1. Federal and State Pay Equity Laws

2. I. Legal Framework Federal Law Equal Pay Act, 29 USC § 206(d)(1)
Prohibits an employer from paying different compensation to employees of the opposite sex who work in the same establishment and perform equal work in jobs that require equal skill, effort and responsibility and which are performed under similar working conditions
Differences in pay may be justified by: (1) seniority system; (2) merit system; (3) system which measures earnings by quantity or quality of production; or (4) based on any other factor other than sex

3. I. Legal Framework
Other federal statutes: Title VII of 1964 Civil Rights Act, Age Discrimination In Employment Act, Americans With Disability Act, and Genetic Information Nondiscrimination Act
Regulations
Beginning with the 2017 report due on March 31, 2018, employers with 100 or more employees are required to report aggregate W-2 wages and hours in 12 pay bands for each of the 10 EEO-1 job categories and 14 gender, race and ethnicity categories on the current form

4. I. Legal Framework
Effective January 11, 2016, OFCCP Final Rule under Executive Order applicable to federal contractors prohibits discrimination against those “who inquire about, discuss, or disclose their own compensation or compensation of other employees or applicants”
Effective August 15, 2016, additional OFCCP regulations prohibit contractors from paying different compensation to similarly situated employees on basis of sex; factors include tasks performed, skills, effort, level of responsibility, working conditions, job difficulty, minimum qualifications and other objective factors

5. I. Legal Framework
Recent State Laws make it easier to prevail on equal pay claims
States with recent EPA statutes and amendments:
California (1/1/16, 1/1/17)
Oregon (1/1/19)
New York (1/19/16)
Maryland (10/1/16)
Massachusetts (7/1/18)

6. I. Legal Framework Key features of state statutes: Protected Classes
California: sex, race, ethnicity
Oregon: sex, race, religion, sexual orientation, national origin, marital status, veteran status, disability, age
New York: sex
Maryland: sex and gender identity
Massachusetts: gender

7. I. Legal Framework Key features of state statutes Location comparison
California: Amendment eliminated same establishment provision
Oregon and Massachusetts: Location may explain wage difference
New York: Comparators must work in same “geographic region” no larger than the same county
Maryland: Comparators must work in same county

8. I. Legal Framework Key features of state statutes Comparison Groups
California and Massachusetts: Substantially similar work when viewed as a composite of skills, effort and responsibility and performed under similar working conditions
Oregon: “work of comparable character” defined as “work that requires substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or title”
New York: “equal work” defined as “equal skill, effort and responsibility” and “performed under similar working conditions”
Maryland: “work of comparable character” or work on the same operation, in the same business, or of the same type; or providing less favorable employment opportunities based on sex or gender identity

9. I. Legal Framework Key features of state statutes Defenses
California: seniority, merit, system that measures quantity or quality of production, bona fide factor other than sex
Bona fide factor other than sex (e.g. education, training or experience) requires employer to show factors non- discriminatory, job related and consistent with business necessity; employee can prevail by showing a less restrictive alternative
Prior salary may not by itself justify pay disparity

10. I. Legal Framework Key features of state statutes Defenses
Oregon: education, training, experience, seniority, merit and production related systems, workplace location, travel needs
Affirmative defense to compensatory and punitive damages: Within three months before action filed, employer completed an equal pay analysis in good faith that was reasonable in detail and scope; employer eliminated wage differential for plaintiff and made reasonable and substantial progress towards eliminating wage differential for the protected class

11. I. Legal Framework Key features of state statutes Defenses
New York: bona fide factor other than sex; such as education, training or experience
Employer must show that the factor: 1) is not based or derived from a sex-based differential; 2) is job-related; and 3) is consistent with business necessity
Employee will be able to overcome the defense by showing: 1) the employer uses an employment practice that causes a disparate impact on the basis of sex; 2) an alternative employment practice exists that would serve the same purpose without causing a disparate impact; and 3) the employer has refused to adopt the alternative practice

12. I. Legal Framework Key features of state statutes Defenses
Maryland: employer systems that measure performance based on quality or quantity of production and bona fide factor other than sex or gender identity, including education, training or experience but only if factor is not based on gender-based differential, is job related and consistent with business necessity, and accounts for the entire pay differential

13. I. Legal Framework Key features of state statutes Defenses
Massachusetts: bona fide seniority system, bona fide merit system, bona fide system that measures quality and quantity of production or sales, geographic location, travel, education, training or experience but only if job related and consistent with business necessity
Eliminates employee’s previous compensation defense
Affirmative defense: 1) employer conducted reasonable self- evaluation of pay practices, 2) evaluation is conducted within three years of commencement of action, and 3) employer made reasonable progress on eliminating gender-based pay differential based on self-audit

