Pay equity took a major step forward last month as the result of a case that ruled unequal pay for equal work was not required for proving pay discrimination under Title VII under the Civil Rights Act.
The case, Lenzi V. Systemax, Inc. involves female employee Danielle Markour and her former employer, Systemax, Inc. In the case she asserts sex-based discrimination under Title VII of the Civil Rights Act. The district court initially dismissed the case as there were no other employees in which her salary could be compared.
The case was then appealed to the second circuit, where an “external equity” analysis was performed and sex-based pay discrimination was in fact determined. The analysis works by comparing one company’s pay levels to what other employers are paying for the same job function. Markour was being paid only 87.5% of the benchmark market rate as determined by the analysis.
What this means in a larger context is that employees can claim pay discrimination with much more ease, as the Title VII ruling found that unequal pay for equal work is not a requirement for determining pay discrimination and instead, can be proved through external equity analyses.
Employers should know that the result of this case demonstrates that their employees—in addition to proving claim of pay discrimination under the federal Equal Pay Act, or any other local legislation—will also be able to approach the issue of pay discrimination through Title VII, even where there is not a direct comparator in the organization.
Undergoing a pay equity audit provides your organization with complete transparency into your organization’s pay structure. In addition, a pay equity audit can identify pay differences between employees that cannot be explained due to job-related factors. This type of audit not only identifies problems, but also provides actionable solutions. It gives employers an opportunity to ensure fairness in pay and prevent equal pay issues. It allows employers to minimize risk by identifying and remediating deficiencies, providing them with greater standing to defend against and win claims of discrimination.
A recent report conducted by the Harvard Business Review demonstrates how organizations benefit from pay equity audits. You can read the report by clicking here.
Organizations looking to disclose pay equity, diversity, and inclusion data information should do so within an ESG reporting framework. Download our white paper, DEI in ESG Reporting to learn about the different standards you can leverage for sharing your progress.