52 | Developments in Equal Pay Litigation 2025 ©2025 Seyfarth Shaw LLP 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,361 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.362 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.363 And in Melgoza v. Rush University Medical Center,364 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.365 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.”366 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. For example, in Lochner v. Wisconsin Department of Agriculture, Trade, and Consumer Protection,367 a state civil service employee alleged she was discriminated against with respect to compensation because she was paid less than comparable male employees. The crux of her dispute was that some male employees with less seniority were hired at higher starting salaries under the state’s broadbanding pay structure, while she was repeatedly denied discretionary equity or retention adjustments to keep her salary on par with her peers.368 The state’s broadbanding program allowed state agencies some latitude with respect to setting salaries for new hires, rather than requiring a single, rigid minimum rate. The program was intended to give state agencies a better ability to attract new hires by paying them higher starting salaries based on factors such as, special need, private competition, and unique qualifications.369 The problem with this approach is that it can lead to “salary compression,” meaning that “newer staff are paid similar to or higher than long-term staff; and no mechanism within the state compensation system existed to go back and re-set the salaries of all employees in the class.”370 The state attempted to address this problem by allowing the payment of discretionary equity and retention adjustments, but there 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”). 361 Barthelemy v. Moon Area Sch. Dist., No. 2:16-cv-00542, 2020 WL 1899149 (W.D. Pa. Apr. 16, 2020). 362 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. 363 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). 364 Melgoza v. Rush Univ. Med. Ctr., No. 17-cv-6819, 2020 WL 6565235 (N.D. Ill. Nov. 9, 2020). 365 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. 366 Id. 367 Lochner v. Wisc. Dep’t of Agric., Trade, and Consumer Prot., No. 19-cv-878-wmc, 2022 WL 3355262 (W.D. Wisc. Aug. 15, 2022). 368 Id. at *1. 369 Id. at *2. 370 Id. at *3.
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