In this case, the merit system justifies the compensation disparity. An incentive or productivity system is designed to encourage employees to work more productively and efficiently. For example, an employer might pay word processors a certain amount of money for every document produced. Similarly, a store may pay sales people by commission, based on their volume of sales. A seniority, merit, or incentive system operates as a defense only to the extent that it accounts for the compensation disparity. Example 32: CP, a high school teacher, alleges that she is paid 5,000 less than a male teacher who performs substantially equal work. The respondent states that the compensation difference is due to its seniority system and that the male teacher has greater seniority. The investigation reveals that the male has worked at the school three years longer than CP, which would only justify a 3,000 difference in pay under the seniority system. An EPA violation is found. Example 33: Same as Example 32, except there is a 10,000 pay disparity. The respondent asserts that the disparity is caused by both its seniority system and its merit system. Again, the investigation reveals that seniority accounts for about a 3,000 difference in pay. The investigator also determines that the respondent in fact does have a merit system, and it appears bona fide. But CPs merit increases have been about the same as those of the male comparator, so differences in merit do not explain the remaining 7,000 gap in pay. An EPA violation is found. 2. Factor Other Than Sex The EPA permits a compensation differential based on a factor other than sex. (63) While this defense encompasses a wide array of possible factors, the employer must establish that a gender-neutral factor, applied consistently, in fact explains the compensation disparity. (64) An employer asserting a factor other than sex defense also must show that the factor is related to job requirements or otherwise is beneficial to the employers business. (65) Moreover, the factor must be used reasonably in light of the employers stated business purpose as well as its other practices. (66) The following are examples of justifications that employers have asserted as factors other than sex, along with a discussion of the appropriate analysis: a. Education, Experience, Training, and Ability While the relative education, experience, training, andor ability of individual jobholders are not relevant to determining whether their jobs require equal skill, these factors can, in some cases, justify a compensation disparity. Employers can offer higher compensation to applicants and employees who have greater education, experience, training, or ability where the qualification is related to job performance or otherwise benefits the employers business. (67) Such a qualification would not justify higher compensation if the employer was not aware of it when it set the compensation, or if the employer does not consistently rely on such a qualification. (68) Furthermore, the difference in education, experience, training, or ability must correspond to the compensation disparity. Thus, a very slight difference in experience would not justify a significant compensation disparity. Moreover, continued reliance on pre-hire qualifications is less reasonable the longer the lower paid employee has performed at a level substantially equal to, or greater than, his or her counterpart. (69) Example 34: CP had been employed as an office manager. Her starting salary was 42,000. She resigned one year later. Her male successor was hired at a starting salary of 50,000. CP filed a charge claiming that the difference in starting salaries violated the EPA. The employer proves that the salary difference was based on the successors extensive experience as an office manager, as compared to CPs lack of any job-related experience. The difference in experience qualifies as a factor other than sex justifying the compensation disparity. Example 35: Same as Example 34, except that the evidence shows that the employer relies inconsistently on work experience in setting salaries for office manager jobs, and that males who lacked experience were offered higher starting salaries than CP. A violation of the EPA is found. Example 36: Same as Example 34, except that CP did have job-related experience, though her successor had a slightly greater amount of experience. The difference in their experience was not commensurate with the 8,000 difference in starting salaries, and therefore a violation of the EPA is found. ข Participation in Training Program A compensation disparity attributable to participation in a bona fide training program is permissible. While an organization might offer numerous types of training programs, a bona fide training program that can justify a compensation disparity must be a structured one with a specific course of activity. Elements of a legitimate training program include: (1) employees in the program are aware that they are trainees (2) the training program is open to both sexes and (3) the employer identifies the position to be held at the programs completion. (70) If the training involves rotation through different jobs, the compensation of an employee in such a training program need not be revised each time he or she rotates through jobs of different skill levels. Example 37: CP, a bank teller, alleges that she is paid less than a male bank teller who performs substantially equal work. The respondent alleges that the male comparator is a participant in a management training program that is open to both sexes. The evidence shows, however, that the program is not bona fide because it is not a formal one, no other employees are identified as participants in the program, and the comparator does not receive any formal instruction or even know that he is in a management training program. An EPA violation therefore is found. ค Shift Differential While a difference between night and day work is not a difference in working conditions, it could constitute a factor other than sex that justifies a compensation differential. A shift differential operates as a defense only if both sexes have an equal opportunity to work either shift, if sex was not the reason the employer established the compensation differential, and if there is a business purpose that the shift differential is being used reasonably to serve. Example 38: CP, a female security guard, gets paid less than male security guards whose jobs are substantially equal to CPs job in terms of skill, effort, responsibility, and similar working conditions. The male comparators work night shifts, while CP works a day shift, and the respondents pay scale provides for higher compensation for night shift jobs. Other male security guards who work day shifts get paid the same rate as CP. There is no evidence that the pay differential had its origins in discrimination, that sex plays any role in shift assignments, or that women are steered to the lower paying shift. Rs justification for the differential is that it pays a premium for night shift work because it is less desirable and a harder shift for which to recruit employees. The charge is dismissed without a finding of an EPA violation. d Job Classification Systems An employers assertion that its compensation rates are based on a job classification system does not, by itself, justify a compensation disparity between men and women performing substantially equal work. The employer must prove that the job classification system accurately reflects job duties andor job-related