Equal Pay or Bust

By: Mary Morandini

The Securities and Exchange Commission (the “SEC”) has advised tech giant, Amazon, to allow shareholders to vote on whether or not the company should provide a report on equal pay.[1]  The SEC only recently got into the business of analyzing employee compensation, following the various executive compensation mandates from the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).[2]  When approached with the shareholders request, Amazon asked the SEC for permission to strike the proposal for lack of clarity on how the company should calculate the gender pay gap.[3]  The SEC, however, rejected Amazon’s claim that the way in which to calculate a gender pay gap was “vague and misleading.”[4]

Women at Amazon made 99.9 cents on the dollar of male employees last year,[5] this is significantly higher than the national average which is approximately 77 cents on the dollar.[6]  Pay inequality is an issue shareholders are certainly permitted to be concerned with, and can make such proxy demands as the shareholder in this case.[7]  The shareholder, Arjuna Capital, amended its proposal after Amazon announced its commitment to continue providing equal pay between genders.[8]  Arjuna Capital was satisfied when the company finally conceded, noting that pay inequality is an important factor that should be addressed.[9]  Amazon’s commitment to income inequality is an important step in the right direction to help combat the gender pay gap.[10]

The Obama administration has been adamant in the equal pay field,[11] but not all of its initiatives have been successful.[12]  As recently as 2014, Republicans in Congress rejected the Paycheck Fairness Act of 2009 (the “Paycheck Act”), an act that would provide additional resources for women to fight to close the gender pay gap.[13]  The Paycheck Act was rejected for a number of reasons,  one of which being that the proposed legislation would have a potential negative effect on women, rather than help them.[14]  The increased potential of wage discrimination cases that would flow from the Paycheck Act would deter employers from hiring women, quite the opposite of the intention of the legislature.[15]  The White House has called the pay gender gap a “real and persistent problem” that must be addressed.[16]

It is important, for the equal pay agenda, that the SEC also felt that the pay gender gap was something that could be an important disclosure for shareholders.[17]  Amazon has joined a few other large companies in disclosing the gender pay gap, both Apple and Intel have made similar gender pay rate disclosures.[18]  Arjuna is also currently working on similar shareholder proposals with Microsoft and Adobe, and has already filed same with eBay, Expedia, Google and Facebook.[19]  Since the Obama Administration’s Paycheck Act was unsuccessful, the commitments made to equal pay by individual companies like Amazon, backed by the SEC, are an important step to further the fight against unequal pay for women in America.

[1] Dani Meyer, Amazon Reports Pay Equality After Shareholder Pressure, Law360 (Mar. 23, 2016, 7:33 PM), http://www.law360.com/articles/775395/amazon-reports-pay-equality-after-shareholder-pressure.

[2] See 124 Stat. § 1376.

[3] Meyer, supra note 1.

[4] Id.

[5] Id.

[6] Laura Basset, Paycheck Fariness Act Blocked Again by Senate GOP, HuffPost Politics (Sept. 15, 2014) http://www.huffingtonpost.com/2014/09/15/paycheck-fairness-act_n_5825644.html.

[7] Shareholders are permitted to make proposal for action so long as the shareholder meets certain demand requirements.  17 C.F.R. § 240.14a-8.

[8] Meyer, supra note 1.

[9] Id.

[10] Id.

[11] Melanie Garunay, Taking Action to Advance Equal Pay, The White House Blog (Jan. 29, 2016, 9:43 AM), https://www.whitehouse.gov/blog/2016/01/29/taking-action-advance-equal-pay.

[12] Basset, supra note 6.

[13] Id.

[14] Id.

[15] Id.

[16] The White House, Your Right to Equal Pay, https://www.whitehouse.gov/issues/equal-pay (last visited Mar. 23, 2016).

[17] Meyer, supra note 1.

[18] Id.

[19] Id.

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