Fix the Problem The First Time

Fix the Problem The First Time

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

Laws Requiring the Disclosure of Salaries: A Welcome Trend

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?

What is Wage Theft?

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

Equal Pay: Substantially equal ≠ identical

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.

But Your Husband Has A Job…

But Your Husband Has A Job…

For decades, companies paid female employees less because “her husband has a job” or because a male coworker “has a family to support.” Finally, a court called this pay practice what it is:  blatant discrimination.

 In Kellogg v. Ball State University d/b/a Indiana Academy for Science, Mathematics, and Humanities, Cheryl Kellogg was hired to be a teacher. The hiring director told her that she “didn’t need any more [starting salary] because he knew her husband worked.” Kellogg suffered the effects of this “outdated and improper approach” to her starting salary for the next 12 years.

When Kellogg finally sued for pay discrimination under Title VII and the Equal Pay Act, the Academy said that the pay differential was not discriminatory.  Instead, it claimed Kellogg’s lower pay was because of  (1) salary compression (paying newer hires more) and (2) difference in Kellogg and the male coworkers’ qualifications.

 In granting a motion for summary judgment, the district court ruled these two reasons were “undisputed” gender-neutral explanations for the salary disparity. 

 On appeal, Seventh Circuit said that the Academy “blatantly discriminated against Kellogg by telling her that, because her husband worked, she did not need more starting pay.” Such clear discrimination calls the sincerity of the Academy’s rationales into question.” It then reversed and remanded the case.

 This sharp rebuke was well deserved. 

 The district court erred in two significant ways.  First, it did not consider the statement that Kellogg did not need more pay because her husband worked.  It characterized that statement as a “stray remark.” The Seventh Circuit quickly dismissed that argument, noting that this statement “was not water cooler talk.” Instead, it was a straightforward explanation by the Academy’s director, who had control over setting salaries, as to why Kellogg did not need more money.  As it said, “few statements could more directly reveal the Academy’s motivations.”

 Second, the district court did not consider the discriminatory statement because it had been made outside of the statute of limitations period.  The Court of Appeals reminded that under the paycheck accrual role, as codified by the Lilly Ledbetter Fair Pay Act of 2009, a new cause of action for pay discrimination arises each time a plaintiff gets a paycheck resulting from an earlier discriminatory compensation practice—even one that occurred outside of the statute of limitations.

And, even apart from the paycheck accrual rule, it held Kellogg could rely on the statement’s to show that the Academy’s explanation for the pay disparity is pretextual because “time-barred acts [are allowed] as support for a timeline claim.”

Because the blatantly discriminatory statement that Kellogg did not need more pay because her husband worked put the Academy’s stated reasons for the pay different in dispute, the Seventh Circuit remanded this case.

That companies still make decisions about what to pay female employees based on a perception of whether a woman “needs” the money “because her husband works” or because her male coworker has a “family to support” is disheartening.

Let’s hope employers start to recognize this for what it is:  blatant discrimination.

Equal Pay:  It is Fundamental

Equal Pay: It is Fundamental

The importance of equal pay just got a shout out in a recent Fifth Circuit case. The money quote is:

“Equality of opportunity is fundamental to who we are, and to who we aspire to be, as a nation. Our commitment to this ideal is deeply engrained in our Constitution and in numerous state and federal laws. And a core component of our promise of equal opportunity, regardless of the circumstances of one’s birth, is non-discrimination in pay. … But what we do not accept are pay disparities due to the employee’s race or sex.”     Lindsley v. TRT Holdings, Inc. 2021 WL 62251(5th Cir. 2021).

Here, Sarah Lindsley was Food & Beverage Director at the Omni Hotel in Corpus Christi.  Her starting pay was $11,649 lower than that of her male predecessor. Her starting salary was also lower than his two male predecessors.  

Lindsley sued for pay discrimination under the Equal Pay Act, Title VII, and Texas Labor Code Chapter 21. To establish a prima facie case under the Equal Pay Act, Lindsley had to show that “she performed work in a position requiring equal skill, effort, and responsibility under similar working conditions” and that she was paid less than members of the opposite sex.  To establish her prima facie case under Title VII and Texas Labor Code Ch. 21, Lindsley had to show she was paid less than members of the opposite sex for “work requiring substantially the same responsibility.”

Lindsley showed that the three men who held the exact same job she held before her were all paid more than she was paid. Yet, the district court concluded Lindsley introduced no evidence to show that her job as Food & Beverage Director was similar to her predecessors aside from having the same job title.

The Fifth Circuit made short shrift of that argument, saying “far from failing to show that her job was in any way similar, Lindsley showed that she held the same position  as Walker and Pollard did, at the same hotel, just a few years after that did—and that she was paid less than they were.”  It concluded that “no more is needed to establish a prima facie case.”

Because Omni had not put forth a non-discriminatory reason to explain the pay disparity, the Fifth Circuit reversed and remanded the case.

Here, Lindsley’s predecessors were paid more than she was paid.  One often forgotten fact is that a successor in a job can also be cited as an appropriate comparator.  See 29 CFR sec. 1620.13(b)(4). 

The Fifth Circuit got this case right.  If a woman is paid less than the men who preceded her in the same job, a claim exists.

What remains to be seen in further litigation is how the company will explain the reason for the pay difference.  Stay tuned.