Equal Pay: The Rate of Pay

Equal Pay: The Rate of Pay

How do you measure equal pay?  Is it the employee’s base salary?  Or is it the employee’s total compensation?

A recent Fourth Circuit case, Sempowich v. Tactile Systems Technology, Inc., answered this question. In Sempowich, a female employee and her male peer were both paid a base salary and also earned commission income based on sales. The male employee was paid a higher base salary in 2015, 2016, and 2017 (even though he had less seniority and lower performance review scores). However, Ms. Sempowich’s total earnings in 2016 and 2017 were more than the male employee’s because she received more in sales commissions.

When she sued, the district court used her “total wages” as the metric for determining wage discrimination under the Equal Pay Act. Because Ms. Sempowich had earned more in total wages in those two years, the court dismissed her Equal Pay Act claim.

Ms. Sempowich appealed and argued that the proper measurement was the “rate” at which her employer paid her—the base salary.

The Fourth Circuit agreed—based on the text of the Equal Pay Act. The statute says an employer may not “discriminate … between employees on the basis of sex by paying wages to employees … at a rate less than the rate at which he pays wages to employees of the opposite sex.” 

This statutory language says nothing about “total wages.” Instead, it focuses on the wage rate. Here, Ms. Sempowich’s base salary was lower than her male peer’s base salary. So, she was paid at a rate lower than her male peer. Because of that, the Fourth Circuit found that the district court erred in dismissing her claim.

To drive home this conclusion, the Fourth Circuit used a hypothetical to demonstrate why total pay cannot be the proper point of comparison. Assume a company pays a woman $10 per hour and a man $20 per hour. If total wages is the measure of pay, the company would not violate the Equal Pay Act if the woman earned more than the male employee—even though she would have to work twice as many hours to do so. A woman should not have to work twice as many hours to make the same money.

That makes sense. A company cannot say it pays its employees equally if one employee has to work twice as many hours to make the same money. Likewise, that a female employee earned more in commissions than her male peer should not mean that her employer did not discriminate against her by paying her a base salary lower than her male peer.

This seems to be a common-sense conclusion. Unfortunately, it was not to a district judge in North Carolina. Fortunately, the Fourth Circuit caught and fixed this error.

Pay issues can be tricky, but the rate of pay is the starting point for any pay discrimination analysis—not total pay. It is good to have clarity on that point.

 

 

The Chicken or the Egg?

The Chicken or the Egg?

One of the most frustrating things right now for job seekers is that employers are screaming they cannot find enough employees.  Yet, thousands of well-qualified people remain unable to find a job. 

Why?

The reasons are many, including biases. For example, age discrimination is real.  During the pandemic, it has gotten worse as many older employees lost jobs, and they have found it very difficult to replace the lost jobs. 

Another stubborn (and less publicized) bias is the bias against the unemployed. 

One common saying is that it is always easier to find a new job while you have a job.  Sadly, that is true.  Many companies screen out people who have been unemployed for six months or more for unknown reasons.  There is no good reason to screen out the entire unemployed out of work for six months just automatically.  That reflects all kinds of bias.  For example, it screens out people who have taken time out of the workforce to raise a family. It screens out people who may need to take time off for a serious health condition or care for family members with a serious health condition.  As those people try to go back to work, they hit the brick wall of bias against the unemployed.

A new area getting a lot of attention right now is artificial intelligence in the hiring process.  Most job search boards and many large companies use artificial intelligence and algorithms to help screen the job applications they receive.

While AI is undoubtedly a helpful tool for companies to use in screening applicants, it can create many problems.  Applicants have to figure out the “magic” word that will cause the AI to catch their resume or job application.  If an applicant does not use just the right word to trigger a hit, a human will never see that application.

Because the AI is programmed to look for certain experience levels, it does not catch the strong applicants out there who do not have the perfect match in terms of experience sought but could still be excellent employees if given a chance and a bit of training. Intangible skills don’t necessarily translate well to AI.

Unfortunately, research shows that bias can permeate the algorithms used by those AI tools.  This may cause discrimination against all kinds of protected groups.  For example, years ago, Amazon had to scrap a recruiting tool it had designed to screen resumes for top talent.  When it tried to use the tool, it found the AI screened out qualified women because the algorithm was based on ten years of patterns in resumes submitted to the company.  Because most of those resumes came from men (due to the pattern of male dominance in the tech industry), the system did not rate candidates in a gender-neutral way and had to be tossed.

A company can run tests on the algorithms it uses in job screening to search for bias, but many companies do not do that.  However, it sounds like it would be smart for companies to do so.

One of the next waves of litigation will be the challenge of such biased tools in hiring.  Smart companies will make sure their AI can—and has—passed the tests against bias before that wave hits.

Though AI can save time, it’s clear it can never replace the human touch.  Humans are so much more than words on a piece of paper screened electronically.  Sometimes it takes a little time and effort—and luck—to find the perfect person for the role.  I’d like to see all candidates get a fair chance at jobs with eliminating bias—particularly the bias against the unemployed.  What a great world that would be.

