Employers frequently design their compensation programs to provide increased compensation to employees based on differences in production or merit. For example, employers in the business of producing widgets quite appropriately will seek to maximize their profits by compensating employees who produce a higher number of widgets more generously than employees who produce fewer widgets. Similarly, employers in service businesses frequently will compensate employees who deliver higher quality service to customers more generously than employees who deliver service of lesser quality. In enacting Title VII, Congress recognized that such merit- or production-based compensation systems are socially desirable, and accordingly immunized such systems from discrimination claims under Title VII with only limited exceptions.

Section 703(h) of Title VII of the Civil Rights Act of 1964 embodies this congressional intent by providing that “[i]t shall not be an unlawful employment practice…to apply different standards of compensation, or different terms, conditions, or privileges of employment pursuant to a bona fide seniority or merit system, or a system which measures earnings by quantity or quality of production [when] such differences are not the result of an intention to discriminate because of race, color, religion, sex, or national origin.” 42 U.S.C. §2000e-2(h). Although this provision has been part of Title VII since its enactment in 1964, courts have infrequently addressed the scope of employers’ defenses to claims of discrimination arising from the application of merit- or production-based compensation systems.

Congressional Intent

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]