employee qualifications and is uniformly applied to men and women. (71) For example, a store might have a job classification system under which head cashiers are paid more than cashiers. If the classification system accurately reflects job duties andor job-related employee qualifications, the compensation disparity is justified. (72) Example 39: CP works as a cleaner in an elementary school. Most of the cleaners are female. CP establishes that her job is substantially equal to that of custodians in the school who are paid more and who are mostly male. The school fails to prove that the different classifications for the two jobs accurately reflect differences in job duties or job-related employee qualifications. Therefore, an EPA violation is found. อี Red Circle Rates Temporary Reassignments Red circling means that an employee is paid a higher than normal compensation rate for a particular reason. Such a practice does not violate the EPA if sex is not a factor and it is supported by a valid business reason. For example, an employer might transfer a long-time employee who can no longer perform his regular duties because of deteriorating health to an otherwise lower paid job, but maintain the employees higher salary in gratitude for his long tenure of service. Similarly, an employer might assign employees in skilled jobs to less demanding work temporarily until the need for the higher skill arises again. As with all factors other than sex, the investigator should determine whether the red-circle rate is consistent with the respondents business justification or whether, instead, the employers reason is pretextual. If the red-circling defense is satisfied, the employer may continue to pay the employees their original salaries, even though opposite sex employees perform the same work for lower pay. (73) An employer may temporarily assign an employee to work in a higher paid job, without changing his or her compensation. However, investigators should scrutinize such situations to determine whether sex is the real reason for the differential. See 29 C. F.R. 1620.26(b). ฉ Revenue Production An employer may be able to justify a compensation disparity by proving that the higher paid employee generates more revenue for the employer than the lower paid employee. (74) However, the Commission will scrutinize this defense carefully to determine whether the employer has provided reduced support for revenue production to the lower paid employee. If that is the case, then the difference in revenue will not justify the compensation disparity. Furthermore, a mere assumption that the higher paid employee will produce greater revenue will not justify the compensation disparity. Example 40: CP, an associate attorney at a mid-size law firm, claims that she was hired at a lower starting salary than a male attorney who performs the same work. The employer proves that it offered a higher salary to the male because he brought clients to the firm who generated substantial revenue, while CP brought in no clients. This evidence establishes that a factor other than sex justified the compensation disparity. Example 41: Same as Example 40, except neither CP nor her male comparator brought clients to the firm at the time they were hired. But in the four years since their hire, the male comparator has generated more revenue than CP due to cultivating a better relationship with the firms clients, bringing in a couple clients of his own, and consistently producing more billable hours than CP. The investigation reveals, however, that the firm has given the male attorney more exposure to firm clients (e. g. more chances to work one-on-one with clients), and provided the male attorney more opportunities to speak at legal seminars, giving him valuable exposure to potential clients. The evidence also shows that the firms partners provide CP with less complex work, exacerbating the difference in billable hours. In this variation of the example, revenue production is not a valid factor other than sex. ก. Market Factors Employers have sometimes asserted that they must pay more to a male employee than a female employee performing the same job because of the male employees market value. Of course, payment of lower wages to women based on an assumption that women are available for employment at lower compensation rates does not qualify as a factor other than sex that would justify unequal compensation for substantially equal work. (75) As one court stated, the argument that supply and demand dictates that women qua women may be paid less is exactly the kind of evil that the EPA was designed to eliminate, and has been rejected. (76) Market value qualifies as a factor other than sex only if the employer proves that it assessed the marketplace value of the particular individuals job-related qualifications, and that any compensation disparity is not based on sex. Prior salary cannot, by itself, justify a compensation disparity. This is because prior salaries of job candidates can reflect sex-based compensation discrimination. Thus, permitting prior salary alone as a justification for a compensation disparity would swallow up the rule and inequality in compensation among genders would be perpetuated. (77) However, if the employer can prove that sex was not a factor in its consideration of prior salary, and that other factors were also considered, then the justification can succeed. (78) The employer could, for example, show that it: (1) determined that the prior salary accurately reflected the employees ability based on his or her job-related qualifications and (2) considered the prior salary, but did not rely solely on it in setting the employees current salary. If the employer did not bargain with the higher-paid comparator it will cast doubt on the employers argument that it had to offer a higher salary to compete for himher. And even if there was bargaining, the investigator should consider whether the employer bargains differently with men than with women (e. g. responds more favorably to mens demands than to womens demands). Example 42: CP, a certified public accountant (CPA), claims that R accounting firm violated the EPA by offering her a lower starting salary than it offered a male CPA. R proves that it offered a higher salary to the male because he had very favorable job references based on his productivity and successful track record in providing tax advice to clients he received other job offers at the higher salary and he relied on those job offers as a bargaining tool for negotiating the higher salary. R began salary discussions with CP with the same opening offer as given to the male, and indicated it was willing to go higher if necessary. But CP did not bargain as assertively as the male CPA, and ended up with a lower starting salary. There is no evidence that R treated CP any differently than the male in salary negotiations. R has proved that the compensation disparity is based on a factor other than sex, and therefore no EPA violation is found. A difference in the relative market value of employees at the time of their hire may not accurately reflect their relative market value in later years. Thus, if an employee has made out a prima facie case under the EPA, the employers continued reliance on market value to justify the pay disparity should be evaluated to determine whether such reliance is reasonable. ชั่วโมง Part-timeTemporary Job Status Labor force data show that substantially more women than men perform part-time work. (79) Women also disproportionately fill temporary