Pay Equity Litigation Update: Employers In The Academic Healthcare Industry Are Often Uniquely Suited To Challenge Prima Facie Evidence Of Wage Discrimination

Seyfarth Shaw LLP

Seyfarth Synopsis: Employers in the health care industry—and in particular health care within the university academic setting—are consistently some of the most-frequent targets for equal pay lawsuits. A series of cases decided in 2019 reveal strategies that those employers (and other employers) can use to cut off an equal pay claim at the beginning, by defeating a plaintiff’s prima facie case of gender-based wage discrimination.

As we look forward to the end of the year, we can start to identify some of the more significant developments in equal pay litigation in 2019. In this installment of Seyfarth’s pay equity legal update series, we will be focusing on how plaintiffs attempt to use comparator evidence to establish a prima facie case of gender-based wage discrimination.

Specifically, 2019 saw several courts knock down comparator evidence introduced against employers in one of the industries hardest hit by equal pay claims: the health care industry, particularly employers within academic health care community. In several recent cases, courts identified the unique challenges that confront plaintiffs seeking to define a proper comparator in the health care space. Those decisions provide some useful insight into strategies those employers and other employers can use to defeat a plaintiff’s prima facie case at the outset of a lawsuit.

Recent Decisions Involving University health care Equal Pay Claims

The federal EPA (and most state-law analogues) utilizes a burden-shifting mechanism for establishing liability for wage discrimination. An employee must first establish a prima facie case by showing that he or she was paid different wages than an employee of the opposite sex who performed equal (or substantially similar) work under similar working conditions. The “equal work” requirement often provides ripe opportunities for employers to attack a plaintiff’s case. That has been particularly true in the health care industry.

For example, in Freyd v. University of Oregon, No. 6:17-CV-448-MC, 2019 WL 1960330, at *1 (D. Or. May 2, 2019), the District Court for the District of Oregon discussed how difficult it can be for plaintiffs to establish the “equal work” requirement within an academic setting, holding that “[w]hen applied to the university setting, the notion of ‘equal pay for equal work’ has unique complexities that are not found in other institutions.”

In that case, a professor of psychology alleged that she was paid less than other professors at the same university for performing the same work. Id. at *2. Plaintiff had become concerned that the salary inequities in her department were related to gender and, in particular, that her salary was below that of male professors in the same department with less seniority. After an investigation, the university decided not to offer her a raise, concluding that she was compensated at a higher rate than the majority of professors in the College of Arts and Sciences and that any discrepancy with respect to her salary versus her male colleagues was attributable to retention raises and significant differences in job duties. Id. at *3.

The District Court explained that the nature of the academic setting allows different professors within the same discipline to choose to follow different paths of knowledge and to pursue endeavors that create different and unique value to the institution. Moreover, a university must offer competitive salaries in order to attract top faculty while at the same time maintaining a fair compensation system for all professors. In particular, senior professors and professors who take on introductory courses and devote extra time to advising and other roles that make up the bread and butter of a university education, may be paid according to a pay scale that has not kept up with the market demand that influences what a university has to pay to attract top talent. The District Court then analyzed plaintiff’s comparators in detail, holding with respect to each one that the differences in their job duties and other related activities, as well as the frequency and success of their grant applications, justified the salary discrepancies among those professors. Id. at *4-6.

Similarly, in Miller v. Sam Houston State University, No. H-15-CV-2824, 2019 WL 4758357 (S.D. Tex. Sept. 30, 2019), the District Court for the Southern District of Texas held that a tenure-track Assistant Professor had failed to establish that her job responsibilities were substantially similar to her chosen comparator, another Assistant Professor in the same field. Plaintiff alleged that her salary was less than 90% of that of her male comparator, who was one year behind her on the tenure track. Id. at *9.

However, the university had shown that her comparator had elevated job responsibilities because he was a licensed psychologist with clinical supervisory responsibilities. Id. The comparator had obtained his license ten years prior to plaintiff. The university was able to show that during the time that plaintiff did not have that license, it was required to devote extra resources to assist her, such as assigning a licensed psychologist to help supervise her students. The District Court concluded: “[b]ecause [comparator] did not require those extra resources in supervising his students, their work was not equal.” Id.

The Northern District of Iowa came to a similar conclusion (although in a different procedural context) in Bertroche v. Mercy Physician Associates, Inc., No. 18-CV-59-CJW-KEM, 2019 WL 4307127 (N.D. Iowa Sept. 11, 2019). In that case, the District Court decertified a collective action of female physicians after concluding that the nature of their claims would require an individualized determination regarding the factual situation of each plaintiffs’ physician practice. Although plaintiffs had alleged a common discriminatory compensation scheme, the employer argued that the compensation scheme was designed to account for each physicians’ different medical and business decisions, which would result in different total compensation amounts.

The District Court agreed, holding that, “the different ways in which physicians operate their medical practices can serve to differentiate them from one another such that they should not be able to proceed collectively.” Id at *26 (quoting Ahad v. Bd. of Trs. of S. Ill. Univ., No. 15-CV-3308, 2019 WL 1433753, at *4 (C.D. Ill. Mar. 28, 2019)). Although the Court was not deciding plaintiffs’ prima facie case – and in fact had refused to grant summary judgment to the employer on plaintiff’s claims – the same reasoning could be applicable to show that a physician’s chosen comparators were not performing equal or substantially similar work due to the inherent differences that exist among different physician practices.

Implications For Employers

These recent decisions highlight just how difficult it can be for plaintiffs to establish that they and their chosen comparators were performing equal or substantially equal work within the academic health care setting. The lessons of these cases are twofold.

On one hand, employers that provide their employees with substantial autonomy to mold their own professional careers, and which are under pressure to pay premium rates to obtain “star” performers, appear to be at an increased risk for equal pay litigation. Those factors appear to inject an appearance of subjectivity into what employers and employees may consider “fair compensation” and “equal work.” All of the industries that our analysis has identified as the most at risk for equal pay lawsuits, including health care, higher education finance, technology, and yes, the legal profession, tend to share some of these features of compensation.

But on the other hand, the decisions described above show that those same features are also often the most important evidence that employers in those fields can use to defeat equal pay litigation. Simply put, the more autonomy that exists for employees to develop their careers, the more diversity that tends to develop among their working conditions and relevant experiences. This, in turn, makes it that much more difficult for wage discrimination plaintiffs to identify appropriate comparators and establish their prima facie case.

For employers who operate in states with more expansive equal pay laws (like California, Illinois, Massachusetts, New York, New Jersey, Oregon, Washington State, and others), where plaintiffs can compare themselves not just to people performing equal work but also “substantially similar” or “comparable work”, the risks may be even higher for those in the health care and/or academic industries.

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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