Developments In Equal Pay Litigation - 2022 Update

© 2022 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 3 U.S. Court of Appeals for the Third Circuit decided Greater Philadelphia Chamber of Commerce v. City of Philadelphia , 15 which rejected a number of arguments claiming that those bans infringed on free speech. The lawsuit involved the 2017 Philadelphia Wage Equity Ordinance, which, among other things, prohibits employers from inquiring into or relying upon job applicants’ prior wage history in establishing starting pay. The Ordinance consisted of two provisions: the “Inquiry Provision” and the “Reliance Provision.” The Inquiry Provision prohibits an employer from asking about a prospective employee’s wage history, and the Reliance Provision prohibits an employer from relying on wage history at any point in the process of setting or negotiating a prospective employee’s wage. Both provisions were upheld by the Third Circuit. Among other things, the court agreed that solving the gender pay gap is a substantial government interest and that the ordinance directly advances that interest. 16 The decision is significant because it upheld the ordiance based on many of the arguments and analyses that underlie the rationale for salary history bans generally, including the alleged scientific bases of the gender pay gap and the purported failure of existing anti-discrimination legislation to address that issue. If the Third Circuit’s decision is any guide to the future, salary history bans will continue to be an important factor in employers’ hiring decisions. In addition to salary history bans, some states and localities have recently started to enact legislation that requires employers to be more transparent with respect to compensation. Some of those laws require employers to submit annual reports of various pay and hours data for its workforce in a manner very similar to what the EEOC very briefly required as EEO-1 Component 2 of the federal EEO-1 pay report. Other states have experimented with other versions of pay transparency as well. The federal EEO-1 Report is a survey document that has been mandated for more than 50 years. Employers with more than 100 employees, and federal contractors or subcontractors with more than 50 employees, are required to collect and provide to the EEOC certain demographic information (gender, race, and ethnicity) in each of ten job categories. On February 1, 2016, the EEOC proposed changes to the EEO-1 report, which would have required more detailed reporting obligations of “Component 2 data,” specifically, data on employees’ W-2 earnings and hours worked. 17 On August 29, 2017, the EEOC announced that the OMB, per its authority under the Paperwork Reduction Act, had immediately stayed the collection components of Component 2 data. The OMB’s decision was immediately challenged in court. In National Women’s Law Center v. Office of Management and Budget , 18 the District Court for the District of Columbia held that the OMB’s stay was unlawful. Ultimately, the court issued a series of orders that required the EEOC to complete the Component 2 data collections for calendar years 2017 and 2018. 19 But on September 12, 2019, the EEOC announced that it was not planning to continue using the EEO-1 Report to collect Component 2 data information. 20 The EEOC’s decision to stop collecting Component 2 data settled the matter only briefly. In 2020, states and localities began to enact pay transparency laws that required employers to submit data reporting that was very similar to the EEOC’s rescinded Component 2 data reporting requirements. For example, in 2020, California passed its Pay Data Reporting Law. Under the new law, on or before March 31, 2021, and each year thereafter, private employers with 100 or more employees, are required to submit a pay data report to the California Department of Fair Employment and Housing that includes the number of 15 Greater Phila. Chamber of Commerce v. City of Phila. , 949 F.3d 116 (3d Cir. 2020). 16 Id. at 143. The court found that the City Council relied upon sufficient testimony and studies to support the enactment of the Ordinance, including that: (1) the wage gap is substantial and real; (2) numerous experiments have been conducted, which controlled for such variables as education, work experience, and academic achievement, still finding a wage gap; (3) researchers have long attributed the gap to discrimination; (4) existing civil rights laws have been inadequate to close the wage gap; and (5) witnesses who reviewed the data concluded that relying on wage history can perpetuate gender and race discrimination. Id. 17 See U.S. Equal Employment Opportunity Commission, Agency Information Collection Activities: Revision of the Employer Information Report (EEO-1) and Comment Request , available a t https://www.gpo.gov/fdsys/pkg/FR-2016-02-01/pdf/2016-01544.pdf. 18 Nat’l Women’s Law Ctr. v. Office of Mgmt. & Budget , 358 F. Supp. 3d 66 (D.D.C. Mar. 4, 2019). 19 See Order, Nat’l Women’s Law Ctr. , No. 17-cv-2458 (D.D.C. Apr. 25, 2019), ECF No. 71; Order, Nat’l Women’s Law Ctr. , No. 17- cv-2458 (D.D.C. Oct. 29, 2019), ECF No. 91; Order, Nat’l Women’s Law Ctr. , No. 17-cv-2458 (D.D.C. Feb. 10, 2020), ECF No. 102. 20 Paperwork Reduction Act Notice, 84 Fed. Reg. 48138 (Sept. 12, 2019).