The U.S. Women’s National Soccer Team’s Claim of Pay Discrimination Should Remind Employers to Pay Attention to Unequal Pay

Most employers know that they cannot discriminate on the basis of sex by paying lower wages to the opposite sex for equal work. But what is considered “equal work” can be challenging for employers, especially for those who have employees with the same job title, with diverse skills and abilities and who perform work under different working conditions.

The discrimination charge filed with the Equal Employment Opportunity Commission (“EEOC”) by five members the U.S. Women’s National Soccer Team (“Women’s Team”) against the United States Soccer Federation (“Federation”) highlights the issue of unequal pay for women performing similar work to their male counterparts. The female players allege that they are paid about a quarter of what their male counterparts are paid on the U.S. Men’s National Soccer Team despite the Women’s Team generating nearly $20 million more revenue than the Men’s Team in 2015.

Last year, the California Legislature enacted the California Fair Pay Act, which became effective on January 1, 2016, to enhance California’s prohibition against unequal pay based on gender. Although existing law already prohibits discrimination in compensation, this new law enhances existing protections by reducing the burden of proof placed upon the employee alleging a discriminatory pay practice and increases the amount recoverable by the employee who asserts an unequal pay claim.

Under the California Fair Pay Act, an employee claiming discrimination in pay must show only that she is not being paid the same as a male counterpart for substantially similar work. The law expressly permits an employee to compare her pay to that of a male who holds a different job, but one that is substantially similar in terms of skill, responsibility and working conditions. If the employee succeeds in demonstrating that she is paid less than a male employee for substantially similar work, the employer must then justify the difference by showing that it is attributable entirely to (a) a seniority system, (b) a merit system, (c) a system that measures earnings by quantity or quality of production, or (d) a bona fide factor other than sex (such as education, training or experience) consistent with a business necessity. Employers must also show that any factor cited as a reason for the discrepancy is applied in a reasonable fashion. Employers who do not conduct systematic, comprehensive and well-documented performance evaluations are unlikely to be able to justify differentials in pay by citing merit or performance as the cause.

Employees who prove the existence of discriminatory pay practices pursuant to the new law are entitled to recover the differential in pay, interest, and liquidated damages equivalent to the differential in pay, essentially creating a “double damages” remedy in every case.

In addition to making it easier for an employee to prove discriminatory pay practices and enhancing the remedies available, the new law also prohibits an employer from preventing employees from discussing their wages in the workplace. This provision is intended to create greater transparency and access to the information that would be needed to support a claim of pay discrimination.

What should employers do now?

  • Increase awareness of wage discrepancies – In light of the lower standard of proof and greater potential liability, employers should be more alert to discrepancies in pay that could create a basis for a claim.
  • Consider whether a thorough review of compensation practices is warranted – Employers who become aware of sex-based discrepancies in pay between employees performing substantially similar work should consider whether to conduct a thorough and systematic review of their compensation practices to determine the cause of the discrepancy and the extent of their potential liability.
  • Conduct any review of compensation practices under attorney-client privilege – Employers who elect to review their compensation practices should do so in conjunction with an attorney in order to gain the protection of the attorney-client privilege. Employers who review their payroll practices without conferring with an attorney may be forced to disclose any harmful findings in subsequent litigation.
  • Eliminate any policies that prohibit or discourage employees from discussing or disclosing their wages – Policies that prohibit or discourage employees from discussing or disclosing their wages are historically common, so any employer that still maintains such a policy should discontinue the policy.