©2024 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 59 Because at the pleading stage the court is bound to draw reasonable inferences in favor of plaintiffs, it rejected the employer’s arguments, holding that a more searching inquiry into the employer’s pay practices would be needed before it could reach a conclusion. 4. Other Affirmative Defenses A “factor other than sex” is the most commonly asserted defense in equal pay litigation. The other defenses are available, however, and they can be just as successful. If employers choose to justify a pay disparity based on a seniority or merit system, or on a system that bases pay on the quantity or quality of output, they must be careful that those systems are well documented and communicated to employees. A system that appears ad hoc or that is inconsistently applied risks being met with skepticism by a court. Merit Systems. A merit system is perhaps the second most frequently relied upon defense, because many employers tie compensation increases to performance metrics. For example, in Shen v. Automobile Club of Missouri, Inc.,476 a software developer alleged that she was paid less than male employees in the same role. The employer pointed to its merit system, i.e., its system of administering performance evaluations, which was used to determine salary increases and bonuses. The court first recognized that “[a] merit system must be known to employees, must not be based on sex, and must be an organized and structured procedure whereby employees are evaluated systematically according to predetermined criteria.”477 The court then held that the employer’s merit system met those requirements. Among other things, the court found that the employer’s system: “utilize[ed] non-gender based performance factors to determine an employee's rating,” and left supervisors “little leeway” to make small adjustments to evaluations because “pay performance calculations were performed within a calculation tool and all recommendations had to be approved by upper management.”478 The court also rejected plaintiff’s arguments that the merit system was biased, finding that “no one at [employer] ever made derogatory comments about her gender or told her they were making an employment decision based on her gender,” and that “the undisputed facts show that plaintiff made more salary than the average male employee and more than half the males had lower salaries than plaintiff.”479 Accordingly, plaintiff failed to rebut defendant's showing that the alleged pay disparity was the result of a legitimately implemented merit system.480 Similarly, in Mullenix v. University of Texas at Austin,481 a tenured law professor alleged she was underpaid compared to her male comparators. The court held that the EPA allows an employer to pay two comparable employees different salaries if that difference arose from a merit system that rewards workers for outstanding experience, training, and ability, so long as the resulting salary differential is not based upon sex.482 Such a merit system must be administered “at least systematically and objectively,” while permitting some level of subjectivity as to the weighing of nondiscriminatory factors.483 The court held that the employer had established its “merit system” affirmative defense because the evidence showed that faculty salaries were set according to performance ratings set by a Budget Committee according to written standards.484 The court then evaluated the history of pay raises in the context of that system and concluded that: “Because the University has provided uncontroverted summary judgment 476 Shen v. Auto. Club of Mo., Inc., No. 4:20-cv-626-SNLJ, 2023 WL 3948859 (E.D. Mo. June 12, 2023). 477 Id. at *8 (quoting Price v. N. States Power Co., 664 F.3d 1186, 1193 (8th Cir. 2011)). 478 Id. 479 Id. 480 Id. 481 Mullenix v. Univ. of Tex. at Austin, No. 1:19-cv-1203-LY, 2021 WL 5881690 (W.D. Tex. Dec. 13, 2021). 482 Id. at *6. 483 Id. 484 Id. at *7. The Committee’s work was guided by the “Standards For Law School Performance Evaluation of Tenured and TenureTrack Faculty,” which requires that evaluations of tenured faculty are based on three key metrics: research and scholarship, teaching, and service. The Standards explain the meaning of those terms and how faculty will be evaluated with respect to each of them. Id. It provided a performance rating for each faculty member, which was translated into a raise by the Dean in consultation with the Budget Committee. Id. at *9.
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