University's Retention Bonuses to Professors May Violate Equal Pay Act

​The University of Oregon's practice of paying retention bonuses to professors offered positions by other universities may violate the Equal Pay Act and Oregon law, the 9th U.S. Circuit Court of Appeals ruled.

A psychology professor unintentionally received salary information for the university's psychology department faculty in 2014 as part of an unrelated public records request. The plaintiff noticed that she was making between $14,000 and $42,000 less per year than four of her male colleagues whom she believed were of comparable rank and tenure.

The disparity in pay seemed to relate to the university's practice of granting retention raises to faculty as an incentive to remain at the university when they are being courted by other academic institutions. The university conducted its own pay study, which noted that of the 20 retention negotiations the psychology department had engaged in from 2006 through 2016, only four affected female faculty and only one of the successful retention cases was a woman.

Because the plaintiff was married to another professor at the university and had a family, she wished to stay at the university and had never made efforts to seek a position at another academic institution. She thus never received any of these retention raises.

In January 2017, the plaintiff met with the dean and associate dean of the College of Arts and Sciences to discuss the data and request a retroactive merit raise to compensate for the pay inequity the retention raises had caused. In response, the associate dean conducted his own analysis and concluded that the plaintiff's compensation was not unfairly, discriminatorily or improperly set. The plaintiff was denied a raise.

In March 2017, the plaintiff filed a complaint against the university and the dean and associate dean of the College of Arts and Sciences. She asserted various causes of action under the Equal Pay Act, Titles VII and IX of the Civil Rights Act of 1964, the Equal Protection Clause of the U.S. Constitution, the Equal Rights Amendment of the Oregon Constitution, Oregon equal pay laws and breach of contract.

In her lawsuit, the plaintiff claimed that female professors at the university were less likely to engage in retention negotiations than male professors, and when they did, they were less likely to successfully obtain a raise. She retained an expert economist, who found a $15,000 disparity in the pay of female psychology professors when compared to their male colleagues. The defendants presented contrary expert analysis that questioned the statistical significance of the data relied on by the plaintiff.

The district court granted the defendants' motion for summary judgment on the plaintiff's claims. The court rejected the plaintiff's Equal Pay Act and Oregon law claims because she could not show that she and the comparators performed substantially equal or comparable work and, alternatively, because the university established that the challenged practice was job related and a business necessity.

On appeal, the 9th Circuit panel disagreed with the district court's analysis of the plaintiff's claim as contesting the legality of the university's retention raise practices. Rather, the 9th Circuit panel found that the plaintiff was challenging the university's practice of awarding retention raises without also increasing the salaries of other professors of comparable merit and seniority.

The panel reversed the district court's dismissal of her equal pay claims under the Equal Pay Act and Oregon law, which would proceed to trial.

Freyd v. University of Oregon, 9th Cir., No. 19-35428 (March 15, 2021), petition for rehearing en banc denied (April 23, 2021).

Professional Pointer: As a dissenting judge argued, the 9th Circuit's decision potentially expands the Equal Pay Act to restrict facially neutral pay practices that may cause disparities due to voluntary decisions by female employees. Employers can nonetheless protect themselves from unintended liability by comparing employee compensation histories to identify and address disparities that may have arisen due to gender-specific responses to seemingly neutral practices.

Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.