The #MeToo movement has focused on sexual harassment in the workplace, but employers should be cognizant of another major gender issue that has been the focus of regulatory agencies in recent years—equal pay.
The Equal Pay Act (EPA) and Title VII of the Civil Rights Act of 1964 both prohibit discriminatory pay and pay disparities based on sex. A recent federal court of appeals case makes clear how pressing an obligation equal pay is and highlights that such cases can be hard to defend in court unless pay disparities between men and women are based on clear and consistent reasoning and rationale.
“Vivian” first worked for Manheim Remarketing as an automobile detailer but was later promoted to arbitration manager. She replaced a male arbitration manager who made $46,350 during his first year in that position. She made only $32,000 in her first year in that position and didn’t reach the salary equivalent to her male predecessor until her sixth year serving in the role.
Vivian’s salary at some points was below the company’s minimum salary for an arbitration manager and was consistently below its midpoint salary for arbitration managers. Internal investigations at the company found that women were paid less than men and that comments suggesting sexist attitudes against women were prevalent.
After learning of this pay disparity, Vivian filed a lawsuit against Manheim alleging violations of the EPA and Title VII. The company argued that it had legitimate reasons for the differences in pay between Vivian and her predecessor. He had more experience, a higher previous salary level, and a broader range of expertise.
The district court granted Manheim’s request to dismiss the case based on its argument, and Vivian appealed to the U.S. 11th Circuit Court of Appeals—which covers Alabama, Florida, and Georgia.
The 11th Circuit held that the trial court’s decision to dismiss the case wasn’t appropriate and that Vivian should be allowed to attempt to establish her claims before a jury. Stated another way, the court found that a jury could conclude that the disparity in pay was based on gender—a violation of the EPA and Title VII.
To establish an initial inference of discriminatory pay under the EPA, an employee must show that an employer paid different wages to employees of opposite sexes for equal work on jobs requiring equal skill, effort, and responsibility that were performed under similar working conditions. Then, the burden shifts to the employer to show that the difference in pay was justified by some factor other than sex.
As the court of appeals noted, this burden is a heavy one and requires the employer to show that sex provided no basis for the wage difference. If it’s able to make that showing, the employee may still prevail if she establishes that the proffered reason is a pretext (excuse) to cover up illegal discrimination.
The appellate court held that Vivian made an initial case of discriminatory pay and that a jury could find—despite the reasons given by Manheim—that gender nonetheless motivated that pay disparity. The company’s reasons (her predecessor’s experience and higher previous salary) could be rebutted because her salary was consistently below the midpoint of salaries for arbitration managers. Ultimately, whether sex motivated the pay disparity was a matter for a jury to decide.
It’s easy to focus on sexual harassment issues in light of their prevalence in the news, but you should always be cognizant of issues of discriminatory pay under the EPA and Title VII. Pay particular attention to evaluating and setting salaries for new hires and promotions to ensure that you are paying employees appropriately and similarly to others who have similar positions, relevant experience, and skill sets. Ultimately, you should strive to compensate employees fairly, and you are absolutely obligated to compensate employees without regard to gender or any protected class.