14. I. Legal Framework
Pay Transparency – All statutes prohibit employers from prohibiting employees from disclosing, discussing or inquiring about own or co-workers’ wages
Prohibition on asking about salary history
California and New York: Bills to prohibit asking about salary history
Massachusetts: Statute prohibits screening applicants based on salary history

15. I. Legal Framework Summary Movement towards comparable worth
Comparisons across locations
Prohibition on prohibiting employees from disclosing, discussing or inquiring about own or co-workers’ wages
Prohibition on use of previous salary history
Audit defense
Movement towards favorable opportunity requirement

16. Pay Equity Audits

17. Overview
Ensure that analysis is protected by attorney-client privilege
How should you reduce the likelihood of creating “smoking gun” (non)evidence.
What is the best way to evaluate whether and to what extent there are compensation equity issues?
Which data sources should you use for an audit?
What are the best options for addressing issues that are identified?

18. Data Name / unique EE ID # Gender
Substantially Similar Group info (“SSG”)
Total annualized discretionary compensation (all components of compensation broken into parts, e.g. base wage rate, bonus, fringe benefits, etc.)
“Controls” (legitimate job-related alternative determinants of variations in compensation based on skill, effort, and accountability)

19. What is a “Substantially Similar Group?”
Functions are the larger organizational segments, such as “legal,” ”operations,” “sales,” “IT,” etc.
Roles are substantially similar job titles based on skill, effort, and accountability.
For instance, if there are call center operators, receptionists, assistants, and executive assistants, these all might require substantially similar skill, effort and accountability, and so, may be one role for purposes of the audit.

20. Relational Data Blind-360 measure of contributions to work
Easy and cost-effective to deploy with software (Syndio):
More defensible than employer-created top-down measures of performance that may be more readily susceptible to attack for being biased.

21. Relational data from Syndio’s platform
Influence score
Network impact
Collaborative load
Catalyst

22. Relational data from Syndio’s platform
Influence score
Network impact
Collaborative load
Catalyst

23. Advantages of Software Done Right
Avoid ”smoking gun”
Speed
Flexibility
Accuracy (no human error)
Ability to quickly run and re-run analysis over time

24. Advantages of Software Done Right
Avoid ”smoking gun”
Speed
Flexibility
Accuracy (no human error)
Ability to quickly run and re-run analysis over time

25. Important notes
Adopt a plaintiff’s perspective, not a company’s perspective when identifying SSGs. Ask how a jury or fact-finder might regard the substantial similarity of work based on skill, effort, and accountability, not based on job titles or job families, etc.
Be sure to include all discretionary forms of compensation. The CA Act uses the phrase, “wage rate,” but it is unlikely that a California court would permit employers to avoid liability by labeling parts of pay something other than “wages” or “wage rates.”
Gender equity laws are not anti-discrimination laws. Auditing for pay equity compliance is not an audit for state or federal gender discrimination laws.

26. Mediating and Litigation Pay Equity Cases

27. Plaintiff’s Perspective
1. Characteristics of a Good Case (Bad Conduct by Employer + Corroborating Evidence) x Compelling Plaintiff = Good Case

28. Plaintiff’s Perspective
2. Bad Conduct by Employer + Corroborating Evidence
Same/substantially similar job
Clearly paying women less
Received complaints
Did nothing
No previous attention paid to the issue
No prior salary review

29. Plaintiff’s Perspective
Compare: businesses that announced salary reviews, some resulting in adjustments
/06/14/businesses-taking-equal-pay-pledge (Airbnb, Amazon, Staples, etc)
Apple, GoDaddy, Google, FB, Microsoft – Analysis & Reports
E.g., Salesforce.com – 2015 review & spent $3M to adjust salaries to ensure equal pay

30. Plaintiff’s Perspective
3. Industries -- Law Firms
Kerri Campbell v. Chadbourne & Parke (8/16)
$100M class action; high performing P, paid bottom 20%; no bonus; complained & retaliated against
Michele Burke Craddock v. LeClair Ryan (1/16)
Suppressed compensation & delayed promotions; men refer work to men; assign lowest hourly rates to women; not given origination credit; pay cut; secret & discretionary application of comp policy
Jane Doe v. Proskauer Rose (5/17)
6th among equity partners for billable hours; 18th among equity partners for origination; yet, 32nd among equity partners for compensation.
Ji-In Lee Houck v. Steptoe & Johnson (6/17)
Fmr Jr. Associate hired as contract atty then associate paid much less; complained numerous times about unequal pay but nothing done.

