Developments in Equal Pay Litigation

24 | Developments in Equal Pay Litigation © 2021 Seyfarth Shaw LLP “families. ” 175 They also added allegations that the employer maintained a company-wide policy for setting starting salary that included consideration of an employee’s prior salary. According to plaintiffs, that policy perpetuates a historical pay disparity that exists between men and women and caused female employees to receive a lower starting salary than men in the same job position and level. 176 The court upheld the class definition in the amended complaint, finding that “Plaintiffs allege that [employer] has a company-wide policy for setting compensation that includes considering an employee's prior salary in deciding her starting salary and/or job level,” and that those allegations “are sufficient at this stage to demonstrate that common issues of law and fact predominate over individualized questions.” 177 Whether plaintiffs can maintain their case as a class action through the class certification stage remains to be seen. However, it still ranks as one of the most noteworthy decisions in pay equity litigation of the past few years with potentially far-reaching consequences because the pay disparity alleged in plaintiffs’ complaint is based on nationwide averages. In 2019, the District Court for the District of New Jersey approved a class settlement in a long-running equal pay act litigation, Smith v. Merck & Co., Inc . 178 In that case, plaintiffs had alleged that the defendant, a global pharmaceutical company, had systematically paid female sales employees less than similarly situated male sales employees who performed the same job under the same working conditions. 179 The court had previously granted conditional certification on the strength of plaintiffs’ evidence, which showed that sales representatives had similar responsibilities, and an expert report that showed compensation differences among male and female representatives. 180 As a result of that order, notice was sent to more than three thousand female sales representatives nationwide, of which 671 chose to join the lawsuit. 181 After extensive discovery, the parties came to a resolution at mediation . 182 On July 19, 2019, the district court preliminarily approved the class settlement, conditionally certified a class action for settlement purposes, and finally certified the EPA collective action for settlement purposes . 183 The district court scrutinized the settlement and held that the employer’s agreement to pay $6,200,000 to the settling class and collective action members was a fair and reasonable settlement in light of the discovery that had taken place and the claims and potential liability at issue. 184 C. Disproving Discrimination: Employers’ Affirmative Defenses Under the burden-shifting framework applicable to the federal EPA, if a plaintiff successfully establishes a prima facie case, the burden shifts to the employer to establish one of the four statutory affirmative defenses, i.e. , that the pay disparity is justified by: (1) a seniority system; (2) a merit system; (3) a pay system based on quantity or quality of output; or (4) a disparity based on any other factor other than sex . 185 As with the standards for establishing a prima facie case, the affirmative defenses allowed to a defendant under state laws may vary from what is allowed under the federal EPA. For example, under the California Fair Pay Act, an employer has access to the first three federal EPA affirmative defenses. But the fourth 175 Am. Compl. ¶¶ 2-3, Ellis v. Google, Inc. , No. CGC-17-561299 (Cal. Super. Ct. Jan. 3, 2018). 176 Id. ¶¶ 40-41. 177 Order Overruling Def.’s Dem. to First Am. Compl. and Den. Alternative Mot. to Strike, Ellis v. Google, Inc. , No. CGC-17-561299 (Cal. Super. Ct. Mar. 27, 2018). 178 Smith v. Merck & Co., Inc. , No. 13-CV-2970 (MAS)(LHG), 2019 WL 3281609 (D.N.J. July 19, 2019). 179 Smith v. Merck & Co., Inc. , No. 13-CV-2970 (MAS)(LHG), 2016 WL 1690087, at *2 (D.N.J. Apr. 27, 2016). 180 Id. at *5. 181 Smith , 2019 WL 3281609, at *1. 182 Id. 183 Id. , at *4-5. 184 Id. at *5. 185 29 U.S.C. § 206(d)(1).

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