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.

Health Insurance:  Help has arrived.

Health Insurance: Help has arrived.

The loss of health insurance benefits is one of the worst things about losing a job. Families often worry about how they will afford necessary medical treatment and pay for expensive prescription medications. This worry compounds the fears caused by the job loss.

Help is here.

The American Rescue Plan Act (“ARPA”) was signed into law on March 11, 2021, by President Joe Biden. This act offers eligible people who have lost a job a lifeline to receive health insurance benefits.

From April 1, 2021, through September 30, 2021, if an eligible employee chooses COBRA coverage, the former employer must pay the insurance premiums’ total cost. The government will reimburse the employer for this cost through payroll tax credits.

To be eligible, an employee must have been involuntarily terminated for reasons other than gross misconduct and (1) be already enrolled in Cobra, (2) elected Cobra initially but let the coverage lapse even though it would have extended beyond April 1, 2021, or (3) did not elect Cobra initially, but if he/she had done so, the coverage would have extended beyond April 1, 2021.

A former employee currently covered under any other group health plan or is Medicare eligible is not eligible for this benefit.  Employees who resigned are also not eligible.

For employees who enrolled in COBRA coverage and were actively covered as of April 1, this should be simple. The company should pay the premiums for the next six months. However, because this is a very new law, we recommend that employees check with their insurance provider or the company’s Human Resources department to find out the logistics for handling the premiums.

For those former employees who did not initially elect COBRA coverage or who let COBRA coverage lapse, there will be a special enrollment period.  They must be notified by their former employer or the insurance provider about their eligibility for this benefit and given a chance to elect to participate in COBRA coverage now.  The special enrollment period begins on April 1 and ends 60 days after the delivery of the COBRA notification. 

If you are eligible for this benefit and do not hear from your former employer soon, we recommend that you check with the company’s Human Resources department or the insurance carrier promptly to see when this notice will be sent.

This law was just signed three weeks ago. The Department of Labor has not yet drafted regulations and guidance for companies to implement this benefit. Because of that, expect some confusion as this law gets implemented. The rollout may not be seamless and smooth.  Be prepared to be patient.  We recommend that you communicate often with your former employer to make sure you get this benefit. 

The American Rescue Plan Act should help provide healthcare access to so many families affected by job loss during the past year. Hopefully, the program rollout with be smooth, and kudos to President Biden and Congress for getting this done.   

Goals Gone Bad

Goals Gone Bad

Most people are ready to see the end of 2020 and are actively looking forward to the new year.  As with any new year, many people will be setting personal and business goals for 2021.

I am a firm believer in the importance of setting goals.  Many companies also believe in setting goals using the SMART goals framework.  This requires the goals to be Specific, Measurable, Achievable, Realistic, and Timely.

One thing that many people rarely talk about is the pitfalls in setting goals and how goals cause unethical behavior or unintended consequences. 

Wells Fargo is a perfect example of this. Sales employees who opened accounts for new customers were strongly encouraged to cross-sell credit cards and other banking products.  They were under intense pressure by their managers to meet these very aggressive (and sometimes mathematically impossible) sales goals.

What happened?  Employees under severe pressure to either meet those goals or be fired opened accounts without customer consent and issued credit cards without customer authorization.  This was all fraudulent activity.

When the scandal broke, Wells Fargo fired 5300 employees because of fraudulent sales activities and discontinued its sales quotas.  After legal costs, settlements, and regulatory penalties, this scandal cost Wells Fargo close to $3 billion.

Clearly, this is an example of goal setting gone awry.

Setting incentives for employees can be a good thing.  However, the incentives need to be sensible.

I once watched a television show featuring a concrete truck driver trying to get through heavy city traffic to deliver a load of fresh concrete.  If he got to the site too late, the concrete would have gone bad.  He then would have been fired because it would have been his third late load. At his company, once you delivered three loads late, you were fired.  The result was that he felt pressured to dangerously speed through crowded city side streets because he did not want to get fired.  Luckily, he did not get involved in a traffic accident and no one got hurt.  However, the pressure he felt to break traffic laws to save his job always stuck with me.

Companies do need to have goals and incentives for employees.  But companies also need to make sure those goals and incentives do not encourage employees to break laws or safety rules just to protect their jobs.  Companies must make sure they do not incentivize bad behavior. In this time of the pandemic and high unemployment rates, anyone with a job will do whatever he or she can do to keep that job. 

Smart companies will put these steps in place to protect both the company and the employee:

  • Create realistic goals and incentives.
  • Watch for managers pressuring employees to meet unrealistic goals.
  • Carefully consider rules and incentives to see if employees will feel pressured to engage in unethical conduct just to meet the goals.
  • Analyze the goals and incentives to make sure employees do not feel pressure to break safety rules or laws just to preserve their jobs. Employees should not be penalized or fired for things that are outside of their ability to control.
  • Listen carefully to employee expressions of concern about the goals or incentive programs and how realistic those programs and goals are. Do not just assume that the employees expressing concerns are disgruntled, low performers. 
  • Do not retaliate against or fire the employees who report problems with the goals and unethical behavior by managers and co-workers.

Putting these steps in place is just good business.  Otherwise, a company risks being the next Wells Fargo.