Fair is Fair

Steer clear of trouble by making sure you pay men and women equally.

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Laws requiring equal pay for men and women have been on the books for decades. But this long-established workplace requirement is currently in flux, making it trickier for today's entrepreneurs to know how to set pay rates for their employees and what impact their salary decisions might have on their companies.

Legislation supporting equal pay was first passed in the 1930s, and lawmakers have significantly amended it several times since. Last year, the U.S. Supreme Court got in on the act by upholding a lower court ruling sharply reducing the amount of time within which someone complaining of unfair pay can bring a lawsuit against an employer. In that case, a female employee alleging discrimination over a period of many years had her claim denied when the court said she had just 180 days after the discrimination occurred in which to file a claim.

That's probably good news for employers, but it doesn't mean unequal pay laws can be ignored. "I don't think anything has changed," says Mary Krakow, a labor law attorney at Fredrikson & Byron. "Federal law and almost every state law says the same thing: You are prohibited from discriminating based on sex."

The basic rule is to give men and women the same pay for doing the same work. There are wrinkles, however. For instance, employees' duties, not their job titles, are key. If people with different titles do the same work and get paid different amounts, that could be trouble. But unequal pay may pass muster if there is a business reason. For instance, it may be OK to pay employees who perform extra duties more than others who otherwise do the same work. But you mustn't give extra duties only to men or only to women.

Entrepreneurs today face the possibility of making errors that could be costly in the event of a successful lawsuit. Congress has already introduced legislation to restore employees' ability to seek legal remedies. That legislation, which has passed the House and is awaiting action in the Senate, likely won't be the last word either, since President Bush is widely expected to veto it.

—By Mark Henricks, who writes on business and technology for leading publications and is author of Not Just a Living.

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