Landmark Pinterest Settlement Reflects Continued Gender Gap in the Workplace

By Stark & Stark on January 28th, 2021

Posted in Employment Law

The federal Equal Pay Act, 29 U.S.C. § 206, was enacted in 1963 to protect against wage discrimination based on a person’s sex. The purpose of the Act is simple: men and women in the same workplace should be given equal pay for equal work. All forms of employment compensation are covered by the Act, including salary, overtime pay, bonuses, incentive compensation, vacation, etc. Under the Act, if there is any inequality in wages between men and women who perform substantially equal jobs, the employer must make it right by raising wages to equalize and normalize pay. In addition, an employer who violates the Act is liable to its aggrieved employee in the amount of her (or his) unpaid compensation and an additional, equal amount as a liquidated damage, plus reasonable attorneys’ fees and court costs.

In addition to the Equal Pay Act, which is federal law, most states have enacted their own equal pay and anti-discrimination laws designed to combat wage inequalities between men and women (and other underrepresented minorities). For example, in New Jersey, on April 24, 2018, Governor Phil Murphy signed into law the Diane B. Allen Equal Pay Act, which generally prohibits an employer from paying an employee who is a member of a protected class (including women) less than what it pays an employee who is not a member of that protected class for “substantially similar work.” Remedies for equal pay violations under the New Jersey Equal Pay Act include a six-year “lookback” period, allowing an employee who establishes discrimination in compensation to recover up to six years of back pay as long as the discrimination was continuous and the most recent violation occurred within the statute’s two-year statute of limitations, plus treble damages, reasonable attorneys’ fees, litigation costs, and potentially punitive damages.

Despite these legislative efforts, wage inequality remains a contentious issue. Even today, the average salary for women remains less than the average salary for similarly-situated men, and this statistic worsens across racial and ethnic minorities. For an example, African-American women and Hispanic women statistically earn even less relative to white women and, of course, white men. Also, according to the Center for American Progress, women fill only about 7 and 10 percent of top management positions in Fortune 100 and S&P 1500 companies, respectively. Thus, not only are women and minority classes underpaid compared to their peers, but they are underrepresented statistically at the C-suite level in corporate America as well.

Awareness has increased and greater efforts are being made to bridge this gap. However, it may take more trailblazers like Françoise Brougher to build the bridge.

On August 11, 2020, Ms. Brougher filed suit in California Superior Court in San Francisco County against her former employer, Pinterest (the San Francisco-based technology company that operates the well-known image sharing and social media App by the same name), in which she alleged gender discrimination, retaliation and wrongful termination. Three months later, the parties settled her lawsuit for $22.5 million. The settlement is one of the largest publicly-announced, single-plaintiff gender discrimination settlements ever.

In the opening paragraph of her Complaint, Ms. Brougher alleged as follows:

Even at the very top ranks of a public company, female executives can be targeted for sex discrimination and retaliation. Although Pinterest markets itself to women looking for inspiration, the company brazenly fired its top female executive for pointing out gender bias within Pinterest’s male-dominated leadership team. For two years, Plaintiff Francoise Brougher was Pinterest’s high-performing Chief Operating Officer and helped take the company public. However, whereas male executives were rewarded for strong leadership styles, Ms. Brougher was criticized for not being compliant or collaborative enough. In addition, Ms. Brougher was offered a less favorable compensation structure than her male peers and had to fight for equal treatment. Finally, when Ms. Brougher complained to the head of Human Resources and to [the CEO] that Pinterest’s Chief Financial Officer made demeaning sexist comments to her, and she asked for help to remedy the hostile work environment, [the CEO] fired her over a video call.

Ms. Brougher brought suit “to change Pinterest’s culture of gender bias and to hold Pinterest accountable for discrimination, retaliation and wrongful termination.”

By way of background, and according to Ms. Brougher’s Complaint in the lawsuit, before joining Pinterest as its Chief Operating Officer in March 2018, she was an experienced executive, leading teams at Charles Schwab, Google, and Square. In less than two years and while overseeing half of Pinterest’s workforce, Ms. Brougher was instrumental in seeing the company’s revenue increase from $500 million to $1.1 billion, while increasing its advertiser base from 10,000 to 80,000 clients and expanding operations to 20 countries. As Pinterest prepared for its initial public offering, however, Ms. Brougher learned through required SEC filings that she was compensated less than her similarly situated male colleagues, including a less-favorable equity structure. Further, despite her objective successes with the company, Ms. Brougher’s performance reviews encouraged her to be more “proactive and collaborative” while being mindful of communicating in a pointed and direct manner.

