Labor Department Reminds Employers: Equal Pay Required for Equal Work

The Labor Department’s equal-pay guidance is a reminder that pay fairness is not just a legal box to check. For A Simple Gesture and other mission-driven nonprofits, it is also a trust issue: when people doing substantially equal work learn that compensation has drifted by manager, by negotiation or by hire date, the damage can show up fast in morale, retention and recruiting credibility.

Under the Equal Pay Act of 1963, signed on June 10, 1963, employers must pay women and men equally for equal work in the same workplace. The Labor Department says the law turns on whether jobs are substantially equal, not whether titles match, and it covers salary, overtime, bonuses, life insurance, vacation and holiday pay, gasoline and cleaning allowances, hotel accommodations, travel reimbursements and benefits. If wages are unequal, the agency says employers must raise pay to equalize compensation, not reduce other workers’ wages.

That matters in small nonprofits because compensation can evolve informally. A route coordinator, a volunteer manager, a warehouse lead and an administrative planner may carry different titles but overlap on responsibility, schedule pressure and decision-making. If a newer hire is brought in above a long-tenured employee, or if a strong negotiator lands a better package than a quieter colleague, the organization can create a gap that feels arbitrary even when no one intended it. In a workplace built around service and community values, opaque pay decisions can undercut the very culture leaders are trying to build.

The National Council of Nonprofits says compensation in the sector is governed by both state and federal laws and may require professional guidance. It also says nonprofit boards are responsible for executive compensation and should set pay that is reasonable, not excessive, and sufficient to attract and retain talent. For managers, the practical move is to compare the actual content of jobs, review the full compensation package and decide whether salary bands or written pay rules are needed before another hiring round or merit cycle widens the gap.

The stakes reach well beyond one organization. The Bureau of Labor Statistics says nonprofit organizations operate in all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands, and a September 2024 Monthly Labor Review article examined nonprofit earnings and sectoral employment since 1994. Candid’s 2024 compensation report, based on 209,655 compensation observations from 128,238 tax-exempt organizations, found that in nonprofits with budgets above $50 million, median CEO pay was $559,770 for men and $430,640 for women. With state pay-transparency laws pushing more openness, compensation is becoming part of how nonprofits prove they are serious about fairness, not just service.