Echoing an increasingly familiar refrain, another district court has declined to certify a class of women bringing pay equity claims on the basis that they did not present a common question capable of producing a common answer to “the crucial question why was I disfavored.” Relying largely upon Wal-Mart Stores, Inc. v. Dukes, the court found certification inappropriate because the putative class members were subject to countless independent decisions involving the judgment and discretion of individual managers. The case also serves as another reminder that courts (including California state courts) will not accept an overly simplistic analysis comparing broad job categories or titles, but will continue to look at actual business practices and job responsibilities to ensure comparators are “similarly situated” so a meaningful pay comparison can be made. READ MORE
In recent years, the volume of equal pay lawsuits has continued to increase in Silicon Valley, despite technology companies reaffirming their commitment to equal pay policies and practices. Earlier this month, Hewlett Packard Enterprise Co. (“HP”) was hit with the latest equal pay lawsuit. The class action lawsuit, filed in Santa Clara Superior Court, alleges that HP discriminated against its female workers by paying them less than their male counterparts and funneling women into certain jobs based on stereotypes. READ MORE
In the wake of the Ninth Circuit’s decision in Rizo v. Yovino, key employer-side groups have expressed support for U.S. Supreme Court review to determine whether employers who rely on prior salary to set starting pay can continue to do so consistent with the federal Equal Pay Act, 29 U.S.C. § 206(d)(1) (“EPA”).
The EPA prohibits sex-based wage differentials between men and women who perform equal work, but allows employers to justify wage differentials even between such employees based on seniority, merit, production, or “any other factor other than sex.” The Ninth Circuit’s recent en banc decision in Rizo held that “prior salary alone or in combination with other factors cannot justify a wage differential” because prior salary is not a “factor other than sex.” 887 F.3d 453, 456 (9th Cir. 2018). The Ninth Circuit reasoned that a “factor other than sex” must be “job-related,” and thus rejected the defendant employer’s exclusive reliance on prior salary as a benchmark against which to set starting pay for new hires. The Court, however, left open the possibility that prior salary could permissibly “play a role in the course of an individualized salary negotiation.” Id. at 461. (For a comprehensive analysis of the Rizo decision, see Can Prior Pay Inform a New Hire’s Salary? (Daily Journal, May 11, 2018)).
On August 30, 2018, the Fresno County Superintendent of Schools, Jim Yovino, filed a petition for writ of certiorari asking the Supreme Court to review the Ninth Circuit’s decision in Rizo. The petition argued that the U.S. Supreme Court should grant review because the Circuit Courts of Appeal diverge on whether prior salary is a “factor other than sex” (see, e.g., Wernsing v. Dep’t of Human Servs., State of Illinois, 427 F.3d 466, 469 (7th Cir. 2005)) and because prior salary is a “factor other than sex” under a plain reading of the EPA.
Since Yovino’s petition for writ of certiorari, several business groups have filed amici curiae briefs urging the U.S. Supreme Court to accept the case. The Chamber of Commerce of the United States of America (Chamber) and the Society for Human Resource Management (SHRM) recently filed a brief for amici curiae in support of Yovino. The Chamber is the world’s largest business federation, representing the interests of 300,000 members and over three million companies and professional organizations. SHRM is the world’s largest human resources professional society, representing 300,000 members in more than 165 countries. Representing strong business interests, the amici brief asserts that the question of whether employers can rely on prior salary history in setting workers’ wages “is of extraordinary significance.” The amici brief argues that the Rizo decision deepens a circuit split on the legality of the widely-used and useful employment practice of relying on prior salary, which is legal in most jurisdictions and is a facially sex-neutral practice. The Chamber and SHRM also argue that the Ninth Circuit’s “tortured reading of the EPA’s catchall defense” could be read to call into question other legitimate and sex-neutral practices that rely on objective information, such as individualized negotiations and competitive salary bidding.
The Center for Workplace Compliance (CWC) and the National Federation of Independent Business (NFIB) Small Business Legal Center also filed a brief for amici curiae in support of Yovino’s petition. The CWC, whose membership includes 240 major U.S. corporations, is the nation’s largest nonprofit association of employers dedicated exclusively to ensuring compliance with fair employment and other workplace requirements. The NFIB is the nation’s leading small business association, with offices across the country. The CWC and NFIB argue that the “Ninth Circuit’s decision  rests on a legally flawed premise—that an employer has an affirmative obligation under the EPA to eliminate disparities in pay, even when those disparities are caused by gender-neutral compensation policies.” The amici brief asserts that review of the Rizo decision is necessary to “resolve issues of substantial importance to the employer community,” and that permitting the decision to stand “will have a profound, largely negative, impact on employers nationwide.”
