Pay Equity Laws in the USA

Extent of Protection

The U.S. has pay equity laws and regulations on both the federal and state level.

Federal Law 

Equal Pay Act of 1963

The EPA prohibits employers from paying employees less for equal work, because of gender. Specifically, an employer cannot discriminate between employees of the same establishment on the basis of sex, “paying wages to employees at a rate less than the rate at which the employer pays wages to employees of the opposite sex for equal work on jobs, the performance of which requires equal skill, effort and responsibility, and which are performed under similar working conditions.” Wages can include not only hourly or annual pay, but also bonuses, company cars, expense accounts, insurance and other elements of compensation. Further, an employer cannot lower the wages of some employees to make wages equal. The statute of limitations for filing an EPA claim is within two years of the alleged unlawful compensation practice or, in the case of a wilful violation, within three years.

Title VII of the Civil Rights Act of 1964

An employee may also file a pay or benefits discrimination claim under Title VII, which prohibits discrimination by covered employers on the basis of race, colour, religion, sex or national origin. Unlike the EPA, Title VII does not require the jobs being compared to be substantially equal. Furthermore, in January of 2009, as the first piece of legislation of his administration, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009 (“the Ledbetter Act”), amending Title VII. The Ledbetter Act overturned Supreme Court precedent severely restricting the time period for filing unfair pay complaints, establishing that such complaints can be filed within 180 days of a discriminatory pay check, or 300 days in jurisdictions with a state or local law prohibiting the same form of discrimination, a period which resets each time a pay check is issued. Employer practices subject to challenge include managerial decisions about base pay or wages, job classifications, career ladder or other noncompetitive promotion denials, tenure denials and failure to respond to requests for raises.

State Law

Many states have enacted their own pay equity laws, some of which mirror the language of the federal EPA. Since 2016, many states have sought to broaden the pool of comparators to those performing “substantially similar work” or “comparable” work. For example:

• California, Colorado, Hawaii, Illinois and New Jersey prohibit disparities among employees performing “substantially similar work.”
• Massachusetts prohibits disparities among employees performing “comparable work.”
• Oregon and Maryland prohibit disparities among employees performing “work of a comparable character.”
• Washington prohibits pay disparities among employees who are “similarly employed.”

Further, many of the state laws do not restrict comparison to the same establishment or geographic location. For example, California’s fair pay law allows comparison to employees in other locations or establishments.

In addition, some states specifically prohibit sex-based wage discrimination in their general employment discrimination laws, including for example, Wisconsin and Louisiana, while several other states prohibit wage discrimination based on protected class status in their general employment discrimination laws, including for example, Texas and Utah.

Additional State Efforts to End the Pay Gap

• Prohibitions on Prior Salary Information

Many cities and states (such as California, Delaware, Hawaii, Massachusetts, New Jersey, Oregon, Puerto Rico, Vermont, New York City, Philadelphia, and San Francisco) have passed laws restricting the collection of prior salary information during the hiring process based on concerns that setting the starting pay rate on the basis of prior salary, may have the effect of perpetuating pay discrimination. For employers, it means there may be a need to revisit long-standing practices around pay-setting decisions, complicated by differing requirements among the state laws. For instance, in some jurisdictions employers cannot ask applicants for prior salary information, but they can use information that is provided voluntarily. In other jurisdictions, employers can ask the question for legitimate purposes such as screening applicants, but cannot rely on the information when setting pay rates.

• Pay Transparency Laws

Nearly half of the states have also enacted pay transparency laws that prohibit employers from discharging, or taking any other retaliatory action against an employee, for discussing wages or compensation with another employee. Most recently, states such as Connecticut, Maine, and Virginia have enacted pay transparency laws requiring certain employers to list salary ranges for advertised jobs.

Remedies

An employer who violates the Equal Pay Act is liable to the affected employee, for the amount of wages the employee was underpaid, for liquidated damages equal to 100% of the underpaid wages, as well as for reasonable attorneys’ fees and costs. Further, if the employer has retaliated against an employee for filing a complaint under the EPA, the employee is entitled to equitable relief which may include reinstatement, promotion and the payment of wages lost, as well as an additional equal amount as liquidated damages. The employer must also pay the reasonable attorneys’ fees and costs of the action. However, compensatory and punitive damages are not available.

Under Title VII pay discrimination claims, in addition to the remedies available under the EPA, an employee can also recover compensatory and punitive damages. There are limits however, on the amount of compensatory and punitive damages a person can recover. These limits vary depending on the size of the employer:

• For employers with 15–100 employees, the limit is $50,000.
• For employers with 101–200 employees, the limit is $100,000.
• For employers with 201–500 employees, the limit is $200,000.
• For employers with more than 500 employees, the limit is $300,000.

Similar remedies exist under state law.

Enforcement/Litigation

New state and local pay equity laws and the increased attention afforded to equal pay issues, pose significant challenges and unprecedented risks to employers. Recent litigation and settlements demonstrate the significant exposure in defending these claims.

Other Requirements

Federal Contractor Audit Requirements

Historically, covered federal contractors subject to Executive Order 11246 and its implementing regulations were required to maintain affirmative action programs and evaluate their compensation systems as part of those programs. Those regulations required covered contractors to monitor and examine employment decisions and compensation systems to evaluate their impact on women and minorities, and to maintain documentation of compliance. However, Executive Order 14173 revoked Executive Order 11246 in January 2025, and the Department of Labor has halted enforcement of the Executive Order 11246 regulations. Contractors should separately evaluate any continuing obligations under Section 503 of the Rehabilitation Act, VEVRAA, Title VII, the Equal Pay Act, and applicable state and local pay equity laws.

In addition, Executive Order 14173 requires contractors to certify they are not engaged in “illegal DEI.” Similarly, Executive Order 14398, Addressing DEI Discrimination by Federal Contractors, which was issued in March 2026, requires contractors and subcontractors to certify they are not engaged in any “racially discriminatory DEI activities.” Both Orders direct federal contracting agencies and the DOJ to investigate possible non-compliance.

EEOC EEO-1 Reports

The EEOC requires covered private-sector employers with 100 or more employees, and certain federal contractors with 50 or more employees, to submit annual EEO-1 Component 1 reports containing workforce demographic data by job category, sex, and race or ethnicity.  However, in May 2026, the EEOC submitted a formal request to rescind the regulations requiring EEO-1 reporting.  As a result, there is a possibility that EEO-1 reporting may not be required in 2026 or beyond.

Certain states may also have their own workforce demographic data reporting requirements.

State Audit Requirements

Some states provide an affirmative defence under their pay equity laws if employers conduct voluntary self-audits. For example, under the Massachusetts Equal Pay Act, if an employer can demonstrate that it 1) “completed a self-evaluation of its pay practices in good faith” and 2) “can demonstrate that reasonable progress has been made towards eliminating wage differentials based on gender for comparable work.” The audit must be reasonable in detail and scope, in accordance with the employer’s size. It is worth noting that even if a state does not explicitly include a “self-audit” provision as a viable affirmative defence, such an audit may be helpful in defending a pay discrimination claim.