$2.5 million premium for underpaying women

If health insurance giant Humana thought it was saving money by paying women less than men doing comparable work, it was wrong. The company just agreed to pay $2.5 million to 753 women who worked for the company in 2011 and 2012.

If you do any business with Uncle Sam, this case should grab your attention.

The settlement came about after investigators from the U.S. Department of Labor’s Office of Contract Compliance Programs found disparities in the pay of men and women at Humana headquarters in Louisville, Ky. OFCCP has compliance oversight because Humana performs work for the federal government there.

According to investigators, female consultants, project managers and managers were paid far less than men performing the same work. The pay disparity violates Executive Order 11246, which bars federal contractors from gender-based discrimination.

Humana settled without admitting fault. It agreed to adjust its pay rates and take measures to ensure that women’s compensation keeps pace with that of men in comparable management job classifications.

Gender pay issues have commanded headlines in recent years. In many states, employers may no longer ask job applicants about their pay histories. (See “Complying with ‘ban the box’ turns out to be pretty easy.”) Advocates for this approach argue that paying an applicant based on her salary history may perpetuate gender-based pay discrimination.

Advice: All employers—but especially federal contractors—should take proactive steps to avoid gender pay disparities. Base pay on employee experience, skills and education for each position. Employers can avoid charges of bias by paying the same amount to workers with similar duties, skills and experience regardless of gender or other protected characteristics.

Gender pay issues have been an important subtext of the #MeToo movement. Women who have been sexually harassed frequently point to pay disparity as a red flag that tips off retaliation in addition to discrimination.