Possible Bias in Salary Negotiations Means Unequal Pay Claim Will Proceed

By Carolyn Russell Jan 9, 2015
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A trial court erred in granting summary judgment in a salary discrimination case brought under the Equal Pay Act (EPA) and Title VII of the Civil Rights Act of 1964 where, although a female job applicant was told that the salary was nonnegotiable, a man applying for the same position was allowed to negotiate and ultimately received a higher salary than the woman, the 5th U.S. Circuit Court of Appeals ruled.

Margaret D. Thibodeaux–Woody began working as an adjunct faculty member for Houston Community College (HCC) in 1998. She applied and interviewed for one of HCC's two open program manager positions in February 2008. Around the same time, Alan Corder, a male, applied and interviewed for the other position. Both interviewed with Joseph Little, the supervisor for the positions, and were informed that the positions paid $41,615 per year. Both responded that they would like to negotiate for more money. Little told Woody that the stated salary was the maximum amount HCC was willing to offer and there could be no negotiations for a higher salary. Woody accepted the offer with the stated maximum salary of $41,615. Corder, who was not told that he could not negotiate, counteroffered for $60,000. Little forwarded Corder’s request to the proper authorities in human resources, who responded with an increased offer of $52,000, which Corder accepted.

Both Corder and Woody began working in their new positions in April 2008. Approximately one year later, Woody learned that Corder was paid more than she and then found out that he had negotiated for more money at the time he was hired. Woody filed a charge with the Equal Employment Opportunity Commission, received a “right to sue” notice and sued in November 2011.

In her complaint, Woody accused HCC of violating the EPA and Title VII by paying her less than Corder; she also claimed retaliation. HCC asserted Corder's negotiations as a legitimate, nondiscriminatory reason for the wage disparity. The parties moved for summary judgment, and the district court granted summary judgment in favor of HCC as to each of Woody's claims. The 5th Circuit reversed the district court’s grant of summary judgment on the EPA and Title VII claims of unequal pay and remanded the case for further proceedings.

The 5th Circuit found that Woody presented evidence that HCC had an informal policy that permitted negotiation, and that Little knew or should have known about the policy even though he lacked authority to negotiate salaries.

To state a prima facie case for wage discrimination under the EPA, a plaintiff must show that the employer pays different wages to men and women, the employees perform equal work on jobs that require equal skill, effort, and responsibility, and the jobs are performed under similar working conditions. An employer is not liable under the EPA if it shows that the pay differential is made pursuant to a “factor other than sex.”

Although HCC agreed that Woody made a prima facie case under the EPA, it argued that the difference in Woody’s and Corder's salaries was due to their different approaches to salary negotiation, which it contended to be a “factor other than sex.” Woody argued that negotiation is not a proper “factor other than sex” because men and women's different success in negotiation may reflect exactly the sort of inequality Congress intended the EPA to address. The 5th Circuit declined to decide whether negotiation is a proper “factor other than sex,” reasoning that the defense applies only where pay differentials are based on a bona fide use of ‘other factors other than sex,’ and a practice is not bona fide if it is discriminatorily applied. The Fifth Circuit ruled that a reasonable fact-finder could reject HCC's negotiation defense on the ground that it discriminatorily applied its negotiation policy.

The 5th Circuit also concluded that the district court erred in granting summary judgment on the Title VII claim to the extent that decision also was based on HCC's negotiation defense. Title VII incorporates the same affirmative defenses as the EPA, including the “factor other than sex” defense. If negotiation is not available to persons of both sexes, it cannot be a legitimate, nondiscriminatory reason for a pay differential. Noting that, unlike an EPA claim, a wage discrimination claim under Title VII requires a showing of discriminatory motive, the 5th Circuit cited alleged statements made by Little indicating he had a bias against women (e.g., calling Woody “dingy,” “princess” and “blonde”) as evidence that supported her claim.

Thibodeaux-Woody v. Houston Community College, 5th Cir., No. 13-20738 (Nov. 14, 2014).

Professional Pointer: Employers should answer consistently when asked whether a salary is negotiable and when responding to counteroffers.

Carolyn Russell is a shareholder in the Houston office of Ogletree Deakins, a labor and employment law firm representing management.

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