Seyfarth Synopsis: On October 17, 2023, the Second Circuit issued the eagerly-awaited decision in Eisenhauer v. Culinary Institute of America. The court clarified that the federal EPA never required employers to show that a “factor other than sex” must be related to the job in question, contrary to arguments by many plaintiffs and commentators. This was a notable appeal because it raised several critical issues, any one of which could have changed the contours of equal pay litigation dramatically. The Second Circuit chose to leave most of those issues undecided, and instead took the opportunity to clarify a thirty-year-old decision, and its thirty years of precedent.

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On October 17, 2023, the Second Circuit issued its eagerly-awaited decision in Eisenhauer v. Culinary Institute of America, No. 21-2919-cv (2d Cir. 2023). This decision clarified an important issue regarding an employer’s “factor other than sex” affirmative defense under the federal Equal Pay Act (“EPA”). This appeal was notable due to the several weighty issues it raised regarding the course and conduct of equal pay litigation. Even the EEOC had jumped into the mix, filing an amicus brief on the plaintiff’s behalf relating to two of those issues. Ultimately, however, most of those issues were left undecided, as the Second Circuit focused its energies on clearing up a confusing history of case law regarding the affirmative defenses available under the federal EPA.

Background

The plaintiff in Eisenhauer, a female professor at a culinary school, alleged she was paid less than a male professor who managed a similar course load. That salary disparity existed because plaintiff and her comparator were hired at different salaries, which then increased over time according to the sex-neutral terms of a compensation plan. Under that plan, all faculty members received the same percentage increase in their salaries each year. The result was that the pay disparity between the professors only grew over time. The Second Circuit addressed itself to an issue that was not much discussed by the district court: does the federal EPA require an employer to show that the factor it is relying upon to establish its “factor other than sex” affirmative defense is related to the job in question?

The Second Circuit held that no such requirement exists under the federal EPA. To be clear, the district court found in favor of the employer even applying the more stringent standard the Second Circuit held was in error, i.e., the district court appeared to hold that the ”factor other than sex” relied upon by the employer was in fact job related: “The parties appear to agree, and the evidence shows, that the disparity between the initial salaries was due to non-discriminatory, business-related reasons.” Id. at *7.

But the Second Circuit noted that the plaintiff had brought equal pay claims under both the federal and state-level equal pay statutes, and that the district court had decided the two claims under the same standard—as most courts do for most purposes. The Second Circuit clarified that these two statutes are different with respect to a job-relatedness requirement applicable to the “factor other than sex” defense. When the New York legislature amended the New York equal pay statute, it added a provision that required a “factor other than sex” to be “job-related with respect to the position in question,” among other things. N.Y. Lab. Law 194(1)(iv). The federal EPA, on the other hand, allows for “any other factor other than sex,” without qualification, which the Second Circuit held means exactly what it says: “to establish the EPA’s ‘factor other than sex’ defense, a defendant must prove that the pay disparity in question results from a differential based on any factor except for sex. . . .  The requirement that a ‘factor other than sex’ be job related appears nowhere in the EPA’s text and, in our view, conflicts with the statute’s plain meaning.” Eisenhauer, 2023 WL 6815280, at *6.

The court’s clarification of this point is welcome news. As the Second Circuit explained, decisions from the Second Circuit and other circuits have given some litigants the mistaken impression that the federal EPA’s language says more than it does. Much of the court’s decision was spent clarifying and distinguishing its own earlier decision, Aldrich v. Randolph Central School District, 963 F.2d 520 (2d Cir. 1992), which was as guilty as any other in introducing this misunderstanding into the case law. As the Eisenhauer court acknowledged, “[t]he term [factor other than sex] has sowed needless uncertainty and confusion among our sister circuits.” Eisenhauer, 2023 WL 6815280, at *5. Among those is the Ninth Circuit, which—according to the Second Circuit—erroneously found in its famous decision, Rizo v. Yovino, an ambiguity in these unambiguous words, which led it to misapply canons of statutory construction and, ultimately, to read a “job-relatedness” requirement into the federal EPA where none belonged.