The U.S. Supreme Court will likely issue a decision on the petition for writ of certiorari later this year. Until then, it remains unclear whether Rizo will remain the guiding precedent in the Ninth Circuit. For employers operating in California, Rizo may not prompt significant changes given that the California Equal Pay Act separately provides that “prior salary shall not, by itself, justify any disparity in compensation.” But employers elsewhere in the Ninth Circuit will need to evaluate their pay practices in light of Rizo unless and until it is overruled. Experienced counsel can assist employers in navigating these complex issues.
On August 28, 2018, a judge in Los Angeles County Superior Court issued one of the first decisions – if not the first decision – on a motion to certify a putative class action under the state’s revised Equal Pay Act, Cal. Labor Code § 1197.5 (“EPA”). See Bridewell-Sledge, et al. v. Blue Cross of California, No. BC477451 (Los Angeles Sup. Ct. Aug. 28, 2018) (Court’s Ruling and Order re: Pls.’ Mot. for Class Certification). Specifically, the court denied the plaintiffs’ motion to certify classes of all female and all African American non-exempt employees of Anthem Blue Cross California and related entities. The complaint alleged both violations of the EPA, as well as discrimination in promotions and pay in violation of the Fair Employment and Housing Act (Cal. Gov. Code §12900 et. seq.).
Big Law is no stranger to providing advice on pay equity or defending pay equity lawsuits. But until recently, headlines generally featured lawsuits challenging the compensation practices of their clients, not the law firms that represented them.
In the last two years, however, Big Law has itself moved into the spotlight with a wave of pay equity suits brought by aggrieved female partners and, in some cases, female associates. To date, the number of these suits against Big Law—either pending or concluded with multi-million-dollar settlements—has reached double digits and shows no signs of slowing down. We think the details are worth a second look—particularly in light of the complicated dynamics at play in how law firm partner compensation is set. READ MORE
The California Pay Equity Task Force recently published guidance and approved resources for employer compliance with the state’s equal-pay laws. As we continue to track developments in this arena and await further interpretation from the courts, employers should be aware of this comprehensive and illustrative guidance in reviewing their hiring and compensation practices. READ MORE
In a highly anticipated move, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) issued its new compensation directive on August 24, 2018. Directive (DIR) 2018-05, Analysis of Contractor Compensation Practices During a Compliance Evaluation, replaces the Obama-era compensation guidance DIR 2013-03, Procedures for Reviewing Contractor Compensation Systems and Practices (referred to as Directive 307). OFCCP also included a list of 22 Frequently Asked Questions (FAQs) with DIR 2018-05. READ MORE
Last week, California enacted new legislation updating the prohibition on employers inquiring into the salary history of their applicants and the requirement that employers respond to applicants’ requests for the pay scale for positions. This law, enacting Assembly Bill No. 2282, clarifies key provisions in Labor Code section 432.2 regarding employers’ obligations, which were left undefined in the bill that added Section 432.3 to the Labor Code last year. READ MORE
Connecticut Governor Dannel Malloy is poised to sign into law the Act Concerning Pay Equity bill, which has been passed by both the Connecticut House and Senate General Assembly. In what Governor Malloy referred to as “commonsense legislation” to address pay equity concerns, the Connecticut bill would prohibit an employer, or a third party acting on the employer’s behalf (like a recruiting firm), from inquiring about a prospective employee’s wage and salary history unless voluntarily disclosed by the applicant. The bill does permit an employer to inquire about other components that contributed to the applicant’s previous total compensation package, but not about the value of those items. Although no examples are provided in the legislation, it would seemingly be permissible to ask whether a prospective employee received stock options at their previous employment, but not the value of those options. READ MORE
After years of failed attempts at equal pay legislation, New Jersey has now passed a historic equal pay law. Notably, the Diane B. Allen Equal Pay Act (“Equal Pay Act”) becomes the strongest measure attempting to close the gender pay gap in the country. READ MORE