When Equal Pay Audit Results Lead to Retaliation Claims

Equal pay is getting a lot of press these days. Indeed, it seems to be a “Hot HR Topic.” (Yes, that IS a thing! OK, just for employment law nerds.)

There’s a federal law requiring employers to provide equal pay for equal work, and, employers should know that most states have equal pay statutes on the books.

So why are pay audits having such a moment right now?

Women’s sports may have something to do with it—the U.S. Women’s Soccer team has been embroiled in litigation – now mediation – with U.S. Soccer for the past few years in order to receive compensation in line with the men’s team.

BigLaw, too, is battling a fair share of sex discrimination and equal pay claims, as reported often by our friends at Above The Law.

But what happens when an audit shows a pay disparity? How is that corrected? What happens to the bearer of that bad news?

One company is thinking about these questions. Earlier this week, a former VP at WeWork Companies sued the company and its head of human resources in New York state court for sexual harassment, gender discrimination, equal pay violations, retaliation, and aiding and abetting discrimination (Bridges v. WeWork Companies, Inc. and Jennifer Berrent, No. 156140/2019 (Supreme Court of the State of New York County of New York June 20, 2019)), in violation of state and city anti-discrimination laws.

The plaintiff’s responsibilities included compensation, benefits, and stock awards, and, as part of her job, she asked the analytics division to run a pay analysis. You can guess the result. The Complaint alleges that the division reported “a significant equal pay problem,” specifically finding that $1,000,000 equity grants were given almost exclusively to men.

But that’s not all. Is it ever?

When she advised the higher-ups about the results of the analysis, she alleges she was told that more men received equity grants because “men take risks and women don’t” and because women are “secondary wage earners,” among other allegations.

And we’re not done. This plaintiff alleged the company retaliated against her after she complained about the equal pay violations she found, discriminatory practices, and questionable equity practices.

(There’s a current age discrimination complaint brought against the same company, but we’ll save that for another day.)

Equal Pay Is Having Its Day

The Equal Pay Act of 1963 (“EPA”) prohibits sex-based wage differentials for work requiring equal skill, effort, and responsibility performed under the same or similar working conditions. Title VII of the Civil Rights Act of 1964 does too, as so does New York law, of course.

To make out a prima facie case for unequal pay, an employee must show that the skill, effort, and responsibility required in her job responsibilities are equal to those of a higher-paid male employee. The work does not need to be identical, just substantially similar, which is, as so many things are in the law, determined on a case by case basis.

Pay disparity for substantially similar jobs breeds legal action. We’ve seen it in professional tennis, and we’ve seen it in soccer. Corporate America has long struggled with the issue.

This VP complained about a pay disparity uncovered by the analysis she ordered done. Now what?

Complaint/Opposition => allegations of sex discrimination/unequal pay => termination.

Retaliation And Opposing Discriminatory Treatment

The sometimes forgotten “Opposition Clause” in Title VII of the Civil Rights Act of 1964 (Title VII) prohibits retaliation against an individual for opposing discriminatory employment practices (or for filing a discrimination charge, testifying, or participating in any way in an investigation, or proceeding).

Once an employee complains to you, Employer, about sex discrimination based on equal pay or sexual harassment (or sex discrimination like we talked about here, or age discrimination or based on another protected class), if the employer takes any adverse action against the employee, like terminating her or him, the employer can be held liable for retaliating against the employee.

How does that work?

Telling or complaining to management about perceived unlawful workplace discrimination is “protected activity” under Title VII, which contains this anti-retaliation provision of which I speak that prohibits an employer from taking an “adverse action” (demotion, pay cut, unfavorable shift changes, termination, etc.) when that employee has opposed any practice made an unlawful employment practice by law.

The EEOC considers “opposition” to be complaining to anyone about alleged discrimination to oneself OR others.

To make out a claim for retaliation, an employee need only demonstrate that (1) she was engaged in a “statutorily protected activity” by opposing an employment practice which she has a good faith, reasonable basis to believe is unlawful; (2) an “adverse employment action” was taken by the employer; and (3) there is some causal connection between the two, i.e., an adverse action following a statutorily protected activity.

And opposition is a statutorily protected activity!

So you see how this works.

Application Here

Here, the Complaint alleges that the company discriminated against the plaintiff due to her sex, as she complained about gender-specific issues, namely, that women received less equity in the company based on stereotypes; alleged the company then created a hostile work environment based on sex by treating her “less well” than her male colleagues (remember, this is New York where the standard is far lower than under federal law); engaged in equal pay violations against her and other women in the company; and retaliated against her for complaining about these matters, all of which are based on gender.

New York state and city law also makes all of the above unlawful.

Employer Takeaways

I do not know how this litigation will resolve—in settlement or in court. I can imagine that the company has quite a few affirmative defenses in its quiver.

However, it worth repeating, as my partner Rich Cohen said here—the answer to gender pay inequality requires employers to comply with equal pay laws and not have sex-based wage differentials for work requiring equal skill, effort, and responsibility performed under the same or similar working conditions.

Another thought: employers might consider tracking their pay data by gender to determine if any pay differentials between the genders seem unjustified—and then rectify the situation.

Finally, remember, it is far, far, FAR easier to prove retaliation than the underlying discrimination — and  easier to create a retaliation situation if your company doesn’t know how to deal effectively with a discrimination complaint or one opposing discriminatory behavior.