Microsoft’s LinkedIn social network has agreed to settle allegations it systematically underpaid women in engineering, product, and marketing roles.
The US Department of Labor (DoL) on Tuesday announced the settlement on behalf of 686 female workers in California. The government said an evaluation conducted by DoL’s Office of Federal Contract Compliance Programs found that between March 1, 2015, though March 1, 2017, LinkedIn failed to provide equal pay for women in its San Francisco and Sunnyvale, California, offices.
Specifically, LinkedIn was accused of violating Executive Order 11246, which prohibits federal contracts from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. EO 11246 dates back to the Johnson administration in 1965 and has been amended since then. The enforcement action also reflects Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974.
The settlement applies to LinkedIn’s engineering and marketing positions in San Francisco and to its engineering and product jobs in Sunnyvale. The agreement calls for LinkedIn: to pay $1.8m in back wages and interest to affected workers; to conduct staff training covering non-discrimination; and to provide gender-neutral compensation for at least the next three years.
In addition to recovering $1.8 million in back wages and interest for these workers, our agreement will ensure that LinkedIn better understands its obligations as a federal contractor and complies in the future
LinkedIn will also be obligated to revise its compensation practices and policies and to accept government monitoring to ensure the company is complying with its federal agreement.
“Our agreement with LinkedIn Corp resolves alleged pay discrimination that denied 686 female workers at the company’s San Francisco and Sunnyvale locations their full wages,” said Jane Suhr, Regional Director of the Office of Federal Contract Compliance Programs (OFCCP) in San Francisco, in a statement. “In addition to recovering $1.8 million in back wages and interest for these workers, our agreement will ensure that LinkedIn better understands its obligations as a federal contractor and complies in the future.”
LinkedIn in a statement posted to its website acknowledged the settlement – which really is tiny change for the tech giant – while disputing the government’s claims.
“While we have agreed to settle this matter, we do not agree with the government’s claims; LinkedIn pays and has paid its employees fairly and equitably when comparing similar work,” the statement read.
The DoL has not always prevailed when challenging company pay practices. In 2017, the DoL accused Oracle of pay discrimination against female, African American, and Asian employees and of favoring Asian employees in its recruitment. But three years later, the judge hearing that case ruled the government failed to prove its claim.
In its pushback against the now settled charges that it paid female workers unfairly during the period from March 1, 2015, through March 1, 2017, LinkedIn cited a survey of its own conducted during a different time period – 2021 – that found “globally, for every $1.00 earned by men, our female employees earn $0.999.” And in the US that year, LinkedIn employees of color earned $1.00 for every $1.00 earned by white employees, the company said.
Wendy Musell, managing partner of law offices of Wendy Musell and of counsel for employment-law specialists Levy Vinick Burrell Hyams LLP, told The Register in a phone interview she expects the settlement will reverberate through Silicon Valley and beyond.
The decision is specifically relevant to companies with federal contracts that do more than $10,000 in annual business with the US government, said Musell, noting that it came from the OFCCP, an agency that gets its marching orders from the executive branch.
“For companies that have federal contracts, one may see that the US Department of Labor will actually enforce these laws,” said Musell. “The prior administration did not and did not require reporting [of workforce demographic data].”
Musell expects more companies will pay attention to gender-based pay equity for fear of getting caught.
“This is not the first time pay equity issues have been raised in Silicon Valley and I’m sure it will not be the last,” she said. “But what this says is the Department of Labor will be watching and that itself is a big change.”
Government attentiveness however is not the only scrutiny companies should consider, however. Investment firms are also paying attention.
“Proactively managing pay equity is essential, not simply to avoid legal action and reputational hits like the DoL settlement with LinkedIn, but to ensure companies are attracting and retaining valuable, diverse, talent,” said Natasha Lamb, a managing partner and portfolio manager at sustainable investment advisor Arjuna Capital, in an email to The Register. “We have successfully pressed 27 companies to engage in annual audits and reporting to ensure pay gaps are measured and managed.”
Michael Passoff, CEO of Proxy Impact, a shareholder advocacy firm, told The Register in an email that most companies do not provide gender pay gap data.
“That lack of disclosure hides pay equity problems and makes them vulnerable to regulatory, reputational and legal risks,” said Passoff. “LinkedIn needs to annually report on its gender pay gap so investors, consumers and employees can see that it is making progress towards pay equity.
“By comparison, LinkedIn UK provides an annual gender pay gap report which showed a 20 percent unadjusted median pay gap and a 50 percent unadjusted bonus pay gap between men and women in 2021. US investors and employees should receive the same level of information that LinkedIn UK provides.” ®