4th Circuit Reinstates Equal Pay Act Case Where Employer did Not Prove Non-Discriminatory Reasons for Wage Disparities

The Fourth Circuit Court of Appeals recently decided that three female plaintiffs established a prima facie violation of the Equal Pay Act, 29 U.S.C. § 206 (d) (the “Act”) in a suit against the state government agency that hired them at lower salaries than their male counterparts, despite the defendant having asserted a valid non-discriminatory reason that could have explained the disparity.  The plaintiffs claimed they were hired for jobs requiring equal skill, effort, and responsibility to male “comparators,” but were paid lower salaries than the males.  The Fourth Circuit found that the employer failed to show that the asserted non-discriminatory reasons for salary disparities were the actual reasons for those disparities, and was therefore not entitled to summary judgment.

The plaintiffs were employed as insurance fraud investigators.  Their starting salaries were set in accordance with a grade and step system, under which employees hired for the same job started at the same grade, but sometimes at a different step level based upon previous experience, education, certifications, and other factors.

A plaintiff can establish pay disparity in violation of the Act when (1) the employer paid different wages to an employee of the opposite sex (2) for equal work on jobs requiring equal skill, effort, and responsibility, and (3) the jobs are performed under similar working conditions.  A plaintiff need not prove discriminatory intent.

In order to overcome prima facie evidence of a pay disparity, an employer must show that a wage differential was justified by one of four affirmative defenses: (1) a seniority system; (2) a merit system; (3) a pay system based on quantity or quality of output; or (4) a disparity based on any factor other than gender.

The employer asserted two gender-neutral reasons for the wage disparity: (1) a standardized salary schedule that classifies new hires and assigns grade/step levels; and (2) the male comparators’ more extensive experience and qualifications.

The court of appeals rejected these assertions and reversed the district court’s entry of summary judgment for the defendant.  Importantly, while an employer can rely on a gender neutral salary-setting system, the court of appeals held that the employer still must show that it relied on other job-related distinctions to start comparable male and female employees at different starting salaries.  The court reasoned that a viable affirmative defense for pay disparity under the Act requires more than a showing that a factor other than gender could or may explain a salary disparity; rather, the law requires that a factor other than gender in fact explains such a disparity.  Here, the employer failed to show it in fact relied on such other factors.  Lacking that proof, the case was reinstated for further proceedings.