Should I Stay or Should I Go? Ninth Circuit Finds Gender Discrimination in Retention Raise

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An Equal Pay Act plaintiff must show that employees of the opposite sex were paid different wages for equal work. Pretty simple — right? However, there are many factors that go into deciding what is “equal work” or whether the difference in wages is really tied to sex. In Jennifer Joy Freyd vs. University of Oregon, the Ninth Circuit recently explained just how complicated some of those questions can be.

Differences in the Psychology Department?

Dr. Jennifer Freyd was a well-recognized expert on trauma at the University of Oregon. She was the editor of an academic journal, an investigator at a dynamics lab named after her, and also taught classes. In 2014, she learned that she was being paid between $14,000 to $42,000 less than four of her male colleagues who shared her rank and tenure.

The University of Oregon could increase professor salaries in two ways. First, a professor could get a merit increase based on performance for the last three years. Second, a professor being recruited by another academic institution could get a retention raise. If a professor sought a retention raise, the university would consider specific factors in offering a raise and how much. Dr. Freyd had never sought a retention raise because she was happy at the University of Oregon and her family wanted to remain there. Her male colleagues were not such happy campers and needed raises to keep them at the university.

Dr. Freyd did a regression analysis on the salaries of professors in her department. Her analysis showed that six out of the eight male professors were above the average on salaries while five out of the six female professors were below average. The university did its own study that showed that the average difference in pay between male and female professors was $25,000. The university study also showed that the pay difference was primarily the result of retention raises and that when those raises were removed from the analysis, the gender difference disappeared. It was significant that if a professor received a retention raise, none of the salaries of other similarly tenured professors were adjusted.

Dr. Freyd presented this information to the university and asked that they grant a retroactive merit raise to compensate for the pay inequity between the male and female professors. The university denied the request and stated that Dr. Freyd’s compensation was not “unfairly, discriminatorily, or improperly set.” Dr. Freyd then sued the university under the Equal Pay Act, Title VII and several state statutes.

Lower Court Says You Are Not the Same

The district court granted the university’s motion for summary judgment on the Equal Pay Act claim on the grounds that Dr. Freyd failed to show that she and the male professors performed substantially equal or comparable work. The court also denied her Title VII disparate impact claim holding that Dr. Freyd failed to show adequate statistical data and because the university showed that the retention raises were not based on sex but were job-related and a business necessity.

The Ninth Circuit Weighs In

The Ninth Circuit reversed the lower court on the Equal Pay Act and Title VII disparate impact claims. With regard to the Equal Pay Act, the court noted that a plaintiff does not have to show that the jobs being compared are “identical,” but only “substantially equal.” While the district court had gone into a very detailed analysis of each professor and how they were different, the Ninth Circuit said that you should look to the “overall job” and the “common core of tasks” to see if the positions were equal. The court held that Dr. Freyd and her male comparators all conducted research, taught classes and advised students. The court said that due to this commonality, a court should not find as a matter of law that the positions were not substantially equal. The court held that the Equal Pay Act claim must go to a jury.

On the Title VII disparate impact claim, the Ninth Circuit found it significant that Dr. Freyd was not just challenging the retention raise practice, she was complaining about the university’s failure to increase the salaries of other professors with comparable merit and seniority when it granted a retention raise. She also had presented evidence that female faculty members, for various reasons related to gender, were less willing to move and less likely to seek a retention raise, which resulted in a significant discriminatory impact. She showed that in a 10-year period, only four of the 20 retention negotiations held in the department were with female professors.

The lower court had also held that even if Dr. Freyd had met her statistical burden, summary judgment was appropriate because the university had shown that the retention raises were a ‘business necessity.” The Ninth Circuit did not buy this argument as meriting summary judgment. It noted that Dr. Freyd had presented an alternative solution that involved evaluating all faculty when a retention raise was sought. The Ninth Circuit held that this created an issue of material fact and that summary judgment was not proper.

What Should We Learn from This?

This case, although fairly narrow in scope, shows that employers need to self-audit their pay practices. Changes in individual salaries that appear to be innocent may ultimately result in a disparate impact based on gender (or race). That an employee negotiated a higher increase may not be a legal defense to an Equal Pay Act or disparate impact claim. It is also important to see that courts may have a broader view of what constitutes “equal work” among employees.

Don’t forget that if you are going to review your pay practices, get your lawyer involved to invoke your attorney-client privilege. You don’t want to do a self-audit that ends up being Exhibit A for the plaintiff.

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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