May 5, 2016, Trial News
Equal pay fights take center stage
Diane M. Zhang
Farmers Insurance Group, Inc., has agreed to pay about $4 million to hundreds of female attorneys who claimed they were paid less than their male counterparts during their time at the company. The settlement is one example of recent, high-profile lawsuits filed by women demanding equal pay. This past March, the U.S. women’s national soccer team filed a complaint with the Equal Employment Opportunity Commission, accusing the U.S. Soccer Federation of gender-based wage discrimination.
Farmers Insurance Group, Inc., has agreed to pay about $4 million to hundreds of female attorneys who claimed they were paid less than their male counterparts during their time at the company. (Coates v. Farmers Grp., Inc., No. 5:15-cv-01913 (N.D. Cal. Apr. 12, 2016).) The settlement is one example of recent, high-profile lawsuits filed by women demanding equal pay. This past March, the U.S. women’s national soccer team filed a complaint with the Equal Employment Opportunity Commission (EEOC), accusing the U.S. Soccer Federation of gender-based wage discrimination.
Lynn Coates began working at Farmers as an attorney in 1993. She left the company for another position after several years but returned to Farmers in 2010 as a contract attorney, covering for another lawyer who was out on maternity leave. Coates’s starting salary was $85,200. She became a full-time employee in 2011, and her salary increased to $90,000. Coates then began working as part of the company’s “High Exposure Attorney Team,” sharing tasks with a male colleague, Andy Lauderdale, who regularly referred to her as his “law partner.” From 2012 to 2014, Coates’s reviews were good, and her salary eventually increased to around $99,000.
In May 2014, Coates learned that several male colleagues with significantly less experience received salaries equal to or greater than her own. Furthermore, Lauderdale—who performed the same work as Coates—outearned her by at least $50,000. Other female colleagues also were earning significantly less than their male counterparts. A female attorney licensed in 2009 and hired in 2010, for example, earned $68,000, while a male attorney hired in 2012 with no insurance defense experience earned $92,000. Coates was blindsided by this discovery. Because Farmers never told Coates her salary grade, she did not know the appropriate range and was unaware of what her male colleagues were earning.
When Coates told her supervisor what she had learned, he told her that he had asked someone in Farmers’ HR department to look into the issue. Soon afterward, however, he began to strip Coates of her work duties, denying her the high-level legal tasks she had performed for years and effectively demoting her to a paralegal. When Coates complained, her supervisor told her that HR confirmed that Coates’s salary was within the proper “parameters,” that there was no gender wage issue, and that the company would not increase her salary.
San Francisco attorney Lori Andrus, who represented the plaintiffs, said that this underscores the transparency issues surrounding workplace salary. “Lynn Coates was offered a certain amount of money, and she took it—she was happy to have a job,” Andrus said, “When she said, ‘Wait, he’s making how much?,’ the company came back and told her that her salary was within the appropriate range without even telling her what the salary range was. The lack of transparency is hugely problematic and allows any imbalance in the system to go undetected.”
Coates eventually left Farmers in August 2014 after her supervisor continued to strip her of her work duties. As Trial News previously reported, Coates sued Farmers in April 2015; by December of that year, 11 more women joined her case. The same month, Judge Lucy Koh of the Northern District of California certified the class and authorized notice to potential class members. Significantly, the case was one of the first to test the limits of California’s new Fair Pay Act, which shifts the burden of proof to employers to show that a wage gap is based on legitimate reasons—such as seniority or experience—rather than gender. Although the act became effective in January 2016, the plaintiffs’ complaint was later amended to bring the claim under it. At the time of the proposed settlement, the class of plaintiffs had increased to about 300 women.
The settlement—which has yet to be approved—divides the $4 million among the 300 women, but the proposed agreement contains much more than financial compensation. It outlines various internal controls that Farmers must implement. It has to retain an independent human resources consultant to review and modify its employment policies and procedures with regard to compensation, salary grade placement, performance ratings, and promotions. Farmers must provide annual diversity training, confirm that compensation policies and procedures do not have a negative impact on female attorney employees, and make salary range information available to employees. Notably, in what Andrus calls a “groundbreaking” move, Farmers will use agreed-upon benchmarks to increase the number of women being promoted to higher salary grades by as much as 7 percent over the course of the next three years.
Andrus makes it clear, however, that Farmers did not act maliciously or purposefully. Rather, the wage gap problem is a systemic one—which is why the proposed internal controls in the settlement agreement and Farmers’ new commitment to salary transparency are so important. “Even in companies with rigid HR systems in place, prejudice creeps in,” Andrus said. “A company that wants to make sure bias isn’t infecting its performance review system needs to do annual audits and see if there is a statistical explanation for where the women are falling. Are the women getting poor performance reviews? If so—if you can isolate that variable of gender—then you know you have a problem. And if you’re not doing that, you’re sticking your head in the sand.”
Five members of the women’s national soccer team who filed a wage discrimination complaint with the EEOC in March believe that the gender variable is the sole issue in their case. The women claim that each athlete on the team is paid less than her male counterpart at every level, whether they are playing in a friendly match or a World Cup final.
In recent years, the women’s team has achieved notable success, drawing an audience of 23 million viewers for their 2015 World Cup final—making it the most-watched soccer game in American television history. The record-setting game contributed to the team exceeding its revenue projections by as much as $16 million; currently, the U.S. Soccer Federation projects a $5 million net profit for the women’s team in 2017 and a net loss of $1 million for the men’s. The complaint alleges that female players are paid significantly less than male players—due in part to a different pay scale. Members of the women’s team are paid only if they win a “friendly” game, for example, whereas the men are guaranteed payment regardless—meaning that a male player who loses every game he plays will still make more than a woman who wins all of hers.
In recent months, the team’s fight for equal pay has been complicated with the approach of the summer Olympics and a separate lawsuit filed by the U.S. Soccer Federation. Intent on preventing the players from potentially striking before the games this summer, the federation filed a lawsuit that accused the women’s team of breaching a clause in the collective bargaining agreement by threatening to strike. Both sides are seeking summary judgment. The intense media coverage has highlighted the consistent problem of a wage gap between men and women, regardless of workplace.
Although women are bringing more attention to the problem by both speaking out and suing for equal pay, Andrus noted how important it is for men to advance the cause as well. “When women negotiate for themselves, there’s a backlash and it harms them—because people think she’s too difficult to work with,” she observed. “Women who have made it to the top and reach back and try to help other women also get criticism from others, as well as harsher performance reviews. Men who see this—and who care about equality—can help fix it.”