Florida Bar Journal

Pay Transparency: A Remedy for the Gender Pay Gap?

My grandmother emphasized the importance of going to college and pursuing a profession in the law to achieve independence — something she noted as not readily attainable for her when she was younger. Back in “her day” she noted that women were chiefly limited to helper or caretaker roles, and most took up jobs as nurses and teachers. Otherwise, a safe bet was to seek refuge by joining a convent. She chose nursing. Her sister chose the convent. My grandmother’s anecdote tells a story of limited options for women in a male-dominated workforce in the early 20th century.

To bring this reality closer to home, women comprised only 3% of licensed attorneys within the United States until after 1970.^[1] These numbers did not increase significantly for another decade or so, and it was not until 1981 that the first woman, Justice Sandra Day O’Connor, took her seat on the bench with the U.S. Supreme Court.^[2] By 1991, women still comprised just 20% of the legal profession. Today, men still dominate the legal profession by population. Women just crossed over the 30% threshold within the last decade or so.

Further, while there has been progress to achieve gender parity in the legal profession, many women who join law firms do not stay for the long haul or ascend the ranks at the same rate as their male counterparts.^[3]

In the context of attrition and women in the workforce, there has been a persistent conversation regarding the “gender pay gap.” Many have likely heard the prevailing narrative that women, on average, have earned roughly 70% of the compensation of their male counterparts for performing the same work (or “70 cents on the dollar”). Perhaps that pay disparity could explain the attrition issues. But is the concept of a gender pay gap based in truth? If so, what has been done to narrow the chasm?

The Equal Pay Act and Anti-Discrimination Laws

The conversation regarding equal pay in the workforce is not new. In 1942, the National War Labor Board pushed for legislation that would permit “equal pay for equal work,” during a time when women were entering the workforce in increasing numbers due to the war: “If it shall become necessary to employ women on work ordinarily performed by men, they must be allowed equal pay for equal work.”^[4] But despite these cries for equality, major legislation to protect the rights of working women was not enacted for another 20 years.

In 1963, Congress finally passed the Equal Pay Act of 1963 (the EPA or the act), in part, to address pay disparities between men and women who were hired to do the same work. This was signed into law by President John F. Kennedy and serves “[t]o prohibit discrimination on account of sex in the payment of wages by employers engaged in commerce or in the production of goods for commerce.”^[5] Upon its enactment, President Kennedy remarked that the law “affirms our determination that when women enter the labor force they will find equality in their pay envelopes.”^[6]

In 1964, Congress enacted Title VII of the Civil Rights Act of 1964 (Title VII), which prohibited employment discrimination on the basis of various enumerated categories or “protected classes,” such as gender or sex. This legislation states, in pertinent part, the following:

It shall be an unlawful employment practice for an employer —

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or

(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.^[7]

The following year, President Lyndon Johnson issued Executive Order 11246 to effectively extend these prohibitions to federal contractors.^[8] This executive order also bestowed power to the U.S. secretary of labor, giving this individual responsibility and enforcement power to ensure equal employment opportunities were provided to federal employees and candidates.^[9] This executive order has gone through multiple shifts and permutations over the succeeding decades, setting a standard for private employers to follow and also expanding the scope of the federal government’s enforcement powers.^[10]

States have since followed the trend, enacting legislation to prohibit employment discrimination on the basis of gender or sex, which would include any disparate treatment in connection with pay. In 1992, for example, the Florida Legislature enacted the Florida Civil Rights Act, its counterpart to Title VII.^[11] In its present iteration, this legislation renders it unlawful for a private employer in Florida “[t]o discharge or to fail or refuse to hire any individual, or otherwise to discriminate against any individual with respect to compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, pregnancy, national origin, age, handicap, or marital status.”^[12] A separate counterpart to the EPA was also enacted, prohibiting “[w]age rate discrimination” that is “based on sex.”^[13] Florida’s Statute of Frauds likewise prohibits pay disparities in the context of contracts for “equal services performed.”^[14]

Despite numerous laws expressly prohibiting gender discrimination in pay, this issue has been heavily litigated for decades, with hundreds of sex and gender discrimination charges being filed with the U.S. Equal Employment Opportunity Commission (EEOC) every year.^[15] The courts have also repeatedly published decisions affirming the scope and standard of these laws. In a 2007 dissenting opinion, for example, the late U.S. Supreme Court Justice Ruth Bader Ginsberg shared her interpretation of the Equal Pay Act’s appropriate application:

Our precedent suggests, and lower courts have overwhelmingly held, that the unlawful practice is the current payment of salaries infected by gender-based (or race-based) discrimination — a practice that occurs whenever a paycheck delivers less to a woman than to a similarly situated man.^[16]

Likewise, as recently as 2022, the 11th Circuit Court of Appeals affirmed the appropriate framework to ascertain whether there is a true pay disparity that violates the EPA, noting that an employee must show “that the employer paid employees of opposite genders different wages for equal work for jobs which require equal skill, effort, and responsibility, and which are performed under similar working conditions.”^[17]

In spite of these attempts to settle the issue through judicial interpretation, the U.S. Department of Labor has continued to report a disparity in pay based on sex. As the old adage goes — a picture is worth a thousand words.