jobs. (80) Thus, payment of disproportionately lower wages and benefits to part-time and temporary workers affects women more than men. For this reason, investigators should scrutinize closely employer assertions of part-time or temporary status as a factor other than sex that explains a compensation disparity. Part-time or temporary status, of course, operates as a defense only if sex was not the reason the employer established the compensation differential and both sexes have an equal opportunity to work under either arrangement (e. g. no evidence of steering). Example 43: CP does editing and proofreading for a company that publishes newsletters. She works 3 days each week, but is paid less than half the salary of full-timers performing the same job. She also receives no health insurance, while full-timers do receive that benefit. CP claims that the disparity between her compensation and that provided to male full-time employees performing the same job violates the EPA. The investigator discovers that all part-timers are women and no part-timers in recent history have moved into full time status, despite numerous attempts. A violation of the EPA is found. The investigator also finds cause to believe the respondent has violated Title VII, both on pure unequal pay grounds ( see 29 C. F.R. 1620.27(a)) and by unlawfully limiting womens access to full time jobs ( see 10-III D.). Like any factor other than sex, if the employee can make out a prima facie case, an employer can justify paying part-time or temporary workers disproportionately less than full-time or permanent workers only if it can show that this justification is related to a legitimate business purpose and is used reasonably in light of that purpose. The classifications part-time or temporary also must be accurate. Thus, if workers designated as part-time work substantially the same number of hours as full-timers, or temporary workers appear not to be temporary, the investigator should not give credence to the employers assertion that these designations satisfy the factor other than sex defense. (81) If a compensation disparity is sex-based, the employer cannot defend the disparity on an assertion that it resulted from an erroneous belief that the jobs in question were different, or general assertions of good faith. (82) However, an employers proof of good-faith and reasonable grounds to believe it did not violate the EPA may serve as a basis for the employer to avoid an award of liquidated damages. ( See infra 10-VI). J Collective Bargaining Agreement An employers assertion that a compensation differential is attributable to a collective bargaining agreement does not constitute a defense under the EPA. If the union contributed to the creation of a compensation differential, the union should be added as a respondent. (83) 10-V INTERACTION OF TITLE VII AND EPA The Bennett Amendment to Title VII sought to reconcile Title VII and the EPA in cases of pay discrimination between men and women. The Bennett Amendment is found in 703(h) of Title VII: It shall not be an unlawful employment practice under this subchapter for an employer to differentiate upon the basis of sex in determining the amount of the wages or compensation paid or to be paid to employees of such employer if such differentiation is authorized by the provisions of section 206(d) of Title 29 the EPA. The Supreme Court in County of Washington v. Gunther . 452 U. S. 161 (1981), interpreted the Bennett Amendment not to incorporate the EPAs equal work requirement in Title VII sex-based wage claims, but to subject such claims to the EPAs four affirmative defenses: seniority system, merit system, a system based on quality or quantity of production or any other factor other than sex. Title VIIs incorporation of the EPAs four affirmative defenses also incorporated the EPAs burden of proof as to each of the EPA defenses, as the employer bears the burden of proof as to the four affirmative defenses under the EPA. (84) The purpose of the Bennett Amendment was to resolve any potential conflicts between Title VII and the Equal Pay Act, (85) and to clarify that the standards of the Equal Pay Act would govern even those wage discrimination cases where only Title VII would otherwise apply. (86) Thus, once the plaintiff makes out a prima facie case of sex-based pay discrimination under Title VII, the employer has the burden of proving one of the four affirmative defenses. (87) However, compensation discrimination on the basis of sex in violation of Title VII does not necessarily constitute a violation of the EPA. This is because Title VII compensation discrimination claims are not limited to claims of unequal pay for equal work. Compensation discrimination in violation of Title VII can be established even if no member of the opposite class holds an equal, higher paying job. Comparisons can be made under Title VII between the compensation rates of similarly situated employees, which is a more relaxed standard than the equal work requirement under the EPA. Furthermore, a Title VII claim can be brought based on an employers segregating or classifying protected class workers in lower paying jobs and limiting their opportunities to secure higher paying jobs. Finally, compensation discrimination claims under Title VII are not restricted to claims in which comparisons are made between jobs in the same establishment, (88) although Title VII does not forbid applying different standards of compensation to employees who work in different locations as long the difference is not the result of discrimination. (89) 10-VI RELIEF If compensation discrimination is found, the investigator should seek appropriate relief. The calculation and formulation of relief can be complicated. ORIP and RAS are available to assist enforcement staff. The remedy should include a salary increase and back pay in the amount of the unlawful difference between the wages of the lower and higher paid comparator(s). (90) It should also include attorneys fees and costs, and appropriate damages. If the violation involved segregated job categories, the employer cannot correct the violation merely by opening the higher-paid category to all. Instead, the pay of the employees in the lower-paid job category must be raised to an equal level, (91) and back pay must be provided. Furthermore, the employer cannot equalize an unlawful compensation differential by periodically paying the underpaid employees bonuses. Because systemic compensation discrimination often is a continuing violation, (92) relief for a systemic violation generally is available for all discriminatory actions that occurred in furtherance of the policy or practice (e. g. each paycheck), including those that occurred outside the charge filing period, subject to generally applicable limitations on remedies. In addition to back pay and a raise, Title VII and the ADA permit recovery of compensatory damages for intentional discrimination and recovery of punitive damages for discrimination that is intentional and engaged in with malice or reckless indifference to the federally protected rights of an individual. 42 U. S.C. 1981a. The ADEA does not allow for compensatory or punitive damages, but does provide for liquidated damages for willful violations. 