The Challenge of Wage Claims Under the Equal Pay Act

For those of you who may not know it, the Equal Pay Act (EPA) was a 1963 amendment to the Fair Labor Standards Act (FLSA) that prohibits wage discrimination based on sex. But the EPA is administered and enforced by the Equal Employment Opportunity Commission (EEOC).

Odd, given that the FLSA is administered and enforced by the Department of Labor (DOL). Congress actually granted the authority to the DOL’s secretary, but then permitted it to be assigned to the EEOC. As part of the FLSA, it has the penalties in that act, and not under Title VII which also prohibits wage discrimination based on sex. Confused? That’s our tax dollars at work. 

Today’s post is a bit lengthier than normal and is about a case involving claims of wage discrimination under both Title VII and the EPA. We will focus on the latter law.

While written in gender neutral terms, the EPA was passed to achieve some equity in wages for women who traditionally have been paid less for the same work as their male counterparts. They still are. Now, nearly 60 years later, it is estimated that women earn between 75% and 83% of the median income of their male colleagues depending on the source of information. Both statistics are appalling.  

The EPA, found in Section 206 of the FLSA, states in relevant part:

(d) (1) No employer having employees subject to any provisions of this section shall discriminate, within any establishment in which such employees are employed, between employees on the basis of sex by paying wages to employees in such establishment at a rate less than the rate at which he pays wages to employees of the opposite sex in such establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions, except where such payment is made pursuant to (i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex…

Back in the late 1970’s I worked for a major retailer in its security department catching shoplifters. Ah, good times. Nothing like a chase before breakfast. But the women were hired as “store detectives” and men were hired as “security investigators” earning a couple of dollars more an hour than the women. We basically did the same thing. I filed a charge with the EEOC, and the practice was corrected. Later I worked in security at a local hospital and noticed that there were female “housekeepers” and male “janitors.” But, I digress.

The first bill signed into law by President Barack Obama was the Lilly Ledbetter Fair Pay Act which allows the statute of limitations on claims under the EPA to renew with each paycheck. Now a woman who discovers she is being paid less because of, by way of example, a maternity leave taken years earlier (as was the case with Ms. Ledbetter), will not be barred by the statutory limitations period. This was a step in the right direction. There have been a number of bills introduced over the years to narrow the wage gap, including the Paycheck Fairness Act introduced last spring. But none has garnered the support to become law except the EPA.

Likely you are aware that Title VII is broader than the EPA in terms of the protected statuses and types of employment actions that are covered. But there are other distinctions worth noting. First, the potential damages are different. Because of the Civil Rights Act of 1991, Title VII now allows for lost wages/benefits (past and future) and reinstatement, along with emotional distress/other compensatory damages and attorneys’ fees. There can also be punitive damages (where it is shown the employer acted with malice or reckless indifference to the employee’s rights), but there are damage caps based on the number of employees employed by the defendant company. 42 USC 1991.       

By comparison, the EPA allows employees to be awarded the wages that should have been paid, and an equal amount in liquidated damages along with attorneys’ fees.

But, I want to focus on a significant difference today: the burdens of proof of the two laws. This fascinates me and is where we will pick up with today’s case which is a published opinion by the U.S. Court of Appeals for the Sixth Circuit. Because the university has been a client of the firm, neither the case name nor the university shall be identified. 

The case involves “Lee” an African American male who, in 2011, became employed by a university as a benefits generalist starting at $39,000 per year. In 2013, Lee became a compensation analyst with a wage increase to $43,000.

That same year, the Human Resources department hired a white female named Cassandra, in the exact same position, with a starting salary of $53,000 per year. The university explains the difference in their wages by the fact that Cassandra had been working for the university earning just over $48,000 per year and under university policy she had to receive a minimum increase of 5%.

Cassandra, however, was provided an increase of 10.2% because of her “outstanding recommendations” and because those in HR who interviewed her were “very impressed by her.” Their mutual supervisor testified recalling that Cassandra said she would not leave her prior position for anything less than $53,000 and while he recognized that there was a significant gap in compensation, he planned to “revisit” Lee’s salary later. 

