Bull’s-Eye on Gender Pay Gap; Laws, Lawsuits Proliferating

Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...

By Joyce E. Cutler

Companies that haven’t yet started to address pay disparity between their male and female employees may want to start.

Pay equity has become a central focus for many city councils, state legislatures, class-action litigators and shareholder activists.

Cities and states like New York City and San Francisco and Massachusetts and California are adopting laws that address pay disparity and prohibit companies from discussing applicants’ salary history pay equality. At the same time, class-action litigators and shareholder activists are pushing for equity in the courtroom and in shareholder resolutions. A recent McKinsey Global Institute report found $12 trillion could be added to global GDP by 2025 by advancing women’s equality.

How companies compensate workers “is likely the number one area” where the plaintiffs’ bar and governmental enforcement litigators are bringing class actions, Gerald Maatman, a partner with Seyfarth Shaw LLP, told Bloomberg BNA in an April 10 email. “The increasing media focus on pay equity is apt to fuel even more attention” to this type of workplace litigation.

In the San Francisco Bay Area in particular, pay equity has been in the news as Alphabet Inc.’s Google and other tech companies defend pay policies for women employees.

The regional director of the Labor Department’s Office of Federal Contract Compliance Programs recently testified in a San Francisco courtroom that the agency found “systemic compensation disparities against women, pretty much across the entire workforce” at Google. The tech company denied the allegations. The DOL is now in court seeking data on Google’s pay decisions, including bonus pay, stock options and salary history.

Coastal Cities Move Ahead

Cities on either U.S. coast are moving ahead with their own laws as well.

The New York City Council on April 5 approved a measure barring companies from asking job applicants about their pay history. In Philadelphia, a similar wage-equity law is due to take effect May 23, although the Philadelphia Chamber of Commerce sued April 6 to block the law.

Out West, San Francisco employers would be banned from asking applicants about their salary history and prohibited from releasing former or current employees’ salary information without prior written consent under legislation introduced April 4. And the Bay City could sue to enforce the pay equity requirement.

Women in San Francisco earn 84 cents on the dollar for what a man earns, and the disparity is even greater for women of color, Supervisor Mark Farrell said in introducing the legislation. African American women in San Francisco earn 60 cents on the dollar and Latino women, 55 cents.

The pay gap has narrowed at a half cent a year since the federal Equal Pay Act of 1964 was passed. “If we keep the current rate of closing the wage gap, we’ll get there across our country in 2059. That’s 42 years away. For African American women it will be 108 years. For Hispanic women, 232 years. It’s simply unacceptable,” Farrell said.

Across San Francisco Bay, Berkeley, Calif., proposed April 4 giving preference to vendors who can demonstrate equal pay.

Shareholder Action

Some shareholders are pushing for action as well.

Arjuna Capital, a division of Marion, Mass.-based Baldwin Brothers Inc., in a shareholder proposal asked Alphabet to prepare a report by November on the company’s policies and goals to reduce the gender pay gap. The proposal is up for a June 7 vote at the annual shareholder meeting.

“If Google thinks that its massive size and influence somehow makes it invulnerable to shareholder pressure, it needs to think again. Federal litigation, fines, and the risk of resulting civil suits show why shareholders have every right to be concerned. Investors long-term wealth is under threat when companies flout the rules on how women are treated in the workplace,” Natasha Lamb, Arjuna Capital managing director, said in an April 10 statement.

Arjuna last year led a successful shareholder fight targeting eBay Inc., Intel Corp., Apple Inc., Amazon.com Inc., Expedia Inc., Microsoft Corp. and Adobe Inc. to upgrade standards and transparency on gender pay disparity in the workplace.

This year Arjuna is targeting Wells Fargo & Co., Citigroup Inc., Bank of America N.A., JP Morgan Chase & Co., MasterCard Inc. and American Express Co.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at JCutler@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Bloomberg Law for HR Professionals