29 U. S.C. 626(b). The EPA also provides for liquidated damages, at an amount equal to back pay, unless the respondent proves that it acted in good faith and had reasonable grounds to believe that its actions did not violate the EPA. 29 U. S.C. 260. Unlike Title VII, the ADEA, and the ADA, an individual alleging a violation of the EPA may go directly to court without filing an EEOC charge beforehand. Moreover, filing a charge does not toll the time frame for going to court. This means the limitations period continues to run even after the charge has been filed, and during the investigation. Thus, investigators should investigate EPA charges expeditiously so the charging party andor the Commission can file suit with the benefit of a completed investigation, and so that relief for the charging party is not unduly limited. Liquidated damages under the EPA are compensatory in nature. (93) Therefore, in sex-based pay cases under both the EPA and Title VII, a charging party cannot obtain both liquidated damages under the EPA and compensatory damages under Title VII for the same injury because that would amount to a double recovery. Nevertheless, relief should be computed to give each individual the highest benefit which entitlement under either statute would provide. See 29 C. F.R. 1620.27(b). Thus, the charging party may receive the greater of the liquidated damages available under the EPA or compensatory damages available under Title VII. The availability of EPA liquidated damages does not affect the availability of punitive damages under Title VII. Injunctive relief also is available. For example, because the EPA is an amendment to the Fair Labor Standards Act (FLSA), the Commission may seek an injunction against any person for violating the FLSAs so-called hot goods provision. (94) The hot goods provision prohibits any person from transporting or selling goods produced in violation of the EPA. (95) Companies are exempted from the hot goods provision in two circumstances: (1) common carriers transporting in the regular course of their business goods they did not produce and (2) purchasers who acquired goods without notice of a violation and in good faith reliance on a written assurance from the goods producer that they were produced in compliance with the EPA. (96) Thus, if goods were produced in violation of the EPA, the Commission may seek an injunction in federal district court to prevent the respondent, and others not exempt, from transporting or selling the goods in interstate commerce. Example 44: CP, a female sales representative for a thriving pharmaceutical company, establishes that her annual salary is 5,000 less than a male who performs substantially equal work and is otherwise similarly situated. CP and her comparator had both been receiving 5 annual bonuses. Also, the employer makes a 10 matching contribution into sales representatives pension plan. The investigation finds that the compensation disparity violates the EPA and Title VII. The investigator concludes that the EPA violation is willful because the respondent ignored CPs complaints about her compensation. The investigator seeks the following remedies: an increase in CPs salary and benefits to the level of her comparator back pay of 17,250 reflecting the three-year difference in salary, bonuses, and pension contributions (5,000 salary difference 250 bonus difference 500 pension difference, multiplied by three) and liquidated damages of 17,250. CPs total monetary relief, therefore, would equal 34,500. Example 45: Same as Example 44, except CP demonstrates through documentary and medical evidence that she is entitled to 10,000 in Title VII compensatory damages for emotional harm and medical expenses incurred as a result of complaining about her salary disparity but being ignored. However, because EPA liquidated damages are compensatory in nature, and the liquidated damages are greater than the Title VII damages, the investigator pursues the EPA remedy (17,250 in EPA liquidated damages rather than the 10,000 in Title VII compensatory damages). Thus, CP would receive total monetary relief of 34,500, the same amount as in Example 44. Example 46: Same as Example 45, except testimony reveals that CPs manager believed CPs reduced compensation violated Title VII but did not correct it, even in response to CPs numerous complaints. In addition, there was no evidence that the respondent had educated itself or its employees on Title VIIs prohibition against compensation discrimination. Punitive damages are appropriate. Given the character of the respondents discrimination and its good financial condition, punitive damages are assessed at 75,000, which is within the respondents cap. This is in addition to backpay (17,250) and liquidated damages (17,250). CPs total monetary relief would equal 109,500. 10-VII RETALIATION It is unlawful for an employer to retaliate against an employee because he or she opposed compensation discrimination under any of the EEO statutes or participated in complaint proceedings. Although the EPA does not specify that retaliation based on opposition is unlawful, employees are protected against retaliation for making either formal or informal complaints about unequal compensation. (97) Compensatory and punitive damages are available for retaliation claims brought under the EPA and the ADEA, as well as under Title VII and the ADA. Compensatory and punitive damages for retaliation obtained under the EPA and the ADEA are not subject to statutory caps because the EPA and ADEA borrow their remedies provision for retaliation from the Fair Labor Standards Act, which contains no provision capping compensatory or punitive damages for retaliation. 1. See Bureau of Labor Statistics, Department of Labor, Usual Weekly Earnings Summary, Table 1 (July 2000). 4. See Lita Jans and Susan Stoddard, Chartbook on Women and Disability . U. S. Department of Education 23 (1999). 5. Presidents Council of Economic Advisers, Explaining Trends in the Gender Wage Gap (June 1998). 6. Presidents Council of Economic Advisers, Opportunities and Gender Pay Equity in New Economy Occupations (May 2000). 7. Deborah Anderson and David Shapiro, Racial Differences in Access to High-Paying Jobs and the Wage Gap Between Black and White Women . 49 Industrial and Labor Relations Review 273, 278-79 (Jan. 1996). There is evidence, as well, that women of color encounter practices that indirectly affect compensation -- collectively known as the glass ceiling -- at a higher rate than their white counterparts: Although women of color make up 23 of the U. S. womens workforce, they account for only 14 of women in managerial roles. African-American women comprise only 6 of the women in managerial roles. Debra E. Meyerson and Joyce K. Fletcher, A Modest Manifesto for Shattering the Glass Ceiling . Harvard Business Review 136 n.1 (Jan.-Feb. 2000). 8. This Manual Section also applies to federal sector complaints. 9. The Commissions Guidelines on the Equal Pay Act, at 29 C. F.R. Part 1620, remain in force. 10. 42 U. S.C. 2000e-2(a)(1) (Title VII) 29 U. S.C. 623 (a)(1) (ADEA) and 42 U. S.C. 12112(a) (ADA). 12. 29 C. F.R. 1620.27(a). For further discussion of the interaction between Title VII and the EPA, see 10-V of this Manual Section. 13. Compensation has the same meaning as wages under the EPA. The terms include (but are not limited to) payments whether paid periodically or at a later date, and whether called wages, salary, overtime pay bonuses vacation and holiday pay cleaning or gasoline allowances hotel accommodations use of company car medical, hospital, accident, life insurance retirement benefits stock options, profit sharing, or bonus plans reimbursement for travel expenses, expense account, benefits, or some other name. Specific issues related to discrimination in life and health insurance benefits, long-term and short-term disability benefits, severance benefits, pension or other retirement benefits, and early retirement incentives are covered in the Manual Section on Employee Benefits (available at eeoc. gov). 