The numbers in Chart 2 reflect employees’ median weekly earnings in 2022, which are broken down by sex and educational attainment.^[18] In each category and education level, reported earnings for women were less than for men as recently as two years ago.^[19] Attainment of an advanced degree did not serve to narrow the gap. In fact, the median weekly earnings for women with advanced degrees in 2022 were 33% less than the median weekly earnings for men with advanced degrees during that same time period.^[20] This might explain why there have been additional efforts to close the gap through pay transparency laws.

The Pay Transparency Trend

In the federal agency context, President Barack Obama took measures to create parity in compensation by signing Executive Order 13665 in April 2014, which amended Executive Order 11246.^[21] This amendment, which was to apply to federal contractors and subcontractors, was aimed at promoting equal pay for women by improving transparency of wages.^[22] It also prohibited retaliation by federal contractors against employees or applicants for inquiring about or discussing compensation.^[23] Under the Obama Administration, the EEOC also announced a proposal to collect pay information in conjunction with specific demographic groups as part of the employer’s annual reporting requirements in the EEO-1 form (Component 2), which was collected and analyzed over the course of several years.^[24] By publicizing this information, the EEOC’s position is that employers would be disincentivized from paying employees in similarly situated positions different amounts. In conjunction with this analysis, the EEOC noted the following:

Preventing and remedying pay discrimination in the workplace is core to the EEOC’s mission. It’s been almost 60 years since the Equal Pay Act and Title VII went into effect. Yet women who work full-time in the United States still make just 83 cents for every dollar paid to men. The pay gap is even wider for women of color. Not all pay disparities result from discrimination, but discrimination in pay and promotions, as well as other discriminatory factors such as race and gender segregation in jobs and assignments, contribute to the problem.^[25]

States have since joined in on the effort. Since January 2016, there has been an uptick in more targeted laws, focused specifically on creating gender parity in compensation.^[26] California established its own pay transparency law, for example, requiring employers to provide a pay scale for a current employee’s position upon request and requiring employers with 15 or more employees to publish pay scales in any job posting.^[27] California has likewise enacted a law that sets restrictions on salary history inquiries by recruiters, and prohibits employers from asking about this information during the interview process or relying upon it to make determinations about appropriate compensation.^[28] The goal of this two-tiered approach — prohibiting inquiries into past compensation and publicizing compensation — is clearly aimed at leveling the playing field. This approach appears to be picking up steam.

In addition to California, 21 other states and U.S. territories have enacted laws of their own. In particular, Washington,^[29] Oregon,^[30] Nevada,^[31] Colorado,^[32] Missouri,^[33] Minnesota,^[34] Illinois,^[35] Alabama,^[36] Hawaii,^[37] Ohio,^[38] Maryland,^[39] Pennsylvania,^[40] New York,^[41] New Jersey,^[42] Delaware,^[43] Connecticut,^[44] Rhode Island,^[45] Massachusetts,^[46] Vermont,^[47] Maine,^[48] and Puerto Rico^[49] have each established more narrowly tailored laws addressing pay equity, pay transparency, and prohibiting inquiries into salary history. While Florida does not have any specific pay transparency laws enacted yet, policy considerations, as well as potential federal laws, may have Florida employers adjusting their own reporting and compensation disclosures.

What Comes Next?

On March 14, 2023, U.S. Rep. Eleanor Holmes Norton introduced H.R. 1599, the Salary Transparency Act.^[50] If passed, this bill would amend the Fair Labor Standards Act of 1938.^[51] This proposed law has requirements applicable to both public and private employers, including: 1) pay scale disclosures that would be required in job postings; 2) pay scales provided to current or existing employees upon request; and 3) prohibitions on retaliation for inquiring about compensation (along with associated statutory penalties and attorney’s fees for violating this law).^[52] Notably, private lawsuits would be permitted in state and federal courts under this legislation and actions would be permitted by individual applications or employees on behalf of themselves and others who are “similarly situated.”^[53]

Time will tell whether the constellation of recent pay transparency laws, along with this proposed federal legislation, will impact any overarching pay disparities between men and women (or between or among other protected classes). In the interim, class and collective action lawsuits addressing fair pay under Title VII and the EPA will continue to place pressure on employers to prioritize this issue.

At present, Florida employers may benefit from following the policy considerations underlying other pay transparency laws, by creating their own policies and procedures to make certain their employees are receiving equal pay for equal work. This may come in the form of establishing clear job levels and salary bands with a more “lockstep” approach to compensation. It may also require educating recruiters and decision makers to ensure they are adhering to company policy during the hiring process. Finally, it may also require employers to conduct routine pay equity audits to ensure their pay practices do not run afoul of applicable laws.

This column is submitted on behalf of the Labor and Employment Law Section, Sacha Dyson, chair, and Alicia Koepke, editor.