Pay Issues Archives

Equal Pay in Attorney Fee Awards

by Karen Fitzgerald | Jul 12, 2022 | Equal Pay

In an interesting twist on equal pay issues, a judge pointed out that two female attorneys deserved the same hourly rate in the fee award as an older male co-counsel.

After their client won an age discrimination claim, three attorneys petitioned the court for their reasonable fees. The Court awarded them fees of almost $765,000.

In its opinion, the court held that all three attorneys should be awarded the same hourly rate of $700 per hour. To address this issue, the court noted that women in law historically earn less than their male counterparts, a discrepancy that may reflect hidden bias.

Because the two female attorneys’ expertise and skill were pivotal to the plaintiff’s success, the court awarded the female attorneys the same hourly rate as the more senior male attorney.

Pointedly, the court said, “Attorneys of comparable skill and ability merit equal compensation without regard to gender or age. As unremarkable as that statement sounds, the reality is that fee awards are often based on status and not performance.”

Wow. This court is rare in viewing the rates counsel charges through that prism. However, it is correct. Fee awards are often based on how many years an attorney has been practicing law—and less on the attorney’s skill and ability.

Here, the court was impressed with the female advocates and remarked about the “exceptional legal work” both provided. The court then awarded that skill with a higher hourly rate even though the female advocates had fewer years of experience.

However, it is the court’s recognition of the potential for hidden bias in attorney’s fees that is exceptional. Let’s hope this trend continues.

Equal Pay: The Rate of Pay

by Karen Fitzgerald | Dec 27, 2021 | Discrimination, Equal 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.

Fix the Problem The First Time

by Karen Fitzgerald | Oct 2, 2021 | Equal Pay, Pay Issues, Workplace Issues

When you know about a pay disparity, fix it before you get told by a court to fix it.

Too often, a company knows of pay disparities between male and female employees. Yet, the company does not fix the pay disparities—usually arguing there is no money in the budget.

However, years of costly litigation to address pay discrimination may not be in the company’s budget either.

A recent Sixth Circuit case demonstrates the risk that a company takes in refusing to fix pay disparities. In Briggs v. University of Cincinnati, 11 F.4th 498 (6th Cir. 2021), Lee Briggs, an African American male, was a Compensation Analyst. The University later hired a Caucasian female as a Compensation Analyst. Despite having no prior compensation experience, she was paid over $9,000 more than Briggs.

The Director of Compensation knew of the pay disparity but did not immediately correct it for budget reasons.

However, the Director of Compensation later asked the Chief Human Resources Officer for an equity adjustment to Briggs’ pay. The CHRO’s response was only “we’ll see.” In a follow-up meeting, she told him, “I’ll think about it.” Over two years later, nothing had been done to close the pay gap.

In a good reminder that men too can bring an Equal Pay Act claim, Briggs filed a Charge of Discrimination and sued under the Equal Pay Act and Title VII.

The University defended its pay disparity for several reasons, including (1) the female demanded the higher salary as a condition of accepting the job and (2) that the female’s performance reviews were higher.

The Sixth Circuit made short shrift of the salary demand argument. It said: “No authority supports the concept that an employee’s prior salary or demand for a specific salary is sufficient in isolation to justify a wage differential. Such a rule would simply perpetuate existing sex-based pay disparities and undercut the purpose of the Act—to require that those doing the same work receive the same pay.”

As for the higher performance reviews, the court said the employer had to show it actually used the performance review scores in setting the pay. Here, it did not.

That argument was further undercut by the Director of Compensation testifying he knew there was a pay gap when he hired the female and hoped to close it when the budget permitted.

What is the moral of this story? When you see a pay disparity, find the money to fix it. Here, the $9,000 salary increase would have been far cheaper for the University than years of litigation. Plus the fact that litigation of this kind gets the attention of other employees and may lead to additional pay discrimination claims.

The Sixth Circuit reversed the grant of summary judgment and remanded Briggs’s case for trial. So the University is in for more expensive litigation.

Do the right thing the first time. Fix the problem when you discover it. The University of Cincinnati did not, and it is paying far more in litigations costs for that mistake than it would have taken to fix the pay disparity.

Stay tuned.

Laws Requiring the Disclosure of Salaries: A Welcome Trend

by Karen Fitzgerald | Jun 30, 2021 | Pay Issues

Connecticut recently passed a law that will require employers to provide wage range information to employees and job applicants for their positions. This law becomes effective in October 2021. In passing this law, Connecticut joins California, Colorado, Maryland, and Washington.

Texas has no such law on the books. However, it is high time that the Texas legislature considers this.

Pay discrimination thrives in secrecy. Even though it is illegal, far too many employers still tell employees they cannot discuss their pay with co-workers and put those unfair rules in employee handbooks.

Even though those companies that don’t explicitly forbid discussing pay in their policy manuals still strongly discourage it. Far too many employment contracts specifically require the employee to keep salary information and the other terms of the contract confidential.

Under the new Connecticut law, an employer must provide an applicant the wage range for a position for which the applicant is applying upon the earliest of (1) the applicant’s request, or (2) prior to, or at the time the applicant is made an offer. The employer must also provide an employee the wage range for the employee’s position upon (1) the hiring of the employee, (2) a change in the employee’s position within the company, or (3) the employee’s first request for a wage range.

This is great. Though the company has to provide only the range of wages paid for a particular position, that range contains much valuable information. If the person is hired at the bottom of a salary range, that person can then ask questions about why the salary is set there and how the person can increase within the range for the position.

This also forces employers to take a hard look at the pay ranges for positions and to figure out the reason such a wide range in pay might exist.

In doing this analysis, many employers might be shocked to see that the women in a particular role are paid towards the lower end of the range. If the company sees a trend like that, it can figure out the reasons for the pay disparity and fix it.

