LinkedIn Settlement Demonstrates Need For Accurate Pay Equity Audits

As pay equity continues to heat up around the world, some organizations are learning the hard way why it’s important to conduct a pay equity audit with the support of experts. 

Such is the case with LinkedIn, the professional networking website that ironically hosts much of the dialogue associated with pay equity, the great resignation, and what employees are looking for in an employer. 

Last week LinkedIn reached an agreement with the Department of Labor (DOL). In the case, DOL asserted that LinkedIn harbored “systemic gender-based pay discrimination,” or in other words, paid women less than men who performed comparable work.

The social media company, owned by Microsoft, settled with the DOL and has agreed to pay $1.8 million in backpay to roughly 700 female employees who worked at the company’s San Francisco and Sunnyvale office locations. These women held engineering, product, and marketing positions at the company between 2015 and 2017. 

What’s interesting is that this time frame represents periods before and after the $26.2 billion Microsoft acquisition. Some might argue that the pay issues identified by DOL may have arisen as a result of the acquisition, due simply to the fact that employee classifications merged to align with Microsoft and as such created pay disparities unbeknownst to LinkedIn. 

No matter the reasoning, it demonstrates the need to consult experts when performing a pay equity audit, especially during an acquisition. 

According to a DOL press release, in addition to the lump sum payout, LinkedIn must also:

• Conduct a staff training program to ensure compliance with LinkedIn’s non-discrimination obligations.
• Evaluate – for the next 3 years – whether the company’s compensation is gender-neutral and make salary adjustments if not. LinkedIn will also revise its compensation policies and practices and agreed to monitor and report to ensure compliance with federal contract obligations.

While the details of the settlement are important, the major takeaway from this story is the disconnect between LinkedIn and DOL regarding pay equity. Despite reaching the agreement, LinkedIn said in an announcement that it does “not agree with the government’s claims” and it “pays and has paid its employees fairly and equitably when comparing similar work.” 

Evidently, LinkedIn and the DOL arrived at different conclusions following the completion of two different pay equity audits. In the official agreement, LinkedIn asserted that its analysis didn’t identify any pay disparities between men and women performing comparable work. On the contrary, the DOL’s analysis found “significant pay disparities even after controlling for ‘legitimate explanatory factors,’” according to a post by the Associated Press.

This situation demonstrates the utmost importance of not only conducting a pay equity audit but conducting it correctly. Pay equity audits require a statistical regression analysis – it’s a very complicated process that, as LinkedIn’s settlement proves, requires a perfected method. 

While many organizations may prefer a stand-alone SaaS platform for conducting a pay equity audit, it can pose a risk if the tool is not administered by trained professionals. Instead, pay equity audits should be conducted with the support of experienced data scientists, legal professionals, and savvy consultants.

To learn more about pay equity audits, contact us to learn about our software solution, PayParity. PayParity performs a pay equity audit across your workforce at the intersection of gender, race/ethnicity, age, and disability. This holistic approach identifies all scenarios where pay disparities may exist. 

The platform also takes into account the legitimate business reasons your organization uses for paying employees differently. Moreover, PayParity models pay equity through the same lens the state and federal governments leverage for ensuring compliance with equal pay for equal work. This ultimately ensures your compliance with state and federal pay equity laws and positions you as a leader in equal pay.

If pay equity is a new topic for you, download our introductory piece, What is Pay Equity below.