November 3, 2022

Pay Equity – A Cautionary Tale

Google has agreed to pay $118 million to settle a class action lawsuit alleging violations of California’s Equal Pay Act and Unfair Competition laws.  The lawsuit dates back to September 2017 when three former Google employees filed a class action litigation accusing the tech giant of systematic discrimination based on sex. Specifically, the suit alleges that women in the same job position (i.e., same job title performing substantially equal or similar work) were paid less than their male counterparts, citing a wage gap of around $17,000.

Given California’s emerging focus on pay equity and transparency, employers should view this outcome as a cautionary tale. With a new year on the horizon there is no time like the present to begin an internal review of your organization’s current pay practices.

Pay audits are one way to ensure all employees are being compensated fairly and that there are no major salary disparities within the workplace. Here are a few tips for conducting a successful audit:

  • Develop your audit goals – long term and short term. For example, verifying each employee’s pay, identifying pay disparities, uncovering internal trends/patterns in pay disparity.
  • Decide who should be involved (e.g., payroll, human resources, company leaders, legal counsel).
  • Examine/develop a compensation strategy. For example, what is the company’s compensation philosophy? Does the company have a compensation philosophy? How do these goals fit into existing budgetary constraints?
  • Decide what employee data should be collected. For example, hours of work, job classifications, employee demographics, individual pay rates, and pay ranges for positions evaluated.
  • Evaluate the data and address any pay disparity issues.

It is recommended that legal counsel be consulted before initiating a pay audit as issues such as confidentiality and how best to address disparities will require strategic advanced planning.