Equal Pay Act: A Cautionary Tale
One California appellate court opinion highlights risk under the state's recently expanded Equal Pay Act ("EPA"). The EPA requires equal pay for employees who perform “substantially similar work” when viewed as a composite of skill, effort, and responsibility. Initially applied to differences in sex, the law has been expanded to include race and ethnicity as well.
Unlike federal law, which has stricter requirements, the state law applies to 'similar' (rather than nearly identical) work. It also requires equal pay among different establishments, prohibits retaliation, and requires that any 'bona fide' justification account for the entire difference in pay. The law is discussed on the Labor Commissioner's website here.
In the recent opinion, Allen v. Staples, Inc., a female employee argued that she had not been paid the same for substantially similar work performed by male employee(s). The trial court had dismissed her claims on the basis that men and women had made more or less than one another, without apparent bias toward women. The appellate court noted that, during Allen's employment, "women were among the highest earning" in her position and "at least six men earned less than" her.
Unfortunately, however, there was one male employee who made more than Allen in the same position. The court reversed the trial ruling, reinstating the case, on the basis that "a plaintiff claiming gender-based pay disparity may establish a prima facie case by showing that she was paid less in salary than a single male comparator." The case will be sent back to the lower court for trial even though the appellate court agreed that Allen had not shown evidence of actual discrimination or harassment, upholding dismissal of most of her claims.
The employer will have an opportunity to justify the difference with legitimate factors (such as tenure at the company), but it will have to present that defense at - or settle with Allen before - an expensive trial.
This case may not remain published or could be reviewed by the Supreme Court. Other appellate courts might also disagree. But Allen is a strong cautionary tale for employers who pay too little attention to differences in salary between employees.
Allen v. Staples, Inc. can be viewed here.