Two major organizations, the NFL and investment bank Goldman Sachs, are facing fallout amid accusations of workplace discrimination and the gender pay gap.
Goldman Sachs settlement
Following a gender discrimination class action lawsuit which began in 2010, investment bank Goldman Sachs agreed to pay $215 million in settlement. The case, involving 2,800 female associates and vice presidents, alleged systematic discrimination against women, including intentional pay discrimination, and performance reviews which impeded the plaintiffs’ career prospects. A trial had originally been scheduled for June 7th, 2023.
Part of the Goldman Sachs settlement requires the bank to work with an independent consultant for three years to review pay practices and performance evaluations, and ensure “accurate, reliable, and non-biased outcomes” in the future. The expert will carry out additional pay equity studies while Goldman Sachs investigates and addresses any gender pay gaps, where appropriate.
The first filed lawsuit in 2010 claimed that Goldman Sachs violated EEOC Title VII of the Civil Rights Act of 1964 and the NYC Human Rights Law. As part of the settlement, Goldman Sachs denied violating laws and did not admit to any wrongdoing. It also stated its commitment to ensuring a “diverse and inclusive workplace.”
While the Financial Times reported that Goldman Sachs does not release figures for its US business, the mean hourly gender pay gap at Goldman Sachs International in 2022 was 53%. The bank claims that men and women performing similar roles in a similar way receive equal pay.
NFL investigation
In the week prior to the Goldman Sachs settlement, the NFL faced allegations of workplace discrimination, relating to sex, racial and age bias, sexual harassment, and a hostile work environment. On May 4th, Attorneys General Letitia James, of New York, and Rob Bonta, of California issued subpoenas to NFL executives as part of a wider examination into its workplace culture in both states. The allegations extend to gender pay disparities. Investigations are focused on the corporate offices, rather than individuals.
In response, the NFL described the allegations as “entirely inconsistent” with its values and practices. However, it is not the first time, it has been the subject of allegations around workplace discrimination. In 2021, New York Attorney James expressed “grave concerns” over reports of the NFL’s “hostile workplace culture.”
A “laggard” in closing the gender pay gap
The Washington Post has described the US as a “laggard” in its attempts to close the gender pay gap compared to other nations, and recommends comprehensive legislation at the federal level to achieve meaningful change.
Signs of that legislation are slowly emerging. On Equal Pay Day this year, the US Department of Labor highlighted several agency initiatives to increase equity in federal programs. One initiative included the publication by the Women’s Bureau of a brief on the causes of the gender pay gap. Some of the findings indicate underlying cultural issues which may have contributed to the workplace discrimination seen at Goldman Sachs and alleged in the NFL investigation, such as:
- Regardless of the gender composition of jobs, women tend to be paid less on average than men in the same occupation even when working full-time.
- As women’s labor is so devalued, the average pay for an occupation has been shown to decrease when women start to enter a field in larger numbers.
Equal Pay Day is the day each year on which women finally earn the same amount that men did in the previous year. It is no coincidence that Equal Pay Day also saw the introduction of the “Salary Transparency Act” (HR 1599) by Congresswoman Eleanor Holmes Norton (D-DC) in a move towards national pay transparency.
Psychological resistance to pay equity
An article in the Harvard Business Review article may offer some insight into continuing workplace discrimination. It suggests that resistance to Diversity, Equity and Inclusion (DEI) emanates from three types of threats, namely:
- Resistance to organizational change from members of majority groups, who traditionally benefit from being in that category and feel threatened, or “status threat.” Members of the majority group (male employees in the allegations made in the NFL investigation and the Goldman Sachs settlement), would incur losses if the minority group (women) made gains. Those gains might include improved opportunities for promotion.
- Majority group members may also experience “merit threat”, that is, when recognizing workplace discrimination may “explain away” their own successes.
- “Moral threat” means that if your privilege is acknowledged, your moral image is affected by linking it to an unfair system.
Both pay equity and the gender pay gap fall within the ‘Equity’ element of DEI.
The benefits of gender equality in the workplace
Achieving gender equality through pay equity offers numerous benefits for employers, including motivating them to work harder. What’s more, creating a culture of fair pay can help to attract more qualified candidates to job listings, increase employee engagement and enhance organizational trust.
Research from Moody’s Analytics highlights also shows that closing the gender gap in labor force participation, and the gender gap in management — which correlates strongly with the pay gap — in OECD countries would raise global economic activity by approximately 7%, equating to $7 trillion.
Pay equity is a movement that is here to stay
The full impact of the Goldman Sachs settlement on future lawsuits, including the NFL investigation and the pending investigation into systematic pay inequality at Nike, remains to be seen. Plaintiffs in all three cases have alleged a “boy’s club” culture. Legal and HR experts agree that there are consequences for pay discrimination, and the settlement highlights practices that pose “financial and HR-related problems” if concerns are ignored.
One thing is clear. Closing the gender pay gap and ending workplace discrimination is now a priority at federal and global levels. We encourage all employers to urgently adopt a proactive approach, examine their compensation strategy and take steps to close gender pay gaps.
The first of those steps is to conduct a pay equity audit. A pay equity audit makes a clear statement about your organization’s commitment to gender equality. Our pay equity auditing software, PayParity, identifies pay disparities at the intersection of gender and race/ethnicity. An internal pay equity analysis is an effective way of identifying unexplained pay gaps and their root cause, as well as implementing strategies to deliver pay equity.
To find out how Trusaic can help your organization deliver pay equity, schedule a meeting with one of our experts.
For more information on emerging pay equity-related laws, download the Pay Equity Definitive Guide below.
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