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The Gender Pay Gap and Class Actions: How to Avoid a Gender Discrimination Lawsuit

The treatment of women in the workplace has perhaps never been more in the national spotlight than it has been in recent months. With the nomination of the first-ever female presidential candidate by a major party, pay and employment opportunities for women have taken center stage in the fight for equality.

Those who want to decry the existence of a so-called “glass ceiling” are facing an increasingly uphill battle. While the true measure of any gender pay gap will continue to be hotly debated – the White House puts it at 78 cents on the dollar, while others staunchly disagree – there is no denying that gender discrimination is an ongoing problem in businesses across the country.

Discrimination based on an employee’s gender is not simply a question of fairness, but one of federal law. Class actions filed in recent years against corporate giants such as Microsoft and Qualcomm have highlighted the illegality of unequal pay, leaving many companies to reexamine their payment practices to ensure that they are not running afoul of the law.

The Current Legal Battle for Equal Pay

Often viewed as a matter of public policy, the battle for equal pay has moved to the courtroom. It will come as no surprise to many that two of the most prominent class actions alleging unequal pay involve companies in the tech sector, an industry that has historically been dominated by men.

On September 16, 2015, a former female employee of Microsoft Corporation filed a class action against the software company on behalf of all female technical professionals employed since July 18, 2010. The lawsuit contends that Microsoft engaged in systemic discrimination against female employees in engineering and technical roles.

According to the plaintiff, the pervasive discrimination took the form of disparities in pay, performance evaluations, and promotions, among other things. Specifically, the complaint alleges that the company’s female technical professionals received less compensation than similarly situated male employees in violation of Title VII of the Civil Rights Act of 1964.

Federal Laws Prohibiting Unequal Pay

Two major pieces of federal legislation make it illegal to pay female employees less than male employees who are performing the same tasks. The first and most prominent, Title VII, forbids employment discrimination on the basis of race, color, religion, sex, or national origin.

The statute prohibits discrimination in any aspect of employment, including hiring, firing, pay, promotions, and termination. Employers violate the law and engage in illegal gender discrimination whenever an individual is treated differently in any of these employment factors because of his or her gender.

The other major piece of federal legislation prohibiting gender discrimination is aimed more directly at the gender pay gap. The Equal Pay Act of 1963, part of the Fair Labor Standards Act of 1938, forbids sex-based pay disparity between male and female employees who work at the same company and perform jobs that require substantially the same skill, effort, responsibility, and working conditions.

Together, these laws essentially require one basic thing – equal pay for equal work. While that notion may seem like a simple one, a history of lawsuits suggests that many companies fail to grasp it.

Prior Class Actions

Microsoft is not the first technology company to come under fire from female employees claiming a disparity in pay. On July 26, 2012, tech giant Qualcomm agreed to settle an unequal pay class action lawsuit brought by female employees.

Filed on behalf of approximately 3,300 women in STEM positions at the company, the lawsuit alleged that female workers were deprived of the same job opportunities and pay that were available to their male counterparts. Specifically, the complaint contended that women held less than 15% of the company’s leadership positions, earned less money, and were promoted less often than male employees. As part of the settlement, Qualcomm pledged a commitment to implementing policy programs and changes aimed at promoting qualified female employees.

The tech sector isn’t the only industry seeing the battle for equal pay move to the courtroom. Even lawyers in Biglaw, another industry accused by some of traditionally being an “old boys’ club,” have been accused of violating equal pay laws.

On July 26, 2012, the same day Qualcomm agreed to shell out nearly $20 million to settle its gender discrimination case, a female partner at Sedgwick LLP, one of the nation’s most prominent law firms, filed a class action against the firm, alleging a “male-dominated culture” that threw up roadblocks to equal pay and partnership status for female employees.

The complaint was filed by Traci Ribiero, a female non-equity partner in Sedgwick’s Chicago office since 2012, and the firm’s third highest revenue generator. Ribiero filed a class action lawsuit on behalf of all female attorneys at her firm who were allegedly paid less than their male counterparts.