When Ms. Brougher objected to the content of her performance reviews, the Chief Financial Officer allegedly became defensive, yelling and calling her a liar, before hanging up the video call. In future meetings, he refused to acknowledge her presence. Soon, Ms. Brougher was no longer invited to executive meetings, even though the meetings were integral to her job duties and the strategic outcomes of the company. Next, she was not allowed to participate in the company’s IPO roadshow, despite the company’s use of the parts of the roadshow presentation she had designed.

Shortly after asking for help from the Chief Executive Officer and Human Resources department to remedy the allegedly hostile work environment, Ms. Brougher was fired. In terminating her employment, Pinterest asked Ms. Brougher to cover up the company’s decision to terminate her employment by signing a nondisclosure agreement and telling her team she decided to leave the company. Ms. Brougher refused and subsequently filed suit.

Although Pinterest has not admitted to any liability, in an attempt to remedy its allegedly hostile work environment, the company opened a private investigation into its culture, added two African-American women to its board of directors, hired a new head of diversity and inclusion, increased salary transparency, and partnered with the National Association for the Advancement of Colored People to create an advisory council. Ms. Brougher reportedly welcomes the changes but maintains that more women must be appointed to executive positions to combat gender discrimination.

Ms. Brougher’s settlement is notable for its large size and public nature, but perhaps most notably for its provisions requiring charitable donations aimed at improving technology education and career advocacy for women and traditionally underrepresented minorities. Although Ms. Brougher agreed to settlement, she previously believed she “had shattered the glass ceiling in the tech world.” Now, she and anti-discrimination advocates maintain this is merely another step towards breaking that glass ceiling, and more work must be done to ensure workplaces are equitable for all employees. Pointing to the public nature of the settlement and large settlement amount, advocates expect this and other similar settlements to mark a turning point from private “nuisance payments” paid merely to make claims go away to systemic changes more seriously addressing gender discrimination and creating equitable workplaces.

Employers can learn and take away a lot from this landmark gender discrimination settlement. First, simply put, employees should be paid equally to do equal work, regardless of their characteristics. While there remain exceptions from equal pay where the pay differential is made pursuant to a seniority or merit-based system, or is based on one or more legitimate, bona fide factors (e.g., training, education, experience, objective metrics) applied reasonably, the best starting point for determining pay is an equal, level playing field. Employers should conduct pay equity audits to ensure fair compensation and avoid enhanced wage-claim damages. These audits must include considerations of base compensation, bonuses, and fringe benefits.

In addition, employers should take concrete steps to implement policies designed to improve workplace culture, move towards equity, and protect their business. A diverse workplace has been shown to increase productivity, profitability and employee morale, while expanding the business’s brand and reputation. Furthermore, beyond the moral imperative, or an employer’s desire, to create an equitable workplace, many state and federal laws impose significant legal obligations and penalties for falling short, including enhanced and punitive damages. These policies, at their core, include (i) equal employment opportunity, (ii) diversity, equity and inclusion, and (iii) comprehensive anti-harassment, anti-discrimination and anti-retaliation rules to ensure equitable environments for employees of all backgrounds. Should an employee submit a complaint or internal grievance relating to gender discrimination or any other form of disparate treatment or hostile work environment, employer policies and grievance procedures should be designed to ensure fair treatment and avoid retaliation.

Employers should conduct training, promote seminars, and provide other forms of education and assistance to illuminate less-obvious forms of discrimination and unconscious (or inherent) bias. Additionally, employers should consider implementing mentorship programs to achieve equity in the workplace by retaining and developing employees that are traditionally underrepresented in the workplace. These are just a handful of the actions an employer can consider when creating a positive and equitable workplace culture while preventing – and protecting itself against – claims of employment discrimination, harassment and retaliation.

Another issue highlighted by Ms. Brougher’s lawsuit against Pinterest is the “abrasiveness trap,” where women are criticized for speaking up and appearing abrasive, while men are encouraged and rewarded for being aggressive. A research study called “The Abrasiveness Trap,” referenced in Ms. Brougher’s Complaint against Pinterest, uncovered an abrasiveness trap in the technology sector. It found about 90% of performance reviews given to women contained critical feedback versus only about 60% given to men. Crucially, when women were criticized, the criticism was far more likely to focus on personality. Only 2.4% of the critical reviews that men received focused on personality traits, whereas personality was the focus of 75.5% of women’s critical reviews. Again, as with other forms of training and education that can be provided to its workforce, employers should have special training designed to root out things like “the abrasiveness trap,” while also educating their employees to identify and report discrimination and harassment in the workplace when they see it.

The Brougher-Pinterest settlement, while extraordinary, is merely one more step towards “shattering the glass ceiling” and achieving gender equality in the workplace. As your legal and HR partner, our attorneys at Stark & Stark are available to help you create and maintain an equitable, fair, and legally compliant workplace. Also, if you are an employee and you believe you have been subjected to pay discrimination or any other form of harassment, retaliation or discrimination at work, please do not hesitate to contact our employment attorneys.

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