By: Joseph H. Laverty, Esq.
There has been much more litigation and emphasis on equal pay issues over the last two to three years. In May of this year, the Eighth Circuit Court of Appeals (which encompasses Iowa) ruled on the case Drum v. Leeson Electronic Corporation. In this case, Drum began working for Leeson's predecessor in 1990. In 1999, she was promoted to Human Resources Manager (HRM). In 2005, her HRM salary was $41,548. She was promoted to another position with a salary of $45,600. Her male HRM replacement was hired from outside the company at a salary of $62,500. Drum sued Leeson for sex discrimination in violation of the equal pay act, Title VII, and the state civil rights act. The trial court granted summary judgment and the appellate court reversed the trial court's decision and sent the case back to the district court for trial. In this case, Leeson's defense was that they hired the male replacement at a substantially higher salary because that was the prevailing market rate while Drum's salary was substantially below that rate. In an equal pay action, the employer must prove that the pay differential was based on a factor other than sex. The court stated "Justifying Crosier's [the new male HRM] salary does not justify Drum's salary. It is the differential that must be explained." In this case the court said that Leeson must justify Drum's salary to prove the differential was based on a factor other than sex. The court went on to say that Leeson did not provide information regarding education, experience or other qualifications which could have showed that the decision was based on a reason other than sex. Because of these issues, the Court of Appeals reversed the District Court's decision granting Leeson's summary judgment.
Employers will see more litigation regarding alleged equal pay violations in the future. This decision means that employers can't simply point to market rates and male employee's qualifications to justify a higher salary if the issue is challenged. The employer must be able to show that the female employee was paid fairly and in accordance with the company's policies based on her assigned job duties, qualifications, skills and the then current market rate. Employers should audit their pay practices to ensure that employees with equivalent skills, qualifications and job requirements are paid equitably. Differences in wages that cannot be justified by qualifications or duties could bring litigation if the lower paid person is of the opposite sex or in another protected category.
Questions? Please contact WS Shareholder and Senior Attorney Joseph H. Laverty at (563) 333-9102 or jolaverty@wesselssherman.com.