Ok, not to take away from the seriousness of this, but it’s kind of ironic when you realize that these were compensation analyst positions in the HR department! Right?

Both individuals had wage increases and received bonuses, but Cassandra consistently received more. In 2017, Cassandra was also reclassified as compensation and HR operations lead which eventually resulted in her receiving a 7% increase. A couple of months later, Lee requested an equity increase and his salary was increased by 3.3% to just over $48,000. There was testimony from the university’s witnesses who explained that Lee had received “inconsistent” performance reviews.

In November, there was a discussion about backfilling the senior compensation analyst position. Tamie, the new senior associate vice president and chief human resources officer, decided the position should now require a bachelor’s degree and prior experience as a senior compensation analyst. These changes would mean that Lee was no longer eligible for the position.

Lee filed an internal discrimination claim. A meeting was held with Lee, his supervisor (who served as Lee’s representative) and Tamie to discuss the complaint. Following the meeting, Tamie advised Lee’s supervisor that she had reviewed Lee’s resume and determined that he had not been qualified for the comp position he presently held when he was placed in it four years earlier.

The day after the meeting, Lee contacted the university’s Office of Equal Opportunity & Access, advising it of his concerns of discrimination and retaliation. “A few days later, [Tamie] sent [Lee] an email further responding to his complaint, contending that he did not understand department policies and was behaving inappropriately.”

Less than a week later, Tamie told Lee’s supervisor that she wanted the senior compensation analyst position posted at a “manager level.” It was eventually posted with the title “Senior Compensation & Performance Analyst” with a bachelor’s degree required. Eventually a white female was hired for the position at $76,000 per year.

In August 2018, Lee filed a federal lawsuit claiming sex discrimination and retaliation under the EPA and race and sex discrimination and retaliation under Title VII. Eventually, the university filed its motion to dismiss the case which was granted by the federal district court. Lee appealed.

The U.S. Court of Appeals for the Sixth Circuit began by explaining the EPA and its purposes. Notably, and unlike Title VII, the EPA does not require any showing of discriminatory intent. The plaintiff is required to simply “show that an employer pays different wages to employees of opposite sexes ‘for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.’” Then, “the defendant is required to prove by a preponderance of the evidence ‘that the wage differential is justified under one of the four affirmative defenses set forth under …Equal Pay Act.’

The fourth exception, the catch-all, relied upon by [the university in this case], permits a ‘factor other than sex’ to be an affirmative defense only if, ‘at a minimum, [it] was adopted for a legitimate business reason.’ The defendant bears the ultimate ‘burden of persuasion and production on its affirmative defenses.’ So, on a motion [to dismiss], if the defendant carries its heavy burden of proving its affirmative defenses, the plaintiff must produce evidence creating a triable issue of fact as to whether the defendant’s proffered explanation was pretextual…” (emphasis added; internal citations omitted).

Wow, did you catch that? In Title VII cases, the employer only needs to “state” (not prove) its lawful reason. But, under the EPA, the employer has to prove one of the affirmative defenses by a preponderance of the evidence. There you have it. The reason for this article and the reason why the EPA is so dangerous (along with the Lilly Ledbetter Fair Pay Act, which allows the statute of limitations on such claims to renew with each paycheck, forever…).

The appellate court found that the university failed to meet its burdens under either law and remanded the entire case to the district court.   

One last distinction between Title VII and EPA.  Under Title VII, the plaintiff must compare herself, to someone who is similarly situated, generally a current employee who works for the same supervisor, holding the same or similar position.

But the EPA allows the plaintiff to also compare herself to someone who held the position before or after her. So, don’t think that because the plaintiff has left your company’s employment that she may not be waiting to see what her replacement is paid. 

It is for the reasons above that one of the most experienced HR professionals I have had the pleasure to work with created a form that had to be completed by the HR generalist (or by a compensation specialist) every time a new employee was hired. The form compared what the new employee was going to be paid to others who currently and recently held this position.

I was very impressed when I saw that form in a personnel file. (You know who you are Tina!). This is a good process to adopt.

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