United States: Pay Equity Litigation Update: The Second Circuit Clarifies A Key Difference Between Title Vii And Equal Pay Act Wage Discrimination Claims

Seyfarth Synopsis: In an unusual opinion considering an issue raised by the plaintiff for the first time on appeal, the Second Circuit clarifies that unlike under the Equal Pay Act, Title VII plaintiffs need not show "equal work for unequal pay" to succeed on a pay discrimination claim. This case demonstrates that plaintiffs have options when bringing such claims and underscores the different challenges employers face under the different statutory schemes.

On December 6, 2019, the Second Circuit Court of Appeals vacated in part a summary judgment ruling that had dismissed a plaintiff's pay equity claims against her former employer. The plaintiff had alleged, in relevant part, violations of the Equal Pay Act ("EPA") and Title VII related to the setting of her compensation. The District Court for the Eastern District of New York dismissed her claims because she had failed to prove she performed equal work for unequal pay, as she was the only employee in her position at the company. After consideration, the Second Circuit vacated the District Court's order related to the Title VII claim, clarified the standard for Title VII discriminatory compensation claims, and remanded the case back to the District Court for further proceedings.

Case Background

Plaintiff filed her lawsuit in 2014 alleging violations of the EPA, Title VII, the Pregnancy Discrimination Act, the whistleblower protections of the Consumer Product Safety Improvement Act, and related provisions of New York state law. In sum, Plaintiff's complaint claimed that Defendant had paid her less because of her gender, retaliated against her when she brought forward concerns about her disparate pay and potential Consumer Product Safety Act violations, and terminated her because she was pregnant. Defendant filed a motion for summary judgment on Plaintiff's claims in March 2017.

In March 2018, the District Court granted the motion for summary judgment. After analyzing Plaintiff's pay discrimination allegations, the District Court held that Plaintiff's Title VII claims, like claims brought under the EPA, required her to show "positions held by her purported male comparators [were] substantially equal to her position." Lenzi v. Systemax, Inc., No. 18-979, 2019 WL 6646630, at *6 (2d Cir. Dec. 6, 2019) (internal citations omitted). Plaintiff could not make this showing because she was the only employee who held her job title and duties, so her Title VII claims were dismissed. The District Court further noted that Plaintiff had not presented evidence of discriminatory intent in the determination of her pay, as is also required for Title VII wage disparity claims.

Plaintiff subsequently appealed the District Court's order to the Second Circuit. Notably, in the briefing of the summary judgment motion to the District Court, both Plaintiff and Defendant had agreed that Title VII disparate pay claims shared the same standard as EPA claims but required an additional showing of discriminatory animus; however, on appeal, Plaintiff challenged the District Court's holding that Title VII discriminatory compensation claims, like EPA claims, required a showing of equal work for unequal pay.

The Court's Decision

In evaluating the dismissal of Plaintiff's Title VII claims, the Second Circuit first addressed Plaintiff's failure to challenge Defendant's argument at the summary judgment stage that a pay discrimination claim under Title VII required a showing that the Plaintiff's position was substantially equal to the positions held by her purported comparators (in fact, the Plaintiff adopted this standard in her own briefing on the issue). While the Second Circuit recognized that "[s]uch a concession ordinarily precludes a party from advancing a different argument on appeal," it ultimately decided that it would exercise its discretion to consider the Plaintiff's later argument that such standard was not appropriate. Id. 

The Second Circuit then acknowledged that one of its opinions from 1995, which held that"[a] claim of unequal pay for equal work under Title VII . . . is generally analyzed under the same standards used in an EPA claim," is commonly used by district courts in their analyses of Title VII pay discrimination claims. Id. (quoting Tomka v. Seiler Corp., 66 F.3d 1295, 1312 (2d Cir. 1995)). The Court expressed a desire to "take this opportunity to clarify that a Title VII plaintiff alleging a discriminatory compensation practice need not establish that she performed equal work for unequal pay," as is required by the EPA. Id. at *7 (emphasis added). While affirming that a plaintiff could bring a claim for equal work for unequal pay under Title VII if they could show a discriminatory animus behind the pay determination, the Court emphasized that such a claim was not the only kind of Title VII claim available related to pay.

The Second Circuit gave examples of several variants of disparate pay claims that could be alleged under Title VII that would not require an equal work for unequal pay showing: "[f]or example, an employer might hire a woman for a unique position in the company, but then pay her less than it would had she been male . . . [s]imilarly, if an employer used a transparently sex-biased system for wage determination, women holding jobs not equal to those held by men would be denied the right to prove that the system is a pretext for discrimination [if required to make such a showing]." Id. Ultimately, the Second Circuit rejected the notion that plaintiffs can only succeed on discriminatory pay claims under Title VII if there is an employee of the opposite sex in an equal position earning a higher rate of pay.

The Court concluded its holding by reiterating that "all Title VII requires a plaintiff to prove is that her employer 'discriminate[d] against [her] with respect to [her] compensation . . . because of [her] . . . sex." Id. (quoting 42 U.S.C. § 2000e-2(a)(1)). Discriminatory pay claims can be brought successfully under Title VII even if the plaintiff cannot show a purported comparator of the opposite sex earning a higher wage (provided that the challenged pay rate is not based on seniority, merit, quantity or quality of production, or any other factor besides sex). The Second Circuit then found that the Plaintiff had sufficiently shown discriminatory intent with respect to her pay and vacated the District Court's order granting summary judgment on her Title VII claim.

Implications For Employers

The Second Circuit's opinion is, in effect, a reaffirmation of the U.S. Supreme Court's 1981 holding in Washington County v. Gunther. 452 U.S. 161 (1981) ("[C]laims for sex-based wage discrimination can also be brought under Title VII even though no member of the opposite sex holds an equal but higher paying job."). However, this case serves as a good reminder that employers should not expect to rely exclusively on the fact that there is no comparator in an equal position as a defense to a pay discrimination claim. Plaintiffs in such positions have options as to how to structure their theory of the case. And the oft-repeated mantra that Title VII is to be interpreted in line with the EPA clouds important, substantive differences between those two statutory schemes. When performing pay equity audits or setting employee compensation, employers should be mindful of those differences, particularly employers with more specialized positions or smaller operations that may have only one or two employees in senior leadership roles or performing the same kind of work. Such employers may also want to check market analyses and reporting when setting compensation. This case shows how pay equity claims can be brought even where there are no purported comparators, perhaps especially when it comes to high-level or specialized positions that are unique within a company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.