Equal Pay and Class Action Implications

Carlton Fields

Carlton Fields

After winning the World Cup on Sunday with a thrilling 2-0 victory over the Netherlands, the U.S. women’s national soccer team laid claim to being the best women’s soccer team in history. They celebrated their victory at the trophy presentation to the deafening sounds of stadium chants. Not “USA, USA,” but “Equal pay, Equal pay.”

The U.S. players had already sued their national federation, the U.S. Soccer Federation, for a pay increase, asserting that the men’s team was paid far more than they were. From 2013 to 2016, women’s national team players earned $15,000 each for making a World Cup roster. Men’s team players earned $55,000. U.S. Soccer contends that the teams have fundamentally different pay structures. In any event, the World Cup victors thus brought worldwide attention to an issue that is no longer merely an emerging employment law trend.

The Equal Pay Act of 1963, part of the Fair Labor Standards Act, has long prohibited employers from paying an employee of one sex less than an employee of the other sex for equal work. An Equal Pay Act plaintiff does not need to prove “discriminatory intent.” She instead must show only that a disparity in pay exists and that the jobs “require[] equal skill, effort, and responsibility,” and “are performed under similar working conditions.” The burden then shifts to the employer to show that the disparity is based on a factor other than sex. Affirmative defenses include that disparate payments were made because of seniority, merit, different quantity or quality of production, or “any other factor other than sex.” Prior salary alone is not a “factor other than sex.”

Although the EPA has been in existence for decades, employment lawyers recently have been predicting that pay equity issues present increasingly significant risks for employers. There are several reasons for this.

For example, in 2016, the EEOC proposed revisions to its EEO-1 report form in which employers with more than 100 employees must report race, sex, and ethnicity data. The revised collection criteria included data on “pay bands,” which the agency said it would use to identify discriminatory pay practices. Although the Trump administration expressed an intent to reverse course and not collect pay band data, in recent months, courts have reinstated the new data collection rule. See EEO-1 Pay Data Collection Stay Held “Arbitrary and Capricious” (March 6, 2019). In addition, various state statutes have been expanding the pool of potential comparators from those performing “equal” or “substantially equal” work under the EPA to “substantially similar” or “comparable” work. Some states also have banned employer inquiries into salary history when interviewing potential job candidates.

Finally, on March 27, 2019, the House of Representatives passed the federal Paycheck Fairness Act that narrows the “factor other than sex” defense, increases remedies, and bans salary history inquiries. While its fate in the Senate is uncertain, some Democratic presidential candidates have made “equal pay” a feature of their platform. Senator Kamala Harris, for example, seeks to require employers to receive a certification from the EEOC that they are in compliance with the EPA or risk substantial fines.

Pay equity has significant class action implications. First, Equal Pay Act claims are subject to the Fair Labor Standards Act’s opt-in rules, not the usual Rule 23 opt-out approach used in Title VII sex discrimination claims. Thus, Equal Pay Act collective actions may be subject to the more lenient, two-step collective action certification process used in general FLSA claims. Second, whether at the initial certification stage or the decertification stage after discovery, determining whether male and female employees are similarly situated can be enormously complicated. As with disparate impact cases, employers face the risk that courts sympathetic to such claims will give greater weight to a gross statistical disparity irrespective of individual variations that may explain the disparity on grounds other than sex.

Given the attention to the issue raised by the U.S. women’s soccer team’s worldwide platform, pay equity and class actions in this context bear watching. Employers are well-advised to review their compensation plans to evaluate whether they have “pay equity” risks.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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