Computer information technology company, Hewlett Packard Enterprise reached a settlement regarding allegations of pay discrimination late last week.
1,735 female employees who worked at the company’s California offices from 2015 onward will be awarded compensation ranging from $500 to $17,000 each. The amount itself will come down to each individual’s tenure with the company and how much they assert they were underpaid.
As a result of the several year class-action lawsuit, Hewlett Packard Enterprise, a separate entity from Hewlett Packard, Inc., has agreed to pay $8.5 million to the affected female employees.
The case, Ross v. Hewlett Packard Enterprise Company, dates back to 2018. The plaintiffs assert that the company violated California’s Equal Pay Act, specifically paying female employees performing similarly situated work to their male counterparts, less.
As an example of the pay disparity, analysts reviewing Hewlett Packard Enterprise’s compensation data found that “the earnings of women in sales representatives and services roles to be only 67.7% of men’s in the same roles,” according to the case filed.
Furthermore, it was discovered through an analysis of the 2016 EEO-1 annual report that the company is predominantly employed by males. Roughly one-third of the company’s workforce is made up of women and they hold the vast majority of lower pay positions.
This is not the first time Hewlett Packard has been charged with alleged pay discrimination. In 2020, the collective Hewlett Packard firm, including Enterprise and Inc., agreed to pay $1.45 million to an affected 391 female employees. The outcome was the result of a multi-year investigation conducted by the Office of Federal Contract Compliance Programs.
Hewlett Packard is not the last tech company to be subject to allegations of pay discrimination. This year alone, several other firms have made headlines, including Riot Games, Activision Blizzard, LinkedIn, and Esri.
The commonality between all these organizations, in addition to operating within a male-dominated industry, is that their approach to pay equity has been rather reactive – and that is ill-advised for a number of reasons.
The first is that 2022 has been the banner year for change in the workplace. Leading HR analysts like Josh Bersin specifically called out the importance of pay equity this year in his HR Prediction for 2022. Harvard Business Review too echoed his sentiment, encouraging organizations to make it a priority.
So the question is, why are leaders encouraging it? For one, it helps with attracting and retaining talent. With pay equity issues like wage compression on the rise, employers need to be diligent in how they establish pay ranges, promote pay transparency, and discuss pay equity internally. According to ADP Research Institute, 70% of job seekers value compensation first when evaluating an organization.
Beyond being a differentiator for attracting and retaining top performers, prioritizing pay equity is a generally good business practice.
A recent study conducted by job recruiting site Indeed, finds that 81% of workers are more productive and engaged when they perceive themselves as paid fairly. And higher engagement in the workplace means higher quality outputs from your employees, and happier customers.
So, organizations watching from the sidelines should take note of the benefits of pursuing pay equity proactively, and the consequences of neglecting it.
With new laws like California SB 1162 taking effect next year, organizations will have no choice soon enough. If you need assistance ensuring your pay practices are equitable, contact us to learn about our PayParity solution.
For more information on the benefits of pursuing pay equity, download our research report, Creating a Culture of Diversity, Equity, and Inclusion, conducted by the Harvard Business Review, below.
Conducting a pay equity audit is a key component to ensuring equitable compensation within your organization. Just as important as the analysis is how you communicate findings and progress with various stakeholders. Download The Pay Equity Communications Planner to learn best practices for discussing compensation, both internally and externally.