14. See, e. g. County of Washington v. Gunther . 452 U. S. 161, 180-81 (1981). 15. See, e. g. Bazemore v. Friday . 478 U. S. 385, 395-96 (1986). 16. If there is an explicit policy or other direct evidence of compensation discrimination, cause should be found. Such evidence might include, for example, discriminatory statements by officials of the respondent, combined with evidence of pay disparities, or documentation that the respondents pay practices are applied differently to those inside and outside the protected class. 17. Investigators generally should contact ORIP with questions during an investigation. However, RAS also is an available resource for investigators. EEOC attorneys generally should seek litigation support from RAS. 18. While most of these factors overlap with those statutorily prescribed under the Equal Pay Act ( seeinfra 10-IV E.2), job similarity for purposes of Title VII, the ADEA, and the ADA is a more relaxed standard than under the EPA because the EPA only permits comparisons of employees in substantially equal jobs. See . e. g . Crockwell v. Blackmon-Mooring Steamatic, Inc . 627 F. Supp. 800, 806 (W. D. Tenn. 1985) (Although the work performed by household cleaners and cleaning technicians was not substantially equal within the meaning of the Equal Pay Act, for Title VII purposes cleaning technicians were situated similarly to plaintiff. The jobs had many similarities and included similar requirements of effort and responsibility.). Enforcement staff should contact their legal units on this issue, as there is disagreement in the courts on whether the EPAs strict equal work requirement applies in sex-based pay cases under Title VII where there is no direct evidence of discrimination. See Miranda v. BampB Cash Grocery Store, Inc . 975 F.2d 1518, 1530 (11th Cir. 1998) (citing cases). 19. See Coward v. ADT Sec. Sys. Inc . 140 F.3d 271, 275 (D. C. Cir. 1998) (job titles not determinative). 20. See Gibbons v. Auburn Univ. at Montgomery . 108 F. Supp. 2d 1311,1318 (M. D. Ala. 2000) (holding black university faculty member and white comparator who worked in different schools within university still were similarly situated for Title VII purposes -- university failed to explain why a difference in the schools where the faculty members worked, or in the academic merit of the programs that they administered, is relevant to an evaluation of their relative salaries -- but granting summary judgment for university on procedural grounds). 21. See Anderson v. Zubieta, 180 F.3d 329, 341-42 (D. C. Cir. 1999) (minimum objective qualifications are relevant to whether employees are similarly situated). 22. Id. at 341 (where the employer had certain eligibility criteria for a pay differential, the court held that the employer could not use those same eligibility criteria as the basis for arguing that black plaintiffs who challenged the pay differential were not similarly situated to white employees: To adopt such a position would be to assume the very thing the McDonnell Douglas test is aimed at ferreting out -- namely, that a facially-neutral factor is indeed a pretext.). 23. The charge of course may allege that the employer has engaged in systemic compensation discrimination. But a charge that alleges discrimination only against the charging party also may trigger a systemic investigation, because an individual charge of compensation discrimination can be indicative of a broader problem. EEOC has broad investigatory powers. See 42 U. S.C. 2000e-8(a) (EEOC investigation must be relevant to the charge under investigation) EEOC v. Shell Oil Co. . 466 U. S. 54, 68 (1984) (courts have generously construed the term relevant). The Commission also may investigate a companys compensation practices on its own initiative, through the filing of a Commissioners charge under Title VII or the ADA, or a directed investigation under the EPA or ADEA. See 29 C. F.R. 1601.11 (Title VII and ADA) 29 C. F.R. 1620.30 (EPA) 29 C. F.R. 1626.15 (ADEA). 24. See 10-III A.3. explaining an approach to using statistics. 25. Any difference is sufficient to support a charge and subsequent investigation. As a practical matter, however, enforcement staff should exercise reasonable discretion in deciding how to allocate resources to individual investigations. 26. Barbara Lindemann amp Paul Grossman, Employment Discrimination Law 19 (3d ed. 1996). 27. Note that, unlike other Title VII cases, in sex-based compensation cases the employer bears the burden of proving one of four affirmative defenses. For a discussion of the interaction between Title VII and the EPA in sex-based pay cases, see 10-V and footnote 87. While burdens of proof typically are insignificant during the investigative phase, they can be important in litigation. 28. E. g . Connecticut v. Teal . 457 U. S. 440, 455 (1982) (Congress never intended to give an employer license to discriminate against some members of a protected class merely because he favorably treats other members of the employees group.). 29. See 10-IV F.2.e. discussing the concept of red-circling. 30. See Bazemore . 478 U. S. at 398 (quoting Teamsters v. United States . 431 U. S. 324, 336 (1977)). A cause finding of systemic discrimination rarely should be based on statistics alone. Where possible, evidence of individual instances of discrimination should be used to bring the cold numbers convincingly to life. Teamsters . 431 U. S. at 339, 340 (also stating that the usefulness of statistics depends on all of the surrounding facts and circumstances). See also Bazemore . 478 U. S. at 400 (stating that the probative value of statistics will depend in a given case on the factual context of each case in light of all the evidence). 31. See, e. g. McDonnell Douglas Corp. v. Green. . 411 U. S. 792, 804-05 (1973) (statistics as to employers general policy or practice are relevant to whether employers asserted reason for an individual employment decision is a pretext for discrimination). 32. While not intending to suggest that precise calculations of statistical significance are necessary in employing statistical proof, the Supreme Court has stated that a fluctuation of more than two or three standard deviations would undercut the hypothesis that decisions were being made randomly with respect to a protected trait. Hazelwood Sch. Dist. v. United States . 433 U. S. 299, 311 n.17 (1977). 33. Griggs v. Duke Power Co. . 401 U. S. 424, 431 (1971). 34. Enforcement staff should be aware that questions have been raised regarding the availability of disparate impact theory in sex-based compensation discrimination cases. The Supreme Court, in County of Washington v. Gunther . 452 U. S. 161, 170 (1981), noted in dicta that Title VIIs incorporation of the EPAs any other factor other than sex defense by virtue of the Bennett Amendment could have significant consequences for Title VII litigation of sex-based compensation cases under the disparate impact theory. Some courts have concluded from this language that the disparate impact method of proof is not available in such cases. See . เช่น. . Mullin v. Raytheon Co. . 164 F.3d 696, 702 (1st Cir.) (reading Gunther as precluding disparate impact in EPA and sex-based Title VII equal pay cases, and applying same reasoning to ADEA), cert. denied . 