Male employee’s equal pay claim fails

A male employee, whose compensation model was changed by his employer to match the compensation plan applied to a female counterpart, resulting in a deep cut in his pay, could not maintain a suit under the Equal Pay Act (EPA), ruled the Sixth Circuit. As an initial matter, the appeals court noted that the EPA forbids an employer from lowering an employee’s wages only if it does so to remedy an underlying EPA violation. In this instance, the court found that the employer had proven that this pay disparity was due to a “factor other than sex”—each employee chose to be compensated on a different pay model. As a result, there was no EPA violation to cure.

Compensation model

The plaintiff, a male employee, headed the healthcare information technology staffing group for a staffing company. He shared responsibilities with a female employee and the two performed the same job, had the same responsibilities, and each earned a share of the profits they collectively generated. However, they were paid pursuant to different compensation models: The male employee received 20 percent of the group’s profit pool, while his female counterpart received a $100,000 base salary plus a 10 percent draw from the profit pool. This worked out well for the male employee and he out earned her by nearly $695,000 over a three-year period.

The employees performed well for the company, generating substantial revenue growth in the healthcare business unit. Although the male employee earned substantially more than his female counterpart, there were never any complaints about the pay disparity, and the female employee actually refused the opportunity to switch compensation plans because of the risk involved. However, the male employee had problems with a number of different people at the company. After a number of disagreements, in 2013, the employer modified his compensation model so that it matched the female employee’s. From that point onward, he received a $100,000 salary and 10 percent of the profit pool.

Following the male employee’s termination at the end of 2013, he filed suit under the EPA, alleging that the employer violated the statute by paying him more than his female counterpart for three years, then lowering his compensation so that it matched hers. A district court granted summary judgment to the employer, finding that it had conclusively established that sex played no part in the pay differential between the employees.

Equal pay arguments

Here, the Sixth Circuit affirmed the district court’s grant of summary judgment in favor of the employer. The employee made a two-part EPA argument. First, he claimed that the employer violated the EPA by “maintaining the pay disparity” between the man and woman for more than three years. Second, he argued that the employer violated the EPA again when it tried to cure this pay disparity by lowering his compensation to match that of the woman’s.

Three-step scheme

The EPA forbids an employer from lowering an employee’s wages only if it does so to remedy an underlying EPA violation. “In order to establish a prima facie case of wage discrimination under the EPA, plaintiffs must show that an employer pays different wages to employees of opposite sexes “for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.” “Once the plaintiff establishes a prima facie case, the defendant must “prove” that the wage differential is justified under one of the four affirmative defenses set forth under §206(d)(1) of the Equal Pay Act: (1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) any other factor other than sex.” Finally, if an EPA defendant proves an affirmative defense, an EPA plaintiff “must come forward with evidence demonstrating the existence of a triable issue of fact” regarding pretext.

As an initial matter, the appeals court agreed with the district court that the male employee established a prima facie EPA case. However, the employer proved that this pay disparity was due to a “factor other than sex”—each employee chose to be compensated on a different pay model. Accordingly, both parts of the male employee’s EPA argument failed. First, the employer did not violate the EPA when it paid the male employee more than his female counterpart. Nor did it violate the EPA when it equalized their compensation models, because there was no underlying EPA violation to “cure.”

Factor other than sex

The record in this case was clear that the employer paid the male employee more than the female employee because of a “factor other than sex.” The woman chose to be compensated pursuant to her $100,000 base salary plus 10-percent profit pool draw, rather than the riskier profit-pool-only basis model chosen by the male employee. Even viewing the evidence in the light most favorable to the male employee, the Sixth Circuit concluded that sex played no role in the company’s decision to pay the male employee more than his female counterpart. Moreover, the employer offered the woman the exact same compensation model but she declined the offer.

Further, the employee produced no evidence raising a fact dispute about the employer’s “factor other than sex” defense, his claim that it violated the EPA when it paid him more than his female counterpart failed. Thus, he failed to show that the employer’s proffered reasons for maintaining the pay disparity were pretextual.

Finally, the male employee argued that the employer violated the EPA when it changed his compensation to match the female employee’s compensation. This second part of his argument necessarily depended on the first part. “Under the express terms of the EPA, when a prohibited sex-based wage differential has been proved, an employer can come into compliance only by raising the wage rate of the lower paid sex.” Thus, an employer violates the EPA by lowering an employee’s wages only if it does so to remedy an underlying EPA violation. That was not the case here. Because the employer proved its affirmative defense, the fact that it changed the male employee’s compensation plan to match that of his female counterpart was irrelevant. (Schleicher v. Preferred Solutions, Inc., 6thCir, 166 LC ¶36,462).

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