For the first time in history, women are half of all U.S. workers, and mothers are the primary or co-breadwinners in nearly two-thirds of American families. The recent economic downturn accelerated this trend: Men lost three-quarters of the jobs shed from December 2007 to October 2009. Consequently, gender discrimination has become not just a women’s issue, but a family issue that has taken center stage in the country’s legal and political arena.
Developments in this area are increasingly affecting American employers — and their corporate law departments — as evidenced by the growing popularity of multimillion-dollar gender-discrimination lawsuits filed against some of the world’s largest corporations. Some of these suits have had devastating results for employers, including a 2010 $250 million jury verdict against Novartis AG, a company that was previously voted by Working Mother magazine as one of America’s top 100 places for women to work.
The U.S. Supreme Court’s 2011 decision in Wal-Mart v. Dukes, despite being generally friendly to employers, seems only to have motivated private counsel and government agencies to become more creative in pursuing these claims. For example, following the Supreme Court’s ruling, the Dukes plaintiffs filed a number of regional class actions as well as hundreds of individual charges with the Equal Employment Opportunity Commission.
On the federal front, President Obama’s National Equal Pay Enforcement Task Force has actively pursued its agenda, with a strong focus on collecting data from private-sector employers to better understand the nature and scope of pay gaps and to target enforcement efforts. The president also appointed new leaders to the EEOC, the Department of Labor and the Office of Federal Contract Compliance Programs (OFCCP). These leaders, who have extensive experience in civil rights advocacy and enforcement, are committed to an aggressive enforcement agenda — particularly with regard to systemic discrimination — and have been given additional financial resources to pursue their activities. Given this leadership, the agencies’ systemic discrimination enforcement efforts are not likely to wane in the near future, particularly in light of Obama’s re-election.
Corporate law departments should expect to continue to face a multitude of challenging and nuanced legal issues, particularly with regard to pay, promotions and other emerging work-life balance issues. Thinking ahead is critical for mitigating risk and avoiding future claims.
When Obama took office for his first term in 2009, he made it clear that passing the Lilly Ledbetter Fair Pay Act would be only the first step in his quest to “crack down on violations of equal pay laws.” Among its other initiatives, the EEOC has commenced a Directed Investigation Pilot Program under the Equal Pay Act, intending to reinvigorate the EEOC’s authority to conduct Equal Pay Act audits. Under the pilot program, three EEOC district offices have begun auditing employers to ensure compliance with Equal Pay Act standards, and the EEOC expects to expand the program.
The National Equal Pay Enforcement Task Force also published a report indicating that both the OFCCP and the EEOC would implement new requirements for measuring and collecting pay information by gender, race and national origin from U.S. employers. At the suggestion of the task force, the EEOC asked the National Research Council to convene a panel to review potential collection methods. On August 15, the panel reported that the collection of earnings data would be a huge task for the EEOC to handle given its current capacity, and employers would experience significant reporting burdens. The panel concluded that for the EEOC to collect this information, it must first have a clearly articulated vision of how the earnings data will be used, and the panel made several recommendations.
For now, neither the EEOC nor the OFCCP has a clearly articulated plan or the capacity to make collection of earnings data feasible and meaningful to use in their enforcement efforts. But given the emphasis placed on issues surrounding equal pay by the Obama administration, it may be only a matter of time before agencies start requiring employers to take on the burdensome and expensive task of providing such earnings data.
What has become clear is that both the government and private plaintiffs are focused on data. And they prefer to look at large, aggregated groups of employees, because doing so tends to show statistically significant disparities. Employers must therefore ensure that the right data is analyzed. A proper analysis — either for a pay audit or for a defense to a claim of pay discrimination — involves carefully identifying the proper comparator pools (those who perform “equal work” under “similar working conditions”) as well as any legitimate factors that may explain pay disparities (e.g., education and experience, performance ratings and rankings, etc.).
This is where a good statistical expert can add significant value. This was true for Bloomberg L.P., which recently defeated an EEOC suit alleging pay discrimination against pregnant employees and those returning from maternity leave. Bloomberg succeeded because, unlike the EEOC, it compared the class members to similarly situated individuals (i.e., other leave-takers) and demonstrated that Bloomberg increased compensation for women returning from maternity leave more than for those who took similar lengthy leaves.
Promotion claims are also often the focus of gender-discrimination claims because, in many sectors, managers and highly compensated professionals are still overwhelmingly male, despite a large number of women in feeder jobs. Some studies have suggested that employers are not necessarily to blame — women are often less interested or are not available for these positions. But an employer may find it difficult to raise a life choices defense if it does not have a robust, uniform and well-documented promotion process.
Again, it comes down to having the right data. Employers have faced significant liability — despite potentially persuasive life choices evidence explaining disparities — when they had insufficient systems to track interest in promotion, they failed to systematically use the information in making development and promotion decisions, or they had no job posting or other transparent processes to inform employees of development and promotion opportunities. Employers are, therefore, well advised to:
• Implement and mandate systems for tracking interest in promotion.
• Systematically use and document use of “interest data” in making development and promotion decisions.
• Require uniform, documented assessments at all levels.
• Require uniform, documented decisions for advancement.
• Document high-potential and succession-plan selections.
• Post job openings, and improve transparency about development and promotion opportunities.
While relevant and compelling data may ultimately defeat discrimination claims, the data alone will not guarantee a litigation-free workplace. Costly lawsuits are often filed by employees who feel wronged, even if the employer has complied with the law. While it is impossible to please all employees, employers can take steps to cultivate a culture of inclusion and temper a litigious atmosphere. While what is appropriate differs from employer to employer, adopting proactive policies that allow all employees (men and women, whether caregivers or not) to integrate their personal lives with their work lives may improve morale, decrease complaints of unlawful discrimination and ultimately benefit the bottom line.
This article first appeared in Corporate Counsel, a Legal affiliate based in New York. •
Timothy Long is a partner with Orrick, Herrington & Sutcliffe, representing clients throughout California and beyond from his offices in Los Angeles and Sacramento, Calif. He can be reached at firstname.lastname@example.org.
Lauri Damrell is a senior associate in the firm’s Sacramento office. She represents employers in a variety of complex employment matters, including claims regarding discrimination, harassment, wage and-hour laws, independent contractors, exempt/non-exempt classifications, wrongful termination and other employment regulations. She can be reached at email@example.com.