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May 16, 2019 Articles

The Persisting Gender Pay Gap: Recent Developments in the Law That Address Gender Pay Disparities

State laws prohibiting employers from asking prospective employees about their wage history, a pending Supreme Court case, and discrimination suits filed by women attorneys at prominent law firms.

By Rebecca Sha

The Equal Pay Act, the federal law mandating that women and men receive the same pay for the same work, has been in place since June 10, 1963, yet gender pay equality remains elusive.

Under the Equal Pay Act, an employer must pay men and women equally for equal work. Equal pay includes not just a worker’s salary but also overtime, bonuses, benefits, training, reimbursements, etc. While equal work does not need to be identical, it must be substantially similar. This standard leaves much open for interpretation.

Currently, studies show, women make 80 cents for every dollar earned by men. For minority women, including African Americans, Native Americans, and Hispanics and Latinos, that figure is significantly lower.

There are many reasons why this gap exists. For instance, while women are becoming more educated and earn college degrees at a higher rate than men, they have difficulty obtaining that first or subsequent job that actually pays well. This initial lower pay has a lasting impact on the rest of the woman’s career, affecting promotions, future pay raises, and even new jobs, because employers historically use prior wages to set new wages.

Recognizing that the current gender pay gap is “an embarrassing reality of our economy,” the Ninth Circuit Court of Appeals in Aileen Rizo v. Jim Yovino, Fresno County Superintendent of Schools, an April 9, 2018, decision, held that employers can’t pay women less than men because they made less at their prior job. The court reasoned that considering a woman’s prior salary to pay her less than a similar male employee would perpetuate sex discrimination. The court stated that acceptable criteria for setting a wage that may be considered must be limited to “legitimate, job-related factors such as a prospective employee’s experience, educational background, ability, or prior job performance.” That case is currently pending review by the U.S. Supreme Court.

Some of the reasons for this pay gap may be discrimination, although it is often difficult to prove or quantify. Recently, the legal community has seen a wave of litigation alleging that prominent law firms discriminate against female attorneys in pay, promotions, and opportunities. For instance, in January 2018, a female nonequity shareholder at Ogletree, Deakins, Nash, Smoak & Stewart brought a $300 million class action lawsuit alleging that the firm discriminates against female partners in pay, promotions, and opportunities. The suit claims that the law firm denies female shareholders the same opportunities, training, and business credit provided to male shareholders. Further, it is alleged that females are invited to fewer client development events and are locked out of important business development opportunities. Moreover, the suit alleges that the firm disproportionately gives administrative duties to female attorneys, which takes away from actual, substantive work.

Similarly, in June 2018, Jones Day was hit with a gender discrimination lawsuit filed by a former hiring partner, which alleges that the firm operates like a “fraternity” and uses a black box compensation system, which results in less pay to female attorneys than male attorneys. For instance, the lawsuit alleged, a sixth-year male associate was compensated more than an eighth-year female partner.

Both firms deny the allegations.

Some states are proactively tackling the gender pay gap by enacting new laws. For instance, in October 2017, California enacted a law prohibiting California employers from asking job applicants about their salary histories. The City of Philadelphia in January 2017 was the first city to enact legislation doing the same—prohibiting employers from asking prospective employees about their wage history. Some states, including New York and Massachusetts, have enacted laws that increase the burden on employers to show that they are not discriminating with respect to wage payment based on sex and lessen the burden on the employee to prove pay bias. Other states and federal enforcement agencies, including the Equal Employment Opportunity Commission, have homed in on efforts to increase pay transparency.

Internationally, the United Kingdom has regulations that require employers, including large international employers, to publish statistics and other information regarding gender pay gaps in their workforces by April 2018.

In light of this movement toward more transparency, some companies are conducting their own internal audits and publicly disclosing such pay data voluntarily.

It remains to be seen whether the gender pay gap may be eliminated in the next decade or two, but the recent developments in practice and law show that governments, companies, and employees are invested in seeing an end to pay disparities.

Rebecca Sha is an associate with Phelps Dunbar in New Orleans, Louisiana.

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