Under the Equal Pay Act (EPA), courts have generally allowed employers to prove that some “factor other than sex” justified the pay differentials. However, a recent Federal 8th Circuit of Appeals case narrowed the parameters that employers can use to defend EPA lawsuits and allowed broadening of testimony to show the employer is committing systemic discrimination.
In the case of Dindinger v. Allsteel, Inc., No. 16-1305 (8th Circuit Court of Appeals, 4/3/17), Dindinger, Loring, and Freund (Plaintiffs) worked at Allsteel, a furniture manufacturer. They brought suit against Allsteel on October 10, 2011, alleging that it paid them less than it paid men performing equal work. Dindinger and Loring were Safety and Environmental Managers for Allsteel and claimed that they were paid less than men for the doing the same work. Freund, a Member and Community Relations (MCR) Plant Manager, claimed she was paid less than a male MCR doing the same work.
Allsteel countered. First, it brought evidence that the jobs were not comparable. Although they had the same title, the men were doing different work. Further, Dindinger and Loring were paid less because of factors including prior education, outside experience, and seniority. Allsteel argued that Freund had less outside experience than the male comparator.
Moreover, Allsteel tried to present that because of economic conditions of the great recession that began in 2008, it laid off several employees, restructured job responsibilities, and froze merit-based pay raises, which also attributed to the disparities found. In addition, Allsteel submitted evidence of an audit result by the U.S. DOL Office of Federal Contract Compliance Programs (OFCCP) in 2012 that found no issues with men and women comparators. However, the trial court only allowed the testimony of HR as to the audit and results.
As for the Plaintiffs, they countered by showing that other female Allsteel employees were paid less than male employees despite their comparative seniority, experience, or education. In fact, an email had accidentally been sent to certain Allsteel employees showing that some female employees were paid less than male employees, prompting one female Allsteel employee to file an internal complaint. And finally, Loring had positive performance reviews until she filed the present lawsuit, at which point she began to receive negative reviews.
When the case was being submitted to the jury, the court instructed the jury that Allsteel could not rely on economic conditions such as layoffs, restructuring, or pay raise freezes to establish the affirmative defense. The trial court found that Allsteel failed to present evidence at trial showing how these cost-saving measures caused the plaintiffs to be paid less than their male comparators.
As to be expected, Allsteel lost with respect to each of the plaintiffs. Allsteel appealed.
The 8th Circuit Court of Appeals affirmed the trial court’s action and jury verdict. The 8th Circuit held that the trial court was correct when it explained to the jury that it is not a defense under the Equal Pay Act that a woman may be paid less than a man in the same position simply because the woman is willing to accept less pay, or because the man demands more pay. The Court further stated that with respect to the OFCCP audit information, the OFCCP’s findings could be unfairly prejudicial because it would suggest to the jury that an official fact-finding body had already decided whether Allsteel had violated the Equal Pay Act, which is neither the purpose of an OFCCP audit, nor in the purview of an OFCCP review.
Regarding the accidental email, the 8th Circuit ruled that the “me-too” evidence “should normally be freely admitted at trial” because “an employer’s past discriminatory policy and practice may well illustrate that the employer’s asserted reasons for disparate treatment are a pretext for intentional discrimination.”
The takeaway for HR is that under attorney privilege, employers should conduct annual pay disparity analysis and correct any disparity not reasonably explainable. The 6th Circuit Court of Appeals, which covers Michigan, has ruled that sole reliance on prior salary to justify a wage differential violates the EPA. The 9th Circuit Case covered in last week's EPTW does allow for prior pay only in specific circumstances. Generally it is not allowed as a factor if people move from region to region due to differences in the cost of living. Further, each employer should set what it believes is the market rate for a position – another company’s salary may not be relevant.
EPA type cases, whether federal or state, will grow, especially as states become more aggressive in picking up the enforcement slack of the federal government. HR needs to be forewarned and forearmed for these types of cases.
Source: Jackson Lewis 4/6/17