The federal government announced yesterday that it was stepping up its equal pay efforts. Coinciding with “The White House United State of Women” summit being held in Washington D.C., the White House announced several initiatives including new Department of Labor rules regarding sex discrimination for federal contractors and grant programs for job training. The White House also unveiled a White House Equal Pay Pledge. The pledge is part of a voluntary program in which 28 corporations to date have agreed to conduct “an annual company-wide gender pay analysis across occupations,” to “review hiring and promotion processes and procedures to reduce unconscious bias and structural barriers,” and “to embed equal pay efforts into broader enterprise-wide equity initiatives.”
The signatories also pledge “to identify and promote best practices that will close the national wage gape to ensure fundamental fairness for all workers.” Notable signatories so far include new economy companies such as Amazon and Slack and large corporations including PepsiCo and Johnson & Johnson. The program does not detail the specific analysis these companies intend to perform or what structural changes they intend to make if gender-based pay or other disparities are found.
The clear intent of the pledge is to spur participation by other companies to commit publicly to performing similar analyses. Companies can join the effort simply by completing an on-line pledge statement on the White House website. However, employers should give careful thought to the ramifications of signing the pledge, including the commitment to conduct annual pay audits and other self-analyses of employment practices. Those ramifications include what the effect will be of signing the pledge but not conducting a pay audit and whether or not such pay audits if not prepared on a privileged basis will be subject to discover in potential future regulatory inquiries and litigation.
In addition, the efforts dovetail with government efforts to require employers to submit pay data including the proposed amendments to the Equal Employment Opportunity Commission’s employment data collection and non-government efforts such as activist shareholder proposals to require public companies to disclose publicly the percentage “pay gap” between male and female employees and planned steps to address. Further, more states are strengthening their pay discrimination laws in ways which place employers at greater risk of equal pay lawsuits.
These efforts reflect the fast changing nature of equal pay efforts and make the landscape more complex. Although there may be competitive pressure to sign on the White House Equal Pay Pledge, companies will be well advised to discuss all of the ramifications with experienced counsel on these issues. Employers seeking to address these issues should know where they stand by conducting privileged internal audits. In addition, employers should tailor any public affirmations narrowly to allow them to defend themselves fully should they face claims down the road.