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Betsy Bulat Turner, Attorney
More than 50 years after the passage of the Equal Pay Act, pay equity remains a hot topic. The national #MeToo movement not only triggered a nationwide discussion about sexual assault and harassment in the workplace, it also created a demand for more transparency in the workplace and pushed equal pay back in the spotlight. In January 2018, for example, the #TimesUp movement and legal defense fund were started by a group of women in Hollywood to address harassment and safety in the workplace, as well as equality. News headlines followed highlighting disparities in pay between male and female actors.
The recent emphasis on equal pay and the gender gap has spurred courts and legislatures to modify and extend current laws and create new ones in effort to remediate pay disparities. In light of the changing legal landscape, employers are well advised to take note of the developing laws and proactively address any pay disparities that may exist in their workplaces.
The Equal Pay Act Since 1963, the Equal Pay Act has prohibited paying men and women differently for the same work. As the Ninth Circuit explained in its recent April 9, 2018 decision in Rizo v. Yovino, “The Equal Pay Act stands for a principle as simple as it is just: men and women should receive equal pay for equal work regardless of sex.”
The Equal Pay Act contains four exceptions to pay disparities between men and women: employers can pay workers at different rates if they do so based on seniority, merit, the quantity or quality of the employee’s work, or “any other factor other than sex.” Critics of the Equal Pay Act – those who contend it does not go far enough to address the gender gap – have argued that this last exception – “any other factor other than sex” – has been used to justify factors and policies that, while facially neutral, create pay disparities. One such factor is prior salary history.
The Ninth Circuit Bans Reliance on Prior Salary In Rizo, the Ninth Circuit overturned precedent to hold that salary history can never justify a wage differential between men and women. The Court explained that allowing employers to base pay decisions on prior salary would perpetuate wage gaps ad infinitum, vitiating the purpose of the Act. Instead, the Court limited the “factor other than sex” exception to legitimate, job-related factors such as an “employee’s experience, educational background, ability, or prior job performance.”
The Ninth Circuit’s ruling is directly at odds with the Seventh Circuit’s position, which has approved of using salary history as a “factor other than sex. ” Other appeals courts have taken middle-of-the-road positions, allowing consideration of prior salary in some cases.
The defendant-employer in Rizo intends to appeal the case to the U.S. Supreme Court. Regardless of whether and how the Supreme Court ultimately decides the issue, employers in the Ninth Circuit need to quickly audit their workforces for gaps based on salary history. We strongly recommend that other employers undertake a voluntary analysis as well.
States and Cities Are Taking Additional Action Instead of waiting for federal or court action, state legislatures are taking up this issue quickly and directly. For example, California implemented a “salary history ban” effective January 1, 2018 which bars employers from asking about salary history information or using salary history to set a new candidate’s salary. Delaware, Massachusetts, Oregon, and various municipalities like New York City, Philadelphia, and San Francisco have recently passed similar laws. Further, the Equal Employment Opportunity Commission and the Department of Labor’s Office of Federal Contract Compliance Programs have indicated that review of pay related employment practices will be a priority in the coming year.
Workplace Audits Are Essential The proactive pay equity analysis employers should undertake should include an analysis of data not only by gender, but also by race, disability and other protected categories. Job duties, responsibilities, and employees’ entire compensation packages should be reviewed. Employers should consider consulting an attorney to design an audit that evaluates each of the relevant factors in their jurisdiction and allow the attorney to conduct the internal audit so that the results and analysis of the audit remain privileged.
Employers must be able to provide legitimate factors to explain disparities in pay such as qualifications, skills, education, merits, or other factors. Companies may need to make corrections, where appropriate, to address any unexplained pay disparities and modify existing compensation policies and procedures to prevent future pay disparities. In some instances, evidence that an employer conducted an internal audit and engaged in reasonable efforts to correct unexplained pay disparities can be used as a defense to pay disparity claims.
Documentation of any resulting discussion, investigation, and consideration of an equal pay complaints is vital to ensure equal treatment and to reduce the likelihood of prolonged litigation.
Employers may also choose to review their company culture to evaluate whether it promotes equal pay for equal work. This may include a review of employment applications and employment policies, as well as training for management level employees. These practices can substantially reduce an employer’s chances of appearing in the next #MeToo headline.
Betsy Bulat Turner, Partner Phone: 404-909-8108 | Fax: 404-909-8120 E-mail: bturner@martensonlaw.com
Betsy defends labor and employment litigation from small claims to class actions and counsels management and executives on related business compliance matters. Betsy takes an efficient approach toward simplifying and organizing complex disputes, compliance, and HR-related matters. In addition to advice related to federal and state wage and hour and anti-discrimination laws, Betsy advises clients subject to federal contracting laws, such as the Davis Bacon Act and initiatives enforced by the Office of Federal Contract Compliance Programs. Betsy has represented clients through trial and appeal in a wide variety of litigation, including cases involving business torts, fiduciary duties, restrictive covenants, and other contractual disputes before federal, state and administrative courts. Betsy has been selected as a Rising Star by Georgia Super Lawyer magazine in employment litigation defense from 2013 to the present. She has also been designated as Legal Elite in Labor and Employment by Georgia Trend magazine and has obtained a Martindale-Hubbell AV Preeminent Peer Review Rating. Before joining Martenson, Hasbrouck & Simon LLP, Betsy served as a law clerk to the Honorable E. Clayton Scofield III, Magistrate Judge for the Northern District of Georgia and worked in the labor law and employment litigation sections of Meyer Moser Lang LLP and Freeman Mathis & Gary LLP. Betsy was a member of Georgia Tech’s cross country and track teams and the Zeta Tau Alpha sorority. She remains active with Georgia Tech and previously served as a member of the Alumni Association’s Board of Trustees and as President of the Georgia Tech Bar Association. Practice Areas • Employment Litigation Defense • Employment Contracts • Wage and Hour • Federal Contract/OFCCP Compliance • Government Investgations • Labor Disputes and Bargaining Education • Georgia State University College of Law, J.D., cum laude, 2007 • Georgia Institute of Technology, B.S., High Honors, 2004
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