Equal Pay Day – April 10, 2018 – is the approximate date in the New Year to which the average US woman must work to make what the average US man earned at the end of 2017. Of course, for African American, American Indian and Latina women this day comes around much later in the year.  As we mark this day each year, it drives home the persistence of the gender pay gap and the failure of our current laws to address it. What policy changes are necessary to achieve the intuitive and popular goal of “equal pay for equal work?”

President Obama’s first act as President was to sign the Lily Ledbetter Fair Pay Act. While the act importantly extended the statute of limitations under current federal Equal Pay law, it did not address other limitations of the “equal pay” legal framework, including: (1) lack of employer level accountability and/or transparency; (2) narrow definitions of “equal work;” (3) a singular focus on gender inequities to the exclusion of other pay inequity generators such as race; (4) the role of other employment decisions that indirectly affect pay differentials; and (5) weak enforcement.

I focus on the first limitation –employer accountability – because this is where we are today witnessing rollbacks by the Trump administration, but also some important advances by states.

Federal Rollbacks

During the Obama Administration, Republicans blocked Democrats in Congress committed to paycheck fairness when they attempted to improve equal pay laws. Consequently, President Obama used executive actions to make equal pay a priority. Arguably his most important executive action on the pay gap was to require large corporations to report pay data by race, ethnicity, and gender to the federal Equal Employment Opportunity Commission (EEOC). This kind of data reporting would require employers to compile and analyze pay data periodically and, once reported, these data could be used by the EEOC to target audits and other potential enforcement actions.

While President Trump surrogate Ivanka Trump called for “equal pay” last year at this time (and earlier on the campaign trail), she backed efforts last August by the administration’s Office of Management and Budget (OMB) to block these same EEOC equal pay data collection regulations. OMB placed an immediate and indefinite stay on the equal pay data collection, without any guidance on timeline or process.

Why Employer Accountability Matters

The federal Equal Pay Act of 1963 prohibits sex-based wage discrimination. Title VII of the 1964 Civil Rights Act also prohibits wage discrimination based on race, color, national origin, and sex. Under these laws, and state-based versions of them, employers are required to pay employees equally for performing equal work except where pay differences can be explained by permissible factors. While important and effective under some circumstances, this legal framework is complaint-based. It requires individual workers to step forward and face huge hurdles when they do so.  “Much of the risk and responsibility lies with the woman.”  She must find out she is being paid less and document it, which can be difficult or impossible due to pay secrecy. Then she must find the resources to file a complaint or lawsuit, and handle the almost inevitable retaliation from her employer that follows. And if she goes the EEOC route, only one in three times will she prevail due to narrow legal interpretations. These constraints and others have limited the effectiveness of state and federal equal pay laws.

Scholars of work and workplace organizations point out that inequality at work doesn’t “emerge from the ether, nor from amorphous occupations or industries.” It is developed within the routines, policies and practices that organizations use to recruit, evaluate, hire and retain employees. These same scholars have documented that organizational structures and practices once established are resistant to change, yet “[i]n some cases organizations may be compelled to conform to demands or alter existing practices as a result of coercive pressure from powerful actors within their environment.” For example, Sociologist Kevin Stainback and co-authors found that the rate of integration for women into male dominated workplaces between 1966 and 2002 coincided with the aggressiveness of federal EEO regulatory agencies, suggesting, “some forms of legal and regulatory pressure provide a stronger incentive to modify behavior and organizational routines than others.” Another body of research conducted by scholars, such as Emilio Castilla, finds that the combination of greater transparency and accountability at the employer level are associated with decreased pay gaps.

State Progress

Public policies are helping us to increase employer accountability and transparency and move from an individual complaint-based framework to one where responsibility to find and address pay inequities lies with the employer. Significant progress has been made in other countries recently to flip the burden, with Iceland and the U.K. building on the history of EU (particularly Nordic) countries to require companies to analyze and report their data.

The Obama era EEOC pay data collection rolled back by the Trump administration would move the US in the same direction. While this federal action remains on hold, US states have and are moving ahead, if in more limited ways, to increase accountability and transparency at the employer level.

• In New Jersey, under a bill widely believed to be headed for the newly elected Democratic Governor’s desk for signature, state contractors will be mandated to report to the Commissioner of Labor and Workforce Development information on the gender, race, job title, occupational category, and total compensation of every one of its New Jersey employees working on a state contract.
• In New York, Executive Order 162, adopted in 2017, requires state contractors and their subcontractors to submit job title and salary for each employee working on a contract, in addition to the equal employment opportunity information (such as sex, race, and ethnicity) already required.
• A new Massachusetts law creates an affirmative defense (negating liability) to wage discrimination claims for an employer that has (1) completed a self-evaluation of its pay practices that is “reasonable in detail and scope in light of the size of the employer” within the three years prior to commencement of the action; and (2) made “reasonable progress” toward eliminating pay differentials uncovered by the evaluation.
• A Minnesota law, adopted in 2014, requires the CEO of companies receiving a state contract to certify that they are meeting the requirements of state and federal equal pay laws and share information about their compensation system.

More than a dozen states introduced or adopted equal pay measures in recent years. While perhaps unsurprising in democratically controlled states like New York, California and most recently (possibly) New Jersey, but we’ve also seen bi-partisan support for measures like these in Massachusetts and Maryland where Republican Governors signed equal pay bills into law.

The growing collection of state reforms has lawyers encouraging employers to “take steps” to limit risk in an evolving legal landscape. Law 360 quotes one: “Employers have two choices. They can react on a state-by-state basis — and I wouldn’t even say react — and be forced to scramble … or they can choose to get proactive and strategic in their approach.” In this vein, many lawyers are also encouraging pay audits: “The spread of pay equity laws should also have employers considering pay audits, which can expose the unexplainable gaps that many of the new laws target.” State laws are creating a new regulatory context within which employers operate nationally, driving a change in “standard” employment practice. This is just what organizational and pay gap scholarship suggests is necessary to achieve change.

Maybe next year, Equal Pay Day will come in March instead of April.