The Second Circuit remanded the decision back to the district court to reconsider its decision in light of the different standards under the federal and New York EPA statutes. As noted above, the district court decided both claims under the arguably higher standard articulated by Aldrich, i.e., that the employer “bears the burden of proving that a bona fide business-related reason exists for using the gender-neutral factor that results in a wage differential in order to establish the factor-other-than-sex defense.” Eisenhauer, 2023 WL 6815280, at *3 (quoting Aldrich, 963 F.2d at 525). It concluded that the employer met its burden to establish this affirmative defense even under that standard, so it is hard to see how it would come to any different conclusion under the New York EPA, even with a job-relatedness requirement.

As important as this issue is, the Eisenhauer decision is also notable for the issues it left undecided. The district court had held that the plaintiff had established a prima facie case of wage discrimination because she had identified one male comparator who earned more than her, even though there were other male employees who earned less than her, and other female employees who earned more. The defense argued that the presence of those other comparators negated any inference of discrimination. While the district court agreed that the identification of a single comparator may be insufficient to prove discrimination as a matter of fact at trial, it nevertheless held that the plaintiff could establish a prima facie case based on the existence of just one comparator at the summary judgment stage. Moreover, the court declined to even consider the existence of other, countervailing comparators before trial, holding that those were questions exclusively for the jury. (We previously blogged about this “one comparator rule” and its many practical difficulties here.)

The district court decision also touched upon another issue currently bedeviling equal pay litigants: how does burden shifting work under the EPA? Some courts have held that the burden shifts only once; it shifts to the employer when the employee establishes a prima facie case, and that is where it remains. Other courts have held that the burden shifts back to the employee to prove pretext if the employer successfully establishes its affirmative defense. The district court in Eisenhauer appeared to apply the latter framework, holding: “Because Defendant has articulated a legitimate, non-discriminatory reason for the pay disparity, the burden would now shift to Plaintiff to establish that that reason was a pretext for discrimination.” Eisenhauer v. Culinary Inst. of Am., No. 19-cv-10933(PED), 2021 WL 5112625, at *9 (S.D.N.Y. Nov. 3, 2021). Because the plaintiff had failed to establish pretext, the district court ruled in favor of the employer. (See our analysis about this issue and its ramificationshere.)

Both of these questions were important enough to attract the attention of the EEOC, which filed an amicus brief with the Second Circuit in support of the plaintiff. Some might even add to this list of issues the district court’s highly questionable holding that it was not allowed to even consider the existence of other comparators at the prima facie stage, because that issue is exclusively the province of the jury. A decision on any one of these three issues could have had a profound impact on equal pay litigation. The Second Circuit held them for another day.

Implications for Employers

While Eisenhauer left many weighty questions unanswered, it clarified that the “factor other than sex” defense under the federal EPA does not contain any job-relatedness requirement. This alone made the decision worth the wait, given the vast confusion that has crept into the case law on this point.

Moreover, there is at least a chance one of the other issues raised by the lower court may eventually be resolved in this matter. When the Second Circuit remanded the case, it did so with explicit instructions. If the district court decides to retain supplemental jurisdiction over the state law EPA claim, it must decide whether the plaintiff had established a prima facie case under the New York law by identifying a single male comparator who earns more than her, while ignoring other comparators who would complicate any inference of discrimination. The Second Circuit explained in a footnote the disagreement that exists on this issue under the federal EPA, but left it to the district court to decide this as a separate issue under the New York law: “should the District Court decide to invoke its supplemental jurisdiction over [plaintiff’s] [NY EPA] claim on remand, it must determine whether a single male comparator is sufficient to establish a prima facie case under [the NY EPA].” Eisenhauer, 2023 WL 6815280, at *9 n.83. EPA litigants will just have to wait and see whether this questionable proposition gains new life under New York law. Seyfarth will, of course, keep our readers updated on any developments.