120 S. Ct. 44 (1999). The Commission, however, believes the Gunther Courts comment on this issue raises more questions than it answers. After Gunther . in fact, at least two courts appear to have recognized the disparate impact theory as viable in sex-based Title VII compensation cases. See Aldrich v. Randolph Cent. Sch. Dist. . 963 F.2d 520, 528 (2d Cir.), cert. denied . 506 U. S. 965 (1992) EEOC v. J. C. Penney Co., 843 F.2d 249, 252 (6th Cir. 1988). The Commissions view is that the disparate impact method of proof is available for sex-based compensation discrimination under Title VII. Enforcement staff also should be aware that three courts of appeals have ruled that the disparate-impact theory is not available under the ADEA. See Mullin v. Raytheon Co. . 164 F.3d 696, 699-704 (1st Cir. 1999) Blackwell v. Cole Taylor Bank . 152 F.3d 666, 672 (7th Cir. 1998) Ellis v. United Airlines, Inc . 73 F.3d 999, 1006-10 (10th Cir. 1996). In the other circuits, disparate impact claims can still be pursued under the ADEA. 37. Depending on the facts of the case, such practices may fall under either or both of sections 703(a)(1) and 703(a)(2) of Title VII, or counterpart provisions in the ADEA and ADA. See 42 U. S.C. 2000e-2(a)(1) amp (a)(2) (Title VII) 29 U. S.C. 623(a)(1) amp (a)(2) (ADEA) 42 U. S.C. 12112(a) amp (b)(1) (ADA). 38. See supra note 23 (EEOCs broad investigatory authority). 39. Generally, each discriminatory paycheck received by the charging party is a separate violation. See Bazemore . 478 U. S. at 395-96. See Section 2: Threshold Issues . EEOC Compliance Manual, Volume II (BNA) (2000) (available at eeoc. gov). 40. 29 C. F.R. 1620.10. 41. See, e. g. Bence v. Detroit Health Corp. . 712 F.2d 1024, 1027 (6th Cir. 1983) (compensation disparity found where employer paid higher commission rate to males than females, even though total remuneration was substantially equal). 42. 29 C. F.R. 1620.9. 43. Such a comparison might, however, be appropriate under Title VII, the ADEA, and the ADA. See supra 10-III. 44. See, e. g. Mulhall v. Advance Sec. Inc. . 19 F.3d 586, 592-93 (11th Cir.) (plaintiff, who worked for a security services company, and her comparators, who worked at military facilities pursuant to the security companys contracts, were employed at the same establishment because of centralized control and the functional interrelationship between the plaintiff and the comparators), cert. denied . 513 U. S. 919 (1994) Brennan v. Goose Creek Consol. Indep. Sch. Dist. . 519 F.2d 53, 58 (5th Cir. 1975) (school district was one establishment). 45. See, e. g. EEOC v. Maricopa County Community College Dist. . 736 F.2d 510, 515 (9th Cir. 1984) (existence of female in the higher paid classification does not defeat female plaintiffs prima facie showing of compensation disparity). 47. While no EPA violation could be established, the long-standing presence of only one sex in a job category may indicate sex discrimination in violation of Title VII. 48. See infra 10-IV F.2.a (explaining how differences in the comparators education, experience, training, and ability may be a factor other than sex justifying a compensation disparity) infra 10-IV F.1 (explaining how differences in the work efficiency of comparators may support a defense that a compensation disparity is based on a merit or incentive system). 49. See, e. g. Katz v. School Dist. of Clayton, Mo. . 557 F.2d 153, 156-57 (8th Cir. 1977) (teachers aide performed duties of teacher and therefore job was substantially equal to that of teacher). 50. See, e. g. Strag v. Board of Trustees . 55 F.3d 943, 950 (4th Cir. 1995) (professorship in Mathematics department of university was not substantially equal to professorship in Biology department because of difference in skills and responsibilities required by the departments). 51. See, e. g. Stanley v. University of S. Cal. . 178 F.3d 1069, 1074 (9th Cir.) (EPA requires two-step analysis: first, the jobs must have a common core of tasks second, court must determine whether any additional tasks incumbent on one of the jobs make the two jobssubstantially different), cert. denied . 120 S. Ct. 533 (1999) Stopka v. Alliance of Am. Insurers . 141 F.3d 681, 685 (7th Cir. 1998) (critical issue in determining whether two jobs are equal under the EPA is whether the two jobs involve a common core of tasks or whether a significant portion of the two jobs is identical) Brewster v. Barnes . 788 F.2d 985, 991 (4th Cir. 1986) (same). 52. A Title VII violation can be found even without a finding of substantially equal work under the EPA. 53. See, e. g. EEOC v. Central Kansas Med. Ctr. . 705 F.2d 1270, 1272-73 (10th Cir. 1983) (janitors and housekeepers performed equal work any extra work performed by the janitors was insubstantial or was balanced by additional responsibilities performed by housekeepers), overruled on other grounds by McLaughlin v. Richland Shoe Co. . 486 U. S. 128 (1988) Corning Glass Works v. Brennan . 417 U. S. 188, 203 n.24 (1974) (noting that Court of Appeals concluded that extra packing, lifting, and cleaning performed by night inspectors was of so little consequence that the job remained substantially equal to those of day inspectors) Goodrich v. International Bhd. of Elec. Workers . 815 F.2d 1519, 1525 (D. C. Cir. 1987) (job of female union employee was not substantially equal to that of males who did the same work because males had additional duties which, though consuming little time, were essential to the operation and mission of the union) Brock v. Georgia Southwestern College . 765 F.2d 1026, 1034 (11th Cir. 1985) (two college teachers jobs could be compared under EPA even though one served as Coordinator of Business Education Division because any additional duties he performed were ephemeral and took up insignificant amount of time), overruled on other grounds by McLaughlin v. Richland Shoe Co. . 486 U. S. 128 (1988) (adopting definition of willful violation announced in Trans World Airlines, Inc. v. Thurston . 469 U. S. 111 (1985)). 54. See, e. g. Brock . 765 F.2d at 1033 (skill required to teach two different courses in the Business Administration Division of college was substantially equal, given commonality of discipline and substantial equality of course loads and student loads). 55. See, e. g. Mulhall . 19 F.3d at 594 (fact that comparator had accounting degree and plaintiff did not was irrelevant to consideration of whether their jobs required equal skill since the job did not require an accounting degree), cert. denied . 513 U. S. 919 (1994) Soto v. Adams Elevator Equip. Co. . 941 F.2d 543, 549-50 (7th Cir. 1991) (female buyers job equal to that of male even though he had prior purchasing experience and a college degree). 56. Stopka . 141 F.3d at 686. 57. Regarding glass ceilings, steering, and other discriminatory practices affecting compensation, see 10-III D. 58. See, e. g. Krenik v. County of LeSueur . 47 F.3d 953, 961 (8th Cir. 1995) (maintenance engineer and assistant jobs were not equal even though both jobs involved same type of maintenance work, because maintenance engineer supervised the assistant and served as department head) Fallon v. State of Ill. . 882 F.2d 1206, 1209 (7th Cir. 1989) (comparators added responsibility to make sure field office would open and close on time when they were absent due to travel was not substantial enough to render jobs unequal). 59. Corning Glass . 417 U. S. at 202-03. However, the times when the jobs are performed may be a factor other than sex justifying a compensation differential. See infra 10-IV F.2.c. 60. See, e. g. Fallon . 