Diversity & Inclusion

Princeton Pays 1M in Gender-Based Pay Discrimination Settlement

Princeton University recently agreed to pay nearly $1 million in cumulative back wages to 106 female professors whom the U.S. Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) found to be victims of gender-based pay discrimination.

The OFCCP enforces Executive Order 11246, which makes it unlawful for employers that are government contractors to engage in gender-based compensation discrimination. To assess compliance with the law, the agency regularly conducts aggressive, protracted reviews of contractors’ pay practices. The reviews are called compliance evaluations. An employer that is found to pay female employees less than similarly situated male employees may be in violation of the law absent a legitimate, nondiscriminatory explanation for the pay disparity, such as seniority.

The OFCCP can pursue legal remedies against such employers, including back pay and benefits, costly salary adjustments, and nonmonetary relief such as mandatory promotions or job placements, modifications of policies and practices, pay equity training, and more harshly, the cancellation of current federal contracts and exclusion from future contracts.

“Similarly situated” is a term of art. When the OFCCP evaluates employee pay, it’s theoretically supposed to compare the pay of only similarly situated employees, meaning individuals whom one would expect to be paid the same based generally on the similarity of (a) their jobs, such as daily tasks, required skills, effort, responsibility, and complexity, and (b) other objective factors, such as minimum qualifications or certifications.

As the thinking goes, persons in jobs requiring certain credentials shouldn’t be grouped together with persons in jobs that don’t require the same credentials, even though the two jobs otherwise may be similar. For example, one would expect a college professor, required to have a PhD and who regularly teaches classes, to be paid more than her teaching assistant, who likewise regularly teaches but hasn’t yet obtained a PhD. Comparing the pay of a group of professors to that of a group of teaching assistants would be like comparing apples to oranges.

Princeton University’s Alleged Violation

In Princeton’s case, the OFCCP conducted a university-wide review of all full professors’ compensation. At first glance, this seems to be more like comparing apples with apples. The agency considered all of Princeton’s full professors to be similarly situated.

According to the OFCCP’s preliminary findings, 106 of the university’s female full professors were paid lower salaries than their similarly situated male counterparts between 2012 and 2014. The university didn’t admit wrongdoing or attempt to justify the alleged pay disparity with legitimate, nondiscriminatory factors. Instead, it seems Princeton asserted the agency’s findings were the result of a flawed model based on improper comparisons.

Princeton contended not all full professors were similarly situated to one another, and only full professors within each academic department were similarly situated. It claimed a professor’s compensation varied depending on what department he or she was in because professors teaching one academic discipline produce a labor market different than professors who teach other disciplines.

For example, astronauts might be more employable than jazz musicians. Therefore, professors teaching astrophysics are compensated differently than those teaching jazz studies. Princeton’s department-based approach to faculty compensation accounted for market factors it claimed the OFCCP’s process didn’t consider. Thus, as the university claimed, the agency’s inclusion of all full professors in one pool of similarly situated employees created a false impression of pay inequity.

Settlement Agreement

Attacking the OFCCP for the sample of employees whose pay it compared during a compensation compliance evaluation is a method that has had mixed success in defending against allegations of pay inequity. To avoid the burdens and expense of further legal proceedings fighting over whether the agency mixed up Princeton’s apples with its oranges, however, the university entered into an early resolution conciliation agreement.

Princeton agreed to reconcile the alleged pay disparity by paying $925,000 in back wages as restitution to the 106 female professors. It also agreed to other measures including:

  • Conducting internal pay equity audits in the future;
  • Actively hiring women into roles where they are typically underrepresented; and
  • Conducting pay equity training for all personnel involved in compensation decisions for full professors.

All Employers Beware, Even Nongovernment Contractors

The OFCCP has recently ramped up enforcement efforts. But federal contractors aren’t the only employers potentially liable for compensation disparities. Several federal and state laws expose most employers to liability: 

Equal Pay Act (EPA). The federal law requires equal pay to men and women who perform jobs that require equal skill, effort, and responsibility, violations of which expose employers to liquidated damages and the payment of attorneys’ fees.

Diane B. Allen Equal Pay Act. The New Jersey law, considered to be the most aggressive equal pay law in the country, requires equal pay to members within and outside of all protected classes (e.g., race, disability, age) who perform substantially similar work (as opposed to equal work).

Takeaway

It’s a difficult task for employers to comply with all of the laws requiring equal pay and prohibiting discrimination in compensation. One strategy you might consider is conducting an internal pay equity self-audit with legal counsel. In certain jurisdictions, this might trigger safe harbor protections in the event of litigation. More importantly, it may proactively uncover pay disparities within your organization you can reconcile now to avoid litigation later.

John C. Petrella is the chair of Genova Burns’ employment law and litigation practice group and can be contacted at jpetrella@genovaburns.com. Justine L. Abrams is an Associate at Genova Burns and can be contacted at jabrams@genovaburns.com.