Welcome to Labor of Law. A major ruling confronted whether employers can consider prior salary—we ask lawyers, what now? Also, Trump’s NLRB, mired in upheaval, now has a Republican majority. Scroll down for the latest lateral moves in the labor arena.
I’m Erin Mulvaney in Washington, D.C., covering labor and employment from the Swamp to Silicon Valley. Follow this weekly newsletter for the latest analysis and happenings. If you have a story idea, feedback or just want to say hi, I’m at firstname.lastname@example.org and on Twitter @erinmulvaney. Thanks always for reading. With that, let’s get started.
Major Appeals Court Ruling Pushes Discussion on Pay Equity
The pay disparity between men and women is holding strong in the zeitgeist, particularly in recent months amid the #MeToo movement and as states push their own attempts to close the gap. Ever more, big companies are releasing salary data and court cases challenging compensation policies are moving forward around the country.
“A number of new laws, reporting requirements, and agency actions are forcing a shift in pay practices and in evaluating pay discrimination allegations,” according to a new report from Seyfarth Shaw out this week. “Savvy employers are also taking proactive measures to ensure they maintain a competitive advantage by providing equitable pay for their employees.”
The U.S. Court of Appeals for the Ninth Circuit this week zeroed in on a key question in the debate: whether prior salary can be used to explain the difference in pay between men and women. The en banc court, in a forceful majority ruling, declared that employers cannot use salaries from previous jobs to determine pay. This could tee up a Supreme Court battle, as the Seventh Circuit ruled the opposite way and the Tenth and Eleventh issued squishier but contrary rulings, as well. (Read the full ruling here.)
That a company can legally explain away disparity by arguing “a factor other than sex” is one reason a male employee is paid more than a female counterpart.
Debra Katz, the veteran civil rights lawyer at Washington’s Katz Marshall & Banks, tells me that this “gobbled up the law” and made it difficult to get rid of the pay disparity. Company policies that ask about salary history essentially “bake in” the tendency to pay women less, Katz says.
“Employers don’t want to overpay. They want to hire the talented people they want for the least amount of money they can. In asking about prior salary history, they are testing what this person would be willing to work for,” Katz says. “The fact is, if you are considering salary history, you are in effect considering a remnant of discrimination.”
The Ninth Circuit majority stressed that it was setting up a general rule, but not delving into its application. Several judges on the Ninth Circuit panel warned, in concurrences, that the majority ruling could have unintended consequences. Judge M. Margaret McKeown, for instance, charged that the majority went too far and “effectively bars any consideration of prior salary in setting a new salary.”
Some attorneys I spoke with this week said they fear negotiations could fall flat without the use of salary history. Companies are concerned, in light of the changes and attention to these topics, about keeping records and adjusting what is a “comparable job.”
“Companies need to scrutinize other factors that may not be directly job-related,” says Megan Winter, a Fisher Phillips partner in San Diego. “It has been a common business practice to use prior compensation as one factor. Under the ruling, even using it in conjunction with other factors won’t be allowed. For multi-state employers, it creates a patchwork of obligations and whether they can use it as a factor in hiring.”
Steve Hirschfeld of Hirschfeld Kraemer LLP says it’s a best practice to not ask about prior salary, anyway. He tells me that companies should go a step further and do pay equity audits. “The more you can do to get ahead, not necessarily just avoid lawsuits, but also to create a fair playing field in the workplace.”
–> We’re keeping a close eye on pay equity litigation, and we’ll report back on law.comon all the big developments. In the meantime, I’d love to hear more about what you’re telling clients about this issue—especially about any uncertainty stemming from the Ninth Circuit’s ruling.
Confirmation Roundup… Changes at the EEOC and NLRB
The Trump administration’s labor and employment agencies are getting closer to full-staff—we saw a lot of movement this week on the NLRB and EEOC fronts.
➤➤ Sharon Gustafson (above), the White House nominee for general counsel at the EEOC, went to Capitol Hill for her confirmation hearing. The Virginia-based solo practitioner and former Jones Day lawyer made it clear she believes in tackling individual claims of discrimination, case by case, more so than pursuing systemic claims.
