Have You Forgotten about the "Glass Ceiling"?: Equal Pay Act Claims are Coming Your Way

Last week an article appeared in the New York Times announcing the filing of a class action Equal Pay suit against Bank of America by some of it’s female brokers. The brokers claim that when Merrill Lynch was absorbed into BoFA as part of the federal government’s program, female brokers were offered lower retention bonuses then their male counterparts. This event, two recent US Appeals court cases, and upcoming legislation changes to the Equal Pay Act may be combining to show that equal pay claims are becoming the new “hot” area of employment law litigation in the next few years.

For those who may be unfamiliar with the Equal Pay Act, under the law a plaintiff can establish a prima facie case of pay discrimination if they can show that an employer pays different wages to employees of opposite sexes for equal work in jobs that require the same level of skill and responsibility and are performed within similar working conditions. If a plaintiff can establish this then the burden of proof shifts to the employer to prove that the employee was paid a lower wage due to some reason other then gender (i.e. seniority, merit, some other system that measures quantity or quality of work).

In Conti v. American Axle & Mfg., Inc. No. 08-1301 (6th Cir. May 22, 2009), company executive Suzanne Conti claimed that she had not received the same work benefits as her male counterparts, specifically, salary increases and opportunities for advancement and training. Her employer argued that compared to many of her male executive peers, she made the same or more in salary and that her job duties were oftentimes different then theirs and would explain any pay discrepancies. This argument worked in all but one instance.

In her last position with the company, Conti had been promoted and she was paid substantially less then her male predecessor. The company argued that she was paid less because the position was downgraded from a Director to a Manager level and that the new title reflected a difference in the duties. However, Conti argued that she performed the same duties as her predecessor and that she also had acquired some additional responsibilities while in the role. The Appeals Court found that Conti did not have to prove that the duties associated with the different titles were identical to establish her prima facie case, but just that there was a “substantial equality of skill, effort, responsibility and working conditions.” They allowed her proceed with her claim.

While the Conti case points out the importance of paying a replacement an equal salary, another case points out the danger of not paying the predecessor properly. In Drum v. Leeson Electric Corp. 2009 WL 1350737 (8th Cir. May 15, 2009), a Human Resource Manager’s unequal pay claim was prompted when the employer hired a male replacement at a much higher salary. Since the plaintiff had established her prima facie case that she had been paid differently for equal work the issue in this case was whether the pay differential was based on something other then her gender. Her employer argued that the male replacement was the best candidate for the HRM position and that they had to pay a higher marker rate to acquire him. They also try to justify Drum’s lower salary by pointing to her prior salaries arguing that they resulted from a hiring policy that set salaries slightly under market rates. The court rejected these arguments stating that showing that they had to pay the male replacement a higher rate did not explain why they paid Drum a lower salary for the same position, and that they could not use a “lower market salary theory” to explain her prior salaries unless they could show that they were not related to her gender. As a result she was also allowed to proceed with her claim.

Some may argue that perhaps the plaintiffs in Drum and Conti did not have the same qualifications and past experience as their male counterparts and therefore deserved to be paid less. Potentially that could be a valid argument to explain a disparity in pay. However, interestingly, neither employer made that argument (because it wasn’t documented/true?). More important though I think the facts in both cases show their employers obviously both thought they were “qualified’ enough to do the jobs in question in the first place. Maybe the most important message to take away from these cases is that the Equal Pay Act states you should make sure you pay people the same for the same skills and requirements that the position itself requires, not necessarily for the skills and qualifications the person may have as an individual.

Many candidates may be able to meet the minimum requirements of a position, but many often have experience and qualifications that may go above and beyond. Usually this is a good thing because most employers hire with a view towards the future recognizing that talent acquisition is not just for the job today but for the job tomorrow. So what can an employer do to protect themselves from equal pay claims and yet still ensure that their organization is hiring leaders for the future?

• Job Descriptions and duties should be clearly outlined and defined. Any differences in responsibilities, education, or experience requirements should be clearly outlined and differentiated from other jobs.

• Employers should review their compensation structures to make sure they are up to date and market competitive. If hiring an external candidate to fill a position would cost you a significantly higher amount of salary, maybe that is a signal that the pay grades for that position are too low.

• Compensation packages for external and internal candidates for the same positions should be evaluated for consistency. If a candidate has a higher level of experience or qualifications that creates a pay disparity with another employee in the same position this information should be documented so that those decisions can withstand a lawsuit.

• No more perks! Companies will also have to be careful of the traditional “handshake deals” that fall outside of a specific job’s normal compensation package. (i.e. extra weeks of vacation, signing bonus, etc.).

One final reason why employers should re-evaluate their compensation practices is because of legislation that is currently moving to expand the reach of equal pay claims. If the Paycheck Fairness Act becomes law it will expand the Equal Pay Act from pay differences based on gender to include claims based on race and national origin. In addition, the Lilly Ledbetter Act now allows employees to file claims for prior adverse compensation decisions, meaning that decisions that were made years in the past that still affect the employee now can be the basis for claims.

