Today marks the twentieth anniversary of “Equal Pay Day,” which the National Committee on Pay Equity launched as a public awareness event in 1996 to symbolize how far into the year women must work to earn what men earned in the previous year. In more than 50 years since enactment of the federal Equal Pay Act (“EPA”) and Title VII of the Civil Rights Act of 1964 (“Title VII”), women have made significant progress in the workplace and now make up roughly half of the American workforce. However, women working full time still earn, on average, 79 cents for every dollar earned by men, and this number has barely moved in over a decade. That said, it is still not clear that employer bias is to blame for the gap that remains. Indeed, the pay gap measures only the difference in average earnings between all men and all women; it is not a proxy for pay bias—i.e., the failure to pay women equal pay for equal work. Eliminating pay bias is important, but focusing heavily on perceived employer bias obscures a much more complex web of factors contributing to the problem of pay differences between men and women.
While the pay gap continues to make headlines even twenty years after the first Equal Pay Day, the federal government’s enforcement and reporting efforts under the EPA, Title VII and Executive Order 11246 do not reflect significant findings of pay bias. Notwithstanding these open questions, federal and state governments continue to double down on the discrimination narrative and have pushed for greater scrutiny of employers through legislation and executive action, with this year being perhaps the most active year on record. Though these efforts are well-intentioned—no one can dispute that women should be paid the same as their male counterparts for substantially similar work—it remains to be seen whether these efforts will finally narrow the gap. This begs the question whether the government, employers, and society as a whole ought to be thinking more broadly—and beyond alleged discrimination—to identify meaningful ways to narrow the pay gap.
Recent Federal Enforcement Efforts
As we reported in February, the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) has been on the front line of the Obama Administration’s equal pay initiatives. OFCCP’s FY 2017 budget makes very clear that the Agency will focus on complex investigations of federal contractors in the financial services and technology sectors. Among other things, the Agency will be establishing two “Skilled Regional Centers” in San Francisco and New York with “highly skilled and specialized compliance officers capable of handling various large, complex compliance evaluations in specific industries, such as financial services or information technology.” OFCCP is also eliminating its case closure targets and will take other steps to measure how its staff implements “its enforcement priorities of complex systemic compensation. . .” Until now, OFCCP has not identified particular sectors for such aggressive investigation.
This proposed focus is likely in response to increased scrutiny from government contractors regarding the process and efficiency of OFCCP efforts. Lauren Weber of the Wall Street Journal recently published an article emphasizing OCCFP’s struggles to effectively investigate and settle discrimination cases. Weber suggests that the agency may have tried to exceed its limitations, explaining that prior to the Obama administration, “the OFCCP concentrated more on helping contractors comply with regulations [and that] it has taken time and money to gear up for the agency’s aggressive role in protecting workers.” However, despite the OFCCP’s “comprehensive update to its sex-discrimination guidelines . . . the agency is completing fewer audits for compliance with antidiscrimination, its core task.” As reported, government contractors argue that the “meager number of settlements suggests the agency has wasted resources tackling a problem that hardly exists.” And while OFCCP supporters respond that this limited regulatory success underscores the complexity of fair-pay investigations, “[b]oth sides agree that the agency lacks the statistical and other expertise required to root out unequal pay.”
On January 29, 2016, the Equal Employment Opportunity Commission (EEOC) also proposed an amendment to the Employer Information Report (“EEO-1”), which already aggregates data regarding employees’ age, ethnicity, and sex. Under the proposed rule, beginning in September 2017, EEO-1 filers with 100 or more employees (both federal contractors and private industry) would be required to include two additional data components to EEO-1 reports: pay data and hours worked. The proposed rule calls for use of W-2 earnings as the source of the pay data, but not at the individual level. Rather, employers will be required to aggregate W-2 data in 12 pay bands for the 10 EEO-1 job categories. Employers will then count and report the number of employees in each pay band.
