Developments In Equal Pay Litigation - 2022 Update

34 | Developments in Equal Pay Litigation © 2022 Seyfarth Shaw LLP explained the pay disparity under both the federal law and California’s revised statute. 269 “As arbitrary as the two-year bright line cut off might appear to [plaintiff], [employer’s] uniform criteria for increasing the salaries of the other directors in [plaintiff’s] office (i.e., two men and one woman) constitutes an acceptable ‘differential based on any other factor other than sex.’” 270 The court held that this defense hit all of the additional elements of the defense mandated by California’s new law. The factor was not based on sex because the study recommendations were applied uniformly, it was job related because the two- year rule was used as a proxy for proficiency within a classification, and it was related to business necessity because “[employer] decided on a one-time pay bump based on the two-year cutoff in order to implement the [study’s] recommendation in a financially viable manner.” 271 Similarly, in Gardner v. Wells Fargo Bank, N.A. , 272 the court held that the employer had established an affirmative defense under Washington’s new equal pay law. That law contains many of the more stringent restrictions on employer’s affirmative defenses found in the more recent state equal pay laws. It requires employers to show that a wage differential is due to a bona fide job-related factor that is consistent with business necessity, is not based on or derived from a gender-based differential, and accounts for the entire differential. 273 The plaintiff in that case, was a mortgage consultant who had been hired at a far lower starting wage than her male comparator. The employer justified the disparity by pointing to the comparator’s sales experience and connections with local realtors for referrals. 274 Among other things, the comparator’s parents had been top-performing realtors in the sales territory where he would work, which gave him connections the employer thought would be “incredibly valuable.” 275 ˆ The court concluded that “[comparator’s] pay difference was ‘based in good faith on a bona fide job-related factor or factors.’ Plaintiff did not demonstrate any connections to local realtors, which was a concern raised by [supervisor] during his initial review of Plaintiff's application. Moreover, it is undisputed that another male colleague, [other comparator], was paid the same wages as Plaintiff for the same position.” 276 3. Potentially Discriminatory Factors Other Than Sex: Salary History And Beyond One of the key trends driving equal pay litigation today is whether and to what extent an employer can rely on a factor other than sex defense when that factor is itself infected with discrimination. This trend accelerated after the plaintiffs’ bar convinced some courts that employers cannot justify a wage disparity by pointing to a policy of using candidates’ prior salary as a benchmark for setting starting salaries. According to that argument, such a policy was invalid as a factor other than sex because female employees’ prior salaries were likely kept artificially and unfairly low compared to their male peers due to historical pay discrimination prevalent in the marketplace. This section discusses this critical limitation on the factor other than sex defense and explores how the plaintiffs’ bar appears to be trying to build on this argument to discredit other factors that employers may use to explain a pay disparity. At its core, equal pay litigation is about how employers set and adjust salary levels. In a free and competitive marketplace, starting salary must take some account of applicants’ prior salary. If employers cannot meet or exceed that salary, they risk losing applicants to other employers who will. One issue that comes up frequently in equal pay litigation, therefore, is whether and to what extent an employer can justify a pay disparity by pointing to employees’ prior salaries at the time they were hired. Many employers take the common sense view that they must start higher-paid applicants at a higher salary, or those 269 Id. at *2. 270 Id. at *3 (quoting 29 U.S.C. § 206(d)(1)). 271 Id. at *4. 272 Gardner v. Wells Fargo Bank, N.A. , No. 2:19-cv-0207-TOR, 2021 WL 2931341 (E.D. Wash. July 12, 2021). 273 See Wash. Rev. Code § 49.58.020(3). 274 Gardner , 2021 WL 2931341, at *7. 275 Id. 276 Id. at *8 (citations omitted).