Developments In Equal Pay Litigation - 2022 Update

© 2022 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 33 interpret the “factor other than sex” defense in a way that provides an easy path out of litigation for employers. Although broad in terms of what it will recognize as legitimate bases to justify a pay disparity, the defense ultimately hinges on a fact and case-specific analysis that allows for few bright line rules to guide employers. That provides an advantage to plaintiffs and plaintiffs’ lawyers because, when facing the cost and uncertainty of trial, many employers may choose to settle at an inflated value rather than continue to defend a lawsuit on the merits. 2. Additional State Law Requirements To Establish The Factor Other Than Sex Defense As with the standards for establishing a prima facie case, the affirmative defenses allowed to a defendant under state laws may vary from what is allowed under the federal EPA. For example, under the California Fair Pay Act, an employer has access to the first three federal EPA affirmative defenses. But the fourth defense, the “factor other than sex” defense, is subject to additional requirements. Under California’s statute, a defendant must demonstrate “[a] bona fide factor other than sex, such as education, training, or experience.” 262 The statute further clarifies that “this factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity.” 263 The California statute imposes further limitations on each of the affirmative defenses, requiring that each factor relied upon is “applied reasonably,” and that the factors “account for the entire wage differential.” 264 Finally, the statute explicitly excludes the use of prior salary as a justification for a wage disparity. 265 Most of these additional requirements were enacted in 2015 and became effective on January 1, 2016. The courts are still working out how they should be interpreted and applied, and how exactly they depart from the federal requirements. This many years later, there are still few cases interpreting these differences. But so far, it appears that courts are applying those laws in a way that is relatively consistent with federal law. For example, in Basting v. San Francisco Bay Area Rapid Transit District , 266 the District Court for the Northern District of California held that the employer established the factor other than sex defense under both federal and California law. That case involved an employer that classified its non-represented employees into various pay bands. It commissioned a study of its compensation practices, the result of which was that the employer bumped salaries to the midpoint of a pay band for all employees who had two or more years of service within a classification. 267 The plaintiff had only been in her classification for 18 months and so did not receive a salary increase. Her comparators had all received salary increases because they had been in their classification for at least two years at the time the study was conducted. 268 The court found that the study’s recommendations had been applied equally to all non-represented employees regardless of gender, and therefore qualified as a legitimate factor other than sex that employer’s managers’ decisions were influenced by sex bias and that they took sex into account when making personnel decisions: “affidavit testimony establishes that sex-based pay disparities were common at [employer], that the managers refused to remedy the disparities, and that the managers repeatedly exhibited an unwillingness to treat women equally in the workplace”). 262 Cal. Lab. Code § 1197.5(a)(1)(D). 263 Id. The statute further clarifies that “business necessity” means “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.” Id. 264 Id. § 1197.5(a)(2-3). 265 Id. § 1197.5(a)(4). 266 Basting v. S.F. Bay Area Rapid Transit Dist. , No. 20-cv-5981-SI, 2021 WL 5771137 (N.D. Cal. Dec. 6, 2021). 267 Id. at *1. 268 Id.