As we enter the 3rd year of the #MeToo movement, all signs point towards another year of heightened legal activities in the area of gender discrimination and gender equality. Sexual harassment claims will continue to garner news headlines, but there are bigger threats for employers. For many employers, 2019 will be less about whether their female employees are being harassed, and more about whether they are being treated fairly and equally.
What’s the difference you ask? The answer is everything else outside of harassment, including pay equity, opportunity equality, and fair treatment for employees who are pregnant and new parents.
There is no greater indication of this heightened focus on equality than the 116th Congress, which has a record number of women serving. Naturally, legislation aimed to combat gender inequality will be at the forefront. In this post, we identify the legislative and legal trends employers should pay attention to in 2019 as we declare it “The Year of the Woman.”
(1) PAY EQUITY
Pay equity was the focus of state and local legislatures in 2018 and will continue to be the focus in 2019, at both the state and federal level. Pay equity legislation currently takes two shapes, with a crop of salary history ban laws and pay equity laws.
It is no secret that women still earn only 80.5 cents for every dollar earned by men¹. To address this issue and close the gender wage gap, state and local governments have enacted, at an increasingly steady pace, salary history ban laws. Currently, 11 states and 10 local governments have enacted laws that prohibit employers from requesting salary history information from applicants. Included amongst the states are Connecticut and Hawaii, whose salary history ban laws went into effect on January 1, 2019.
Further, Congress reintroduced the Paycheck Fairness Act on January 30, 2019. The proposed legislation would protect employees from retaliation for discussing their salary, limit the use of salary history in the hiring process, and close loopholes in the existing equal pay laws—the Equal Pay Act of 1963 (“EPA”) and the Lilly Ledbetter Fair Pay Act of 2009.
States have enacted similar legislation aimed at providing more expansive protections than the EPA. For example, while the EPA requires “equal pay for equal work” and employee comparisons can only be made at the same physical establishment, Washington State, California, Massachusetts, and New Jersey expand the equal pay definition to require “equal pay” for “substantially similar” or “comparable work.” Further, California, New York, and New Jersey expand the geographical “same establishment” restriction and allow comparisons among employees in different locations.
Challenges to Achieving Pay Equality
There are many questions in this area:
- How do you “fairly” evaluate employees who are in different positions and report to different managers? If you are using subjective criteria, are the evaluations designed in a way that they favor male traits over female traits?
- Who is in charge? Most companies are still dominated at the top by men, and when men manage and evaluate women, studies show there is often an unconscious bias that creeps into those evaluations.
- What about a “fair” compensation system? It’s not that simple – with states now passing pay equity legislation, how do we make sure that employees in similar positions are actually receiving equal pay?
On a related note, if an employer cannot ask about salary history when you hire, how do you set initial salaries? Many states and localities like New York, prohibit any inquiry on salary history in advance of hiring.
Here are some of Kelley Drye’s recommendations:
- Remove the subjectivity in evaluation. Employers should rely upon specific, objective criteria to evaluate employees and utilize performance-rating markers that are clearly defined.
- Be more objective in setting initial salaries.
- Employers should also consider a second set of neutral eyes to review evaluations, particularly when making compensation decisions. This second set of eyes can identify risky trends or patterns that the managers who are giving the evaluations simply cannot.
- Be aware of damaging unconscious bias. Are you assuming a new mother who has just returned from maternity leave will not want to travel across country to an important meeting? Simply-do not. Taking away opportunities based upon harmful assumptions cannot only lead to legal liability but also prevents women from reaching the top.
- Finally, consider a pay equity audit. While audits are often time consuming and costly, new pay equity legislation makes now the right time to invest and commit to equal pay.
(2) FAIR TREATMENT BEYOND HARASSMENT
The EEOC was clearly focused on harassment in the workplace in 2018.
- The agency filed 41 sexual harassment lawsuits in 2018, which was more than a 50% increase in suits challenging sexual harassment over fiscal year 2017.
- Over 7,500 harassment charges were filed with the agency, another significant increase over the prior year.