According to the complaint, Sedgwick prevented Ribiero from achieving equity partnership at the firm, something that is regularly granted to male partners. In addition to lack of access to partnership opportunities, the lawsuit contends that Sedgwick’s female associates make $50,000 less per year than male associates do, even though they are more productive and profitable. Sedgwick has denied the allegations, and the lawsuit is ongoing.

What These Cases Can Teach Us About Preventing Gender Discrimination

The allegations in these complaints leave many companies wondering how they can avoid being accused of hindering the success of their female employees. While most people know that gender discrimination is illegal, they may not know how to spot it and eliminate it, which is critical.

The first step in eliminating gender discrimination is becoming familiar with the laws and knowing what is illegal. Once you’ve done that, it’s essential to put a clear policy in place informing employees that discrimination won’t be tolerated, and defining what behavior is unacceptable. An experienced employment discrimination attorney can help you review your policy to ensure that it complies with all applicable federal and state laws.

Employee training is crucial. While concrete issues like difference in pay may be easy to spot, many employees may not be aware that their day-to-day conduct constitutes gender discrimination. This may be especially true in companies or departments that have not historically seen many female employees. Training on all forms of discrimination and harassment, not just gender discrimination, should be mandatory on at least an annual basis. It is perhaps most critical for employees in management or supervisory positions.

While preventing discrimination from occurring in the first place is the goal, even at good companies bad things can happen. It’s important to take any and all allegations of discrimination seriously and thoroughly investigate them.

Ribiero’s lawsuit against Segdwick provides a prime example of how not to handle allegations of discrimination. In her complaint, Ribiero contends that she attempted to raise her concerns about the disparity in pay between male and female associates with other partners at the firm. In response, a male partner allegedly told their colleagues that she “needed to learn how to behave” and suggested that they reduce her salary.

While it is not alleged that Ribiero’s salary was, in fact, reduced, this is precisely the kind of response that companies want to avoid and that can expose an employer to additional claims of gender discrimination. Title VII not only prevents discrimination itself; it also makes it illegal to retaliate against an employee for reporting discrimination or filing a complaint.

Employers need to establish a clear procedure for filing complaints without fear of retaliation. Taking allegations seriously and conducting a formal investigation can save a costly and time-consuming trip to the courthouse.

With respect to more overarching issues like disparities in pay and promotions, as opposed to isolated incidents of discriminatory conduct, it’s important to take a step back and review your current practices. A formal pay audit can uncover any gaps in pay between male and female employees, even if they’re unintentional. Likewise, a review of hiring and promotion practices will give you a sense of the gender breakdown in your ranks and highlight any disparities that may require further review.

If you do find disparities, don’t panic. Not every difference rises to the level of discrimination. Consulting an attorney will help you figure out if there is anything to worry about, and allow you to formulate an appropriate plan going forward.

As Qualcomm agreed to do in its settlement, you may need to implement policy changes and programs going forward to ensure that female employees are treated equally. It’s far better to do so now than later, when there’s a $20 million settlement price tag attached. These policy changes should include a commitment to diversity in hiring, promotions, and the makeup of leadership committees.

Handling allegations of gender discrimination or unequal pay is not something you should try to do internally. These are serious matters that require a deep understanding of employment discrimination law. An experienced attorney can help you assess the claims and determine whether your current policies are in line with the applicable laws.

If you’ve received complaints of gender discrimination, or are wondering how to implement effective controls and procedures to prevent discrimination, the experienced attorneys at Pasha Law  are here to help.

Stephanie Wilkins

Post by:

Stephanie Wilkins is a writer, attorney, and photographer living in New York City. She earned her B.A. at the University of Notre Dame and her J.D. at New York University School of Law. Stephanie has been a commercial litigator at some of the largest law firms in New York.

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