A rise in pay equity claims will hit employers hard in the future - Small Business Association of Michigan

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A rise in pay equity claims will hit employers hard in the future

A rise in pay equity claims will hit employers hard in the future

By Anthony Kaylin, courtesy of SBAM Approved Partner ASE

Although Equal Pay Act (EPA) EEOC charges are small in number, the trend is growing.  Over the past three years, the number of charges filed rose from 938 to 1,075 or 15%.  These type of cases tend to have large victim classes.  Acting Chair Victoria Lipnic, in a webinar hosted by Seyfarth Shaw on February 9, 2017, identified that the EEOC has not brought many equal pay cases, but stated, "I am very interested in equal pay issues. It's something I would consider a priority."

Pay disparity is a very hot topic.  President Obama’s administration pushed equality in pay as a cornerstone of its civil rights agenda.  The first law President Obama signed as president was the Lily Ledbetter Law, which focused on pay discrimination.  The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) under Director Patricia Shiu pushed enforcement of suspected pay discrimination of the agency.

Recently, on January 11, 2017, a clay modeler filed a federal lawsuit in Michigan against General Motors (GM), asserting violations of the Equal Pay Act. The next day OFCCP settled a pay disparity case against Lexis-Nexus for $1.2 million to settle pay equity claims on behalf of 211 women employees.

While the Trump administration is likely to focus more on the reasons for pay disparity, such as women self-selecting for lower paying jobs, women’s rate of entering and leaving the work force, and negotiation styles of men versus women; employers need to be more proactive in addressing the issues of pay disparity.  Stepping up to fill the enforcement gap are a number of state and local laws and a variety of plaintiff lawsuits that allegedly will address the issues of pay disparity.

But don’t be fooled that something is wrong.  Although workers in same titles may be paid differently and the differential is high, the pay differential may not be discriminatory.  In order to prove an EPA case, the alleged victim most have evidence that the employer paid different wages to employees of the opposite sex, that the employees perform equal work on jobs requiring equal skill, effort, and responsibility; and the jobs are performed under similar working conditions.  Essentially, the evidence must show that the jobs compared are “substantially equal,” in that they entail “common duties or content, and do not simply overlap in titles or classifications.”  Comparable worth claims are not permitted under the law.

A recent 2nd Circuit Court of Appeals gives employers some breathing room to defend its pay practices in an EPA case.   In Chiaramonte v. The Animal Medical Center, Chiaramonte brought suit under the EPA and alleged that she and her better-paid male colleagues perform substantially equal work because they are all department heads with similar credentials and significant responsibilities.  The trial court dismissed Chiaramonte’s claims in summary judgement.  The trial court found that Chiraramonte's responsibilities were primarily public-relations-type duties as well as primary care veterinarian services. She performed basic treatments and would refer patients to specialists if necessary.  Her male comparators; however, practiced in specialized areas of veterinarian medicine and performed complex procedures. Unlike her male colleagues, Chiaramonte was not responsible for supervising interns or other veterinarians, and she contributed little scholarly research.

The 2nd Circuit Court of Appeals affirmed the summary judgement.  Specifically, the 2nd Circuit stated:

The focus of the equal work inquiry is “on the congruity and equality of actual job content between the plaintiff and comparator.” The fact that Chiaramonte and the alleged comparators are department heads whose positions share some common responsibilities is insufficient to demonstrate substantially equal work in light of the drastic differences in job content—that is, the differences in specialties, patient loads, supervision, teaching, and research contributions.

In other words the fact that they were all department heads did not mean their jobs were the same. 

Chiaramonte also tried to prove her disparity simply by using statistical evidence showing by comparable job title that there were statistical findings to support a substantial pay disparity.  However, the court did not buy the statistics, stating that there has to be a real comparator to make this argument. 

This approach espoused by the 2nd Circuit will likely be the approach of the EEOC.  In 2006 acting Chair Lipnic developed and wrote OFCCP’s first compensation guidelines which required that regardless of the statistical findings, there has to be anecdotal evidence to support any findings.  It should also be noted that EEOC can initiate an EPA charge without any complaining party.  Therefore, HR needs to ensure job descriptions are clearly written, accurate, and up to date. 

Moreover, states and local jurisdictions are picking up where the Obama administration left off. Whether it is California, Massachusetts, New York, or Puerto Rico, among others, all are invested in investigating and rooting out unexplainable pay disparities.  Therefore, it is important to work with legal counsel when a questionable salary disparity is found.   
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