Combating Pay Discrimination

By Keelin Reed and Dr. Kelly Hall

Despite regulations like the Equal Pay Act of 1963 and Title VII, pay discrimination continues to be a concern in the U.S., especially in Utah, where women earn 30% less than men. The Equal Pay Act of 1963 is the primary federal legislation that made it unlawful for employers to discriminate against employees in wages based on sex. This includes discriminatory pay based on sex when the jobs involve equal work, equivalent skills, effort, and responsibility and are performed under similar working conditions. Exceptions are permissible in cases where pay differences are due to seniority, merit systems, quantity or quality of work, or a factor other than sex. Additional steps were taken in 1964, when Congress enacted Title VII of the Civil Rights Act of 1964, which prohibits employers from not hiring, firing, promoting, or otherwise discriminating against employees in employment practices on the basis of protected class status, which includes sex.?Like the Equal Pay Act, under Title VII, employers cannot pay someone less based on sex, unless they can establish a business necessity for the pay difference. Discriminatory pay practices may take the form of intentionally paying employees less because of their sex, known as disparate treatment. Discriminatory practices may also be unintentional, known as disparate impact. Even if an employer does not intend to discriminate against someone, their employment practices or policies can still be deemed unlawful if the practice or policy has a greater adverse impact on the members of a protected group. Discriminatory pay practices are risky for employers and unjust to members of the affected groups. Examining organizations’ shortcomings and proactive steps to combat pay discrimination is useful for all who strive to create fairer pay practices.???

Nike is one organization that has come under scrutiny in recent years regarding alleged discriminatory pay practices and a boys-club culture that devalued and demeaned women, allegations that came to light in a 2018 lawsuit. It is interesting to note that one of the catalysts for the lawsuit was a company-wide email sent in 2017 by Nike’s top HR official, declaring that the company had achieved pay equity, with women earning 99.6% of men earned. This prompted an independent review of pay practices. As the lawsuit has unfolded, Nike has fought hard to keep key details of the suit sealed, indicating the release of more information would perpetuate a public scandal and reveal their pay practices to competitors. However, last month, U.S. Magistrate Judge Jolie A. Russo ordered the release of additional documents that had been under a protective seal, stating, the “Defendant’s alleged refusal to pay female employees is a matter of public import and the subject matter of this litigation. Accordingly, there is no apparent public scandal or confidential information association with the proposed reductions.”?

While Nike has come under scrutiny and has fought vigorously to restrict discussion about its pay practices, Salesforce is a company that has become a role model company for improving pay equity. In 2015, chief personnel officer, Cindy Robbins, raised the issue of a pay gap between men and women in the company. CEO Marc Benioff supported further inquiry into the issue and was shocked to learn the company’s pay study results. He described the gender-based pay differences in an interview, stating, “It was everywhere…"It was through the whole company, every department, every division, every geography." He quickly committed the financial resources to make necessary pay adjustments and continues to do so. Since 2015, Salesforce has spent more than $22 million to make pay adjustments, including adjustments in their most recent cycle of evaluations, which revealed that 8.5% of the company’s global employees required adjustments. Salesforce advocates for equal pay for equal work and believes that equal pay reporting should be as expected as an earnings call or an annual report. ?

Some organizations are more eager to address the pay gap than others, so pay transparency through legislation has become a hot topic. California, Colorado, Connecticut, and many other states have taken steps to create fairer pay practices. For example, Colorado enacted the Equal Pay for Equal Work Act in 2021, which requires employers to take specific steps to prohibit pay discrimination, including refraining from asking applicants about wage history, including wage ranges in job postings, and informing employees of internal promotions. Utah does not yet have state-wide legislation to combat pay discrimination through such steps. ?

If pay transparency and other proactive steps to dismantle pay inequity aren’t on your organization’s plan, they should be. Pay transparency benefits women and organizations because it helps eliminate the shadows of the workplace. If women do not know that others are paid more for equal work, they are more likely to settle for something lower, compared to men, who are more likely to initiate negotiations. ?In addition, pay secrecy and asking applicants about wage history can perpetuate pay differences based on gender. In contrast, pay transparency and other proactive steps to improve pay equity can contribute to a sense of fairness and overall job satisfaction and should thus be an organizational priority.?