Pay equity litigation came greater in focus in 2018, and that trend is expected to continue into the new year.

The U.S. Supreme Court is expected soon to announce whether the justices will hear a dispute over whether employers can use an applicant’s prior salary to justify paying men and women differently for the same jobs. State and local governments in 2018 took more steps to boost pay equality, posing more compliance headaches for national companies.

“By and large companies want to do the right thing. Very few say, ‘Yes, I want to pay someone more because he’s a man,’” said Cheryl Pinarchick, a Fisher & Phillips partner in Boston who co-chairs the firm’s pay equity practice. “This debate has evolved and the public has come forward saying this needs to be addressed.”

Law firms, tech companies and accounting giants have faced massive class action lawsuits by women who claim unequal treatment and pay. Here’s a snapshot of some of the developments from 2018 and what’s on deck.

Court cases are shaping equal-pay debates.

Big rulings on pay equity marked 2018, and pending cases are sure to continue the debate into the new year.

The U.S. Court of Appeals for the Ninth Circuit, sitting en banc, in April said employers can’t use prior salary to justify salary differences between men and women. The court ruled against a California school district that’s being represented by a team from Jones Day.

The district in Fresno has appealed the decision to the U.S. Supreme Court, where the petition is set for the justices’ Jan. 4 private conference. At the high court, business advocates—led by the U.S. Chamber of Commerce—are urging the justices to reject the Ninth Circuit’s decision.

“Employers large and small, in every region of the United States, have historically used prior salary as a metric to assess a range of matters, including the caliber and experience of applicants, the viability and competitiveness of their own compensation packages, and, ultimately, the fairness of the wages they pay to employees,” lawyers for business groups, represented by Jonathan Franklin of Norton Rose Fulbright, said in an amicus brief. “By placing wage-history data off limits for employers within the nation’s largest circuit, the court of appeals’ rule exacerbates a clear, acknowledged split regarding the legal viability of that important practice.”

Other cases in the appeals courts have weighed the nuances of the federal law, including over what constitutes a comparable position. “Whether work is substantially equal is a fact-specific inquiry, militating against dismissal of claims at the pleading stage,” Cara Greene, a partner at Outten & Golden, said in a recent white paper.

Pay equity litigation has acutely focused on the tech sector. In June, a federal judge in Seattle denied class status to a group of Microsoft employees suing over alleged gender bias. In California, a state judge in March refused to derail gender pay class claims from a group of Google female employees. That same month, Uber agreed to pay $10 million to settle a class discrimination suit that included claims of gender and racial compensation disparities.

Local government patchwork

Meanwhile, state and local governments have moved forward to adopt new laws confronting salary disparities, pay transparency and paid leave. This trend is expected to continue.

Representing management-side interests, the HR Policy Association and Littler Mendelson’s Workplace Policy Institute said in a report that 100 such bills were introduced in 2017 and 2018 in more than 40 jurisdictions and that wave “shows no signs of subsiding in the future.”

The report warned: “The trend in statehouses and on city councils to supplement existing laws, which already prohibit pay discrimination, is likely to result in unintended consequences, over regulation, and conflicting obligations. These added layers of regulation, furthermore, come with little guidance and no guarantee they will succeed in eliminating unfair pay disparities.”

The Trump administration scuttled an Obama-era initiative at the U.S. Equal Employment Opportunity Commission to boost pay data collection.

Some advice for employers

Pinarchick of Fisher & Phillips said any company that finds a pay discrepancy should take steps to assess it. “With more and more cases filed on a class-wide basis, it’s important for employers to pay attention,” she said. Pinarchick said there’s greater public support for class actions targeting compensation imbalances.

The Fisher & Phillips practice group has begun advising clients to stop asking about salary history altogether, given the many state laws that ban the practice. Hiring should be approached from a perspective of what is the value of the job as opposed to the value of the person.

“It’s a great time to take a step back and let’s look at your hiring practices and compensation practices and re-evaluate and see if there are things you should be changing because of the new laws and things you think about changing and limit liability under the new laws and because your shareholders are demanding it,” she said.

 

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