Developments in Equal Pay Litigation

© 2021 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 25 defense, the “factor other than sex” defense, is curtailed. Under California’s statute, a defendant must demonstrate “[a] bona fide factor other than sex, such as education, training, or experience.” 186 The statute further clarifies that “this factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. ” 187 The California statute imposes further limitations on each of the affirmative defenses, requiring that each factor relied upon is “applied reasonably,” and that the factors “account for the entire wage differential. ” 188 Finally, the statute explicitly excludes the use of prior salary as a justification for a wage disparity. 189 Most of these additional requirements were enacted in 2015 and became effective on January 1, 2016. Because these provisions are only a few years old, the courts are still working out how they should be interpreted and applied, and how exactly they depart from the federal requirements. 1. Proving A Factor Other Than Sex Under the federal EPA, the most common factor relied upon to justify a pay disparity is the catchall “factor other than sex” defense. Employers often point to factors such as levels of education, training, or other qualifications, productive output or performance, and other individually-specific differences as factors that justify pay disparities. The defense is intentionally broad, and so the factors that employers raise under the framework of this defense tend to be quite broad and varied as well. Employers often attempt to justify pay disparities by pointing to their compensation systems, arguing that they are the result of where employees stand within the compensation hierarchy. This argument can be successful, but it is often undermined by the fact that most compensation systems allow for a level of discretion within different pay bands and sometimes allow the system to be bypassed entirely. In those cases, courts will often find that employers have not established that the compensation system fully explains the pay disparity. For example, in In Barthelemy v. Moon Area School District , 190 nine male public school teachers alleged that 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 . 191 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. ” 192 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 . 193 The Court fairly quickly dispensed with the employer’s arguments regarding Plaintiffs’ prima facie case on the basis that each Plaintiff and their chosen comparators were all teachers within the same district. 194 186 Cal. Lab. Code § 1197.5(a)(1)(D). 187 Id. The statute further clarifies that “business necessity” means “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.” Id. 188 Id. § 1197.5(a)(2-3). 189 Id. § 1197.5(a)(4). 190 Barthelemy v. Moon Area Sch. Dist. , No. 2:16-CV-00542, 2020 WL 1899149 (W.D. Pa. Apr. 16, 2020). 191 Id. at *2. 192 Id. 193 Id. at *4. 194 Id. at *13.