The Walt Disney Company owes female workers more than $150 million in wages, according to motions filed on Friday in a California lawsuit. The complaint alleges that women employed by the entertainment giant were shortchanged due to Disney’s practice of asking new hires about their pay history.
On Friday, attorneys for the plaintiffs filed a motion for class certification for more than 10,000 women employed by Disney in California from 2015 until the present. The lawsuit excludes employees who are vice presidents or above and those working at Disney-owned Hulu, ESPN, Pixar, 21st Century Fox, FX, National Geographic, Bamtech and ILM. Deadline has posted a copy of the entire motion and accompanying analyses.
David Neumark, an economist and gender pay gap expert at the University of California, Irvine, conducted a statistical analysis of pay at Disney for the plaintiffs. When Neumark compared the salaries of men and women in similar jobs, controlling for non-discriminatory factors like previous experience that might impact pay, he found that Disney paid women 2% less than men.
According to the complaint, there’s only a one in a billion chance of obtaining Neumark’s results if no gender differences exist. Disney disagrees. Shawna M. Swanson, Associate General Counsel and head of the employment law function for The Walt Disney Company says there is no gender pay gap at Disney. “The plaintiffs’ assertions about an alleged pay gap between women and men are simply false, which we will demonstrate through the litigation,” Swanson wrote via e-mail in response to a request for comment.
Particularly striking in Neumark’s analysis is his finding of a significant narrowing of Disney’s gender pay gap after 2017. Between 2015 and October 2017, Neumark claims women’s starting pay was 4.36% less than men’s. After October 2017, the gender gap in starting pay dropped to 1.3%. According to the plaintiffs, the dramatic decrease was due to a Disney policy change.
Through October 2017, Disney’s compensation policies permitted a new hire’s prior pay to be considered in setting their starting pay at the company. Asking about pay at previous jobs is problematic because women have historically been paid less than men. Employers’ reliance on salary history to determine compensation perpetuates the pay gap problem. A woman, underpaid in a previous job, could be forced to carry the lower wage forward, making it difficult to catch up and achieve equal pay.
According to the complaint, “Disney also had a common practice for annual pay increases, which focused on percentage increases, rather than assessing whether an employee’s salary was appropriate. This practice had the predictable effect of perpetuating the disparities from starting pay.” The argument suggests that if women started at lower salaries, it would be difficult to catch up to their male counterparts.
A California law was enacted in January 2018 prohibiting employers from asking about salary history to close the gender pay gap in the state. This law was the likely impetus for the change in policy at Disney. If correct, the pay gap statistics from this lawsuit reveal how valuable such regulations can be. Currently, 21 states have enacted bans on asking new hires about their salary histories. Most of these bans do not prohibit organizations from using prior salary information if it is offered voluntarily.
According to the complaint, Disney continued to collect current or prior salary if it was provided by the candidate voluntarily and would share this information with their compensation department. In addition, “Disney also encouraged recruiters to ask about a candidate’s compensation expectations, as well as any compensation that would be ‘left on the table’ if they were to leave their current employer,” according to the complaint. Disney allegedly used salary expectations in calculating offers to new hires until approximately 2022.
Asking about salary expectations can hinder women because there’s evidence women ask for less pay than their male counterparts. To be equitable, wages need to be set according to objective criteria and not based on previous salary or job candidates’ ideas about what they should be paid.
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