By Gary Deel, Ph.D., JD
Faculty Director, School of Business, American Public University
If a police officer thinks you have committed a crime, she can’t just arrest and interrogate you, or search your home. In order to take such actions, she must have probable cause — that is, the logical belief, based on evidence, that you indeed committed a criminal act.
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In fact, even to simply stop you in public and question you, police officers must have at least a reasonable suspicion or a good faith presumption that you were involved in a crime. They can make this decision based on facts, circumstances, and their training and experience as police officers.
But without these elements, police have no authority to investigate you. If they do try to question you, you are well within your rights not to answer.
Probable Cause and Reasonable Suspicion Do Not Apply to the IRS
Have you ever noticed, however, how probable cause and reasonable suspicion do not apply to the Internal Revenue Service? The IRS audits income tax returns each year.
While some audits might be motivated by evidence of wrongdoing or good faith suspicion, many more audits are performed completely at random. The IRS routinely conducts audits based on such ostensibly benign factors as the use of round numbers in reporting and the election of too many deductions.
By analogy, this would be like the police investigating you for shoplifting because you happened to buy an item that is commonly stolen by genuine thieves.
If you’re like most people, you’ve probably never pondered this apparent bypass of due process by the IRS. These randomized audits generally don’t strike us as an assault on our rights or privacy.
Why does the IRS conduct audits? Because income tax evasion is a crime and we want to catch and stop criminals.
Without Random Audits, Many More Fraudulent Returns Would Never Be Spotted or Prosecuted
Why do we permit auditing without due process or normal investigative checks and balances? Because we know that income tax fraud is quite common, and without random audits, many more fraudulent returns would never be spotted or prosecuted. After all, we, the honest taxpayers of our country, don’t want to have to pick up the tab for those trying to cheat the system.
Given that Americans seem to have accepted this federal government scrutiny, it begs the question: Why wouldn’t we use the same randomized audit philosophy to monitor other easily hidden crimes such as gender-based pay discrimination?
Pay Discrimination Based on Gender Has Been Prohibited by Law for Decades
Most Americans agree that men and women should receive equal pay for equal work. Discrimination based on gender has been prohibited by law for decades, pursuant to the Fair Labor Standards Act of 1938 and its subsequent expansion under the Equal Pay Act of 1963. Yet, we know that this kind of discrimination is alive and well in America.
Women in the United States still make about 80 cents on the dollar compared to men. Although the pay gap is shrinking, the rate at which we are correcting this problem has slowed dramatically over the past few decades.
In fact, if we continue on the current trend, an analysis by accountancy firm Deloitte based on data from the British Office for National Statistics (ONS) in 2015 found that pay parity won’t be achieved until 2069. it will take as many as 50 more years before women finally see pay equality in the workplace.
In 2009, President Barack Obama passed the Lilly Ledbetter Fair Pay Act which extended the statute of limitations for women who discover evidence of gender-based pay discrimination against them. But this law only helps women who discover evidence of discrimination. Because private-sector workers don’t commonly discuss their salaries with one another, most gender-based pay discrimination goes undetected.
Why can’t the government audit records for these illegal disparities in the same way that the IRS audits tax returns? Federal agencies already have all the information they need to police this problem. The IRS obviously has records pertaining to income of individuals across employers, which can be isolated by federal employment identification numbers (EINs).
The State Department, the Social Security Administration, and the U.S. Customs and Immigration Service have individual-specific gender information on all American citizens and residents. So why don’t the agencies partner to proactively police employers?
Unfortunately, the answer is that current interpretations of agency authority would require warrants or subpoenas for this kind of investigation. But this obviously seems nonsensical in light of the IRS’s freedom to audit tax returns. How is this any different? Or any less important?
The primary argument against such a proposal would be that if the federal government (presumably the Equal Employment Opportunity Commission or the Department of Labor) examined this data without a warrant and used it to pursue instances of wrongdoing, this would be an unconstitutional violation of privacy rights and procedural due process.
But this objection could be easily overcome in two steps.
The first step is to establish that, because the data to be examined is already part of the government’s routinely kept records, no such violation of privacy exists. The government shouldn’t need to subpoena anyone for information it already has.
The second step is to approach instances of apparent discrimination in the same way the IRS handles suspicious audits — with notice and dialogue rather than arrest and prosecution. If you are audited by the IRS and the audit reveals information of potential fraud or dishonesty, the IRS doesn’t kick in your door and haul you off to jail. The agency will send you a letter and start a discussion. You’re given an opportunity to explain any discrepancies. Then, only if you’ve failed to account for any concerns the government has, the prosecutorial process is initiated.
Such would (and should) be the nature of a government process to audit for gender-based pay discrimination. If a suspicious anomaly is detected — say an employer with a roughly equal number of women and men employed, but an imbalance in compensation between them — the government would reach out with a letter requesting an explanation. The employer would then be given an opportunity to explain the disparity.
If a legitimate excuse for the incongruity exists, the audit is concluded without incident. But if not, then probable cause is established and the employer could face legal action in exactly the same way as if an employee had filed a pay discrimination claim with the EEOC.
Our Government Has a Viable Means of Taking Active Steps to Combat Gender-Based Pay Discrimination
It’s clear that the U.S. government has a viable means of taking active steps to combat gender-based pay discrimination, if we’re willing to expand our tolerance of pre-existing, routine data auditing. This process certainly wouldn’t end all gender-based pay bias, but it could pull back the curtain on some of the most egregiously unfair employment practices that might otherwise remain concealed indefinitely.
As a final thought, it’s worth noting that in theory a similar process could be used to police illegal discriminatory employment practices of other types, such as pay discrimination based on race, religion, disability, sexual preference or another protected class. The main hurdle to such efforts is that the government does not keep routine individual-specific records on these classifications, at least not in a declassified manner. Whether or not the government ought to keep such records, for these purposes or others, is a topic for a much larger discussion.
About the Author
Dr. Gary Deel is a Faculty Director with the School of Business at American Public University. He holds a JD in Law and a Ph.D. in Hospitality/Business Management. He teaches human resources and employment law classes for American Public University, the University of Central Florida, Colorado State University, and others.