10 | Developments in Equal Pay Litigation ©2023 Seyfarth Shaw LLP is yet another seemingly simple legal question, which has bedeviled the courts and given rise to many arguably conflicting decisions. For example, in Wiler v. Kent State University,52 the female head coach of a university’s field hockey team alleged that her employer violated the EPA and Title VII by paying her less than her male counterparts. But her claim was based on the fact that other coaches at the same university earned a higher total compensation, which was the sum of their pay, performance bonuses, and camp income.53 The court first held that the proper inquiry under the Sixth Circuit must focus on plaintiff’s and her comparators’ respective rates of pay, not total compensation. While that is not always easy to identify, the court held that, in this case, it was equivalent to the coaches’ base salaries and their performance bonus rates because those are the only components of compensation that are set by the university.54 Camp income had to be excluded because coaches had no obligation to run a camp, and the compensation earned from camps varied depending on factors over which the university had no control.55 “Where an employee exercises a significant degree of discretion or control over earning a portion of her income, that portion cannot comprise part of the common denominator for the base rate of pay. A contrary conclusion risks incentivizing strategic behavior for artificial or leverage purposes.”56 Using that metric, the court eliminated all but one of plaintiff’s chosen comparators because they were not paid at a higher rate than plaintiff, even though they earned higher total compensation.57 The court left it to the jury to decide whether the final comparator’s position was truly equal to plaintiff’s position and whether the university had established its “factor other than sex” defense.58 The issue was further clarified by the Fourth Circuit in Sempowich v. Tactile Systems Technology, Inc.59 In that case, a regional sales manager for a medical device manufacturer alleged she was paid less than a male comparator when comparing base salaries. The district court held that she failed to establish a prima facie case of pay discrimination because she was actually paid more than her comparator when comparing total compensation, meaning base salary plus commissions.60 The court applied the EEOC’s definition of “wages,” which includes all payments made to an employee whether provided as base salary, bonus, or any other form of compensation.61 In an appeal joined by the EEOC as amicus curiae, the Fourth Circuit disagreed, holding that the district court should have made its decision based on a comparison of base salaries.62 According to the Fourth Circuit, “[t]he text of the Equal Pay Act unambiguously states that an employer may not ‘discriminate . . . between employees on the basis of sex by paying wages to employees . . . at a rate less than the rate at which he pays wages to employees of the opposite sex.’”63 There was no need to consider the regulatory definition of “wages” because the statute clearly puts its emphasis on wage rates. But even so, the Fourth Circuit held that the district court had misinterpreted the definition: “The term ‘wages’ includes commissions because, just as with salary, an employer could not pay commissions to a female employee at a lower rate than a similarly situated male employee. This does not mean that all types of remuneration should be combined into one lump sum when comparing the earnings of a male and female employee.”64 52 Wiler v. Kent State Univ., No. 5:20-cv-00490, 2022 WL 15633387 (N.D. Ohio Oct. 28, 2022). 53 Id. at *6. 54 Id. 55 Id. at *7. 56 Id. 57 Id. at *7-8. 58 Id. at *9-10. 59 Sempowich v. Tactile Sys. Tech., Inc., No. 5:18-cv-488-D, 2020 WL 6265076 (E.D.N.C. Oct. 23, 2020). 60 Id. at *23. 61 Id. Plaintiff argued that including her incentive compensation would frustrate the purpose of the EPA because it would require “harder work for commissioned employees with lower base salaries to achieve equal pay.” Id. The court rejected that argument, holding that the EEOC’s definition of wages comports with the text of the EPA and Supreme Court and Fourth Circuit precedent. Id. at *23-24. 62 Sempowich v. Tactile Sys. Tech., Inc., 19 F.4th 643 (4th Cir. 2021). 63 Id. at 655 (quoting 29 U.S.C. § 206(d)(1)) (emphasis in original). 64 Id.
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