EEOC claims that the new data “would provide EEOC and [OFCCP] with insight into pay disparities across industries and occupations and strengthen federal efforts to combat discrimination.” This assumption came under criticism at EEOC’s March 16, 2016 public hearings on its data collection proposal. Among other things, critics pointed out that the proposed data collection will be much less specific than the individualized data that the OFCCP has long requested in such audits. Use of W-2 income data could also be inadequate because of the way certain types of non-traditional income, like stock options, are reported (or not reported). Moreover, the broad nature of jobs encompassed in EEO-1 categories will allow no meaningful look at the pay of workers who are in any way similarly situated in their skill, effort, and responsibility. As such, “false positives” may be abundant and investigating them will absorb valuable EEOC and employer resources that could instead be spent on more targeted and meaningful efforts.
Recent State Enforcement Efforts
Beyond the protections already provided and enforced under the EPA and Title VII, two states—California and New York—have enacted stringent equal pay legislation that significantly increase the burdens on employers to justify any pay disparity between men and women. The California Fair Pay Act (CFPA) (which we reported on here, here, and here) is now hailed as the nation’s strongest equal pay protection law. New York’s new law (reported on here) was enacted days later. And the momentum at the state level is growing. The National Women’s Law Center issued a report in January 2016 highlighting the unprecedented level of activity in new state equal pay laws and legislation.
In September 2015, New Hampshire introduced a bill titled the Gender Advancement in Pay Act (S. 2070). If passed, the new law would: (1) require equal pay among men and women without reducing the opportunity for merit rewards; (2) require employers to prove there is “a business-related factor other than sex” for differences in pay (as opposed to “any factor other than sex” as under current law); (3) prohibit retaliation against employees for discussing (or not discussing) their pay information; and (4) create civil penalties for employers that willfully engage in sex-based pay discrimination. Fees collected under these civil penalties would be used to further study the pay gap nationwide.
In March 2016, New Jersey passed a bill to address the gender pay gap that would require equal pay for “substantially similar” work in terms of effort, skill, and responsibility. If not vetoed by New Jersey Governor Chris Christie (who has rejected similar legislation in the past) the new law would also retrigger the statute of limitations every time an allegedly discriminatory paycheck is issued, allow back pay for the duration of the discriminatory period, and prohibit employers from retaliating against employees who disclose pay-related job information. Additionally, employers would be prohibited from reducing the rate of compensation of any employee in order to comply with the law. Finally, the new law would require companies that enter in contracts with the State to report certain data, including information on gender, race, job title, and total compensation, for each employee working under the contract.
Similar to California’s and New York’s anti-retaliation provisions, Connecticut, New Hampshire, and Oregon have enacted equal pay laws that prohibit employers from retaliating against employees for discussing their wages with each other or in general. North Dakota recently passed a law requiring employers to maintain records of employee compensation for the length of an employee’s tenure, and to report on these records upon inquiry from the state. Illinois amended its equal pay laws to expand coverage to employers with four or more employers and increase the amount of civil penalties available for equal-pay violations. Delaware, Minnesota, and Oregon now hold state contractors accountable for certifying their compliance with state and federal equal pay laws. Finally, Rhode Island has created a tip line for employees to report violations of the state’s gender-based wage discrimination laws.
In addition to the legislation described above, nearly a dozen states either proposed or passed bills to address the pay gap in 2015, including California, Florida, Indiana, Louisiana, Maryland, Massachusetts, Michigan, Ohio, Pennsylvania, South Carolina, and Washington. While many bills were vetoed before being enacted into law, there is a clear trend among states to address equal pay matters on a local level.
In just the past year, the country has seen a significant increase in federal enforcement and state legislation geared towards resolving gender discrimination and closing the pay gap. However, whether these results will be productive is yet to be seen. Historic results from OFCCP investigations and EEOC enforcement actions fail to show the number of violations that one would expect if employer pay bias were currently the overwhelming driving force behind the gender pay gap in the American workplace. This is not to suggest that pay bias has been eradicated. Rather, it suggests that the resolution of pay disparity warrants a closer look at other potential causes. This is important to consider as we reflect on pay equity today and in the future.