This is a different path from her Obama-era counterpart and it’s sure to assuage some concern in the employer community about the fact Gustafson is not a management-side employment lawyer. Gustafson wouldn’t commit to supporting the EEOC’s push for wide LGBT workplace protections.
“I feel like I’m being asked to give a yes or no to a complicated question. We have jurists around the country wrestling with that question and writing lengthy opinions and dissents.”
Trump’s two EEOC nominees—Janet Dhillon, former Burlington Stores general counsel, and West Point professor Daniel Gade—are awaiting confirmation.
➤➤ Meanwhile, at the NLRB…
Morgan, Lewis & Bockius partner John Ring was confirmed by the Senate on Wednesday, clearing the way for him to join the board and return it to a Republican majority.
The board’s a messy place right now.
The National Right to Work Committee wrote recently that the Trump agency will be “hobbled” for years because of the installment of William Emanuel, a longtime management-side shareholder who jumped to the agency from Littler Mendelson.
The group said it advised the White house not to choose a management-side attorney “who would have to recuse himself or herself potentially from vast numbers of cases involving clients of the attorney’s former employer.”
Emanuel is embroiled in controversy for his vote last year to undo the Obama-era “joint employment” standard, and there are open questions about whether he might have to recuse from other cases. Ring and Emanuel each identified dozens of clients and cases that they said they would not participate in for two years.
At his confirmation hearing, Ring vowed he would not “repeat” the ethics flap Emanuel’s enmeshed in. Here’s how Ring put it: “I do not want to be in the position Member Emanuel finds himself in and I don’t want to put a cloud over the NLRB.”
New & Notable Moves
→ Littler Mendelson hired Craig M. Borowski, previously a partner at Faegre Baker Daniels LLP. The new partner in Indianapolis marks the sixth lateral shareholder the firm has recruited since January. The firm also announced Shanthi V. Gaur and D. Finn Pressly have rejoined the firm as shareholders in the Chicago office.
→ Baker Hostetler added five new attorneys in Atlanta, partners Brian M. Harris, Mark Zisholtz and Jason D’Cruz, as well as two associates, Ashley Guffey and Tali Hershkovitz. All were previously with Morris, Manning & Martin. My colleague Meredith Hobbs in Georgia has more on the moves here.
→ Morgan, Lewis & Bockius added employees benefits partner Daniel Salemi.He joined the Chicago office from the boutique firm Franczek Radelet, where he had co-chaired the 40-lawyer shop’s employment benefits practice. We’ve got a lot more on Morgan Lewis’ Chicago office—check out Roy Strom’s report here.
→ Jackson Lewis P.C. hired Brian L. McDermott and Robert Seidler from Ogletree Deakins for the firm’s Indianapolis office.
Around the Water Cooler
Target settled a suit over asking about employees’ criminal backgrounds.Attorneys reached a $3.74 million settlement in a class action that alleged the retail giant’s hiring process unfairly discriminated against African Americans and Latinos. Outten & Golden and the NAACP Legal Defense Fund filed the complaint; Target was represented by the firm Nilan Johnson Lewis. [Wall Street Journal]
Texas judge sides with LGBT workers. For the first time in Texas, a federal court found that LGBT workers should be protected under Title VII. The decision came from Chief Judge Lee Rosenthal in the Southern District of Texas. [Dallas Morning News]
The 10-year baby window and the pay gap. New research finds that women who have their first child before 25 or after 35 eventually close the salary divide with their husbands. The years in between are problematic. [New York Times]
Who is affected by the rise in class action bans? Employees in low-wage workplaces, women and African-Americans are more likely to be subject to mandatory arbitration agreements in employment contracts than other groups, potentially limiting their access to the court system, a study released Friday by the Economic Policy Institute found. [Law.com]
On Equal Pay Day, in-house counsel can start closing the gap. In-house leaders can help close that gap at their companies, but the question remains as to how they can best use their leverage to tackle this vexing problem. Legal departments’ approach to the pay gap depends on company culture and in-house lawyers’ roles, says Nicole Buonocore Porter, a professor of law at University of Toledo College of Law and a former in-house lawyer. [Law.com]