Seyfarth Synopsis: The recent increase in equal pay lawsuits has meant an increase in legal decisions interpreting the provisions of the federal Equal Pay Act and its state-level analogues. That increased scrutiny has brought some surprisingly new and fresh thinking about how equal pay cases should be decided, even with respect to some issues that, until only recently, seemed to be long-settled law. This article will discuss one such fast developing trend: courts starting to question anew the legitimacy and applicability of the McDonnell Douglas burden-shifting framework to resolve these types of cases.
Each year, Seyfarth analyzes all rulings impacting equal pay litigation and distills that analysis into our yearly publication, Developments in Equal Pay Litigation, 2022 Update. Through that process, we are able to identify and track significant legal trends in this area, including what new and novel legal theories are animating the plaintiffs' bar, and which of those tend to be more successful or more broadly applicable to employers navigating the modern American workplace. Although interesting in their own right, an analysis of those trends can also be useful to employers who are facing potential or actual equal pay litigation, as it can sometimes forecast how equal pay plaintiffs will approach certain issues and can reveal pitfalls to avoid. This is the first in a series of posts that will explore some of the most significant of those trends, and what they might mean for employers.
Certainly one of the most significant macro trends in equal pay litigation has been the overall increase in activity and interest in this area. Whether it can be traced back to the #MeToo movement or something else, equal pay litigation is having a moment. That has meant more equal pay litigation in absolute terms, but, more importantly, it has also meant more significant equal pay cases, in that they are focused directly on that issue rather than including it as one among many theories of discrimination. The increase in lawsuits has meant more legal decisions interpreting equal pay legislation and more in-depth analysis of those laws and, in some cases, taking a harder look at legal issues that once seemed quite settled.
One of those issues lies at the very heart of equal pay litigation: what exactly is the method by which courts should determine liability under the federal Equal Pay Act (the "EPA")? The EPA was passed in 1963, so it is hardly new. Yet just in the last year, we have seen courts in several jurisdictions come to distinctly different conclusions about the fundamental burdens of proof and burden-shifting mechanisms that lie at the heart of equal pay litigation.
Burden-shifting is the method by which many discrimination cases are decided because courts perceive it as a way of determining the critical issues of motivation and causation. In order to determine whether discrimination was the cause of some adverse employment action, one must understand what motivated the decision. This leads to the fundamental burden-shifting paradigm: once a plaintiff proves that discrimination may have played a role in an employment decision (i.e. establishes a "prima facie" case), the plaintiff is entitled to relief unless the defendant can demonstrate that it would have made the same decision absent discrimination. In equal pay cases, this requires the employer to establish one of the statutorily allowed affirmative defenses to such claims. In essence, an employer must show that the challenged pay discrepancy is due to some other allowable factor other than sex (or another protected category covered by some states' laws).
But even if an employer succeeds in establishing this defense, a plaintiff may still show that the justification offered by the employer is merely a pretext for discrimination. The question that has arisen in some recent EPA cases is whether the burden shifts back to the plaintiff to establish pretext, or whether the burden continues to rest with the employer. Many courts have adhered to what is known as the McDonnell Douglas burden-shifting framework, named after the seminal Supreme Court case, McDonnell Douglas v. Green, 411 U.S. 792 (1973). Under that framework, the burden does shift back to the plaintiff, who then has the obligation to establish pretext. This method of allocating burdens of proof has drawn some fresh scrutiny—and rejection—by some courts.
For example, in Wilder v. Stephen F. Austin State University, 552 F. Supp. 3d 639 (E.D. Tex. 2021), the court held that EPA plaintiffs never bear the burden to establish pretext. In that case, a female professor alleged that she was paid less than a similarly situated male professor. The employer justified the pay discrepancy by explaining that plaintiff's comparator's salary was set higher because he had replaced a tenured Full Professor, whereas plaintiff had replaced an Assistant Professor, so there was more money in the budget to pay a higher salary when plaintiff's comparator was hired. The court first allowed that this explanation was sufficient to establish an affirmative defense as a matter of law. The court then considered plaintiff's arguments about pretext, noting the differences in proving pretext under the McDonnell Douglas framework versus the framework applied under the EPA.