Most companies will likely hate these laws because the companies prefer keeping salary data highly confidential. Yet, that confidentiality allows companies to hide discriminatory practices.

Since Texas does not have a law like this, Texas employees or job applicants must be proactive to make sure the pay is fair and comparable to members of the opposite sex.

How to do that? First, do some research. Figure out what the market wages should be. Glassdoor.com can be a good place to start. Ask friends and colleagues about their pay. In some cases, hire a compensation consultant to give you a salary review in the particular market.

Second, ask the employer what the salary range is for any position and how an employee moves up within that salary range. If a company is reluctant to share that information with you, ask why.

Ask the company this question: “If you won’t tell me what you pay others in this position, how will I know I’m paid fairly?”

Many companies won’t like this question, but it is only in pushing these boundaries will truly pay parity will be put in place.

Finally, lobby our legislators in Texas to pass a law similar to the new Connecticut law. That is when real change will occur.

What is Wage Theft?

by Karen Fitzgerald | May 10, 2021 | Pay Issues

Wage theft is one of the most common types of theft each year. Sadly, it is rarely prosecuted. A 2017 study by the Economic Policy Institute found the employees lose close to $8 billion each year by employer wage theft.

Wage theft occurs when a worker does not get fully paid for the work performed.

This can occur in many ways, such as:

A company fails to pay proper overtime.
A company fails to pay an employee for all hours worked.
A company fails to pay a final paycheck to an employee.
A company misclassifies an employee as an independent contractor.
A company makes unauthorized deductions from an employee’s paycheck.
A company makes employees work off the clock and does not pay them for it.
A company fails to pay minimum wage.
A company does not properly reimburse employees for mileage or expenses.
Improper tip pooling.

While wage theft is all too common, as noted, law enforcement takes little interest in it. Even the agencies charged with investigating wage theft rarely issue fines for repeat offenders.

Some companies simply run the numbers and determine that it is cheaper not to pay all wages and risk the occasional lawsuit than to pay employees the total amounts owed.

The reason companies can get away with this wage theft is that for each individual employee affected, the damages are often low. While that income is often much needed and critical to the employee, it makes it cost-prohibitive for an individual worker to sue the company.

Yet, when a company steals just a little bit from many employees, that adds up to a staggering amount of wages stolen.

Sometimes, employees can band together to pursue stolen wages either through a class action or a collective action. However, many companies now make employees sign agreements that restrict their rights to file class actions or collective actions.

If a company terminates an employee in Texas, the company is supposed to pay all wages owed within six days of the termination. The company may not deduct from the employee’s pay for anything except for legally authorized deductions (such as tax withholdings or health insurance premiums) unless the employee has given his or her written consent to such a deduction.

Unfortunately, far too often, companies will make deductions from the employee’s wages that the employee has not authorized. This may include deductions for damaged company property or the cost of company property not returned.

An employer can make those deductions when an employee has consented to them in writing. However, far too often, the employee has not consented, and an employer takes the money anyway.

No one should work, not get paid, and be owed for that work. Since it is hard to interest law enforcement in wage theft, it falls to the plaintiff’s employment lawyer to help get the stolen money back—one case at a time.

Otherwise, companies will continue to steal wages because they know they can get away with it. It’s time to put a stop to that practice.

Equal Pay: Substantially equal ≠ identical

by Karen Fitzgerald | Apr 22, 2021 | Equal Pay, Uncategorized

Every pay discrimination case involves determining whether the jobs being compared are substantially equal.

The Ninth Circuit Court of Appeals recently reminded everyone that when it comes to determining equal pay, jobs could be substantially equal without being identical. The case is Freyd v. University of Oregon. For Texas lawyers, note that the Hon. Kathleen Cardone, a United States District Judge for the Western District of Texas, sat by designation on the Ninth Circuit panel, issuing this opinion.

Here, Jennifer Freyd is a highly respected and well-known Professor of Psychology at the University of Oregon. Freyd learned that she was paid thousands of dollars less each year than several male Professors of Psychology. After requesting a retroactive raise and being denied it, Freyd sued under the Equal Pay Act, Title VII, and various Oregon state laws.

After the District Court granted a summary judgment in part, the Ninth Circuit reversed it. The key issue on appeal was whether Freyd’s job as Professor was “substantially equal” to that of the other male Professors in the Psychology department.

Freyd had to prove that the jobs being compared were “substantially equal.” However, as the Ninth Circuit reminded us, “substantially equal” does not necessarily mean “identical.”

Instead, the crucial finding on equal work is whether the jobs compared have a “common core of tasks.” Once a plaintiff establishes there are a common core of tasks, then the court has to determine whether any additional tasks for one job but not the other is enough to make the two jobs substantially different. That decision is made on a case-by-case basis.

The Ninth Circuit reminds us it is the “overall job” and not its individual segments that must be compared. Here, the Ninth Circuit found that a reasonable jury could conclude that Freyd and her male peers all shared the same “overall job.” As full professors, they all conducted research, taught classes, advised students, and served on university committees, and performed other acts of service to the university.

Though there were differences because they did not teach the same courses, manage the same research centers or supervise the same doctoral students, the Ninth Circuit said that the jury must be the one to decide whether those differences make the professors’ jobs unequal.

The Ninth Circuit was critical of the “granularity” with which the District Court picked through the facts. It said that such a granular approach guts the broad remedial purpose of the Equal Pay Act and strips it of the protections offered.

It reminded us Congress wanted the Equal Pay Act to be broadly construed to accomplish the purpose of eliminating unequal pay between the sexes.

This opinion from the Ninth Circuit gives us a good roadmap on how to show that jobs are substantially equal.

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