882 F.2d at 1209 (jobs of Veterans Service Officer and Veterans Service Officer Associate were substantially equal even though Veterans Service Officers did itinerant work the mere fact that some travel was required did not override conclusion that the work was substantially the same). 61. See, e. g. Willner v. University of Kan. . 848 F.2d 1023, 1031 (10th Cir. 1988) (merit system justified compensation disparity where system was explained to professors and the professors were judged on the basis of quality of their instruction, their research, and service), cert. denied . 488 U. S. 1031 (1989). 62. See, e. g. Brock . 765 F.2d at 1036 (alleged merit system did not justify compensation disparity where it operated in informal and unsystematic manner no teachers were aware of any system and evaluations were carried out by Dean and division heads on ad hoc subjective basis salary and raise decisions were based on personal, and in many cases, ill-informed judgments of what an individual or his or her expertise was worth). 63. For a discussion of potential defenses based on a factor other than sex in the context of sports coach jobs in educational institutions, see Enforcement Guidance on Sex Discrimination in the Compensation of Sports Coaches in Educational Institutions (1997) (available at eeoc. gov). 64. See Corning Glass . 417 U. S. at 204 (shift differential not a factor other than sex because higher rate for night shift arose simply because men would not work at the low rates paid women inspectors, and it reflected a job market in which Corning could pay women less than men for the same work) Brewster . 788 F.2d at 992 (employer claimed as factor other than sex a job requirement that employees could only be paid salary of correctional officer if they spent over 50 percent of their time performing correctional officer duties defense rejected because employer never attempted to determine whether plaintiff met the requirement despite numerous requests that it do so). 65. Congress enacted the EPA with business principles in mind. In Corning Glass . the Court observed that earlier versions of the Equal Pay bill were amended to define equal work and to add the fourth affirmative defense because of a concern that bona fide job-evaluation systems used by American businesses would otherwise be disrupted. See Corning Glass . 417 U. S. at 198-201. The factor-other-than-sex defense is most reasonably read in this light. See Aldrich . 963 F.2d at 525. As one court stated, the Equal Pay Act concerns business practices. It would be nonsensical to sanction the use of a factor that rests on some consideration unrelated to business. An employer thus cannot use a factor that causes a wage differential between male and female employees absent an acceptable business reason. Kouba v. Allstate Ins. Co. . 691 F.2d 873, 876 (9th Cir.1982). There is disagreement in the courts with regard to whether a factor other than sex must be based on the requirements of the job or otherwise beneficial to the business. The Commission agrees with the courts in the Second, Sixth, Ninth, and Eleventh Circuits that such a basis must be shown. See Aldrich . 963 F.2d at 525 J. C. Penney, 843 F.2d at 253 Kouba . 691 F.2d at 876 Glenn v. General Motors Corp. . 841 F.2d 1567, 1571 (11th Cir. 1988). In other circuits, enforcement staff should contact their legal units on this issue. See Fallonv. State of Ill. . 882 F.2d 1206, 1211 (7th Cir. 1989) (business-related reason need not be shown). 66. Kouba . 691 F.2d at 876-77 (Even with a business-related standard, an employer might assert some business reason as a pretext for a discriminatory objective. But the Equal Pay Act entrusts employers, not judges with making the often uncertain decision of how to accomplish business objectives. A pragmatic standard for judicial inquiry, which protects against abuse yet accommodates employer discretion, is that the employer must use the factor reasonably in light of the employers stated purpose as well as its other practices.). 67. See, e. g. Tomka v. Seiler Corp., . 66 F.3d 1295, 1312 (2d Cir. 1995) (employer who claims that experience justifies higher salary for male employee must prove both that it based the higher salary on this factor and that experience is a job-related qualification for the position in question) EEOC v. First Citizens . 758 F.2d 397, 401 (9th Cir.) (greater experience of male comparator did not justify pay disparity where the main qualities necessary for the job were speed and accuracy, not experience greater education of another comparator also did not justify pay disparity where that qualification was only marginally related to the job), cert. denied . 474 U. S. 902 (1985). 68. See EEOC v. White and Son Enters. . 881 F.2d 1006, 1010 (11th Cir. 1989) (male employees prior experience did not justify their higher compensation where defendant did not know what prior experience its employees possessed when they began employment). Consistency can be determined using the same method as set out in 10-III A.2, supra . 69. See Kouba . 691 F.2d at 878 (one consideration in determining reasonableness of relying on prior salary to justify a pay differential was whether the employer attributes less significance to prior salary once the employee has proven himself or herself on the job) Jones v. Westside Urban Health Ctr. Inc . 760 F. Supp. 1575, 1580 (S. D. Ga. 1991) (Presumably, defendants initially hired the female comparator at a higher rate of pay because, in their informed judgment, they assumed that experience and education would make her perform at a higher level than the male plaintiff, a less-educated novice. Defendants have offered no explanation for clinging to a salary discrepancy when their underlying assumption has been proved, as plaintiff alleges, grossly incorrect.). 70. See, e. g. First Citizens . 758 F.2d at 400. 71. See, e. g. Lindale v. Tokheim Corp. . 145 F.3d 953, 958 (7th Cir. 1998) (stating that since there is no proof that the Equal Pay Act was violated when the female plaintiff was hired at a lower salary than her male comparator, the question becomes whether the disparity ripened into a violation when she failed to catch up to her male comparators salary, and answering the question no in this case because the disparity was based on the employers nondiscriminatory job classification system that reflected legitimate factors such as seniority, credentials and competition in the labor market) Aldrich . 963 F.2d at 525 (job classification system does not justify compensation disparity unless it is rooted in legitimate business-related differences in work responsibilities and qualifications for the particular positions at issue). 72. See Maricopa . 736 F.2d at 515 (plaintiff who had been performing work beyond her job classification so that her job had effectively become substantially equal to that of male employees was entitled to same compensation as males where employee takes on responsibilities beyond those in job description, employer has duty to determine if reclassification of employees job is warranted). 73. Red circling only justifies a compensation disparity where an existing employees higher compensation is maintained for a valid business reason. It does not justify higher payment to a new employee. See Mulhall . 19 F.3d at 596 (red circling did not apply to situation where new employees who were formerly owners or principals in businesses purchased by the defendant were hired at salaries that were set as part of the negotiated sale of the businesses). 74. See, e. g. Byrd v. Ronayne . 