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Mediating Pay Equity Disputes in an Era of Greater Disclosure

Oct. 25, 2022, 8:00 AM

Pay equity has been a priority of lawmakers for more than a decade. Laws mandating equal pay have been enacted in almost every state and nationally.

Despite such laws, gender-based pay disparities continue to exist. Statistics show that women continue to be paid less than their male counterparts, and the pay gap is even greater for Black and Latina women.

The causes and reasons for these disparities have been pegged to historic attitudes, as well as often inconsistent enforcement of existing equal pay laws.

Over the last two years, however, changes in the workplace, coupled with new state laws, appear to have moved the needle in the direction of greater pay equity for American workers.

This has brought greater awareness among employers of the factors that can cause and impact a pay equity dispute. The perspective of a mediator can help uncover concerns about inequities and reasons for pay differences.

The Pandemic Effect

The past two years have seen significant changes in attitudes towards pay, as well as in the mechanisms that have been implemented for eliminating disparities.

Resignation trends of the post-pandemic period empowered a large segment of the workforce to take control of their work lives and to demand more from their employers.

In addition to seeking greater purpose in their work, workers have asked for a louder voice in corporate decisions, greater respect from management, and pay that reflects their perceived worth.

Many companies scrambling to backfill open positions have found themselves agreeing to these demands, and a substantial sector of the workforce has seen an increase in wages resulting from this pandemic-spawned dynamic.

Pay History Bans

Twenty-one states currently ban prospective employers from asking job candidates for pay history until after a job offer is made.

Banning companies from asking potential hires for salary information is intended to prevent employers from, intentionally or unintentionally, perpetuating historic pay inequities. It is also designed to ensure that wages are based on other factors.

Pay Disclosure Mandates

New state laws should also help close existing pay gaps. Several states have recently enacted laws requiring companies to post pay ranges for all jobs they wish to fill.

Colorado was the first state to adopt such a law in 2021. Washington state adopted its wage disclosure law in May of this year, and California enacted a law in September that also requires companies to provide current employees pay scale information upon reasonable request. A pay disclosure bill now awaits signature by New York’s governor.

Pay disclosure laws are intended to help narrow the wage gap by ensuring that offers to job candidates are consistent. Where laws to this effect have been implemented, data shows that the gender gap has moved in the direction of closure.

In addition to promoting equal pay, pay disclosure laws can help employers think through the value of the jobs they post while providing job seekers with critical information before they pursue opportunities.

When pay ranges are publicly disclosed, workers have more assurance that their pay will not be influenced by age, race, ethnicity, gender, or other protected characteristic.

Mediating Pay Equity Disputes

As a mediator, I often see pay equity cases coupled with claims for gender and/or race discrimination. In such cases, the claimants sometimes argue that they were discriminated against with respect to hiring, promotional, and other opportunities, and they point to alleged inequality in pay as an example of such alleged discrimination.

In my role as a neutral, my job is to uncover the bases for the employees’ claims and to understand the reasons for the employers’ actions. I will therefore ask a series of questions designed to ferret out this information.

First, I’ll ask the employee’s counsel to lay out evidence supporting any claim of pay discrimination. Even though the California pay disclosure law will not go into effect until Jan. 1, 2023, I’ll want to know if the employer in the case I’m hearing posted any notice of the pay scale for the position being filled and, if so, if the employee’s pay was consistent with that posting.

I’ll also ask employee’s counsel for proof that others were being paid at a higher rate for the same work performed by the client.

Next, I’ll ask the employer’s counsel questions to help me gauge the intent and reasons behind any apparent disparity. What are the company’s policies and practices with respect to including wage ranges with job postings?

If there are gaps between the claimant’s pay and that of other workers, are there reasons for that differential? Can the company confirm differences in years of experience, job performance, or actual work performed?

Finally, if we end up identifying a legitimate issue that warrants correction, I will expect the employer to lay out the steps it plans to take to rectify the inequity.

In addition to providing assurance to the worker in this case that their concerns have been heard and will be addressed, such an exercise should help the employer recognize a historic inequity and commit to reversing it, not just for this employee but for all its workers.

As I work with parties to address legitimate concerns about perceived pay differences, I will also be watching for new claims related to pay disclosure legislation. My expectation is that these new laws will help close gender and race pay gaps.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

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Angela Reddock-Wright is founder and managing partner of the Reddock Law Group of Los Angeles, a dispute resolution firm, and a neutral with Judicate West. She is an employment mediator, arbitrator, workplace, and Title IX investigator.