The Court of Appeals for the Sixth Circuit has revived the wage disparity case of an employee on the basis of an employer’s failure to show that their explanation for the disparity was the reason instead of simply a possible explanation. This failure to provide a definitive explanation is enough to proceed with a claim under the Equal Pay Act.

In this case, the plaintiff, a black male, worked as a financial analyst for the same employer for several years before the employer took on a white woman with no prior experience in the role in the same position. This new employee started at a much higher rate of pay than the plaintiff, and over the following few years, the plaintiff’s pay failed to rise significantly while the new employee’s continued to grow.

In accordance with the employer’s policies, the plaintiff requested an “equity adjustment” for his salary, which the employer denied for several more years. In response, the plaintiff filed a claim of wage discrimination as well as claiming that the employer retaliated by altering a job posting that the employer had formerly encouraged him to apply to. This revision resulted in the plaintiff no longer being regarded as qualified for the position.

The district court initially granted summary judgment on all claims in favor of the employer. The plaintiff appealed, and the Court of Appeals reversed the district court’s decision.

The plaintiff had made claims under the Equal Pay Act (EPA) and Title VII of the Civil Rights Act of 1964 for wage discrimination based on race and sex. The court found that both employees were, in fact doing essentially the same tasks for a different rate of pay; therefore, the employer would have to justify such a differential under one of the four affirmative defenses provided by the EPA. The employer chose the fourth defense, which is simply that the justification was the result of “a factor other than sex.”

For this claim to be valid, the other factor would need to possess clear evidence showing that it is the definitive cause for the difference in wages. The employer presented several possible explanations, including experience, qualifications, and performance reviews. However, it failed to demonstrate that they had been a direct factor in setting salaries or granting equity adjustments. The employer-provided inconsistent testimonies and did not provide metrics for how salaries were set. These factors resulted in the court reversing the judgment for the plaintiff’s claims under the EPA.

The court proceeded to the Title VII claim and found that the employer had provided a rational business explanation for the difference in pay as well as some evidence to back it up. However, the evidence failed to demonstrate that the distinctions between the employees motivated the salary discrepancies, and the court found that the changing rationale of the employer may be evidence of pretext. The court reversed the judgment on this claim as well.

The court then analyzed the claim of retaliation. The plaintiff’s direct supervisor had encouraged him to apply for a job with a higher rate of pay, and subsequent to filing a complaint, a higher level manager changed the job posting to include a requirement for a bachelor’s degree which she was aware the plaintiff lacked. The district court found that the plaintiff had failed to establish a causal link between the supposed retaliation and protected activity. However, as the employer did not dispute causation, the appeals court found that the district court should not have granted summary judgment on this ground and reversed the judgment.

Employer Takeaways

This case should serve as a reminder of the importance of setting firm compensation policies. Employers should always have written objective metrics in place that are used in making decisions on wages, raises, and bonuses.