According to that court, under the EPA the defendant always keeps the burden of production and persuasion after a plaintiff has established a prima facie case. The court held that the employer in that case had failed to meet those burdens because, among other things, it had chosen not to fix a known pay disparity even after it was discovered: "There are genuine factual disputes about whether [employer] violated the EPA, and a jury could even decide that [employer] willfully violated the Act in light of the fact that the university chose not to fix a wage gap over the course of two academic years." Id. at 655. The court rested its decision on a comment made by the Fifth Circuit in Lindsley v. TRT Holdings, Inc., 984 F.3d 460, 466 (5th Cir. 2021), wherein that court said: "Under Title VII and the Texas Labor Code (but not under the Equal Pay Act), if the employer provides such a reason, the burden shifts back to the plaintiff to establish that the employer's stated reason is pretextual." Id. at 467 (emphasis added in Wilder). This is not how many other courts assign the burdens of proof, including, coincidentally, another recent decision that relied on the exact same Fifth Circuit case to arrive at the opposite conclusion. See, e.g., Mullenix v. Univ. of Tex. at Austin, No. 1:19-cv-1203-LY, 2021 WL 5881690 (W.D. Tex. Dec. 13, 2021) ("The burden-shifting framework established in McDonnell Douglas Corp. v. Green, . . . governs claims under the EPA.") (citing Lindsley, 984 F.3d at 466).
Similarly, in Patel v. Tungsten Network, Inc., No. 2:20-cv-7603-SB-JEM, 2021 WL 4776348 (C.D. Cal. Sept. 15, 2021), the court declined to apply the McDonnell Douglas framework to decide a claim under the California EPA, specifically because of what it perceived to be the heightened standard that an employer must meet to establish a "factor other than sex" defense under that statute. The court first noted that California precedent held that California's law should be interpreted in line with the federal EPA, which applied the McDonnell Douglas framework. However, the court relied on a recent decision from the Ninth Circuit, Rizo v. Yovino, 950 F.3d 1217, 1223 (9th Cir. 2020) (en banc), to conclude that, under the California EPA, the burden never shifts back to a plaintiff to prove pretext after that plaintiff has established a prima facie case.
According to that court, under the California EPA, an employer must do more than merely "articulate" a legitimate nondiscriminatory reason for a pay disparity, but must instead: "submit evidence from which a reasonable factfinder could conclude not simply that the employer's proffered reasons could explain the wage disparity, but that the proffered reasons do in fact explain the wage disparity." Id. *7 (quoting Rizo, 950 F.3d at 1222) (emphasis in original). That ended up being the dispositive issue in that case because the employer had not presented contemporaneous evidence that it had in fact set plaintiff's and her comparators' salaries according to their different qualifications—which was the employer's stated justification for the wage disparity. Accordingly, the court held that a reasonable juror could conclude that those qualifications do not explain the wage disparity.
It is often the case that renewed or heightened attention to an issue in American society leads to rapid developments of the law relating to that issue. We have seen this countless times in the past. It now appears that an increased focus on equity in the workplace may be having a similar effect on equal pay litigation. It is surprising, however, to see how willing courts are to rethink those issues from the ground up, pulling some well potted principles out root and branch where they are deemed to conflict with more recent developments.
These and other trends impacting equal pay litigation are discussed in much greater detail in Seyfarth Shaw's yearly report, Developments in Equal Pay Litigation, 2022 Update. We highly recommend that report to any employer facing equal pay litigation or just wishing to know more about it, so they can avoid such lawsuits in the future or keep abreast of changes in federal and state equal pay legislation. We look forward to continuing to share our analysis of these issues.
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