Labor & Employment Law Daily Plaintiffs don’t have to establish a prima facie EPA case to assert pay discrimination under Title VII
Tuesday, December 10, 2019

Plaintiffs don’t have to establish a prima facie EPA case to assert pay discrimination under Title VII

By Georgia D. Koutouzos, J.D.

The employee established a prima facie case of pay discrimination under Title VII (without having to meet the EPA’s “unequal pay for equal work” standard), as well as pregnancy discrimination and retaliation.

An employee need not first establish an Equal Pay Act violation in order to make out a prima facie pay discrimination claim under Title VII, the Second Circuit held. Rather, all Title VII requires is that an employee prove that the employer discriminated against him or her with respect to compensation because of sex, the appeals court explained, vacating in part a grant of summary judgment favoring a company and two of its executives on a female executive’s claim that the company paid her less because she was female, retaliated against her when she complained about her disparate pay, and fired her because she was pregnant. The employee had also alleged retaliation for raising concerns about Consumer Product Safety Improvement Act (CPSIA) violations, and the Second Circuit adopted the framework applicable to Sarbanes-Oxley Act whistleblower retaliation claims for purposes of the CPSIA violations (Lenzi v. Systemax, Inc., December 6, 2019, Pooler, R.).

Compensation complaints. The employee was promoted to the position of vice president of risk management at the defendant company and became the only female member of the company’s executive team. Soon thereafter, she complained to her superior (the company CFO) in a series of emails that she was being paid significantly less than other, male department heads who reported to him. In fact, with limited exception, the company paid her male counterparts salaries that exceeded the market rate for their respective positions but paid her at a below-market rate.

Demotion and termination. The employee subsequently sent an email to the chairman and CEO contending that the CFO was not adequately addressing her compensation disparity concerns and noting that there was no product compliance due to the resignation of the individual who had been hired to handle safety and workers’ compensation matters. Within weeks of that email, she was demoted and subjected to strict and specific restrictions regarding her work hours. A couple of months later, she was subjected to an internal audit of her business expense report from a conference she attended. She agreed to pay certain expenses, but was still interrogated, and told to resign. When she refused, she was put on administrative leave. She complained to HR that the actions were retaliatory and was fired two days later.

Lawsuit. The employee filed suit against the company and its CEO and CFO, asserting causes of action under the Equal Pay Act, Title VII, the Pregnancy Discrimination Act, the whistleblower protections of the Consumer Product Safety Improvement Act of 2008, and related provisions of the New York State Labor Law and New York State Human Rights Law. The defendants moved for summary judgment, the trial court granted the motion and dismissed all claims with prejudice, and the employee appealed the trial court’s decision.

Pregnancy discrimination. The appeals court found that the trial court erred in concluding that the employee had failed to establish the fourth prong of her prima facie case under the PDA, i.e., that her discharge occurred in circumstances giving rise to an inference of unlawful discrimination. In that regard, the employee had relied on the temporal proximity between the time she had disclosed her pregnancy and her termination to establish an inference of unlawful discrimination. The sequence of events was sufficient to raise the inference of discrimination necessary for her to carry her de minimis burden to establish a prima facie case, the appeals court said, pointing to the fact that three days after the employee had told her supervisor that she was pregnant he turned a dispute over a reimbursement request into an internal audit of an expense report she had submitted that grew in scope to sweep in other purported policy violations and ultimately resulted in her being fired.

Title VII pay discrimination. The trial court found that the employee’s Title VII pay discrimination claim failed at the threshold stage because she did not establish that the positions held by her male comparators were substantially equal to her own position as required by the Equal Pay Act, alternatively concluding that she had failed to establish discriminatory intent even if she had made that threshold showing. In so ruling, the trial court erred in both respects, the appeals court said, explaining that a Title VII plaintiff need not satisfy the Equal Pay Act’s “unequal pay for equal work standard,” and that the employee here had presented sufficient evidence of discriminatory intent to establish a prima facie case.

By its plain terms, Title VII makes actionable any form of sex-based compensation discrimination. Thus, a claim for sex-based wage discrimination can be brought under Title VII even though no member of the opposite sex holds an equal but higher-paying job, provided that the challenged wage rate is not based on seniority, merit, quantity or quality of production, or any other factor other than sex, the appeals court explained, noting that the employee made a sufficient showing of discriminatory intent.

Title VII retaliation. Similarly, the trial court erroneously held that the employee’s Title VII retaliation claim failed at the prima facie stage because she did not establish that she had engaged in any protected activity when she sent the email to her CEO expressing her concerns over the compensation disparity and noting there was no product compliance due to the resignation of the individual who had been hired to handle safety and workers’ compensation matters. The trial court’s interpretation of the text of the email did not fully account for the context in which it had been sent—a context that reasonably suggested that the employee was taking issue with being paid less than her male peers. Standing alone, the email might well be insufficient to establish that the employee had engaged in protected activity; however, when read in context, it was sufficient to meet the employee’s minimal burden at the prima facie stage of the litigation.

Whistleblower retaliation. The CPSIA affords whistleblower protections to an employee who “provided, caused to be provided, or is about to provide or cause to be provided to the employer information relating to any violation of, or any act or omission the employee reasonably believes to be a violation of any provision of” the Consumer Product Safety Act or related consumer product safety statutes or regulations. To prevail on a CPSIA whistleblower retaliation claim, the appeals court adopted the framework applicable to Sarbanes Oxley Act (SOX) whistleblower-retaliation claims, i.e., an employee must establish that: (1) he or she engaged in a protected activity; (2) the employer knew that he or she engaged in the protected activity; (3) he or she suffered an unfavorable personnel action; and (4) the protected activity was a contributing factor in the unfavorable action. To meet the “reasonable belief” standard, a plaintiff must show not only that he or she believed that the conduct constituted a violation, but also that a reasonable person in his or her position would have believed that the conduct constituted a violation.

Protected activity. In the case at bar, even assuming that the employee had engaged in protected activity because she reasonably believed that the lack of an employee responsible for the safety compliance function placed the company at significant risk for violations of the law, her claim nevertheless failed because she did not satisfy the second prong of the SOX test—that the company knew she had engaged in protected activity. The employee did not cite any particular consumer product safety law or regulation that the company was violating or even risked violating by not acceding to the staffing request she referenced in her email complaining about the absence of a safety compliance manager.

Accordingly, the trial court correctly dismissed the former employee’s whistleblower retaliation claim under the CPSIA, but the lower court’s dismissal of her PDA, Title VII pay discrimination, Title VII retaliation, and related state-law claims was vacated, and the case was remanded for further proceedings.

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