Beyond these statistics, the EEOC signed a new Memorandum of Understanding with the U.S. Department of Justice’s Civil Rights Division on December 21, 2018, that changed the manner in which certain harassment and discrimination claims are processed. Specifically, the Memorandum of Understanding implemented expedited processing of harassment and discrimination charges filed by state and local government employees.
Notable EEOC Settlements Beyond “MeToo” Harassment
But that’s not all: recent EEOC settlements demonstrate that the agency’s efforts to address claims of gender discrimination go beyond #MeToo harassment. The agency is also focused on pregnancy discrimination as one of six national priorities identified in its Strategic Enforcement Plan for 2019.
- December 7, 2018 – Family Healthcare Network in California entered into a $1.75 million settlement with the EEOC, also addressing claims of pregnancy discrimination and failure to accommodate pregnant employees. The employer also entered into a consent decree allowing the EEOC to monitor and review its policies during that period.
- December 10, 2018 – Cato Corporation paid $3.5 million to settle claims that it engaged in systemic discrimination against pregnant employees, and promised to revamp its reasonable accommodation policies to better address accommodation requests by pregnant employees.
The Court of Public Opinion
It’s not just the EEOC. The press continues to highlight salacious workplace gender inequality stories, which in turn fuels even more related claims. Some recent press coverage:
- October 2018 – the New York Times and other media outlets reported that XPO Corporation was alleged to have ignored requests by pregnant employees for work accommodations, and also terminated employees after they announced they were pregnant. XPO vigorously denies the allegations, but this did not stop 97 members of Congress from signing a letter calling for a Congressional investigation of the company.
- December 31, 2018, “A Pumping Conspiracy” – the New York Times published a story on how women employees who worked in prisons were allegedly forced to smuggle in breast pumps after their return from maternity leave.
- January 22, 2019 – the Department of Labor accused Oracle of allegedly underpaying thousands of women and minority employees by $401 million over four years. The complaint alleges that Oracle systematically underpaid women and minorities by relying on prior salaries in setting starting salaries.
The court of public opinion provides the harshest reminder to employers that they must think beyond sexual harassment claims. Employers should revisit their policies and practices and reexamine key areas, including accommodations and leave.
(3) EQUAL LEADERSHIP OPPORTUNITIES
Currently numerous states have proposed pay equity legislation including New York, Pennsylvania, Indiana, Wyoming, Virginia, South Carolina, and Mississippi. Further, the District of Columbia, Washington State, and Massachusetts have enacted paid family leave legislation.
Larger companies are also implementing or expanding their paid leave policies at an increasing pace, including Starbucks, Walmart, and Home Depot. In 2018, Starbucks and Walmart began offering paid leave to hourly workers, who are generally excluded from paid leave policies.
We also predict an increased focus on promoting women to positions of leadership. California became the first state to enact legislation that mandates California-headquartered public companies to have at least one woman on their board of directors by 2019. Companies who violate the law face penalties of up to $100,000 for the first violation and up to $300,000 for subsequent violations. Following California’s lead, the New Jersey legislature recently introduced a bill that would require many public companies based in the state to have at least three women on boards by 2021.
This legislative trend is a reminder to employers that pay equity and leadership roles are tied together.
NOTABLE GENDER EQUALITY LAWSUITS
Already we are seeing a rise in gender equality lawsuits, which is different from ‘plain vanilla’ claims of discrimination. For example, just last month, Sanford Heisler Sharp LLP announced that it was preparing to file a gender bias class action against national law firm Jones Day, piggybacking off a similar single-plaintiff suit filed against Jones Day in June 2018. This would add to the cases that the firm has already filed against Cushman & Wakefield (race and gender discrimination), Ogletree Deakins (gender discrimination), and Morrison & Forester (gender discrimination class action).
PRIORITIES for 2019
Based on what we learned from last year and considering the significant developments that have already taken place in 2019, employers should place equal, if not more, focus on achieving pay equity and promoting women to positions of leadership than managing and preventing sexual harassment allegations. Eradicating sexual harassment in the workplace is undoubtedly crucial; however, employers tackling only what’s on the surface of the #Metoo movement are missing the point. Gender equality in the workplace includes fair treatment, equal pay, and equal leadership opportunities. Employers should take a tripartite approach and attack all three issues with equal force to ensure that 2019 is the year of the woman.