Sexual Harassment in Texas Now:  What You Need to Know

Sexual Harassment in Texas Now: What You Need to Know

Big changes to the law in Texas on sexual harassment become effective on September 1, 2021.  These new changes have gotten surprisingly little publicity but make it easier to pursue a sexual harassment case in Texas. 

The changes are in a new subchapter to Texas Labor Code Chapter 21 addressing only sexual harassment claims.

First, in the past, laws that protected people from sexual harassment only applied to companies with 15 or more employees for at least 20 weeks of a year.  So, for people who worked for small companies, there was no real and effective protection from sexual harassment. 

Second, the harasser usually could not be sued individually under Title VII or Texas Labor Code Chapter 21 for sexual harassment.  The harasser might be sued for assault when there was unwelcome touching.  However, if there was no assault involved, the harasser typically could not be sued individually.

Finally, under Texas law, the period to file a sexual harassment charge was a short 180 days.

That all just changed in Texas. 

Under this new law, an “employer” means a person who employs one or more employees.  It also can mean a person who “acts directly in the interests of an employer in relation to an employee.”

This fills a gap for employees in small companies.  Now, anyone who works for a company with just one employee has protection from sexual harassment. 

The biggest change is that the harasser may be considered an “employer” under the law if the harasser acts directly in the interests of an employer in relation to an employee. With this definition, if there is a coworker harassing his or her peer, that coworker really won’t fit in the definition of “employer.” However, if a boss is harassing a subordinate, there is a good chance the boss can now be sued individually. That is a new and very big change to Texas law.

Finally, the deadline to file a charge of discrimination in Texas for sexual harassment has now been increased to 300 days.  That gives victims a little bit more time to decide whether to pursue a claim for sexual harassment or not.

This increased deadline from 180 days to 300 days only applies to sexual harassment.  All other types of discrimination claims under Texas law are still subject to the normal 180-day deadline.

These changes are huge.  Given that the Texas legislature has lagged far behind in changing its laws to protect women on equal pay issues, it is great to see the Texas legislature get out in front on sexual harassment. 

Even though these changes are not effective until September 1, 2021, expect to see the number of sexual harassment claims increase. For the victims who fell between the cracks in the law before, this is a very welcome change. For the people who harass employees and who now fall within the definition of “employer” and can be sued individually now, this will be a very unwelcome change.

What is Discrimination?

What is Discrimination?

The EEOC recently sued Autos of Dallas, a luxury auto retailer in Plano, for race discrimination.

At a holiday party, Autos of Dallas awarded its African American salesman a trophy that labeled him the employee “Least Likely to Be Seen in the Dark.”  The employee (and others) found the trophy to be very offensive. 

After the employee complained to the General Manager, he was told it “was a joke.”  Autos of Dallas took no action on the employee’s complaint.

The employee ultimately resigned after he continued to be subjected to a hostile environment that included other employees telling he that he needed to smile to be seen in the poorly lit section of the dealership.

When the EEOC sued, the Dallas Morning News quoted Autos of Dallas’s attorney as saying the company had investigated the claim and “found no evidence of discrimination.”

So that begs the question:  what is discrimination?

One of the best definitions of both prejudice and discrimination that I’ve seen come from Robin Diangelo’s book, White Fragility. As Diangelo describes it, to understand racism, we need to under the difference between “prejudice” and “discrimination.”

Prejudice, as defined by Diangelo, is “pre-judgment about another person based on the social groups to which that person belongs.”  Prejudice consists of thoughts and feeling—which can include stereotypes, attitudes and generalizations—based on little or no experience then projected on to everyone from that group.“Discrimination” is action based on prejudice.  This action can include ignoring, exclusion, threats, ridicule, slander and violence.

Diangelo’s simple definitions make it very clear to see that what happened to this auto salesman is discrimination.  He was ridiculed and made fun of by his coworkers simply because of the color of his skin. 

Instead of acknowledging a grave error in judgement, Autos of Dallas doubled down on its prejudice by describing it “as a joke.”

Whether this employee will win his lawsuit remains to be seen.  A court might find he was not subjected to a hostile work environment because what happened might not have been “severe” enough or “pervasive” enough to meet the tough legal standard.  Because the employee was not fired, but quit, a court might find he was not constructively discharged under the tough legal standard. 

However, that this happened at all demonstrates the need for continued discussion and education about what is discriminatory behavior.  When whether to discuss “critical race theory” is such a hot button issue, this case demonstrates why discussions need to continue.

At least one Autos of Dallas employee thought it would be an acceptable “joke” to (1) create this award, (2) actually purchase a trophy with which to make this award, and (3) call this African American employee to the front of the room at the company holiday party and to award him this trophy for being Least Likely to Be Seen in the Dark. The employee was told that it “was a joke” after he complained.  This demonstrates exactly why we need to continue to teach people about racism and discrimination. 

