Case Details
The Jones Company owes female workers more than $150 million in wages, according to motions filed recently in a California lawsuit. The complaint alleges that women employed by the company were shortchanged due to Jones Company’s practice of asking new hires about their pay history.
On Friday, attorneys for the plaintiffs filed a motion for class certification for more than 10,000 women employed by Jones Company in California from 2015 until the present.
David Neumark, an economist and gender pay gap expert at the University of California, Irvine, conducted a statistical analysis of pay at Jones Company for the plaintiffs. When Neumark compared the salaries of men and women in similar jobs, controlling for non-discriminatory factors like previous experience that might impact pay, he found that Jones Company paid women 2% less than men.
According to the complaint, there’s only a one in a billion chance of obtaining Neumark’s results if no gender differences exist. Jones Company disagrees and claims the plaintiffs’ assertions about an alleged pay gap between women and men are simply false.
Through October 2017, Jones Company’s compensation policies permitted a new hire’s prior pay to be considered in setting their starting pay at the company. Asking about pay at previous jobs is problematic because women have historically been paid less than men. Employers’ reliance on salary history to determine compensation perpetuates the pay gap problem. A woman, underpaid in a previous job, could be forced to carry the lower wage forward, making it difficult to catch up and achieve equal pay.
Due to this litigation, the former HR Director resigned their position and you have been hired in their place. As the new HR Director for Jones Company, what immediate and long-term changes would you make because of this litigation?
Consider the following in your response:
Which employment law(s) have potentially been violated? What steps would you take to ensure Jones Company is compensating everyone fairly? Which policies, procedures, and practices you would discontinue or implement? How would you ensure these changes are being properly implemented across all areas of the company? How would you ensure the changes continue and recruiters and hiring managers are not falling back into old habits regarding hiring? What sort of checks and balances are necessary to monitor pay equity going forward?