The Statutory Public Interest in Closing the Pay Gap

Abstract

Since the mid-1960s, federal law has prohibited sex discrimination in pay through two parallel mechanisms: the Equal Pay Act of 1963 (EPA) and Title VII of the Civil Rights Act of 1964 (Title VII). Enacted within one year of each other, the statutes offer two different paths for employees to challenge sex-based pay discrimination, each with its own strategic advantages and disadvantages for plaintiffs. The EPA’s strongest advantage over Title VII is its burden-shifting approach that, once a plaintiff-employee makes out a prima facie case, requires the defendant-employer to disprove, rather than the employee to prove, discrimination.

Yet there is another significant but unexamined advantage to the EPA, based on its enactment as a subsection within the Fair Labor Standards Act rather than the Civil Rights Act: a limitation on an employee’s ability to waive its protections. When Congress enacted the FLSA in 1938, its goal was not solely to create individual private rights of action for exploited workers, but also to serve important public interests—to root out unfair competition, balance employer-employee bargaining power, and improve public health and welfare in the wake of the Great Depression. As a result, the FLSA prohibits employees from agreeing to accept less than the statutorily required minimum wage or waiving their rights to receive overtime pay, as a matter of public interest. When the EPA was enacted in 1963, Congress identified similar goals, raising concerns about the underpayment of female workers whose income was essential to their families’ economic security and the U.S. economy as a whole. Federal courts have held that, like under the FLSA, employees cannot waive their rights under the EPA.

This Essay explores the role that the statutory public interest should play in the enforcement of rights under the EPA. Current data shows that, even fifty-five years after the enactment of federal law outlawing sex-based pay discrimination, the gender pay gap inflicts huge costs on women, their families, and the U.S. economy, echoing the public concerns that led to the statute’s original passage. That FLSA and EPA rights cannot be waived by an employee calls into question two common employer pay-setting practices often excused under federal law: setting pay by individual negotiation and basing pay on an employee’s prior salary. As this Essay argues, both practices unfairly benefit employers due to unequal information and bargaining power; as such, allowing them to excuse unequal pay constitutes a forced waiver of an employee’s EPA rights. Underpaying female workers hurts the entire U.S. economy. Both the FLSA and the EPA were passed with the public concern in mind; it is time to revisit this intention.

Keywords: Title VII, EPA, Equal Pay Act, FLSA, Fair Labor Standards Act, equal pay, pay gap, discrimination, wages

JEL Classification: J08, J3, J31, J38, J71, J78