Adidas, Home Depot Sued For Job Ad Pay Transparency

A batch of proposed class actions filed in Washington state against major companies such as Adidas AG, Home Depot Inc., and Marriott International Inc., will help employers gauge the litigation risk they face under a recent nationwide wave of pay transparency laws requiring salary ranges in job ads.

A handful of job applicants have sued companies in roughly 40 lawsuits alleging they failed to advertise the pay ranges and benefits information that Washington’s law began requiring Jan. 1. Each case could cover “potentially hundreds” of job applicants, according to the complaints.

The salary range requirements—also in effect in California, Colorado, and New York—are aimed at improving pay equity by making women and workers of color less likely to accept jobs for lower compensation than their White, male peers. Average working women in the US made 83 cents for each dollar of average men’s income in 2022, and the gap is worse for women of color, according to the Bureau of Labor Statistics.

Beyond the potential pay equity benefits, the new mandates pose a litigation threat for businesses advertising jobs that can be performed in California and Washington, where the laws include a private right of action with a minimum damages award of $5,000 per person in the Washington statute.

Most of those Washington cases have been filed in state court within the past month, so it’s too early to know how judges will treat their claims. Seattle plaintiff’s firm Emery Reddy PLLC has filed most if not all of those cases in King County Superior Court.

The suits have also targeted Albertsons Companies Inc. and Burberry Group plc, as well as smaller local businesses.

Definitions Matter

Key legal questions will include whether the job applicants can show they suffered any injury to merit an award of damages simply by seeing a job ad without a salary range and clicking “submit” on an application, said Missy Mordy, an employment lawyer with Davis Wright Tremaine LLP in Bellevue, Wash.

“One of the things we’re curious about is whether the plaintiffs have standing to bring the lawsuits,” she said. The Washington law arguably requires that a person be qualified and legitimately applying for a job, not just trolling the internet for noncompliant job listings, she added.

The litigation risk for employers, as well as the payoff potential for plaintiffs and their attorneys, also will depend on whether the courts affirm class status. The Washington complaints claim to cover dozens or hundreds of class members each, including anyone who applied for the jobs posted without salary ranges.

“These are absolutely test cases,” Mordy said.

The Washington law provides that a job applicant or employee can recover damages related to a noncompliant job posting, while guidance from the state’s labor department defines an applicant as anyone who applies.

Salary and benefits information is required only in job postings for specific positions that list desired qualifications, not generic ads such as “help wanted” or “manufacturing jobs available,” according to the guidance.

California’s pay transparency law allows complaints to the state labor commissioner as well as lawsuits by any “person who claims to be aggrieved by a violation.”

Beyond California and Washington, local and state pay transparency laws generally rely on city or state agencies for enforcement. New York City’s pay transparency ordinance allows for private lawsuits only by a company’s employees, not external job applicants.

Agency enforcement has been limited thus far with the exception of several citations and fines issued in Colorado, which was first to require pay information in job ads starting in 2021.

Similar laws are set to take effect in Hawaii and Illinois in 2024 and 2025, while proposals await approval in Massachusetts and Washington D.C.

Unique Washington Incentives

Washington state is the first jurisdiction with these suits filed likely because its statute lets plaintiffs recover actual damages or $5,000, whichever is greater, plus attorney’s fees, said Adam T. Pankratz, an employment lawyer at Ogletree, Deakins, Nash, Smoak & Stewart P.C. in Seattle.

“This potential claim of $5,000 per applicant when the job posting doesn’t include the required information is unique and frankly created this environment where it was ripe for employers to get sued,” Pankratz said. “It’s very difficult to actually argue any financial damages” for a job seeker applying to a noncompliant job posting.

California’s pay transparency law has a private right of action but lacks the statutory damages provision, making private lawsuits less financially rewarding, said Leah Lively, an attorney at the Buchalter law firm who practices in California and Washington. It’s likely, however, that plaintiffs eventually will bring claims of pay transparency violations under the state’s Private Attorneys General Act, she said.

An earlier case filed in Washington in June against Qdoba Restaurant Corp. was removed to federal court, and the court has stayed further proceedings while Qdoba and the plaintiff, Destinee Moliga, pursue mediation.

Moliga alleged she applied for a cook job at a Qdoba in Seattle and the job ad didn’t include the required salary information. She lost valuable time by applying and was unable to negotiate or compare the pay range against other job opportunities, she said in her complaint.

Qdoba’s lawyers argued in court filings that Moliga had no legal grounds to sue.

“Plaintiff’s view suggests” the Washington law allows suits by “any individual who submits an online job application—regardless of qualifications, intent, job interview, or genuine interest in the position,” Qdoba said in an Aug. 24 motion to dismiss. “This defies standing requirements, falls short of basic causation requirements, and the statute’s commonsense interpretation.”

Adidas, Albertsons, and Home Depot declined to comment on pending litigation, while Burberry, Marriott, and Qdoba didn’t respond to requests for comment.

Timothy Emery, one of the Seattle attorneys representing the job applicants, in a written statement said the suits his firm has filed seek to change employers’ illegal practices.

“Employers save big by hiding pay information from their workers. I suppose it’s no surprise that many continue to thumb their nose at the Equal Pay Act—they have one goal: to maximize shareholder profits,” said Emery.

Broader Litigation

Lawsuits targeting deficient job ads are only the newest variety of pay equity litigation, and some attorneys see signs that other kinds of pay-related claims are heating up in California and beyond.

As pay transparency becomes more common and the historical secrecy around pay dissipates, employees can easily spot disparities in their salaries and potentially file discrimination complaints, Lively said.

“There’s sort of been a resurgence of those cases, at least at the administrative level, complaints to the EEOC or the state equivalent,” she said.

California plaintiff’s lawyers also are actively filing other kinds of complaints related to the state’s Equal Pay Act, such as claims against employers illegally asking job applicants for their past salary histories or blocking current employees from discussing pay amongst themselves, said David Bibiyan, a plaintiff’s attorney in Beverly Hills.

It’s also possible the California legislature will update its pay transparency law to provide similar statutory damages as Washington, he said.

“The state itself doesn’t have the resources to bring these cases. It’s a matter of incentivizing private lawyers to bring these cases for employees,” Bibiyan said. “That means recovery for the plaintiffs and the lawyers.”