Lower Pay for Equal Work is Not Sole Path for Pay Discrimination Claim

30 December 2019 Labor & Employment Law Perspectives Blog
Authors: Leonard V. Feigel

Consider this hypothetical: An employer operates a national business, and has two vice president of sales (VP) positions. The VPs have essentially the same tenure with the company and the same duties, except one oversees the western U.S. and the other the eastern U.S. Also, both territories are about the same size. 

Now, consider that the VP of the west is male and is paid 30% more than the VP of the east, who is female.  Is there legal risk of a pay discrimination claim under Title VII (the federal anti-discrimination statute)? 

Spoiler alert: The short answer is YES because the female performs essentially the same work as her male colleague for less money. 

Now let’s ask a different question: Is less pay for equal work the only way to establish a pay discrimination claim under Title VII? 

A federal appeals court recently addressed that very issue in the case of Lenzi v. Systemax, Inc., et al. In that case, Lenzi, a former vice president-level executive, claimed she was paid less than other vice president executives (who are male) because of her female gender.  The trial court granted summary judgment to the company and dismissed the case, because the executive failed to show that her work/duties were substantially similar to the work/duties performed by the male vice president executives. The appeals court, however, reversed the decision, holding that there are other circumstances under which a discrimination pay claim can be established.  The court emphasized the fact that all Title VII requires is that an individual prove that her employer discriminated with respect to her compensation because of her gender (or other protected class).

The appeals court further concluded that the executive presented adequate evidence of gender discrimination regarding her compensation.  Specifically, male vice presidents were paid above the market rate established by the company for their positions, while she was paid below the market rate for her position. 

The court also noted that the executive presented evidence that the senior executive who was principally responsible for setting the compensation for vice presidents had a history of making derogatory comments and jokes about women.

In sum, employers should not rely solely on job titles and compensation in evaluating pay discrimination liability risk.  Employers should consider other circumstances that could support discriminatory animus, including but not limited to the following:

  • Has the decision maker responsible for compensation been engaged in or been accused of engaging in discrimination or harassment?

     

  • Are there compensation variations between similar level employees? If so, are employees who are members of a protected class compensated less?What are the business reasons for the variations?

     

  • What are the market rates for individual job categories?Is there any variation in compensation for employees who are members of a protected class?
This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Authors

Related Services