A high-profile equal pay case in the U.K. just had an important update. The legal theories at issue could have a significant impact on how we think about pay equity in the U.S.
First filed in 2014, the central issue in the case is whether Asda, a major supermarket chain, engaged in gender-based wage discrimination by paying in-store employees who are predominantly women less than distribution center employees who are predominantly men. The claimants assert that they should receive the same rate of pay as the distribution center employees because they are performing equal work, despite the different locations. Asda has argued different pay scales are justified because the in-store retail employees work under different terms and conditions and in different locations than the distribution center workers.
At a hearing in January, an employment tribunal considered the job descriptions for the in-shop employees as well as the distribution center employees. The job descriptions are critical to the case because independent experts will base their decision on whether the jobs are of equal value in large part on the job descriptions. The employment tribunal rejected Asda’s proposed job descriptions, clearing a major hurdle for the female employees seeking equal pay.
Under U.K. law, employees are legally entitled to equal pay with a person of the opposite sex where they are in the same employment and doing “equal work.” Equal work is defined in three different ways:
Like work – this is where the work involves similar tasks which require similar skills, and any differences in the work are not of practical importance;
Work rated as equivalent – this is where the work has been rated under a fair job evaluation scheme as being of equal value in terms of how demanding it is; or
Work of equal value – this is work which is not similar and has not been rated as equivalent, but is of equal value in terms of demands such as effort, skill and decision-making.
Under the terms of the U.K. Equality Act 2010, employees can select equal pay comparators across locations if “common terms” apply to their employment. The U.K. courts have largely supported the position of the claimants (the in-store employees), stating that they can compare themselves to their employee counterparts in the distribution centers even if their work duties are different and they work in different locations. This is because Asda applied the same terms and conditions of employment between the claimants (the supermarket employees) and the comparators (the distribution employees).
This U.K. equal pay case raises important considerations for employers in the United States. Perhaps the biggest consideration is that, like in the U.K. the pools of potential comparators for equal pay purposes are expanding. California, for example, passed major changes to its Equal Pay Act eliminating the requirement that employees being compared must work at the same establishment. States are also expanding the definition of “protected class” —groups of people that share a common, legally protected characteristic. What these changes signal is that employers ultimately have the responsibility to identify and correct unexplained pay disparities that exist within the organization, no matter how large or diverse. Employers are responsible for ensuring the pay structure and integrity within their organization is justified, and fair and within the parameters of the law.
Businesses, in general, should continue to monitor changes in equal pay laws in the communities in which they operate, and those in which they do not, because trends started elsewhere may impact laws locally. Organizations should consider performing a pay equity audit for a comprehensive window into their pay practices to get ahead of any potential issues involving pay equity that could pose litigation and financial risk.
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.