Hello Everyone!

It has been a busy Spring in the Capitol City...and looks to be even busier as 2009 marches on. Here are some important employment law related pieces of federal legislation that may be "hot" topics this year:

 E-verify – E-Verify still hasn’t been mandated for use by public employers, however, this may be changing as extended authorization for the E-Verify program was included in recent Omnibus Appropriations Bill in 2009. In addition, the Obama Administration’s budget for 2010 included $110 million in continued funding for E-Verify.

 FOREWARN Act – This Act would amend the Federal WARN Act which requires employers who have over 100 full time employees be given 60 days notice before a plant or location closing and layoff. The amendments would reduce the full time employee requirement to 25 and extend the layoff notice period to 90 days. Failure to comply with the notice requirements would make an employer liable to the employees for double the back pay for each day of the violation up to the 90 days.

 More FMLA Changes?? – Recently, the Family Fairness Act of 2009 was introduced in the House of Representatives. This Act would amend FMLA by eliminating the requirement that an employee has to have worked 1,250 hours during the 12 month prior to the leave request. The Family and Medical Leave Enhancement Act 2009, also introduced in the house would allow employees to take up to 4 hours of FMLA protected time within a 30 day period for school or community related activities.

 The DOL is growing = more inspections – The Government Accountability Office’s recent review of the Wage and Hour Division of the Labor Department did not go well. GAO staffers found that DOL employees frequently failed to respond to wage and labor law violation claims brought to their attention in a number of ways: telling callers to get a lawyer, failing to follow up on phone calls to employers, and failing to follow up on complaints at all. President Obama sent a letter to the new Labor Secretary Hilda Solis in March indicating his displeasure with the departments past failure to enforce labor laws vigorously. To remedy the situation, the Labor Department is currently hiring 250 additional investigators which will increase the staff of the wage and hour division by more then a third.

The New I-9 Form.....

Ok so I wasn't exactly correct about the new I-9 Form but leave it to the federal government to be ambiguous ;) Days before the new I-9 Form was set to be effective, President Obama's Chief of Staff sent a letter to all Government Agencies that any final rules or changes could not be sent to the Federal Register until it is reviewed by the new administration. This morning they announced they would postpone implementation of the New I-9 Form until April 2009 to give them time to review.

Until any further information is released the Rev. 06/07 I-9 is still the only valid version of the I-9 Form.

The Myth of the New February 2, 2009 I-9 Form....

Some of you may have recently seen announcements about a new I-9 Form that must be in place by February 2, 2009. Unfortunately, the messages coming from the Department of Homeland Security(DHS), various legal firms, and HR websites have a lot of conflicting information and dates so I wanted to clarify and propose MY thoughts about what is really going on.

If you will remember my HR friends, an I-9 Form with an expiration date of 2009 was released in June 2008. Normally when the government produces new Forms for things it must publish them in the Federal Register, after which usually 45 days later the new form is effective. Ahh but the trick here is DHS never published that June I-9 Form in the Register! (I think this observation is backed up by the fact that the USCIS website currently lists the Form with an expiration 6/07 as the correct version of the I-9).

Recently, on December 18, 2008, DHS did publish in the Federal Register new rules that would eliminate certain forms of identification and a copy of a different 2009 I-9 Form reflecting those changes,but it is marked with a gray "informational purposes only" across the body of it and it is open for public comment until February 2, 2009. Unfortunately, some people have interpreted this as a requirement to use a new I-9 Form. But that begs the question, if there is a new Form which one is it? The one printed last June (which does not have the updated ID changes) or the one printed in the back of the Register in December (which is informational only)?

So here is my theory.....DHS printed the I-9 Form last June because they had to, the expiration date for the Form was 6/30/08 so something had to be created to extend the approval DHS has from the budgeting office to actually collect Immigration information. (See my earlier post on 9/4/08 for clarification on the form creation process). However, they never published it keeping in mind they may want to make edits to it. The information published in the Federal Register in December is an "Interim Rule" which means it is NOT final, and they would like people to comment on the new ID removals and the new I-9 Form format before they officially release a new form.

Hopefully DHS will send out some clarification before February 2, 2009 but I would recommend for now sitting tight and waiting for more information.

FMLA General Notice Requirements January 16, 2009

The Family Medical Leave Act Final Rule was released in November 2008 and has changed some major provisions of the Act affecting the responsibilities of employers and employees. I will be posting a more detailed outline of these changes soon, but the most immediate concern to my fellow Human Resource Professionals is the new Notice requirements.

FMLA now requires that each individual employee be given "notice" of their rights under FMLA. The provisions state that this can be accomplished by placing the general notice posting in an employee handbook if it is distributed to all employees but if not then it must be handed to employees at the following times:
- at the time they are hired,and
- when they first request a FMLA leave of absence.

In addition, the new notice poster must be posted in a conspicuous place within the workplace.

Here is a link to a copy of the general notice poster:


www.dol.gov/esa/whd/fmla/finalrule/FMLAPoster.pdf

The general notice poster must be distributed to employees and posted by January 16, 2009.