This week Disney, one of the world’s largest entertainment companies, agreed to pay $43m to settle a class-action suit brought against it by 9,000 female employees accusing it of gender-biased pay discrimination. The terms of the settlement mean that Disney does not have to admit to gender pay discrimination, but the payment represents a step forward in the long battle over the gender pay gap in Hollywood.
The lawsuit was filed in 2019 and brought by LaRonda Rasmussen and Karen Moore, two female Disney employees who alleged that they were paid significantly less than their male counterparts in similar jobs. The rest of the women who joined the class-action suit were employed between 2015 and the start of the trial in 2019 and were originally seeking up to $300m in compensation.
According to Forbes, one of the “most striking aspects of the pay disparities alleged at Disney is the impact of asking about a prospective employee’s previous pay”.
An analysis of the gender pay gap at Disney by UC Irvine in California, economist David Neumark found that while women were paid on average 4.3% less than their male counterparts between 2015 and October 2017, this gap dropped to 1.3% after October 2017.
That may on the surface prove that Disney was doing something to address the pay gap but on closer inspection it seems that another broader hiring policy that affects the salaries of both genders while also reaffirming the discrepancy in their pay was responsible.
From 2018, Disney changed its hiring policies to prohibit the company from asking potential new employees about their previous salary history as a means of determining their new pay. This was in line with a law introduced in California and now implemented in 22 other states that bans employers from asking about salary history. That may seem like a good idea but, as so often in US corporate law, there’s a caveat that can contribute to the perpetuation of gender-biased remuneration.
That’s because the law doesn’t prevent employers from using previous pay information from prospective new hires if that information is volunteered by candidates. One study found that men were 12% more likely than woman to disclose their salary history because, as men, they were paid more in their previous jobs. Employees with a history of high compensation may often choose to divulge their previous salaries as a means of gaining an advantage in new job negotiations. Also, employers may think that if you don’t disclose your previous salary it’s because you were poorly paid. This has obviously not helped the cause of women in the job market because historically they have been paid less.
A recent article published in the Journal of Cultural Economics showed that while the popular narrative around the gender pay gap may be less black and white than many female stars and equality activists have claimed, “the popular narrative partially reflects reality as taking all movies and stars together, there exists a robust and routinely significant unexplained earnings disadvantage for women stars of over $2m per film”.
A 2016 Vanity Fair article showed that for the David O Russell film American Hustle, the two male leads — Christian Bale and Bradley Cooper — each received $2.5m fees and 9% of the profits of the film, while their female co-star, Amy Adams, who worked the same number of days on set, was paid $1.25m and offered 7% of the profits. This is one in a long list of examples of gender disparity in the movie business that’s remained a standard practice for most of its history.
The settling of the Disney lawsuit may be at far less than the original $300m demanded and it may not be used as a legal admission of discriminatory pay policies by the company but it does offer some hope that courts and the entertainment industry are aware that the issue is real and needs urgent attention.
A Disney spokesperson said: “We have always been committed to paying our employees fairly and have demonstrated that commitment throughout this case and we are pleased to have resolved this matter.”
But the reality is perhaps not so neat.
What is undoubtedly true is that, as Lori Andrus, an attorney who worked on the case, said in a press release following the settlement that Rasmussen, Moore and the thousands of women who took the case to court should be commended because “they risked their careers to raise pay disparity at Disney”.
Her fellow lawyer, Christine Webber, added her voice to the chorus of support, telling the Hollywood Reporter: “This settlement would not be possible without these courageous women. Because of them, women can expect equitable treatment at Disney in the future ... [I am] hopeful the court will move swiftly to approve the settlement, so these hard-working women can move forward with confidence that best practices will be used and unencumbered by further litigation.”
The settlement must still be given final approval by a judge in January but for now it seems like a good end-of-year signal to Disney and the entertainment industry at large that the era of gender pay discrimination may soon be a thing of the past.
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