The Change in the Equal Pay Landscape and its Impact on Employers

On December 6, 2019, the Second Circuit held that an employee does not have to show that she received less pay for equal work in order to prevail in an unequal pay claim. Instead, she only has to prove that the employer discriminated against her because of her gender. She does not have to prove that a member of the opposite sex held an equal but higher paying job. Essentially, employees do not have to bring claims under the Equal Pay Act which would require that they prove unequal pay for substantially the same work - now they can obtain relief in an equal pay claim under Title VII and without having to jump through as many hoops.

The holding in Lenzi v. Systemax, Inc., opens the door to claims by employees of unfair pay practices based on all of the protected classes under Title VII of the Civil Rights Act, including gender, race, religion, ethnicity, and national origin. The available remedies include lost wages, benefits, and counsel fees. Lost wages will be measured by the difference between what the employee was paid and what the employee should have been paid. A recovery can include several years worth of unequal pay. Moreover, employees may recover double or even triple damages, dependent upon the jurisdiction in which the violation occurred.

The Equal Employment Opportunity Commission ("EEOC") and many state anti-discrimination agencies encourage employers to conduct equal pay audits. Conducting such audits gives employers an opportunity to identify pay disparities before costly claims are brought against them. These audits should now be expanded to include records that would suggest evidence of unequal advancement as well as compensation. For example, an audit that identifies 50% of mid-level employees as female but only 5% of senior level employees as female, would be good cause for an employer's introspection on its promotion standards - identifying the cause of the disparity and taking action to immediately rectify any standards and/or practices that are found to be discriminatory.

Other steps that employers can take to limit their exposure under Title VII, the Equal Pay Act, and related state law claims, include centralizing compensation and promotion and eliminating the risk of bias. Employers can also modify performance evaluations so that the input is objective and not subjective. It is also possible to audit evaluations to guard against patterns that might suggest bias. At the same time, supervisors should be trained on implicit bias and diversity and inclusion.

For questions regarding equal pay, the scope of audits, and training please reach out to Katherine Brustowicz  or David Gabor of the Wagner Law Group's Employment Law practice.