31. Plaintiff’s Perspective
3. Other Industries:
In-House Counsel
Lynne Coates v. Farmers
$4M settlement for 300 women lawyers
Investment Industry
Chen-Oster v. Goldman Sachs – Associates & VPs
Class cert decision pending 3 years
Entertainment
Technology
Governmental Entities & Education

32. Plaintiff’s Perspective
4. Single Plaintiff, Multi-Plaintiff, Class Action Cases at Pre- Litigation & Litigation Stages
Who are the comparators
What are the factors
P takes broader view
Data needed for statistical analysis

33. Preparing for Mediation/Litigation
Key Objectives:
Develop an in-depth understanding of pay policies and all related policies: job leveling, promotions, hiring.
Determine whether, using the company’s own policies, there are any statistically significant pay disparities between comparators.
Re-examine all relevant policies and data from the plaintiff’s perspective.

34. Preparing for Mediation/Litigation
Investigating Pay Decisions
What factors are taken into account and how?
Examples: market rates, individual performance, company performance.
Which factors may potentially be seen as biased?
Examples: performance reviews, placement at or promotion to a particular level.
How much discretion is delegated to decision-makers?
Are their guidelines or trainings for decision-makers on how to exercise discretion?
How are employees grouped or compared for pay purposes?
What is the rationale for these groupings?

35. Preparing for Mediation/Litigation
Identifying and Collecting Available Data
Out of those factors considered when making pay decisions, which are tracked in a centralized fashion?
Example: Education may be a factor used to determine initial starting salary but may not be stored for all employees in a centralized fashion.
Do decision-makers keep records justifying their exercise of discretion?
Other information: explanations of job leveling system; manager trainings; company pay philosophy, job descriptions, performance rating system, policies on promotions and promotion justifications.

36. Preparing for Mediation/Litigation
Expert Analysis & Legal Arguments
From the company’s perspective, if there are pay discrepancies between comparators, can they be explained by non-discriminatory factors?
Ex: years of experience, education.
The plaintiff’s model will group employees differently.
Why are these groupings inappropriate?
How can you prove this? For example, do job titles or descriptions sufficiently distinguish between different roles?
Consider pre-mediation expert discovery, in order to understand the other side’s perspective and refine legal arguments.

37. Statistical Analysis
Differences Between Statistical Analyses for Pay Equity Audits and Mediation/Litigation:
Period Analyzed:
Pay equity audits usually examine a company’s pay equity at a point in time (i.e., current pay)
Mediation/Litigation comports with statute of limitations period (e.g., 4 years in California)
Mediation/Litigation may also involve a promotion/assignment claim which can impact the factors included in the pay analyses
Factors such as grade/level or job are deemed tainted
As a consequence, promotion/assignment analyses are prepared to determine if there are differences by gender
If no statistically significant differences in the rates of promotion/assignment by gender, then factors are included in the pay analyses

38. Statistical Analysis
How are statistically significant outcomes handled?
Pay equity audits:
Review outliers/cohorts to determine what may be influencing the pay differences
If no explanation, then pay adjustments may or may not be made
Mediation/Litigation:
More extensive data compilation (e.g., obtaining educational background through document review)
Mediation—Distribution of backpay is determined formulaically and may be based on the estimated pay difference
Mediaton/Litigation—cohort analyses are important to compare similarly- situated employees
Under particular state laws, not just the statistically significant differences are identified, but all pay differences are potentially measured (i.e., bigger dollar difference)

39. Statistical Analysis
Impact of Aggregation on the Estimated Male/Female Pay Differential:
*Statistically significant estimated pay difference.
Hypothetical Example—for Illustrative Purposes Only—Not Advocating a Particular Model

40. Statistical Analysis Impact of Aggregation:
Aggregated models combine employees who are dissimilar in skills, level, and responsibility (e.g., all employees across four years are combined)
Estimated liability is $50 million if 10,000 women
Does not identify if there are particular years, levels, jobs influencing the outcome
Disaggregated models
Identify where the estimated pay differentials occur
Debates arise over disaggregating the workforce too narrowly
Is it appropriate to aggregate?
Statistical tests can be run to determine if aggregation is appropriate from a statistical standpoint
Identifying groups included in the model through a cohort analyses assists in determining how dissimilar the employee are