Labor & Employment Law Daily Lowe’s must defend class claim that changing pay scheme for sales associates had disparate impact on older workers
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Monday, January 27, 2020

Lowe’s must defend class claim that changing pay scheme for sales associates had disparate impact on older workers

By Marjorie Johnson, J.D.

Though the retailer argued that its decision to end the allowance applied equally to everyone, and thus older sales associates would not be disproportionately affected at a higher rate, the lawsuit alleged that people hired as sales associates were typically over age 40.

Lowe’s lost its bid to dismiss two employees’ class or collective ADEA claim alleging disparate impact based on the retailer’s announced changes to its way of compensating its sales associates, who were purportedly mostly over 40 years old, which would result in substantially less pay. However, a federal court in Florida tossed the employees’ pattern-and-practice claim of intentional discrimination. Though they claimed that another class of workers whose compensation was not being changed were younger, they failed to provide enough detail to plausibly allege that they were similarly situated. The retailer’s win may be temporary, though, as the court allowed the employees to amend their complaint (Bartholomew v. Lowe’s Home Centers, LLC, January 21, 2020, Chappell, S.).

Extra “allowance” in lieu of commission. In the past, Lowe’s paid its sales associates (SAs) commissions (called “spiffs”) that it received from manufacturers for selling their products, in addition to their hourly wage. However, the retailer ended this practice in 2012, purportedly to provide the SAs with stability. To make up for the loss in variable pay, the company adopted a scheme to pay the SAs an adjusted amount equal to 50 percent of their spiffs earned in 2011, which it called an “allowance.” However, “project specialists—exteriors” (PSEs) were exempt from the new pay scheme and kept receiving unadjusted spiffs.

Additional pay ends. In August 2019, Lowe’s notified its SAs that the allowance was being discontinued on February 1, 2020. This prompted the employees to file this ADEA lawsuit alleging claims of both disparate impact and disparate treatment on a class-wide or collective basis. In particular, they claimed that most SAs were over 40 and thus disproportionately affected by the change in policy, while certain PSEs were younger.

Standing and ripeness. At the outset, the court rejected Lowe’s contention that the employees lacked standing since there was no “injury in fact.” The alleged injury—ending the allowance—was “not conjectural or hypothetical” since that decision would take effect shortly. Moreover, because they sought injunctive relief, they “had standing to enjoin the allegedly discriminatory policy by suing a couple of months before implementation.” Similarly, the retailer failed to convince the court that the case was not ripe.

Change in pay not “de minimis.” Lowe’s also failed to convince the court that ending the allowance did not violate the ADEA since it was an “across-the-board compensation decision.” While the court won’t reexamine otherwise lawful business decisions, those that “significantly affect an employee’s compensation can be an adverse employment action.” Here, the employees claimed they would earn $12,000 less per year as a result of the change, which was not “a de minimis amount to most workers.”

Detailed statistics not required at this stage. Allowing their disparate impact claim to advance, the court noted that the employees were only required to “plausibly allege—not prove” their prima facie case. Thus, while they had to allege “some statistical disparity, however elementary,” they were entitled to conduct discovery before being required to provide “detailed statistics.”

Alleged significant adverse impact. Lowe’s argued that because its decision to end the allowance applied equally to everyone, older sales associates would not be disproportionately affected at a higher rate. However, the employees alleged that the facially neutral policy had a significant adverse impact on SAs. Their assertion that most SAs were over 40 meant that they would “bear the brunt” of the “specific policy.” Though they didn’t explicitly state that older SAs were “disproportionately impacted,” the crux of lawsuit alleged just that.

Lowe’s also argued that dismissal was warranted since ending the allowance was a nondiscriminatory, neutral compensation decision applied equally to all SAs. However, that issue was better tackled at summary judgment. While it may have ended the compensation practice for a reasonable factor other than age, that issue couldn’t be decided at this early stage.

Pattern-and-practice claim tossed. However, the employees failed to plausibly allege a pattern- and-practice claim of intentional discrimination. Their complaint did not state a claim “on its face” since they did not allege that SAs were treated any differently based on their age and offered no statistical data or point to any other evidence of Lowe’s having a pattern or practice of discriminating against older employees.

Insufficient details about comparators. The employees attempted to salvage this claim by pointing to their allegation that Lowe’s treated PSEs, who were younger, more favorably. However, they failed to sufficiently allege that the PSEs were similarly situated as they did not describe “the basic similarities” between PSEs and SAs or even the material aspects of a SA position. Thus, the court could not conclude that similarly situated employees were treated differently, let alone find that they were treated differently because of their age.

Though the employees identified three PSEs by name and alleged they were “younger,” they did not indicate their age or whether they were substantially younger, despite having identified which of the named and opt-in plaintiffs were older than each PSE. They alleged that one of the PSEs was younger than the oldest named plaintiff, but if that PSE was older than the other named and opt-in plaintiffs, “it would be tough to use her as a more favorably treated comparator.”

The employees also failed in “painting a ‘convincing mosaic of circumstantial evidence’” to allow an inference of bias, and didn’t “even try to draw a stick figure.” Accordingly, the court granted Lowe’s motion to dismiss the claim, but with leave to amend.

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