Developments in Equal Pay Litigation

© 2021 Seyfarth Shaw LLP Developments in Equal Pay Litigation | 41 unequal opportunities in the terms and conditions of their employment. ” 336 On March 26, 2019, the District Court for the Central District of California held that plaintiff must arbitrate her claims. 337 First, the court held that an evidentiary hearing was not required to determine whether plaintiff knew the terms of the arbitration agreement and had agreed to be bound by its terms . 338 Because plaintiff had received email notifications informing her about the arbitration provisions and allowing her a chance to opt out, the court held that no hearing was necessary as “the only potential dispute is whether [plaintiff] read the three email notices, not whether she received them. ” 339 The court then held that an agreement to arbitrate was formed by virtue of plaintiff’s failure to opt out of the agreement despite several notices informing her of her right to do so: “[s]ince she continued working at [employer] after March 1, 2016 without opting out, she was bound by the terms of the Arbitration Agreement.” 340 Accordingly, except for her representative claim under the Private Attorney General Act – which was stayed pending arbitration – plaintiff was required to pursue her claims in arbitration. Law firms have been the subject of some of the most high-profile equal pay lawsuits over the past few years. Some of those cases have been filed by partners of the firm, who signed partnership agreements with arbitration provisions. Their claims therefore raise a number of legal issues concerning the employment status of partners and the enforceability of arbitration provisions in the context of a legal partnership. This issue was addressed directly by a California court in 2018. In Ramos v. Superior Court , 341 among other things, the court found held that the law firm was in a superior bargaining position vis-à-vis its Income Partners, akin to that of an employment relationship, finding that Income Partners can be expelled from the partnership “for any reason,” and that the plaintiff had no opportunity to negotiate the arbitration provision because the partnership agreement had been adopted by the capital partners before she joined the firm . 342 336 Id. ¶ 3. The complaint alleges both a collective action under the EPA and a state class action under the California Fair Pay Act (among other things). On January 1, 2019, the District Court for the Northern District of California held that an arbitration agreement at least facially applied to plaintiff and therefore transferred her case to the Central District of California, which has jurisdiction to determine the arbitrability of her claims pursuant to the relevant arbitration agreement. Knepper v. Ogletree, Deakins, Nash, Smoak & Stewart, P.C. , No. 18-CV-304-WHO, 2019 WL 144585 (N.D. Cal. Jan. 9, 2019). 337 Knepper v. Ogletree, Deakins, Nash, Smoak & Stewart, P.C. , No. 8:19-CV-60-JVS-ADS, 2019 WL 1449502 (N.D. Cal. Mar. 26, 2019). 338 Id. at *5. 339 Id. 340 Id. at *6. 341 Ramos v. Super. Ct. , 239 Cal Rptr. 3d 679 (Cal. Ct. App. 2018). In that case, an Income Partner at a law firm alleged various causes of action under state law for discrimination, retaliation, wrongful termination, and anti-fair-pay practices. Id. at 685. Under prior California precedent, Armendariz v. Found. Health Psychare Servs., Inc. , 99 Cal. Rptr. 2d 745 (Cal. 2000), the California Supreme Court had held that mandatory employment agreements that require employees to waive their rights to bring statutory discrimination claims under the Fair Employment and Housing Act and related claims for wrongful termination in violation of public policy are unlawful. Ramos , 239 Cal Rptr. 3d at 692. Although the law firm argued that Armendariz should not apply because an “Income Partner” should not be considered an “employee,” the court held that it need not address that issue. 342 Id. at 694. Whether non-equity law partners can be considered “employees” under the federal EPA has been the subject of other recent equal pay litigation. For example, in Campbell v. Chadbourne & Parke LLP , No. 16-CV-6832 (JPO), 2017 WL 2589389 (S.D.N.Y. June 14, 2017), a female partner claimed that she was paid less than her male peers. The law firm defendant tried to dispense with the claims quickly – before substantial discovery had taken place – by arguing that the term “partner” and the terms of the operative partnership agreement foreclosed the possibility that female partners could be considered employees under the EPA. Id. at *2. The court denied summary judgment on the grounds that additional discovery was necessary to determine “employment” status under the factors set forth in Clackamas Gastroenterology Assocs., P.C. v. Wells , 538 U.S. 440 (2003). Those factors are: (1) whether the organization can hire or fire the individual or set the rules and regulations of the individual's work; (2) whether and, if so, to what extent the organization supervises the individual's work; (3) whether the individual reports to someone higher in the organization; (4) whether and, if so, to what extent the individual is able to influence the organization; (5) whether the parties intended that the individual be an employee, as expressed in written agreements or contracts; and (6) whether the individual shares in the profits, losses, and liabilities of the organization. Campbell , 2017 WL 2589389, at *2 (citing and quoting Clackamas Gastroenterology Assocs., P.C. , 538 U.S. at 449-50). Plaintiffs argued that additional discovery would show that the law firm’s hiring, firing, and promotion decisions, as well as decisions concerning any individual partner’s degree of control, autonomy, and access to profits are determined exclusively by the firm’s Management Committee. Id. at *3. Given the fact-sensitive nature of the factors used to determine employment status, the court denied the law firm’s motion for summary judgment until additional discovery could be taken relating to those factors. The lawsuit later settled.