Takeaway: In a situation where a male management consultant earned slightly more than a woman in the same position, but the discrepancy could be explained by the man having prior experience in the position while the woman did not, the woman could not bring her Equal Pay Act claim to trial.
?A management consultant could not bring her federal Equal Pay Act (EPA) wage discrimination claim to trial because the employer had a legitimate reason other than sex for paying the one comparable male employee slightly more than it paid the plaintiff, a federal appeals court ruled. Notably, the man had prior experience in the position, while the woman did not.
In March 2014, the plaintiff began working at a consulting firm as a senior manager with a starting base salary of $135,000. During the next three years, she received several promotions, ultimately serving as a director/client partner with a base salary of $200,000. In May 2017, the acting managing director of the branch where the plaintiff worked hired a man as a new director/client partner with a base salary of $275,000. Approximately six months after that hire, the plaintiff resigned and subsequently brought a wage discrimination action against the firm under the EPA.
According to the acting managing director, the new hire was brought on board with a higher salary than the plaintiff because he brought a broad experience to the firm that the plaintiff lacked. The plaintiff acknowledged she had no prior experience as a client partner but contended that she possessed valuable skills that the newer hire did not. For example, she contended that she was able to perform billable client service delivery of the company’s consulting services and solutions, which the newer hire was not able to perform. The acting managing director explained that while the plaintiff’s base salary was $200,000, she had an incentive compensation guideline plan of $100,000, which was $45,000 more than the new hire’s plan. Additionally, the plaintiff was paid overtime, while the new hire was not.
The trial court dismissed the action before trial, and the plaintiff appealed.
Equal Pay Act Prohibitions
The EPA prohibits wage discrimination against employees on the basis of sex. To proceed with a claim under the law, a female employee must first show that:
- She was paid less than a man employed in the same establishment,
- For equal work on jobs requiring equal skill, effort and responsibility,
- Which were performed under similar working conditions.
If the employee shows all three factors, her employer may establish an affirmative defense by demonstrating the pay differential is the result of one of the following:
- A seniority system.
- A merit system.
- A system that measures earnings by quantity or quality of production.
- A differential based on any factor other than sex.
The appeals court said the record showed that, after incentive compensation was taken into consideration, the plaintiff had the potential to earn $300,000 and the male employee $330,000. For 2017, the plaintiff was paid $326,526, including her overtime pay. Meanwhile, the male employee made $335,000. The male employee had an identical job title, and his duties were substantially the same as the plaintiff’s job duties.
This was enough for the plaintiff to establish her initial case, the court said. It was then up to the employer to establish that the pay differential was based on any factor other than sex.
Education or experience is a permissible factor recognized by the EPA, the court said. Here, it noted that the pay differential substantially narrowed when terms other than base compensation were factored in. In addition, the appeals court said a marginal pay differential is permitted if it arises from a finely calibrated compensation system that is based on legitimate factors.
The court noted that the plaintiff recognized the male employee brought skills and experience to the job that she did not possess. While the man had substantial experience, the plaintiff acknowledged she was new to the position. Pointing to other skills she possessed that allowed her to perform billable client service delivery was exactly the kind of “wisdom or fairness” assessment of salary decisions that a court should not engage in, the appeals court said.
The court concluded that the company’s explanation for the pay differential—the differences in skill sets and experience–was sufficient to satisfy its burden of proving the pay differential was based on a factor other than sex. Because no reasonable jury could find other than in the employer’s favor in its defense, the plaintiff was not entitled to take her claim to trial.
O’Reilly v. Daugherty Systems Inc., 8th Cir., No. 21-3465 (March 29, 2023), petition for en banc rehearing and petition for panel rehearing denied (May 18, 2023).
Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.