The people in the world who did not know that awarding this trophy is wrong on many levels have much more to learn. This was no joke.  This was discrimination—it was action (ridicule) based on prejudice.  Kudos for the EEOC for suing. 

What Sayeth The Jury?

What Sayeth The Jury?

A little more than a year ago, jury trials screeched to a halt with the onset of the COVID-19 pandemic.  Over the year, courts across the country grappled with when and how to hold jury trials again.  Some courts held trials by Zoom.  Other courts continued to hold jury trials in person while using a variety of safeguards to protect the jurors and parties.

Now that more courts are opening up, everyone is curious to see what impact the pandemic has had on juries and how they view cases.

Jurors are speaking—and they are speaking loudly with their verdicts.

In recent months, in four employment trials, jurors have hit employers with eye-popping seven figure verdicts.

These verdicts include:

  • $6.85 million jury verdict against FedEx Freight in Seattle for disability discrimination and retaliation.
  • A $3 million jury verdict for disability discrimination against Union Pacific Railroad Coat in Idaho.
  • A more than $2 million jury verdict to a Burger King employee in a disability discrimination case.
  • A $4 million jury verdict in a sex discrimination case in Dallas, Texas.

What is the reason for these recent seven figure jury verdicts in employment cases?  No one knows. 

However, what is interesting is that three all involved disabled workers.  It is possible that the pandemic has driven home just how important it is for every person –even those with disabilities—to have the right to work and to support their families. 

Juries seems to have lost patience with employers who won’t allow people who want to work the opportunity to work. 

This is not the final word on these cases.  Most of these cases will likely be appealed.  And, in most of these cases, statutory damages caps will reduce the awards.

For example, in the FedEx case in Seattle, the jury verdict awarded about $5 million in punitive damages.  However, because those damages were subject to a statutory cap of $300,000, those damages were reduced by the court.

In each case, the prevailing plaintiff can seek attorney’s fees and those fees will likely add substantial amounts to the verdicts.  In the FedEx case, the court awarded attorney’s fees and costs of $1.1 million to the winning plaintiff’s lawyer.

We don’t know what is causing this trend of very significant verdicts in the employment cases that have gone to trial in recent months.  However, jurors are sending employers a message.

Whether employers receive the message remains to be seen.

Religious Discrimination in North Texas

Religious Discrimination in North Texas

The EEOC recently obtained a judgment and injunctive relief against a North Texas healthcare provider for religious discrimination and retaliation.

The facts are troubling.  The owner of the healthcare practice was Christian.  However, some of employees were not.  And even those employees who were practicing Christians were not all comfortable being forced to participate in religious meetings at work.

The employer held daily mandatory meetings which all employees had to attend.  These meetings typically began with a reading or study of Bible verses and a discussion of how religious principles could be related to or applied to the personal lives of the employees.

A Buddhist employee asked to be excused from participating in the morning meetings.  The employer denied this request. It fired her after she continued to ask for this accommodation for her own personal religious beliefs.

Another employee told the owner it was wrong to require employees to attend meetings at which a specific religion was discussed in such detail.  A week later, she got demoted. She (and other staff) were told she was demoted because she was not following Christ and was not seeing the owner’s vision.  She had been told to be “more Godly” and to “wash the feet” of others.  This employee was later fired.

Another employee was talked to about his personal life and told he should attend pre-marital counseling because he was living with his girlfriend.  When the employee chose not to attend pre-marital counseling, he was fired.

Because Title VII protects employees from discrimination based on religion, the EEOC sued.  It argued the employer violated Title VII in several ways.  First, the employer was trying to force conformity with its religious beliefs.  The employer denied a reasonable accommodation to employees who requested to be excused from the mandatory meetings to accommodate their own sincerely held religious beliefs. 

Second, the employees were subjected to harassment and a hostile work environment based on religious beliefs because the employer was trying to force the employees to conform to the employer’s religious beliefs.

And finally, the EEOC contended that the employer retaliated by firing employees who objected to their forced participation in religious activities.

These facts seem to demonstrate a very blatant case of religious discrimination. The owners seem to have forgotten that they cannot impose their own personal religious beliefs upon the company’s employees.  Employees may work without being forced to adopt the religious beliefs of their employer.

The EEOC sued in 2017. After close to four years and a detour through the owner’s bankruptcy, the EEOC finally got this judgment for $375,000 plus injunctive relief. The injunctive relief requires the employer to refrain (1) discriminating against employees, including but not limited to terminating an employee when the termination is based on religion, (2) subjecting an employee to a hostile work environment, and (3) refusing to reasonably accommodate an employee’s religious belief or practice. The employer must also train employees on Title VII and the obligation to prohibit religious based discrimination.

The parties entered into this agreed Final Judgment just a week before the case was set to go to trial.  The EEOC persevered over these four years and got justice for these employees.  Kudos to the EEOC for its hard work—which just might protect future employees from further religious discrimination.