©2024 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 45 would be immune from the EPA for no other reason than that the policy was followed, even if no factor other than sex could explain its discriminatory effect.”350 While arguments based on corporate hierarchy or classification systems can be successful, it is critical for the employer to adhere rigorously to its system. At least one court recently held that an employer’s honest mistake in classifying its employees will not serve as a defense to an equal pay claim.351 Moreover, the reliance on a banded compensation system as a “factor other than sex” is sometimes undermined by the fact that most compensation systems allow for a level of discretion within different pay bands, and some allow the system to be bypassed entirely. In those cases, courts will sometimes find that employers have not established that the compensation system fully explains the pay disparity. For example, in Barthelemy v. Moon Area School District,352 nine male public school teachers alleged they were paid less than similarly situated female teachers in the same school district. The crux of the employer’s defense was the step-wise compensation program, which was determined by a collective bargaining agreement.353 Although the employer school district was able to show with respect to each comparator that there were various reasons why those comparators may have been hired above-step, the court could not say, at the summary judgment stage, that any of those proffered reasons actually justified the wage disparity.354 And in Melgoza v. Rush University Medical Center,355 the employer argued that the pay discrepancy alleged by an Assistant Vice President of a medical center was due to factors other than sex; in particular, it argued that it pays Assistant Vice Presidents according to a pay grade system that is determined based on job description, responsibilities, skills, and education.356 However, the court found that the pay grade system did not explain the pay differential: “[e]ven assuming for the sake of argument that [employer’s] grading system applied to all AVPs, [employer] does not explain how that system resulted in the actual salary differentials.”357 But where the evidence clearly demonstrates a business-related justification for how discretion was applied in setting compensation within a banded compensation system, the use of that discretion should not preclude an employer from relying on that compensation system as a defense to an equal pay claim. 350 Id. at *17. 351 In Johnson v. Canyon Cnty., Idaho, No. 1:19-cv-364-BLW, 2020 WL 5077731 (D. Idaho Aug. 27, 2020), four female Licensed Practical Nurses alleged they were paid less than their male counterparts for equal work. The employer argued that the salary differential was the result of a mistake, whereby one of plaintiffs’ male comparators was assigned a code for a Registered Nurse when he was hired and was paid more as a result of that mistake. The court held that the “factor other than sex” affirmative defense had to be read in light of the other three affirmative defenses, which all relate to job experience, job qualifications, and job performance, and were therefore exceptions that were job-related. But the employer’s mistake could not be considered job-related: “Blind adherence to a classification number is actually the opposite of a job-related factor because it is blind to anything akin to job experience, qualifications, or performance.” Id. at *3. See also Spiewak v. Wyndham Destinations, Inc., No. 20-cv-13643 (KMWEAP), 2023 WL 869309, at *5-6 (D.N.J. Jan. 26, 2023) (holding that employer that paid plaintiff on an hourly basis, when it had paid her predecessor in the same position on a salary basis, had failed to establish its affirmative defense, even though the employer argued that plaintiff’s predecessor’s salary was a mistake: “Succinctly stated, while Defendant contends that it erroneously paid [predecessor comparator] a salary, testimony revealed that neither [supervisor nor HR manager] could confirm when the ‘erroneous’ salary payments began or ended. Moreover, while Defendant claims the salary issue was corrected, the cited record evidence, [HR manager’s] testimony, contradicts this contention”). 352 Barthelemy v. Moon Area Sch. Dist., No. 2:16-cv-00542, 2020 WL 1899149 (W.D. Pa. Apr. 16, 2020). 353 Id. at *2. According to the district’s compensation policies, individual teachers were placed into different “steps” and “lanes,” depending on their experience and level of education. There were also unwritten guidelines for lateral hires that would allow, in some circumstances, for individual teachers to be hired “above-step.” The employer articulated five reasons that might justify hiring a teacher with an above-step compensation: (1) an “acute” need to hire teachers with certain certifications or skillsets; (2) a need to fill sudden vacancies; (3) a need to secure the best possible “rock star” teachers; (4) a candidate's excellent credentials or experience and their ability to negotiate a higher salary; and (5) the economic reality at the time of hiring. Id. at *4. 354 However, those discretionary elements meant that plaintiffs were not entitled to summary judgment either: “While this hiring method seems to permit a level of discretion that could allow for sex-based discrimination, it is the province of the jury to determine when, how, and if at all the District did in fact base its decisions on nondiscriminatory factors.” Id. at *21 (emphasis in original). 355 Melgoza v. Rush Univ. Med. Ctr., No. 17-cv-6819, 2020 WL 6565235 (N.D. Ill. Nov. 9, 2020). 356 Id. at *7. The court found that some positions were not graded. Rather, the medical center sometimes identified a position as “admin/tech manager 28,” which did not have any minimum or maximum salary associated with it. Id. 357 Id.
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