Pay Equity Litigation is Gaining Ground
In January 2016, the California Fair Pay Act took effect. It expands the federal Equal Pay Act and Title VII, and is increasingly being used by both plaintiffs and regulators to ensure that men and women are paid the same for substantially similar work. In California, there has been increased focus on pay inequities, especially in the technology sector. The ongoing pay discrimination suit against Google, which is accused of paying women less than it pays men, is a good example.
The purported class action lawsuit alleges that Google has paid and continues to pay women less than men who are doing substantially similar or substantially equal work in certain covered positions at Google offices in California since September 14, 2013. The suit alleges that Google discriminates against women and breaks California law by steering them into lower salary levels than men, giving women lower-paying jobs, promoting women more slowly and less frequently, and generally paying female employees less than men for similar work.
Google is also under federal investigation by the U.S. Department of Labor, which has accused it of “extreme” pay discrimination against women. Google has denied the allegation, and is fighting efforts to turn over data on its pay practices.
As of January 1, it is illegal to ask prospective employees about their previous salaries under a law designed in part to remedy gender pay inequities. Employers now face the prospect of defending, sometimes retroactively, their entire pay schemes. To avoid having to do so in litigation, employers should engage in pay audits, reviewing the compensation of those in “substantially similar” jobs. It’s possible that pay differentials are legal. But it’s also possible that employers will find that they need to adjust salaries to reach a degree of parity.
Ideally, employers should fix the salary for a position before recruiting for it. Read this post for tips on how to discuss salary in the hiring process. While few companies advocate for a completely transparent salary scheme, it can be wise to act as if one’s practices are on full display to ensure equal treatment.