61 F.3d 1026, 1034 (1st Cir. 1995) (higher compensation for male attorney justified because he generated substantially greater revenue for law firm). 75. Corning Glass . 417 U. S. at 205. 76. Brock . 765 F.2d at 1037. 77. Irby v. Bittick . 44 F.3d 949, 955 (11th Cir. 1995). See also Glenn v. General Motors Corp . 841 F.2d 1567, 1571 (11th Cir. 1988) (prior salary alone cannot justify a pay disparity) Faust v. Hilton Hotels Corp. . 1990 WL 120615, at 5 (E. D. La. 1990) (reliance on prior salary as a factor other than sex would allow employer to pay one employee more than an employee of the opposite sex because that employer or a previous employer discriminated against the lower paid employee). 78. See Irby, 44 F.3d at 955 (prior salary alone cannot justify pay disparity under EPA, but there is no prohibition on utilizing prior pay as one of a mixture of motives, such as prior pay and more experience) Kouba . 691 F.2d at 878 (Relevant considerations in evaluating reasonableness of considering prior salary in setting pay include (1) whether employer also uses other available predictors of the new employees performance, (2) whether the employer attributes less significance to prior salary once the employee has proven himself or herself on the job, and (3) whether the employer relies more heavily on salary when the prior job resembles the new job.). 79. See, e. g., Highlights of Womens Earnings in 1998, Bureau of Labor Statistics Report 928 (April 1999) (14,361,000 women and 6,501,000 men performed part-time jobs in 1998). 80. Contingent and Alternative Employment Arrangements, Bureau of Labor Statistics, U. S. Dept. of Labor (February 1997). 81. The Commission has stated that employment for longer than one month will raise questions as to whether a job is temporary. See 29 C. F.R. 1620.26(b). Moreover, even if the respondent is a client of a staffing firm for whom the temporary employee works, the respondent shares in the staffing firms obligation not to discriminate in compensation. However, if the EEOC determines that the respondent client had no involvement in or control over the wages paid to the worker, it may decline to pursue relief against the client. See Enforcement Guidance: Application of EEO Laws to Contingent Workers Placed by Temporary Employment Agencies and Other Staffing Firms . Question 10 amp n.40, N:2219-21 (BNA) (1997) (available at eeoc. gov). cf เลย Vizcaino v. Microsoft Corp. . 120 F.3d 1006 (9th Cir. 1997) (workers labeled by company as independent contractors and employees of temporary agencies really were common-law employees of company, and thus entitled to participate in companys savings and stock purchase plans under the terms of the plans), cert. denied . 522 U. S. 1098 (1998). 82. Laffey v. Northwest Airlines, Inc. . 740 F.2d 1071, 1078 (D. C. Cir. 1984) (where higher-paid purser jobs were reserved for men, and lower-paid stewardess jobs were reserved for women, the employers actual but erroneous belief that the two jobs were different did not shelter employer from liability under EPA to allow such a defense contradicts congressional direction which gives courts discretion only to limit, not to eliminate, damages when an employer in good faith believed his conduct conformed to legal requirements), cert. denied . 472 U. S. 1021 (1985). cf เลย Albemarle Paper Co. v. Moody . 422 U. S. 405, 422-23 amp n.17 (absence of bad faith not a sufficient reason for denying backpay for proven Title VII violation) United States v. Gregory . 871 F.2d 1239, 1247 n.30 (4th Cir. 1989) (citing Albemarle and holding same: The district court erred in relying on the Sheriffs good faith when it realized that the evidence manifestly showed that the Sheriff had no legitimate reason for not hiring the discriminatee.), cert. denied . 493 U. S. 1020 (1987). 83. The EPA specifically provides that no labor organization shall cause or attempt to cause a covered employer to violate the statute. 29 U. S.C. 206(d)(2). 84. Corning Glass . 417 U. S. at 196-97. 85. Gunther . 452 U. S. at 170. 87. Enforcement staff should be aware that there is disagreement in the courts on this issue. The Fourth, Fifth, Seventh, Tenth, and Eleventh Circuits apply different burdens in EPA claims than in sex-based wage discrimination claims under Title VII. See Brewster v. Barnes . 788 F.2d 895, 992 (4th Cir. 1986) Plemer v. Parsons-Gilbane . 713 F.2d 1127, 1136 (5th Cir. 1983) Fallon v. State of Ill. . 882 F.2d 1206, 1215-18 (7th Cir. 1989) Tidwell v. Fort Howard Corp. . 989 F.2d 406, 410 (10th Cir. 1993) Meeks v. Computer Assocs. Intl . 15 F.3d 1013 (11th Cir. 1994). Enforcement staff in these jurisdictions should contact their legal units on this issue. For the reasons stated in the text, the Commission believes these cases were wrongly decided on this point. See Kouba . 691 F.2d at 875 (EPA burdens apply in sex-based pay cases under Title VII). The Commissions interpretation also is consistent with its longstanding position that any violation of the EPA constitutes a Title VII violation. See 29 C. F.R. 1620.27(a). 88. See, e. g. . Bartelt v. Berlitz Sch. of Languages of Am. Inc. . 698 F.2d 1003 (9th Cir.) (female director of a language school who brought Title VII sex-based compensation discrimination claim could rely on evidence that defendant paid higher wages to male directors of other language schools which were operated by the defendant but were not part of the same establishment), cert. denied . 464 U. S. 915 (1983). For a discussion of the restriction under the EPA to compensation comparisons in the same establishment, see 10-IV D. 89. See 42 U. S.C. 2000e-2(h) Russell v. American Tobacco Co. . 528 F.3d 357, 362-63 (4th Cir. 1975) (holding that most important criterion for determining different locations within the meaning of Title VII is whether separate facilities draw from the same labor market, though not intending to define the term for every situation), cert. denied . 435 U. S. 935 (1976). 90. Under Title VII and the ADA, a charging party may recover back pay for two years prior to the filing of the charge. 42 U. S.C. 2000e-5(g)(1). Back pay under the EPA dates back to two years prior the date conciliation is reached or suit is filed. In cases of willful violations, the back pay period is three years. It is the Commissions position that the ADEA contains no back pay limitation period. 91. The EPA explicitly prohibits lowering the pay of any employee to correct a discriminatory pay differential. See 29 U. S.C. 206(d)(1). Title VII, the ADEA, and the ADA do not contain an analogous provision. 92. Bazemore . 478 U. S. at 395-96. See Section 2: Threshold Issues . EEOC Compliance Manual, Volume II (BNA) (2000) (available at eeoc. gov). 93. See Laffey . 740 F.2d at 1096. Cf. Brooklyn Sav. Bank v. ONeil . 324 U. S. 697 (1946). 95. 29 U. S.C. 215(a)(1) (making it unlawful to transport, offer for transportation, ship, deliver, or sell in commerce, or to ship, deliver, or sell with knowledge that shipment or delivery or sale thereof in commerce is intended, any goods in the production of which any employee was employed in violation of section 206. of this title). 97. See, e. g. EEOC v. Romeo Community Sch. . 976 F.2d 985, 989-90 (6th Cir. 1992) White amp Son Enters . 881 F.2d at 1011 Love v. ReMax of America . 738 F.2d 383, 387 (10th Cir. 1984).Contra Lambert v. Genessee Hosp. . 10 F.3d 46, 55 (2d Cir. 1993), cert. denied . 511 U. S. 1052 (1994). See Section 8: Retaliation . EEOC Compliance Manual, Volume II (BNA) (1998) (available at eeoc. gov). This page was last modified on December 5, 2000. Return to Home Page