United States: Pay Equity: Employers Must Be Vigilant

Last Updated: December 12 2016
Article by Lauri A. Damrell and Jessica R. Perry

The pay-equity movement has gained steady momentum over the past eight years. And even with the anticipated transition in the Oval Office, it is unlikely to slow down.

President Barack Obama made pay equity a cornerstone of his administration. His first piece of signed legislation was the Lilly Ledbetter Fair Pay Act. He signed executive orders designed to close the pay gap for employees of federal contractors subject to oversight by the Office of Federal Contract Compliance Programs. The Equal Employment Opportunity Commission announced it would require employers under its jurisdiction to disclose aggregate pay data in their EEO-1 reports starting in 2018. And the "White House Equal Pay Pledge" challenged businesses nationwide to take action to reduce the pay gap.

Although few observers expect President-elect Donald Trump to prioritize pay equity, employers should not ignore it.

California, Maryland, Massachusetts and New York passed pay legislation heralded as more demanding and employee-friendly than their federal counterparts.

More than a dozen states have pay legislation pending. Shareholder activists have also leveraged their power to demand public disclosure of pay gaps. Pay equity has become not simply a matter of legal compliance, but a growing driver in demonstrating corporate social responsibility.

As a result, employers are now struggling with a patchwork of standards and no uniform definition of "equal pay."

Looking At Overall Pay Gap

Some initiatives, like the White House Pay Pledge and shareholder-activist demands, focus on the overall pay gap and whether women are, on average, paid the same as men.

Companies are asked to confirm "100 percent pay equity," but no one has defined who should be compared or the factors considered in that analysis.

The new EEO-1 report requires companies to compare employees within extraordinarily broad job categories — e.g., "professionals," "administrative support workers" and "craft workers" — without accounting for the many variables that could impact pay within those categories.

Federal and state statutes also have varying tests for identifying proper comparators, including examining those "similarly situated," those whose work is "equal," "substantially equal," "substantially similar when viewed as a composite of skill effort and responsibility," "comparable" or "of a comparable character."

There is some agreement that these standards are not intended to promote the principle of "comparable worth" — i.e., comparing dissimilar jobs that nonetheless require similar skills and responsibility or are of similar value to employers.

Courts and legislators have ­generally rejected the theory that courts, ­rather than markets, should determine the ­proper wage for a job. But how courts will identify proper comparators under the new laws and commonalities between jurisdictions remains an open issue.

The affirmative defenses available to employers under the new laws are also more rigorous.

In California, for example, ­employers relying on a factor other than sex to explain pay disparities must show that the factor is job-related, consistent with business necessity, applied reasonably, and accounts for the entire wage differential.

California prohibits employers from relying exclusively on prior salary to justify pay decisions — a variable that some argue is tainted by historical bias.

Massachusetts has gone one step further to completely ban employers from seeking applicant pay history.

Evaluate Pay Practices

Given these developments, it is more critical than ever for employers to prospectively examine their pay practices. This includes evaluating existing policies and procedures to ensure adequate documentation of compensation philosophy and the factors used in pay decisions, both company-wide and by individual.

These records will be key to defending pay claims, particularly those made contemporaneous to the challenged decisions.

Employers contemplating a public pay-equity disclosure, whether voluntary or due to external pressure, should consider conducting a nationwide analysis to determine if the company has an overall "wage gap." How to do this varies depending upon the legitimate factors that are relevant to each employer in setting compensation.

Although the standards are not very clear now, employers should expect that they will later have to explain how they achieved the end result.

Federal contractors and ­employers subject to EEO-1 disclosure ­requirements should consider an analysis based on establishment to determine what the employer's response will be in the event the Equal Employment Opportunity Commission or Office of Federal Contract Compliance Programs focuses on a particular location based on data submitted through the EEO-1 report.

Given the breadth of the EEO-1 job categories, employers should not make pay adjustments based solely on the results of this general analysis.

If disparities are discovered, employers should dig deeper to determine if they can be explained by nondiscriminatory factors.

California, Maryland, Massachusetts and New York employers should conduct state-based analyses that consider state equal pay law particularities.

Employers should also consider analyses of non-U.S. locations, particularly in the U.K., where certain pay disclosures will be required.

In conducting these analyses, it is important to ensure that the right data is analyzed. A proper analysis involves carefully identifying the proper comparator pools, as well as any legitimate factors that may explain pay disparities.

Legal counsel should direct these analyses to establish appropriate privilege over the analyses and any related communications. Counsel may also engage statistical experts, where appropriate, to address more nuanced issues.

Pay decisions are often highly individualized, and careful evaluation of the results of any analyses is crucial for understanding and mitigating potential risk for future pay claims in this uncharted territory.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
21 Sep 2018, Conference, Florida, United States

Employment partner, Michael Weil will be participating in The Intellectual Property Law Institute’s 2018 Conference.

26 Sep 2018, Conference, New York, United States

Employment Partner, Mandy Perry and Chair of Orrick's Global Employment Law Practice, Mike Delikat will be participating in the Global Business Protections 2018: International Restrictive Covenants and Confidential Information Conference.

26 Sep 2018, Seminar, Tokyo, Japan

Orrick’s Global Japan Practice is hosting a series of “Orrick Library” seminars to explore legal issues in various fields in Japan as well as the United States, Asia and Europe

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions