The increasing risk of legal challenges to an employer’s compensation policies and practices: Considerations for compensation self‐assessment

Abstract

In recent years, the compensation practices of employers, including financial services firms, have come under increasing attack by the government and private plaintiffs amid allegations of pay discrimination. These attacks have taken place in a number of forums, ranging from administrative investigations, to single‐plaintiff and multi‐plaintiff litigation and, perhaps most significantly, to the class action arena. An employer’s potential exposure in these types of cases ‐ especially those brought on behalf of multitudes of employees ‐ can be significant. This past summer, for example, Morgan Stanley announced a $54 million settlement with the Equal Employment Opportunity Commission of a class action that included claims of gender discrimination in pay. Shortly thereafter, The Boeing Co. agreed to pay up to $72.5 million to settle a class action gender discrimination suit brought by approximately 29,000 salaried and hourly female employees alleging discrimination in pay, promotions, overtime, assignments, bonuses, and other conditions of employment. In the well‐publicized Wal‐Mart employment discrimination class action, the district court certified a class action involving pay discrimination claims covering more than one million women in both hourly and salaried jobs in Wal‐Mart’s 3,400 stores across the nation. And, last year, a law firm primarily engaged in representing plaintiffs in discrimination litigation was enlisted by the National Council of Women’s Organizations to investigate alleged discrimination at Wall Street firms, including compensation discrimination.