Trial Court Should Not Have Dismissed California Equal Pay Act Claim

​A trial court erred in dismissing an employee's claim under California's Equal Pay Act (EPA) in which she showed that she was paid less than a male employee in the same position, a California appeals court ruled. The female employee's showing of a pay disparity was enough to shift the burden of proof to the employer to show that the differential was based on a factor other than sex. Because the employer did not make such a showing, dismissal of the claim was improper, the court said.

The employee worked for large retail company as an outside facilities area sales manager (ASM) overseeing a team of sales representatives. A male field sales director (FSD)—who had previously been an ASM—supervised the employee and the other ASMs in the Pacific region during the time the employee held the ASM position.

After about two years as an ASM, the employee became an FSD. In that job, she reported to the area sales vice president, as did her former supervisor. Two years after she assumed the FSD job, the employee's position was eliminated as part of a corporate reorganization, and she was terminated.

The employee subsequently sued the company and included a claim for violation of the EPA. The trial court dismissed the complaint before trial, and the employee appealed.

As an ASM, the employee earned approximately $22,000 less than her former supervisor earned when he started in that position. When she became an FSD, she earned $48,087 less than her former supervisor was earning in that position.

During the time that the employee held her ASM position, the company had fewer ASMs who were women than men in the United States. However, women were among the highest-earning ASMs, and at least six men earned less than the employee.

The salary data for FSD employees during the time the employee held the position showed fewer women than men in that position. But at least five of those women earned more in base salary than several of the men, and at least three men earned less in base salary than the employee.

California's Equal Pay Act

California's EPA states that no employer can pay any employee less than the rate paid to employees of the opposite sex for "equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions."

A pay differential may be allowed if the payment is made pursuant to one of the following:

• A seniority system.
• A merit system.
• A system that measures earnings by quantity or quality of production.
• A differential based on any bona fide factor other than sex.

To establish an initial case under the EPA, an employee must show that, based on gender, the employer pays different wages to employees doing substantially similar work under substantially similar conditions.

If the employee establishes the pay differential, the burden shifts to the employer to prove that the disparity is permitted by one of the EPA's four statutory exceptions.

In this case, the evidence showed that female ASMs were paid more, on average, than men were paid and that some male ASMs and FSDs were paid lower salaries than the employee. According to the company, this established that it did not pay men more than it paid women in similar positions.

However, the evidence also showed that the employee's former supervisor was paid more in base salary as both an ASM and as an FSD than the employee was paid in those positions.

An employee claiming a gender-based pay disparity may establish her initial case, allowing her to proceed with her claim, by showing that she was paid less than a single male comparator, the court emphasized. Therefore, the employee's evidence—that she was paid $22,000 less than her former supervisor as an ASM and $48,000 less as an FSD—was sufficient to carry her initial burden on her EPA claim and shift the burden to the employer to produce evidence that the differential was based on one of the four statutory exceptions.

While the employer argued that the salary differentials could be explained by bona fide factors other than gender, such as time with the company and prior experience, its evidence showed only that, as a general practice, it set salaries based on factors such as seniority, years of experience in a given position and merit. It did not set forth the specific factors on which the former supervisor's base salaries were premised or the factors on which the employee's base salaries were premised. Absent such evidence, the court said, the employer failed to meet its burden of proof. The trial court therefore erred in dismissing the EPA claim before trial.

Allen v. Staples Inc., Calif. Ct. App., No. B311426 (Sept. 20, 2022).

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md.